Private equity chiefs give huge cash boost to Labour

Four businessmen, including private equity chiefs, handed over £500,000 in recent weeks to help the party with its huge debts and start building a pre-election war chest. One gave £250,000.

The four are Sir Ronald Cohen, venture capitalist Nigel Doughty, former Goldman Sachs partner Jon Aisbitt and internet betting tycoon Peter Coates.

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Meanwhile, Mr Brown will appoint private equity chief Damon Buffini, Tesco chief executive Sir Terry Leahy, and Sir Alan Sugar as his business advisers. The three will form the core of a new "Business Council for Britain".

Former BP director and long-term Labour supporter Nick Butler is being tipped for a role in No 10, and is expected to use his extensive contacts to further strengthen Mr Brown's links to the City.

It is widely expected that Mr Brown will give a senior ministerial post to a business leader, as part of his bid to create a "government of all the talents".

The unashamed embrace of private equity bosses will fuel fears among some Conservatives that Mr Brown will not take any action on the industry's tax rates.

Labour has noted that shadow chancellor George Osborne has floated the idea of higher taxes in the sector, and believes he could be outflanked if Mr Brown rules out such a move.

At the weekend Mr Osborne said Mr Brown could "draw the sting out of this whole debate by ensuring that what looks like income is taxed as income".

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Private equity bosses currently benefit from tax rates of 10 per cent because they claim their profits should be classed as high-risk earnings.

Sir Ronald, who founded Apax Partners and is the doyen of British private equity, is set to lead the way in donating cash to a Brown-led Labour Party.

A friend of Mr Brown, he will not adopt the job of chief fundraiser that Lord Levy had, but will play a more informal role in using his network of business contacts.

Labour is burdened with £23 million in debts, and £7 million of loans must be repaid over the next year to those linked to the "cash for peeragesî affair. The last big donation was from Lakshmi Mittal, who gave £2 million in January.

A lack of cash is one of the reasons Mr Brown is expected to wait before calling a general election. Labour cannot afford a campaign this year, particularly as the going rate is about £15 million for the four-week blitz ahead of polling day.

The Tories are attracting large funds from their backers. Michael Spencer, City entrepreneur and new Tory treasurer, has won backing from hedge-fund managers. Individual donors have given £3.7 million in the first three months of this year.

Brown's Business Council for Britain aims to inject private sector expertise into areas such as skills and business support reforms. Mr Brown also wants to use it to further to depoliticise some state spending on industry.

"It will also be able to look at whether some parts of policy - industrial policy, technology - should be independent of government like the Bank of England is," Mr Brown told the Financial Times today.