Campaigners argue that the House of Lords should be replaced by an elected upper chamber © Victoria Jones/PA

The elevation of the billionaire businessman and Tory party benefactor Michael Spencer to the House of Lords on Friday means that at least 22 former donors to political parties have been given peerages in the past 13 years, according to calculations by the Financial Times.

In total, those individuals have given £50.4m to the main three parties — either personally or through related companies — with most of the money donated to the Conservative party.

Out of the 22 donors who have received peerages in the past 13 years, three are from Labour, four are Liberal Democrats and 15 are Conservatives.

The biggest gifts include £3.5m from Stanley Fink, £8.2m from Anthony Bamford, £8.6m from Michael Farmer, £3.3m from James Lupton, £3.4m from Alexander Fraser and £2m from David Brownlow — all to the Tory party.

Mr Spencer, who has donated £6m to the Conservatives through his private investment group IPGL, was one of 36 new appointments to the House of Lords announced on Friday. The list of peerages included a number of notable Brexiters and allies of the UK prime minister Boris Johnson.

The Lib Dem peers include James Palumbo, who has given the party £1.2m, Rumi Verjee (£2m) and Paul Strasburger (£1.08m). The Labour-appointed peers were William Haughey (£1.7m), Gulam Noon (£852,326) and Alan Sugar (£385,963) — who quit the party in 2015 and is now a cross-bencher.

The fact that 22 out of 308 new working peers created since 2007 have given generous personal donations to political parties has prompted criticism from campaigners.

Angus MacNeil, the SNP MP who triggered a police inquiry into the cash-for-honours affair in 2006, said the FT’s analysis was the “stuff of banana republics”.

Willie Sullivan, a senior director at the Electoral Reform Society, which advocates abolition of the upper chamber, said the figures showed the need for proper reform of a “discredited, cronyistic set-up” in Westminster.

“The House of Lords looks more and more like a retirement home for party donors and allies [rather] than a serious scrutiny chamber,” he said.

Mr MacNeil added that it was time for the UK to take lessons from other countries.

“Proper democracies don't have people who donate a cool million, magically finding themselves in parliament,” he said.

The cash-for-honours scandal did not lead to any prosecutions but it severely destabilised Tony Blair’s government more than a decade ago.

In 2006, several millionaires nominated for peerages by then prime minister Mr Blair were rejected by the House of Lords Appointments Commission. It later emerged that they had loaned large sums to the governing Labour party, prompting three complaints to the Metropolitan Police as a breach of the law against selling honours.

The subsequent investigation by the Met led to the arrest of Lord Levy, Labour’s fundraiser. However, in 2007, the Crown Prosecution Service announced that it would not bring any charges.

Supporters of the system point out that many donors who become peers have skills and experience in particular sectors such as business.

A Conservative party spokesperson said: “Party donations do not play any part in the selection process. It is wrong to criticise individuals being honoured just because they have also chosen to donate to a political party. Donations should be transparent, but that is not an excuse to knock people for broader philanthropy, enterprise and public service.”

One Tory aide said that the party not only carried out normal vetting checks but always considered whether an individual put forward for a peerage would be a “credible party-political nominee” if they had not given any money to the party.

A Lib Dem spokesperson said the party was still campaigning to create a second elected chamber: “Lib Dem peers have a wide range of experience, including figures from business, philanthropy and community activists.”

Labour did not comment.

Meg Russell, director of the constitution unit at University College London, said there had never been a ban on party donors being appointed as peers.
“That in itself isn’t a problem, as many of the most committed party members make donations,” she said.

But Prof Russell criticised the fact that the House of Lords Appointments Commission (HOLAC) plays no role in judging the suitability of party nominees, unlike the role they play for independent members.

“Parties should really have to state what qualifications their nominees have to sit in the Lords, and nominees should be interviewed by HOLAC before being appointed,” she said.

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