Rachel Reeves has reported the matter to the standards watchdog over allegations of cronyism.

Rachel Reeves’ case was reported to the ministerial standards watchdog amid a cronyism dispute within the government.

Sir Laurie Magnus, the Prime Minister’s independent adviser on ministerial interests, has been called in to investigate possible breaches of the ministerial code by the Chancellor.

Laura Trott, the shadow chief secretary to the Treasury, wrote to Sir Laurie urging him to consider the appointment at the department because of what she said was a “growing scandal of cronyism”.

Ian Corfield, who became Director of the Treasury shortly after the general election, had previously donated £20,000 to the Labour Party.

The former banker, whose new role was not subject to open competition, made political donations in 2023, including £5,000 to Ms Reeves.

Mr Corfield’s appointment had to be approved by the Civil Service Commission, the body that vets Whitehall appointments, which was not informed of the donation, Politico reported.

The Times reported on Friday that James Bowler, the permanent secretary of the Treasury, had also not been informed of the donation.

“Clear conflict”

Ms Trott wrote: “Under the ministerial code, ministers must, within 14 days of their appointment, ‘provide their permanent secretary with a full written list of all interests which might be considered to be likely to conflict with them’. This does not appear to have happened.

“They must also carefully avoid any risk of real or perceived conflict of interest between their ministerial position and private financial interests.”

“There is a clear conflict between receiving a donation (private financial interest) and appointing a person to a position (via the Chancellor’s ministerial position).”

She added: “I know you are committed to maintaining the highest standards in public life, and you share my belief that the growing scandal of cronyism surrounding political donations is undermining those standards.”

Currently, Sir Laurie must consult the Prime Minister before launching any investigation or wait for Number 10 to ask for one to be launched.

However, Sir Keir Starmer has said he wants to allow Sir Laurie to launch his own investigation as part of a drive to improve standards in Whitehall.

‘Short-term contract’

Government sources told the BBC that Mr Corfield had been hired on a short-term contract to help organise an international investment summit due to take place in October.

There may be departures from Whitehall’s standard recruitment principles of fair and open competition, but “such exceptional appointments are usually short-term”, according to the guidance.

Mr Corfield’s appointment is one of a growing number of nomination disputes that have dogged the Labour Party since its general election victory in July.

Emily Middleton, the entrepreneur whose company donated £67,000 to the Labour Party, has been appointed director general of the Department of Science and Technology.

The donation was first reported by Henry Newman, a former Conservative adviser to Michael Gove, on his blog The Whitehall Project.

The Cabinet of Ministers has been contacted for comment.