LABOUR said today that new shadow business secretary Kenneth Clarke had ''questions to answer'' about his relationship with Southampton-based tobacco giant BAT after reports that he accepted hospitality from the company while a Government minister.

Details from correspondence between Mr Clarke and BAT's former chairman Sir Patrick Sheehy suggesting the company invited him to a rugby international and an opera at Glyndebourne while he was in the Cabinet in the 1990s were revealed today.

It also emerged that 1995, Mr Clarke wrote to Sir Patrick thanking him for a ''note and folder'' and promising to discuss it with the Treasury. It is thought the note may have referred to a £123 compensation claim against the company for allegedly mis-selling pensions to employees.

Mr Clarke - who became a director of BAT in 1998 after leaving Government - brushed off questions about the letters, insisting he had neither done nor been asked to do anything improper.

But Labour's Kevin Barron, the chairman of the Commons Health Committee, said: ''It's one thing for Ken Clarke to be paid hundreds of thousands of pounds by a cigarette company once he became a backbencher, but it's another thing for Ken, just 18 months earlier when he was still Chancellor, to have been in private correspondence with the chairman of that same company to discuss potentially changing Treasury policy.

''If Ken is serious about taking government office ever again, then he has some difficult questions to answer about his relationship with BAT.

''In particular, what was discussed with Sir Patrick Sheehy? Did Ken properly inform the Permanent Secretary about the letter, the private meeting and the contents of this mysterious note and folder? Why did Ken Clarke seem to have such a cosy relationship with the tobacco industry and why was he seemingly being offered such generous perks and hospitality whilst in office?''

Asked on BBC1's Andrew Marr Show whether he was worried about the questions being raised over his links with BAT, Mr Clarke said: ''Not in the slightest - I mean it's par for the course now. I mean poor old Mandelson was accused of every sin in the book as soon as he took over.

''When I was Industry Secretary, when I was Chancellor of the Exchequer, you had a lot of dealings with businessmen, in those simple days, when we weren't all accused of sleaze.''

Asked whether he would do the same again, Mr Clarke replied: ''Certainly I would, because I was never ever asked by anybody to do anything improper, probably because they knew only too well that they would have got a very, very firm reaction.''