Labour donors in 'cash-for-honours' affair still hope for a place in Lords

Millionaire donors at the centre of the cash-for-honours affair still hope they will receive places in the House of Lords amid speculation that Tony Blair may deliver a stinging rebuke to his critics over the cash-for-honours affair and grant peerages to his financial backers on his final honours list.

Sir Gulam Noon, the ready-meals millionaire, told The Independent on Sunday that he would be ready to accept a peerage if it was offered in Mr Blair's farewell list, which has been delayed because of the lengthy police inquiry into secret loans to the Labour Party.

And Sir Christopher Evans, whose multi-million biotech empire includes Merlin Biosciences, revealed to the IoS that Labour figures had suggested to him that he should become a science minister in the House of Lords.

The revelations come as Scotland Yard came under strong pressure after Carmen Dowd, the Crown Prosecution Service lawyer in charge of the inquiry, announced last week that there would be no prosecutions arising out of the 16-month investigation, which cost £800,000 and involved the arrest of several key figures in the affair.

Lord Levy, the central figure in the saga, and Mr Blair's personal fundraiser, is understood to be furious over his treatment, and is considering whether to sue Scotland Yard for wrongful arrest.

Friends of Lord Levy are also urging him to complain to the Independent Police Complaints Commission.

The House of Commons Public Administration Committee, which put its own inquiry into cash for honours on ice after the Metropolitan Police launched its investigation, led by deputy assistant commissioner John Yates, will now revive its probe.

The investigation will focus on Mr Blair's decision to nominate for peerages four party donors, who also gave secret loans to the Labour Party before the 2005 election.

Because they were loans rather than donations, there was no requirement at the time for these to be publicly disclosed.

Mr Blair had brought in legislation in 2001 that meant any donor giving a party more than £5,000 would have to be declared, but the loans involved in this saga were for vast sums.

The fall-out of the affair has left Labour facing a cash crisis which may affect Gordon Brown's ability to call a snap election.

The latest Labour Party accounts showed the party is more than £24m in debt, even though the organisation halved its number of staff in the past year, the IoS can reveal.

It has yet to pay back almost all the £15m of loans gathered from Labour supporters and has £1.3m of unpaid interest on top.

The party is also facing huge legal bills run up during the affair, and Lord Oakeshott, a Liberal Democrat treasury spokesman, said: "When Labour can't even pay the interest bill on their debts from the last election, there is no way they can fight the election without relief from the taxpayer."

Sir Gulam, who lent the party £250,000 and was among the donors interviewed by police, said: "I don't think I would turn a peerage down. I really don't know if they will consider it or not." In common with most of the donors, he has not yet asked for the loan to be repaid.

Sir Christopher, who lent the party £750,000 and who was recently repaid, with interest, was one of four figures arrested during the affair. He said that he would not rule out accepting a peerage if it was offered at some time in the future, but that he believed the affair had damaged trust in politicians.

Sir Christopher said: "I think Tony Blair would admit himself that it was a very unfortunate affair and that it did damage him. In his latter days, there was so much talk and shadows cast about this affair. In a way it did reflect badly."

Dr Chai Patel, another lender, who founded the Priory clinics, said that the affair had confirmed the perception that peerages were linked to donations. He said: "You are basically feeding people's impressions of what they think historically happened must be going on now."

Angus MacNeil, the Scottish Nationalist MP who prompted the police inquiry with his original complaint to the police, said that he did not regret making his complaint, adding that the inquiry had led to a "cleansing of 'nod and wink' corruption."

"Large donors to the Labour Party were thousands of times more likely to get a peerage than non-donors over the last six years, and 80p in every £1 of donations came from people who were knighted or ennobled," he said.

"I think that the last 16 months of investigation has changed that, and changed that utterly. In my experience, all decent MPs from across the parties will welcome that fact."

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