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Lords reform will not be enough to wipe away the shame of loans for peerages

Lords reform will not be enough to wipe away the shame of loans for peerages

7 February 2007

10:32 PM

7 February 2007

10:32 PM

It is a strange form of bombardment. Days, sometimes weeks, can pass without any movement from the Metropolitan Police and it seems as if the all-clear is about to be sounded above the Downing Street bunker. Then, from nowhere, comes another arrest, a fresh revelation, and the turmoil starts again. Even the sadist in Gordon Brown will have seen enough by now, knowing that the pain inflicted on Tony Blair is inflicting lasting damage to the reputation of the party Brown will soon lead.

Once, the Chancellor hoped to draw a line under the disastrous loans-for-honours debacle with a triple whammy of legislation. He would agree a deal on party funding, the honours system and House of Lords reform which, together, could be billed as a new constitutional covenant. It would be his way of saying ‘never again’. But to achieve this, he would need a united party. And one of the many bitter legacies he will inherit is that Labour is returning to its old fractious self.

Even before the White Paper on Lords reform was published on Wednesday, the lack of consensus was obvious. Jack Straw was being diplomatic to the point of parody when he described his proposal to the Cabinet as a ‘point for discussion’ rather than a fixed blueprint. He is almost alone in preferring a half-elected and half-appointed chamber. Once, such a division might have made sense. Now, Lords reform has acquired a new significance, as one of the principal symbolic means available to the government to clean up its image and draw an (eventual) line under the cash-for-peerages scandal.

Any proposal which involves places in the Upper House acquired by government patronage will now axiomatically be seen as dodgy. The letter which the police discovered from Sir Christopher Evans — a Labour donor who wanted to know if he was getting a ‘k or a big p’ — is Exhibit A for those who want politicians to be stopped entirely from awarding knighthoods or peerages. This is partly why Patricia Hewitt, Peter Hain and Alistair Darling all support a fully elected second chamber.

That said, the more strategically-minded Labour MPs can see the dangers in a fully democratic House of Lords, especially if it better reflects the actual numbers of votes cast than the House of Commons does. The last three months of opinion polls suggest that Mr Brown will receive substantially fewer votes than the Conservatives at the next election, but nonetheless go on to become Prime Minister, thanks to the electoral system presently in place. America’s howls of protests after the disputed election of George W. Bush will be as nothing to England’s indignation should Mr Brown be swept back to power thanks only to Scottish and Welsh votes.


This is why it is in Labour’s interests not to do that good a job reforming the House of Lords. When the two chambers clash now, Mr Blair can mutter about democratic legitimacy. But if Prime Minister Brown were to secure a good million votes fewer than the Leader of the Opposition, it would be harder to take the democratic high ground. A proportion of appointees in the reformed Lords would be essential, if only to pollute the new spirit of pure democracy in the Upper House and to restrain its ambitions as a competitor to the Commons — where the Brown government might have a very weak mandate indeed.

The Chancellor’s methods are quite different from those Mr Straw is using in this case. In his decade at the Treasury, Mr Brown has honed a trusted procedure for resolving difficult questions. He calls for a national debate (on which he, naturally, adjudicates) and then deputes an outsider to publish a weighty report (guided, of course, by a team of civil servants). A non-negotiable ‘consensus’ is then announced by the Treasury. In contrast, Mr Straw’s approach to Lords reform — presenting MPs with a range of options and allowing them to vote according to conscience — comes close to Mr Brown’s idea of hell.

Nor is there much progress on Sir Hayden Phillips’s review of party political funding, which was due to report two months ago. The Conservatives, now flush with donations, realise that the deadlock presents them with a distinct tactical advantage — as they can afford to fight an election and Labour cannot. In Tory headquarters there is a growing suspicion that Mr Brown will act unilaterally over party funding once he enters No. 10. ‘It would not surprise me if he were to say, “I have a majority, this is what I will do,”’ says one shadow Cabinet member involved in the negotiations.

But for as long as Mr Brown remains in the Treasury, he will be in no place to impose anything. And for the first time in a decade, the Chancellor is putting no pressure on Mr Blair to leave early. The bleaker things look for the Prime Minister, the happier the Chancellor is to stay put. He does not want his honeymoon stained by a dire Labour result in the May elections, especially if this will involve welcoming Alex Salmond as First Minister of Scotland.

Mr Blair has no inside track on the Metropolitan Police investigation, and finds out about its progress only through the newspapers. There was particular celebration in No. 10 at the Crown Prosecution Service’s decision not to charge Des Smith, the headmaster who told an undercover reporter that donating to a city academy could be rewarded with a knighthood. This, I am told, has led the Prime Minister to believe that the investigation will soon end with no serious consequences.

My information is different. After interviewing John McTernan, Mr Blair’s political secretary, detectives learnt of meetings and communications about donors and knighthoods they had not come across in the previous eight months. This is what led to their arrest of Ruth Turner, No. 10 head of government relations. They ran the new evidence past Mr Blair two weeks ago so that when they arrested Lord Levy, his chief fundraiser, they would be able to interview him with something approaching a complete picture.

A month ago the police investigation did indeed look as if it were going nowhere, as I reported at the time. Detectives felt that they were not being told the whole truth and that their questions were being answered in a technical, lawyerly way without new information being volunteered. Mr McTernan’s evidence fundamentally changed the course of their investigation, and has led them to believe there is enough proof of a cover-up to charge at least two people with conspiracy to pervert the course of justice. The only question is whether the CPS agrees.

To have a prime minister interviewed twice in a police investigation has brought enough shame upon Labour. But as Mr Brown must know, it could get much worse. Should any of Mr Blair’s lieutenants face criminal charges, it will leave a stain on the party’s reputation which all the constitutional reform in the world will not wipe clean.


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