A MAJOR row has broken out after political parties awarded peerages to some of their largest donors, including the Labour-supporting tycoon and former Celtic director Sir William Haughey.

The chairman of Glasgow-based City Refrigeration has given £1.3 million over the past decade to Ed Miliband's party. He was among five millionaire donors elevated to the Lords yesterday.

Critics of the new list accused Mr Miliband, Conservative leader David Cameron and the LibDems' Nick Clegg of "polluting parliament" and demanded the end of big-money funding politics.

The row echoes that which saw then Prime Minister Tony Blair interviewed as part of the cash-for-honours investigation in 2006.

Mr Miliband last month announced plans to sever Labour's ties with the trade unions in a move that has raised speculation about how its General Election campaign will be funded in 2015.

Sir William, who was knighted last year, was forced to deny meddling in the selection of Labour candidates for Glasgow City Council two years ago.

Scottish Labour leader Johann Lamont said his peerage was deserved recognition for his charity work and commitment to creating opportunities for young people.

Other new peers include Sir Anthony Bamford, a member of the Bamford family, which has given around £2.5 million to the Conservative party since 2002.

Financier Howard Leigh, who has given £37,682 to the Tories since 2011, joined him in the Lords. LibDem donors elevated to the Upper House include Domino's Pizzas founder Rumi Verjee, who has given £800,000 to the LibDems via a company, and Ministry of Sound music entrepreneur James Palumbo.

LibDem peer Lord Oakeshott, a former member of the joint committee on Lords reform and a close ally of Business Secretary Vince Cable, said the decision "pollutes parliament and political parties who collude in this".

He added: "It's now more urgent and vital than ever that we elect the Lords and get big money out of British politics for good."

Jim Sheridan, Labour MP for Paisley, hit out at the list, saying it reeked of "cronyism and calls into question the whole concept of a second chamber".

With some notable exceptions, he said, the peerages looked "like jobs for old friends, party officials and civil servants who have no understanding of life outside the Westminster bubble."

Sadiq Khan, Labour's Shadow Justice Secretary, attacked David Cameron's decision to increase the size of the Lords despite the fragile economic recovery.

"David Cameron promised to cut the cost of politics but by appointing rafts of new Lords since the election he's done exactly the opposite," Mr Khan said.

"Not only has David Cameron shown he's happy to say one thing and do another, but by making this his priority at a time when hard-working people are concerned about the spiralling cost of living under the Tories, he's proving just how out of touch he is."

Mr Clegg said his new peers would "make a valuable contribution to British politics". Labour and the Conservatives both said they "totally refuted" allegations that peerages were linked to donations.

Also made peers were Annabel Goldie, the former leader of the Scottish Conservatives, and former Lib Dem MSP Jeremy Purvis.

Miss Goldie said she regarded her elevation as a "great privilege" but that her primary role would remain at Holyrood where she is still a serving MSP,

Scottish Conservative leader Ruth Davidson welcomed the announcement and said her predecessor would serve in the Lords "with the intelligence, verve, duty, grace and wit she is known for".

Mr Purvis, who lost his Holyrood seat in the 2011 election, will also become policy and strategy adviser to Scottish Lib Dem leader Willie Rennie.

Joining them in the Lords for Labour

is Doreen Lawrence, the mother of murdered student Stephen Lawrence. Former Paralympic swimmer Chris Holmes will sit on the Tory benches.

David Cameron also risked accusations he is running a "chumocracy" by appointing Daniel Finkelstein, the Times journalist he told the Leveson inquiry was a friend, to the Lords.

Other new peers include Brian Paddick, a former LibDem London mayoral candidate, the party's former communications chief Olly Grender and Nick Clegg's ex-deputy chief of staff Alison Suttie.

The appointments swell the Lords to 785 and mean the Tories are again the largest party with 222 to Labour's 221 and the Liberal Democrats' 99.Details of titles will be released over the coming weeks, Downing Street said.

In July 2007 the Crown Prosecution Service announced that no-one would face charges over cash-for-honours claims.