By Bright, Martin
New Statesman (1996) , Vol. 135, No. 4796
The net is tightening in the loans-for-honours scandal. It is easy to lose track of the many crises afflicting the government. To recap: "loans for honours" broke in March when Labour's treasurer, Jack Dromey, went public over the millions lent to the party by wealthy benefactors, some of whom were later recommended for peerages.
The disclosure was sandwiched between February's scandal, in which Tessa Jowell found herself in trouble over her husband's alleged links to an Italian fraud case, and April's foreign prisoner release saga, which led to the removal of Charles Clarke as home secretary.
Dromey hadn't been told about the loans; the Chancellor, Gordon Brown, hadn't been told; nor had the Parliamentary Labour Party. The only people in the know were a small group around Tony Blair. The police investigation has pushed the issue from the day-to-day political agenda, but it remains potentially the most toxic of all the current scandals. It tears asunder Labour's claim in 1997 to be ushering in a new morality in politics.
All roads lead to Downing Street. One senior Labour source close to the events admits it is impossible now to dismiss the police investigation as a distraction: "It won't go away because, when the police complete the inquiry, there is a strong chance that charges will be laid."
Labour Party headquarters is convinced that individuals connected to Downing Street were explicitly offering knighthoods and peerages in return for loans to the party, or funding of the government's city academies programme. "There is a Downing Street culture that is profoundly corrupt and doesn't know how to handle its relationship with rich men," says the senior figure.
Labour Party officials who have looked into the affair believe that potential donors were specifically instructed to turn their donations into loans, which do not need to be declared, thus avoiding unwanted media attention. My source, who has the most intimate possible knowledge of the scandal, has information that at least one person involved in raising money for the party may have made inappropriate approaches to potential lenders. "I have no doubt [he] was trading cash for favours," the source says. There even appears to have been a crude price list, with a minimum sum for each honour.
The scandal has already severed the relationship between Downing Street and the Labour movement, probably irreparably while this Prime Minister is in power. …