Blair ally attacks smallpox deal

Tony Blair today faced formidable new embarrassment over a £32million smallpox vaccine deal after one of his closest business allies attacked the way the contract was given to a company headed by a Labour donor.

The attack came from Lord Haskins, former chairman of Northern Foods, and himself a Labour donor.

He said there was no reason why it should not have been put out to tender in the normal way.

The contract and the link with Labour - first disclosed in the Evening Standard last Friday - has left the Prime Minister facing more pressure over allegations of sleaze in his dealings with businessmen.

Rival drugs companies have protested that they were not given the chance to bid for the smallpox vaccine contract, after the Department of Health struck a deal with Powderject Pharmaceuticals, which is headed by Labour donor Paul Drayson.

Lord Haskins, who has helped Labour in the past by heading one of the inquiries into the foot-and-mouth disease, and also chairing its Better Regulation Task Force, said today: "I see no reason why a tendering process for these vaccinations should not have been open and transparent right from beginning to end."

He added that the secrecy of Whitehall officials rather than ministerial conspiracy was to blame.

The controversy over the close business links between donors and Labour has reopened the question of who should fund political parties, as Deputy Prime Minister John Prescott admitted today that he was concerned about the allegations of sleaze.

"It is a problem for us," he told The Times. "If the finance comes from the unions everyone says we are in the pockets of the unions.

"Tony Blair has changed a lot of that and we're now getting contributions from business.

"But people are now saying we're in the pockets of business and implying all kinds of things . . . I think the only system under which you can be properly accountable is state financing with set limits of expenditure and advertising."