Blair drops Labour lenders in revised list of new peers

Tony Blair has ended a damaging stand-off with a Lords sleaze watchdog by dropping four businessmen who lent Labour £3.5m from a list of 28 working peers in a humiliating climbdown over the "peerages for cash" scandal.

The Prime Minister's list, officially published today, excludes his nominations for peerages for the Priory clinic head Chai Patel, the property developer Sir David Garrard; the so-called "Curry King" Sir Gulam Noon, and the stockbroker Barry Townsley.

All four had been blocked by the Lords Appointments Commission chaired by Lord Stevenson of Coddenham, the chairman of the HBOS bank, for six months over concerns about their financial interests.

The commission also blocked a nomination by the former Conservative leader, Michael Howard, for a Tory life peerage for the millionaire car dealer Robert Edmiston, who gave the Tories £250,000 in 2004.

But the 23 peers on the final list include Tory donors who have given the party almost £230,000 in total. More than half of the Conservatives' new working life peers have given money. Among them is the party treasurer Jonathan Marland, criticised last month when he refused to name wealthy individuals who secretly lent millions. He has given the party £154,000 in recent years.

Other donors becoming peers include Mohamed Iltaf Sheikh, chairman of the Conservative Muslim Forum (£37,501), and David James, the troubleshooter who drew up plans to slash Whitehall spending for the party, who has given £18,550. None of the other parties' new peers appear on the Electoral Commission watchdog's register of individuals who have made donations of over £5,000.

The debacle over the peerages, which has left Mr Blair looking damaged, led to the disclosure that £13.9m had been raised in loans for Labour's election campaign, which had not been declared. The scandal triggered an emergency package of reforms as Mr Blair fought to defuse the row. But it is understood the commission blocked some names because they had their personal fortunes overseas, and were not taxed in Britain. That led to calls for peerages to be banned in future for those using offshore tax havens.

Praising the commission for sticking to its guns, the Liberal Democrat peer, Lord Oakeshott, said: "No one who is domiciled in an offshore tax haven should ever be put forward for a peerage." He also called for the decisions of the commission to be made binding as part of the reforms to the honours system promised by Mr Blair.

"If the referee shows the red card, it should be a binding decision. Technically, the commission's decisions are only advisory but it would have been outrageous if Blair had overruled them. I hope they will look with great care over Tony Blair's resignation honours list."

The Prime Minister is still facing the humiliating prospect of being interviewed by Scotland Yard over allegations that he breached anti-sleaze laws over "peerages for cash", which he denies.

The new Lords list

* Labour: Sir Bill Morris, Britain's first black trade union leader; Maggie Jones, a Unison member of Labour's executive, who was defeated in Blaenau Gwent at last year's general election; Margaret Ford, chairwoman of regeneration body English Partnerships; Denise Kingsmill, former deputy chairwoman of the Competition Commission; Joyce Quin, ex-Labour MP for Gateshead and junior minister; Keith Bradley, former MP for Manchester Withington and Home Office minister.

* Conservatives: David James, business troubleshooter; Jonathan Marland, Tory party treasurer, donated £154,000 over the past two years; Sandip Verma, British Asian businesswoman; Charles Leach, former merchant banker, a leader of the "No" campaign against euro; Sir Sandy Bruce-Lockhart, chairman of the Local Government Association; Mohamed Iltaf Sheikh, chairman of the Conservative Muslim Forum; and John Taylor, head of a family flower business.

* Liberal Democrats: John Burnett, former MP for Torridge and West Devon; Brian Cotter, defeated MP for Weston-super-Mare; John Lee, former Tory minister; Robin Teverson former MEP for Cornwall and West Plymouth; Celia Thomas, whips' office official in the Lords.

* Ulster Unionists: David Trimble, former leader of the Ulster Unionist Party; Eileen Paisley, wife of DUP leader the Rev Ian Paisley; Maurice Morrow, DUP chairman; Wallace Browne, DUP Lord Mayor of Belfast since last May.

* Crossbencher: Colin Boyd, Scotland's Lord Advocate.