Yorkshire businessman gave pounds 4m to Tory Party

Sir Graham Kirkham, the Yorkshire millionaire businessman knighted in the last New Year's honours list, gave pounds 4m to the Conservatives, the biggest-ever donation received by the party.

Sources close to Sir Graham, 51, admitted yesterday that earlier reports of him loaning the Tories pounds 4m were wrong and confirmed that he handed over the cash gift in the middle of last year, months before he received his knighthood.

When he was awarded the knighthood this January, for charitable services, Labour went on the offensive, with the deputy leader John Prescott claiming it was "the crudest example yet, of honours being given for financial services received by the Tory party".

Conservative party chiefs are thought to have urged the Prime Minister to wait before honouring Mr Kirkham, fearful of an opposition backlash. However, Mr Major - who visited Sir Graham's South Yorkshire home before the donation was made - is understood to have ignored their advice, taking the decision personally.

Sir Graham's philanthropy also aroused opposition because it was revealed that his furniture chain, DFS, while still privately owned, had paid Sir Graham partly in paintings and furniture - saving pounds 500,000 in National Insurance contributions.

The revelation provoked Labour charges that the Conservatives accepted money from a man who had not paid his fair share of taxes.

Sir Graham, the son of a miner, is worth an estimated pounds 300m. After leaving school without a single O-level, he worked for a while as a furniture salesman before going it alone in 1969. He used his own savings of pounds 400 to fund the business and tried to avoid being in debt to the banks and venture capitalists. That way, by the time his company floated on the stock market in 1993, almost every share belonged to him and his family.

In October last year, he netted pounds 74m from a sale of shares. So far, he has raised pounds 200m in reducing his DFS stake, but he and his family still hold 30 per cent, worth over pounds 100m. This year, the company moved south for the first time and opened shops in London.

As well as being a major political benefactor, Sir Graham has also become one of the country's prime art and antique collectors. His gift far outstrips previous publicly revealed donations to the Conservatives, the next highest being pounds 2m from John Latsis, the Greek shipping tycoon.

The fact it was a gift, not a loan, helps explain the change that came over Tory finances last year. From an overdraft of pounds 15m, the party has, apparently, been able to build a war chest sufficient to mount an effective challenge at the next general election.

That transformation is being attributed to Lord Harris, the discount carpet king, who is a close friend of Sir Graham. Since he became chief fund-raiser, Lord Harris is understood to have extracted the donation from Sir Graham and a substantial sum from George Moore, another Yorkshire furniture millionaire.

Mr Moore, with a fortune estimated at pounds 120m, would neither confirm nor deny his donation yesterday.