£1m Labour donor among new peers

Downing Street was accused yesterday of compromising the peerage system after a number of Labour donors, including a wealthy industrialist who donated about £1m to the Labour Party, were ennobled.

Downing Street was accused yesterday of compromising the peerage system after a number of Labour donors, including a wealthy industrialist who donated about £1m to the Labour Party, were ennobled.

The list of 46 new life peers includes Professor Sir Kumar Bhattacharyya and the businessman Paul Drayson, who has already been at the centre of controversy after he won a multimillion-pound government contract after he donated £100,000 to Labour.

Three of the other new peers announced yesterday will be wealthy Tory businessmen who between them have donated millions of pounds to the Conservative Party.

Half of the new peers are Labour supporters. They include Philip Gould, Tony Blair's personal pollster, and Garry Hart, special adviser to Lord Falconer.

Mr Hart, a City lawyer, has also given money to the Labour Party and is godfather to the Prime Minister's daughter, Kathryn.

Sir Kumar, the largest Labour donor to be honoured, is understood to have given about £1m to the party between 1998 and 2000. Professor of manufacturing at the University of Warwick and director of the Warwick Manufacturing Group, Sir Kumar is often consulted by the Government and has sat on several quangos. Yesterday he said he was "delighted" by his peerage and planned to speak in the Lords on international affairs, higher education and industrial issues. He refused to confirm how much he had given to the Labour party, saying he had given "more than £5,000, five years ago". At the time of the donations, he was not obliged to reveal the exact amount.

Dr Drayson is co-founder of the Oxford-based vaccines company PowderJect Pharmaceuticals and one of Labour's highest-profile business supporters. Although a committee of MPs recently found no evidence that the £32.5m smallpox contract deal was influenced by his party donations, questions were asked about the lack of open tendering.

The Tories were criticised for supporting peerages for big donors including Sir Stanley Kalms, the Dixons millionaire, and Irvine Laidlaw, a tax exile who has given about £1.5m to the Conservative Party, but is changing his residency to join the Lords.

Yesterday Labour and Liberal Democrat politicians criticised the award of peerages to big donors.

Lord Oakeshott, a former member of the Joint Committee on Reform of the House of Lords, said: "It's outrageous that people can just suddenly change their tax residence to get a peerage."

Alan Simpson, Labour MP for Nottingham South, said: "The honours system gets compromised when you have people who have made large cash donations in advance of their advancement."