Sarah Brown, the wife of the prime minister, has been drawn into political controversy for the first time as the Tories questioned whether Gordon Brown breached the ministerial code by failing to register her public relations contracts.

Using documents released under the Freedom of Information Act, the Tories have established that companies linked to Sarah Brown, a former highflying PR executive, received payments worth £124,000 from the British Council, the state-funded cultural body.

The Conservatives claim Gordon Brown should have declared the contracts as a potential conflict of interest because when he was chancellor, he increased the council’s budget.

However, No 10 insisted the allegations were a “ridiculous smear” and Labour sources indicated that the Tories might suffer a backlash. A source said Sarah Brown had not personally worked for the British Council since the death of her baby daughter Jennifer in 2002.

Gordon Brown began dating Sarah Macaulay, as she then was, before Labour won power, but their relationship became public only in 1998. They married in August 2000. Between 1998 and 2001, Sarah Brown’s PR consultancy Hobsbawm Macaulay Communications received £45,000 from the British Council for helping to organise two cultural events. In 2001 she moved to the arts division of the financial public relations giant Brunswick. Over the next three years it received £79,000 from the British Council, mainly in the form of monthly retainers.

The FOI documents were obtained by Rob Wilson, Conservative MP for Reading East and shadow minister for higher education. He has written to Sir Gus O’Donnell, the cabinet secretary, asking to know whether Brown, during his period in the Treasury, declared the contracts to the Whitehall authorities.

“It is clear that as director of Hobsbawm Macaulay and employee of Brunswick, Sarah Macaulay Brown had a direct financial interest in the British Council at a time when her husband was substantially increasing its funding,” Wilson writes.

He points out that in the 2002 spending review, for example, Brown announced its budget would rise from an annual £157m to £185m over three years.

Wilson added: “Under the terms of the ministerial code this should have been raised with the permanent secretary at the Treasury by the chancellor and the appropriate action taken. It would be helpful to know whether this matter was raised with the permanent secretary and, if it was, what action was recommended.” The FOI documents also reveal that the British Council awarded the contracts to Sarah Brown’s firms without a competitive tender. “Guidelines state that competitive tender is only required for monies over £100,000,” the council said. “As none of the work above falls into this category it is unlikely that the work was put out to tender.”

Between 1998 and 2004, the British Council was chaired by Helena Kennedy, the Labour peer and left-wing barrister who is a cousin by marriage of Sarah Brown’s former business partner Julia Hobsbawm. Kennedy was succeeded by Neil Kinnock, the former Labour leader.

The British Council said its main contact at Brunswick had been Helen Scott Lidgett. She was Sarah Brown’s art teacher at Camden school for girls in the 1970s. Scott Lidgett later joined Hobsbawm Macaulay as a PR executive and moved with Sarah Brown to Brunswick seven years ago, where she is now the partner in charge of the arts division.

A spokesman for the Cabinet Office said: “We will [respond] in due course.” A No 10 spokesman said: “We are not dignifying this ridiculous smear with a response.”

It is understood that Sarah Brown has not worked personally with the council since 2002, and quit all public relations work last year when her husband The controversy relates to payments made to the firm run by Sarah Brown when her husband was chancellor

became prime minister. Allies of Gordon Brown last night predicted the Tories’ attempt to draw his wife into political controversy would backfire. A Labour source said: “Wilson has been asking a lot questions about Sarah Brown. He seems to have an unhealthy obsession with her. Perhaps David Cam-eron should have a word.”

Yesterday Wilson said he never intended to smear the prime minister’s wife. “This is not about Sarah Brown’s financial interests. She is perfectly entitled to earn a living. It is about whether Gordon Brown has upheld the highest standards in accordance with the ministerial code of conduct.”

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