In March 2006, several men nominated for life peerages by then Prime Minister Tony Blair[1] were rejected by the House of Lords Appointments Commission.
This resulted in three complaints[3] to the Metropolitan Police by Scottish National Party MP Angus MacNeil, Plaid Cymru parliamentary leader Elfyn Llwyd, and a third individual who continues to remain unidentified, as a breach of the law against selling honours.
Well-substantiated allegations that titles were sold during David Lloyd George's premiership led to the passing of the Honours (Prevention of Abuses) Act 1925.
Publication of the list was delayed and stories began to appear in the press stating that the Commission had concerns about some of those nominated on grounds of their large donations to political parties.
In February 2006, stockbroker Barry Townsley, who had donated £6,000 (and loaned £1 million on commercial terms)[11] to the Labour Party and contributed £1.5 m to a City Academy under a government scheme, withdrew his acceptance on the grounds of press intrusion into his private life.
He said that at no time did he have any expectation of a reward nor had he been offered anything in return, yet on a BBC Today programme he expressed the view that he wanted to serve in the Upper House (the Lords) as he felt that his life experience ensured that he could make a valuable contribution there.
[15] He has also stated in a letter to the House of Lords Appointments Commission that "I feel that, given my accumulated experience and deep sense of public service, as well as being able to devote the time to undertake the responsibility effectively, I would be able to make a contribution to the parliamentary process."
[citation needed] In the section headed "We will clean up politics", the text pointed to the debasing of democracy through Conservative MPs who had taken cash for asking questions in the House of Commons.
[citation needed] On 12 March 2006, the Sunday Times reported that shortly before being told that he would receive a peerage, Patel had been asked to change a donation to the Labour Party he was planning to make into an unsecured loan.
[18] However the Treasurer of the Party, Jack Dromey, stated publicly that neither he nor Labour's elected National Executive Committee chairman Sir Jeremy Beecham had knowledge of or involvement in the loans and had only become aware when he read about it in the newspapers.
This loophole raises accusations of undue secrecy and potentially calls into question the probity of those involved in procurement and handling of such large and anonymous sums, particularly when the elected party treasurer was unaware of the existence of the loans.
Lord Levy, a close friend of Tony Blair (who was the Prime Minister's personal envoy to the Middle East, as well as tennis partner), had raised funds for Labour and was identified in the press as a key figure in arranging the loans and on 17 March 2006 it was announced that the Public Administration Select Committee of the House of Commons had invited him to give evidence on political financing.
[23] The Guardian revealed that many of the people who had made loans to the Labour Party had been major donors to charities with which Lord Levy had been involved, namely, the Community Service Volunteers, Jewish Care and the NSPCC.
[26] On 31 March 2006 the Conservative Party published a list of 13 wealthy individuals and companies to whom it owed a total of £15.95 million:[27] The identity of 10 backers it had repaid – including a number of foreign nationals – was not revealed.
[32] On 27 March they gave MPs more details of its inquiry into the complaints[33] and the Public Administration Select Committee agreed to postpone its hearing on this issue in order not to prejudice possible police action.
[36] The Metropolitan Police team, investigating the affair and led by Assistant Commissioner John Yates handed its main file on the cash for peerages inquiry to the Crown Prosecution Service (CPS) on Friday 20 April.
The CPS stated, in its reasoning for this decision, that "If one person makes an offer, etc., in the hope or expectation of being granted an honour, or in the belief that it might put him/her in a more favourable position when nominations are subsequently being considered, that does not of itself constitute an offence.
[68] This was later contradicted when it was confirmed that the "citations" explaining the case for putting Sir David Garrard and Barry Townsley in the House of Lords "prominently" featured their role in helping academy schools.
"What we wanted was people with expertise in academies as working peers, taking the Labour whip, who could actively contribute with a massive amount of knowledge to the debate on education in the House of Lords.
He rejected as "nonsense" a suggestion that the treasurer had spoken publicly about the loans to speed up the transition of power from Blair to Chancellor Gordon Brown.
[72] Sir Jeremy Beecham, chairman of Labour's governing body, the National Executive Committee (NEC), accused Charles Clarke of speaking out of turn and defended party treasurer Jack Dromey.
He added: "Jack Dromey has always carried out his responsibilities with great diligence and retained the absolute confidence of the NEC in ensuring that this issue is dealt with."
Writing of Dromey's reaction in The Times of 17 March 2006, left-wing Labour MP Diane Abbott said:[74] Former cabinet minister and Blair critic Clare Short described the issue with characteristic bluntness: The Labour Party chairman Ian McCartney defended the loans with the BBC quoting him as saying:[76] On 31 March 2006 McCartney said the Conservative Party still looked like they had "something to hide" by not revealing the identity of their foreign lenders.
Prescott said he favoured a change to state funding but also said he would not rule out the suggestion that private loans should be capped:[78] "There's a kind of unhealthy approach to political financing in this country.
[79] He said he had received the planning requirements for a skyscraper in London and the Park Place shopping centre in Croydon but felt the decision could be made locally.
He said he was "very proud" of the people who lent money to the Tories and insisted they had not supported the party out of "self-interest" because, he argued, it had not stood much of a chance of gaining power in recent years.
He urged transparency on funding, and suggested a £50,000 cap on donations by individuals and a reduction in maximum permitted party election spending from £20 m to £15 m:[82] The expression "cash for peerages" has a long history.
In the 1920s David Lloyd George was involved in a barely concealed "cash for patronage" scandal managed by Maundy Gregory, which resulted in the 1925 Act which barred this (purchase of peerages had not previously been illegal).
Sir Eric Miller, knighted in the Lavender List, committed suicide in 1977 while under investigation for fraud; he too had helped fund Harold Wilson's Leader's office.
He had also noted this was emphatically 'a good thing'" and he showed himself ready to do whatever was required to achieve this goal, believing at first that it could be a simple open purchase but moving on to explicit lobbying of prime ministers.