Capita chairman resigns over Labour party loan

The chairman of outsourcing firm Capita resigned today because of publicity surrounding his decision to loan money to the Labour Party.

Rod Aldridge said the group's reputation was being questioned because of his personal decision to lend the money.

"There have been suggestions that this loan has resulted in the group being awarded Government contracts," he said in a statement. "This is entirely spurious."

He added: "Whilst anyone who is associated with the public procurement process would understand that this view has no credibility I do not want this misconception to continue."

Mr Aldridge had been named as one of the dozen millionaires who bankrolled Labour's General Election campaign.

Capita said Mr Aldridge would now serve as non-executive chairman until the group's interim results at the end of July, in order to ensure a smooth transition to a successor.

He has led the company since its foundation in 1984.

Chief executive Paul Pindar said: "Rod has played a key role in establishing Capita as the leading service transformation partner to both public and private organisations across the UK."

The news comes a day after Prime Minister Tony Blair urged Opposition parties to try to reach consensus with Labour over funding, warning the issue was "difficult for any political leader".

The Prime Minister spoke out as the row over secret loans to his party intensified.

On Tuesday Scotland Yard said it was examining complaints that Labour had breached the honours system by giving them in return for loans or donations.

Controversy over the loans was sparked after the independent commission which vets nominations for peerages reportedly raised concerns over a number of people put forward by Mr Blair.

Home Secretary Charles Clarke has questioned the competence of Labour treasurer Jack Dromey, who claimed he and other elected party officials had been kept in the dark about £14 million loans arranged by Mr Blair's chief fundraiser Lord Levy.