UK's Blair defends honours for school scheme backers

LONDON, Apr 24 (Reuters) British Prime Minister Tony Blair, embroiled in a ''cash for honours'' row, said today that people who gave financial backing to his inner-city schools programme deserved official recognition.

Blair has come under pressure since his Labour party said last month it had received nearly 14 million pounds in loans from 12 businessmen, some of whom were later nominated for seats in the House of Lords.

Some of those lenders also gave financial backing to Blair's flagship schools programme, known as city academies.

The row has come as Blair faces persistent questions about when he will step down after he declared he would not seek a fourth term.

Blair swept to power in 1997 promising to be ''whiter than white'' after a string of sleaze allegations damaged the previous Conservative government.

''If someone gives 2 million pounds of their own money -- time, effort, energy, years of hard work -- isn't that something that we should be saying: 'That's a great thing that they've done,''' Blair told a news conference.

''Insofar as the honours system rewards people who contribute to society, contributing to the education of disadvantaged kids in the inner cities is about as big a contribution to society as I can think of,'' he said.

Sponsors such as business leaders or church groups give about two million pounds towards start-up costs for each of the academies, launched in 2002 to boost education in inner-cities.

The Labour party has denied ''selling'' seats in the House of Lords and dismissed allegations from opponents that donors' companies got favourable treatment in return for their support.

The honours row threatened to damage Blair this month when police investigating political parties' funding arrested Des Smith, a former government adviser on the academies programme.

Smith resigned in January after telling an undercover reporter that anyone making donations to the schools programme could expect to receive honours, knighthoods and peerages.

He has denied any wrongdoing.

Police launched their investigation after several members of parliament asked them to look into possible breaches of a law dating from 1925 that forbids selling public honours.

Four men Blair had originally nominated for the House of Lords withdrew their names after the honours row broke out.

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