Tony Caplin, former head of the Public Works Loan Board

A senior Conservative has resigned from his position as head of a government body lending billions of pounds to local authorities after it was revealed he had been declared bankrupt in 2012.

Tony Caplin, the party’s former chief operating officer, stepped down from his role at the head of the Public Works Loan Board, which manages £60bn of taxpayer money, after his personal finances were made known to Number 10.

The Mail on Sunday, which first exposed the revelations, alleged he went bankrupt in May 2012 with debts of more than £3m.

David Cameron promoted Mr Caplin to head up the organisation last year, apparently unaware that Mr Caplin, who previously worked for the same City broker as Mr Cameron’s father, had been declared bankrupt. Mr Caplin was chairman of Panmure Gordon, the City stockbroker, in 2008-2009, where Ian Cameron, the prime minister’s father, was once a partner.

Downing Street said: “Tony Caplin was appointed to a number of public bodies by the previous government.

“He was re-appointed to the PWLB by the prime minister. He should have declared he was bankrupt. This has been pointed out to him and as a result he has resigned.”

The revelations will add to criticism that the prime minister is overly reliant on a close circle of old friends and allies at the top of government.

Chris Leslie, Labour’s shadow Treasury chief secretary, said: “It is astonishing that the prime minister and the chancellor could appoint someone who went bankrupt owing so much to the Treasury to run the Treasury’s lending operations.

“For him to be bankrupted in 2012 and appointed by the prime minister as chairman of this key Treasury body the following year is surely a misjudgement too far by a prime minister with a track record of poor judgement in relation to his cronies.”

But the Tories stressed that Mr Cameron only reappointed Mr Caplin and that he was first put in place by the last Labour government.

Mr Caplin also stood down from his role as a non-executive member of the Medical Research Council, which hands out millions of pounds in grants to scientific research.

Mr Caplin could not immediately be reached for comment, but Number 10 acknowledged he had been made bankrupt.

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