Sleaze watchdog stalls Blair's 'crony' peer list

Tony Blair has become embroiled in a new "cash for favours" row over his nomination of prominent Labour Party donors for peerages.

The parliamentary sleaze watchdog has blocked the Prime Minister's working list of 28 peers, which includes businessmen who have donated thousands of pounds to his party.

He submitted the list of 11 Labour peers, eight Tory peers, five Liberal Democrat peers and four Northern Ireland peers in November. It was first revealed in The Independent on Sunday.

Now the House of Lords Appointments Commission has put a hold on the peerages, pending further checks. "The appointments commission is holding it up because they are dissatisfied with some of the names on the Prime Minister's list. Some members of the commission are holding out as a matter of principle," one source close to the cross-party commission of peers said.

"They think it's getting ridiculous. The embarrassment for Labour is that some people are due to get honours and, if they don't get them, they will have a right to be peeved. They have told these people they are going to get ermine and it's being held up."

Those nominated by Mr Blair for peerages include Labour donors such as Dr Chai Patel, who runs the Priory clinics, Sir Gulam Noon, founder and chairman of an Indian food company in the UK, Barry Townsley, a stockbroker who gave £6,000 to Labour and sponsored a city academy in Hillingdon, and Sir David Garrard, a property developer millionaire who donated to Labour and contributed £2.4m to the Bexley city academy but who has previously given £70,000 to the Conservatives under William Hague.

A number of Tory donors are also on the Conservative list drawn up by David Cameron's predecessor as leader, Michael Howard. It threatens to reopen the row over "cronyism" that erupted when Mr Blair awarded a peerage to Paul Drayson, a Labour supporter who donated more than £1m to the party. Lord Drayson of Kensington founded the pharmaceutical company PowderJect, which secured Government contracts for smallpox vaccine. He has since been made Defence Procurement minister.

The commission was set up as part of the reform of the upper chamber after the removal of hereditary peers to answer criticism that future Prime Ministers could abuse their power of patronage over life peerages.

There is no suggestion of any wrongdoing by any of those on the list but Commission members asked for further evidence on the tax status of some of the nominees, who are normally required to pay tax in the UK.

The list also raises the issue of the use of peerages to reward party donors. Cash for peerages caused a furore in the early 20th century when the then Liberal Prime Minister, Lloyd George, accepted bribes for honours.

Trade union leaders were traditionally given Labour peerages, but it has now become common for businessmen who have donated large sums to parties to be given peerages. Labour's list contains more traditional Labour figures, such as Sir Bill Morris, 67, the former general secretary of the Transport and General Workers Union, Maggie Jones, of the health workers' union Unison, and Joyce Quin, 60, the former home office minister who stood down at the last election.

PM's nominations

* Sir David Garrard, property millionaire, co-founder of the Minerva Corporation that controlled Allders stores; gave £200,000 to Labour and donated £2.4m to Bexley city academy. Also gave Tories £70,000 for a call centre at central office. Knighted in 2003 for charity work.

* Dr Chai Patel, 69, CEO of Westminster Health Care group which owns The Priory Clinic; gave £5,000 to Labour Party funds. One of the architects of the Government's policies on the elderly and also an adviser to the Department of Health.

* Sir Gulam Noon, 69, founder of Noon Products which specialises in ready-made curries in the UK; donated more than £220,000 to Labour since 2001 in nine separate donations. Knighted in the Queen's Birthday Honours in June 2002 for services to business.