Tom Watson, the former Labour deputy leader who recently joined Palantir, has warned against “mob rule” when it comes to awarding public contracts.

Lord Watson, now a senior vice-president at the US tech corporation, said UK ministers could get themselves “in a lot of trouble” as he was questioned about concerns raised about the government working with his new employer.

Palantir was co-founded by the Trump-supporting billionaire Peter Thiel and has provided AI-powered software to the Israeli military and the White House’s ICE immigration crackdown, leading to a public and political backlash against its deepening involvement in British public services.

The prime minister, Andy Burnham, is under significant pressure from Labour MPs and unions to ditch Palantir from government contracts, including a £330m software deal with the NHS.

The company is also fighting Sadiq Khan in court over the London mayor’s block on a £50m contract to use its AI in Metropolitan police investigations. It is seeking to win more public sector work in the UK, where it already has an annual turnover of £427m.

Watson told the BBC podcast Political Thinking with Nick Robinson: “One of the things I’d say to my former colleagues is: do you want to let the rule of law to lead procurement practice, or do you want to let mob rule to lead procurement practices? Because you get yourself in a lot of trouble if you go down on the latter one.”

He added: “I think we are very targeted by the people that are targeting Israeli companies. We’re not an Israeli company, but because of our work in Israel, we found ourselves in the middle of the row of the Gaza protests.”

Watson told the podcast he would work with a Reform UK government on immigration crackdowns if the situation arose, saying: “We don’t actually work in that sector, but yes, of course we would.”

He called Palantir “the most interesting company on the planet” as he announced his new role last month. The company said his job would be, in part, to “deepen the social and economic value its work creates through better British public services, jobs and skills”.

Watson was a defence minister and a minister for digital engagement in Gordon Brown’s government. Since stepping down from parliament in 2019, he has been an adviser to the gambling and music industries and, since 2024, he has been a part-time adviser to Palantir.

Palantir said Watson had taken a leave of absence from the House of Lords and had relinquished his parliamentary pass while he worked for the company in London.

The Labour MP Chi Onwurah, who chairs the science, innovation and technology committee, which has raised concerns about Palantir, told BBC Radio 4’s Today programme: “Tom is not the first politician to be blinded by tech hype. The key issue is we can’t be so dependent on one company. It’s a US company, subject to US legislation regarding access to our data.”