'Cash for peerages' row as Blair honours top donors

'Cronyism' controversy reignited as leaked list of new peers includes Labour's millionaire friends

In a move that will trigger a fresh row over "cash for honours", Mr Blair is to elevate to the Lords four businessmen who between them have given almost half a million pounds to the party.

A leaked list of forthcoming honours shows that Dr Chai Patel, a high- profile Labour donor who runs the Priory clinics, is among those who has been personally recommended for a peerage by Mr Blair.

The Prime Minister is also set to elevate to the peerage Sir Gulam Noon, who has made millions from ready-made curries and given more than £220,000 to Labour since 2001.

Mr Blair also plans to add to the next list of working peers businessmen who have been financially supportive of his flagship projects, including city academies.

The list includes Sir David Garrard, a millionaire property developer knighted in January 2003 for charity work, who gave £200,000 to Labour the following May. Sir David has been a leading sponsor of the Government's "academy schools" programme, contributing £2.4m to the flagship city academy in Bexley, south-east London.

The peerages are vetted by an independent committee of peers and there is no suggestion of impropriety. But the decision of the Prime Minister to award more peerages to prominent Labour donors is expected to reignite a fresh "cronyism" row and cause deep unease among Labour MPs. Last night, Tam Dalyell, a Labour party member for 50 years who, until his retirement as an MP earlier this year, was Father of the House of Commons, said: "This leaves Harold Wilson's notorious honours list in 1976 smelling like roses."

Another figure who has been recommended for a peerage is Barry Townsley, a millionaire stockbroker, who gave £6,000 to the Labour Party in May this year. Mr Townsley is reported to have given £10,000 to Frank Dobson's failed campaign to become Labour candidate for Mayor of London, as well as an estimated £5,000 to the Labour Party between 1998 and 2000-01.

The City figure has also been a generous supporter of the Government's Academy scheme, and is reported to have sponsored Stockley Academy in Hillingdon. He is believed to have invested around £1m in the Government's flagship educational scheme. City academies were set up by Mr Blair in an attempt to tackle underachievement in deprived urban areas but have been beset by controversy.

This is not the first time Mr Blair has faced criticism over awarding donors or Labour supporters honours.

The Prime Minister was heavily criticised last year when he appointed Dr Paul Drayson, a Labour donor who founded the vaccine company PowderJect, one of 23 new Labour peers.

The leaked list, obtained by The Independent on Sunday, marked "Restricted - Appointments", shows that Mr Blair has personally proposed the millionaire donors as peers.

Sir David Garrard was a co-founder of the Minerva Corporation, the property company that controlled the failed department store group Allders.

Dr Patel, one of the architects of the Government's policies on the elderly and an adviser on the Department of Health's older people's taskforce, is believed to have given more than £5,000 to Labour.

Sir Gulam, estimated to be worth £50m, founded Noon products in 1989, and expanded it into the Noon group. Knighted in 2002, he recently made an outspoken defence of Mr Blair's immigration policies. The multi-millionaire Muslim businessman, who employs more than 300 settled refugees at his food company's manufacturing base, said that immigrants who did not respect British values should "get out of the country".

Those who refused to embrace British traditions should "go back to whatever you regard as your home country and leave us in peace". His remarks were regarded within Whitehall as "helpful" to Downing Street.

The new list of peers does not include Rachel Whetstone, former chief aide to Michael Howard, the outgoing Tory leader, or Lakshmi Mittal, the steel magnate. Reports that they were likely to obtain peerages were incorrect.

Mr Blair faced criticism last year for putting Labour "cronies" in the Lords.

Last year Mr Blair's personal pollster, Philip Gould, and the former Labour Party general secretary Margaret McDonagh were given peerages. Another prominent Labour donor given a peerage by Mr Blair is Lord Sainsbury, who is the science minister. The papers show that Downing Street believes the new peers will make a "valuable contribution to the work of the House of Lords".

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