How Labour's fixers schmoozed and flattered the big-money donors

Sir Christopher Evans, a biotechnology tycoon, never made it to Tony Blair's infamous 2005 peerage list. But the New Labour supporter, who lent £1m to Labour before the last election, is believed to have been discussed in No 10 as a possible candidate for the House of Lords.

His arrest by the police last year has heightened interest in his role in the cash-for-honours affair and fuelled speculation that his inclusion on a "long list" of potential peers is a key aspect of the police inquiry. What is more, notes emerged that recorded a meeting between Sir Christopher and "someone from the Government" about honours in which there was a discussion of whether he should get "a K" (a knighthood) or "a big P" (a peerage).

This conversation took place around 2001, even before he was given a knighthood, and is not believed to be a central feature of the police investigation. But the note is significant because, in the murky world of honours, it briefly illuminates the way government patronage is controlled.

Sir Christopher's aides are adamant that the scientist not only never solicited a peerage, he was never directly offered one. But what is clear is that the tycoon was part of a New Labour milieu where it would not be unusual for wealthy businessmen to be told they should really be in the House of Lords.

Millionaire tycoons mingled with politicians and flattery was the order of the day. At social events, Labour figures, starry-eyed about the rich and powerful, used to sidle up to successful supporters of the Party and suggest that they, too, deserved a career in politics. "You are ministerial material", or "I can see you in the Lords" were the type of unctuous suggestions made, according to one source.

One wealthy political figure said that Lord Levy, appointed by Tony Blair as his official fundraiser - and the man who was dubbed Lord Cashpoint because of his success at keeping the Labour coffers full - was a past master when it came to the craft of flattery.

"He usually touched your arm or put his arm round you when you met him," said one successful businessman.

The pop impresario was brilliant at engineering meetings between the Prime Minister and businessmen who could financially support Labour. Mr Blair would sometimes make "surprise" appearances at parties held at Lord Levy's mansion and he was also present at more formal business events.

But it was not only Lord Levy who schmoozed millionaires. Labour officials, advisers and apparatchiks were also in on the game.

A few years ago, Sir Christopher was attending a presentation at Downing Street when a senior government adviser sidled up to him. The official told Sir Christopher, who is the founder of Merlin Biosciences: "Your stock has risen so high, and a lot of people are saying very positive things about you."

One friend of the tycoon said: "This isn't Michael Levy. It's not TB. This is a government adviser - that's the kind of thing." A spokesman for Sir Christopher insisted that at no time was he offered a peerage, nor did he solicit one. The biotech tycoon has also received no indication that he was on a long list of potential peers. But the spokesman said it would not have "been unusual" if it were suggested, because of his background in science and business, that he had sufficient experience to merit a place in the Lords.

"People should not underestimate Chris Evans's proximity to the Government in that period," he said.

Sir Christopher has said he was "shocked and dismayed" to be arrested, and that he would never have made the loan if he had thought it would end in his being placed in such an "embarrassing and mind-boggling position". He is also thought to be bemused that he has been referred to as a figure at the forefront of the inquiry.

The Labour Party is currently repaying his £1m loan.