ALAN Milburn last night dismissed as "utter claptrap" concerns over his possible involvement in the awarding of a £95m NHS contract.

The controversy was sparked by the awarding of a five-year contract for hospital MRI scanners to Alliance Medical, whose parent company, Bridgepoint, uses the Darlington MP as a £30,000-a-year advisor.

Conservatives have demanded that the National Audit Office examines the contract, which has re-ignited the debate over senior politicians taking up posts with private companies.

Earlier this year, Mr Milburn joined an advisory committee for Bridgepoint, which has a stake in a number of companies working in the health sector.

He insisted at the time that the role was not "in any way a conflict with what I have done as a minister or my job as an MP".

But fresh questions are being asked about the new deal for Alliance Medical, which will see it provide 12 mobile scanners to travel to hospitals across the country.

A Sunday newspaper report said Labour found itself embroiled in another cronyism debate, following the unveiling of the contract by Health Minister John Hutton, who is a former flatmate of Mr Milburn.

But Mr Milburn told The Northern Echo last night: "This story is utter claptrap."

Both Alliance Medical and the Department of Health stressed there had been a competitive tendering process, open to any company wanting to bid for the contract.

But Anthony Frieze, Conservative prospective Parliamentary candidate for Darlington, said last night: "It just doesn't really pass the smell test.

"I said when Mr Milburn took up the post that it struck me as a bit odd and I stand by that.

"It doesn't help people's confidence in what politicians do once they step out of the frontline."

However, there were claims last night that the £95m could prove a waste of taxpayers' money.

While the money is being invested in private scanners, existing NHS equipment is said to be lying idle because of a lack of trained staff.

Last year, The Northern Echo revealed how a £1m brain scanner at the James Cook University Hospital, Middlesbrough, could not be used because of staff shortages