Cash for Peerages: The New Evidence; with the Labour Party in Effect Now Broke and the Police Probing Ever Deeper into the Loans-for-Honours Scandal, Our Political Editor Martin Bright Reveals the Terms under Which Donors Were Enticed to Part with Their Cash

By Bright, Martin | New Statesman (1996), September 25, 2006 | Go to article overview

Cash for Peerages: The New Evidence; with the Labour Party in Effect Now Broke and the Police Probing Ever Deeper into the Loans-for-Honours Scandal, Our Political Editor Martin Bright Reveals the Terms under Which Donors Were Enticed to Part with Their Cash


Bright, Martin, New Statesman (1996)


Geoff Mulgan was Tony Blair's chief policy guru from 1997 to 2004. He saw a thing or two while he was there, including the lists of the great and the good recommended for peerages.

[ILLUSTRATION OMITTED]

As a former civil servant, he can't say much about this, but in Good and Bad Power, his book of political theory published this summer, Mulgan lets slip his true feelings about Labour's relationship with rich donors. Turn to page 84 and you will find the following extraordinary allegation: "In later years the scarcely concealed sale of peerages to wealthy party donors, and the appointment of the party's top donor--Lord Sainsbury--to ministerial office, did little to restore the British public's confidence."

Mulgan wrote these words before the "loans-for-honours" scandal showed it was possible that crimes had been committed in raising funds for the last election. But the meaning of the words is clear: Mulgan, a man at the heart of Downing Street and party to discussions about the granting of honours, is saying that the Blair government was selling peerages.

As Labour gathers for its conference in Manchester, any meetings with potential donors will have to be more secretive than ever. The party is broke. With a suspected [pounds sterling]27m worth of debts, it has been forced to cut spending by 20 per cent and has agreed to make 20 redundancies.

When I interviewed Mulgan for a Dispatches documentary for Channel 4, he said: "There's no doubt that to the outside world it looked as if there was a correlation between people making donations to all three political parties and getting peerages." Although he had no direct evidence of peerages being sold, "the level of coincidence would be fairly extraordinary", he added.

On the programme, Mulgan refused to discuss his relationship with Lord Levy, the head of Tony Blair's high-level donor unit, who was questioned briefly in July in connection with loans for honours. But when the camera stopped rolling, Mulgan told me that he had had several heated arguments with Levy over the years.

He was not alone. Lance Price, Labour's former head of communications, told the programme that he had argued vociferously to make donors' names public to pre-empt the government's own legislation, the Political Parties, Elections and Referendums Act 2000, which obliged parties to declare all large donations.

"So I got on the phone to Lord Levy. I said I had had a conversation with the Prime Minister [and] that we wanted to go back to people who'd already given us money and say: 'Actually, we would now like to make your name public.' He absolutely hit the roof. I mean he was apoplectic with rage. He was threatening to resign and never work for the party again." Price said Levy went to Blair and won the argument.

No transparency here

It is now for the police investigation to discover whether any offences were committed in the loans-for-honours scandal.

What the programme identifies is a culture of secrecy at the heart of the Blair administration that runs counter to official policy. This was confirmed by the Electoral Commission, whose inquiry was suspended when the police launched their own investigation last April. Its chief executive, Peter Wardle, told me: "I was surprised at the extent to which the parties had used loan finance. And I was surprised at the extent to which it was driven, at least in part, by a desire to avoid the transparency principle of letting people know where their money was coming from."

Having realised that Wardle had said too much, the commission asked for parts of the interview to be cut from the programme. We decided to adhere to the transparency principle.

Certain facts in this sorry affair are beyond doubt. Labour did collect more than [pounds sterling]13m in loans as a war chest for the 2005 election with the full knowledge of the Prime Minister.

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