Here’s a new storm in Whitehall: a “peerages for loans” controversy that threatens to engulf Toni Blah in yet more allegations of sleaze. Labour’s treasurer Jack Dromey said he had been “kept in the dark” about the loans policy and called for a full investigation by the Electoral Commission.
He accused the Prime Minister of running a secret funding operation involving millions of pounds without the knowledge of the party’s elected officials. An accusation that seems to be holding up as the PM admitted today that he used a loophole in the rules on political donations to nominate for peerages three businessmen who made “secret” loans of more than £1 million to Labour.
“It was the Labour Party that campaigned in opposition for action to ensure that there was the necessary transparency as part of the clean-up of politics,” Dromey said. “The Labour Party needs to put its house in order to restore public and party members’ confidence.” Too right…but probably too late.
Allegations that Mr Blair was abusing the patronage system by hiding donations in the form of loans and offering peerages in return resurfaced last weekend after another donor, Chai Patel, the chief executive of the Priory health care group, revealed details of Labour’s methods.
Mr Patel, who was offered a peerage after lending the party £1.5 million last year, said he had been prepared to give the money as a gift. But senior party figures had persuaded him to hand it over as a loan instead, on which interest would be paid at commercial rates.
By raising money in this way, political parties do not have to declare it to the Electoral Commission, which makes the figures public. As a result, they hoped to avoid accusations that they are selling peerages or other honours.
Apparently Mr Dromey was incensed by reports that Mr Blair’s close ally and envoy to the Middle East, Lord Levy, had acted as the go-between – completely without his knowledge – to secure loans of about £4.5 million from three supporters who were subsequently recommended for peerages.
While there had been no “illegality”, there had been “impropriety.” That is putting it nicely!
Mr Patel, who has not withdrawn his name from the list, said he had not sought or expected a peerage (not entirely sure that is honest either..). But he conceded that the honours system had been “reduced to a bazaar” in which people asked “what was the price of a peerage?” I can help here Mr Patel; market evidence supports a valuation of about £1 million a pop.
If I recall it was the relentless allegations of sleaze that brought down the previous Conservative government. It would appear the current administration has learned little.
Standing quietly in the wings, smiling, is PM in waiting ‘tax and waste’ Brown.