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{{short description|Political scandal in the United Kingdom}}
{{EngvarB|date=April 2015}}
{{Use dmy dates|date=May 2020}}
{{Tony Blair sidebar}}
The '''Cash-for-Honours scandal''' (also known as '''Cash for Peerages''', '''Loans for Lordships''', '''Loans for Honours''' or '''Loans for Peerages''') was a political scandal in the United Kingdom in 2006 and 2007 concerning the connection between [[political donation]]s and the award of [[life peerage]]s. A loophole in electoral law in the United Kingdom means that although anyone donating even small sums of money to a [[List of political parties in the United Kingdom|political party]] has to declare this as a matter of public record, those loaning money at commercial rates of interest did not have to make a public declaration.
In March 2006, several men nominated for life peerages by then Prime Minister [[Tony Blair]]<ref>{{Cite news|url=http://news.bbc.co.uk/2/hi/uk_news/politics/5174108.stm|archive-url=https://web.archive.org/web/20080505074524/http://news.bbc.co.uk/1/hi/uk_politics/5174108.stm|url-status=dead|title=Timeline: Cash-for-honours|date=23 October 2007|archive-date=5 May 2008|via=news.bbc.co.uk}}</ref> were rejected by the [[House of Lords Appointments Commission]]. It was later revealed they had loaned large amounts of money to the governing [[Labour Party (UK)|Labour Party]],<ref>{{cite news|url=https://www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/12/27/npeers27.xml |title=Cronyism inquiry holds up new peers|work=[[The Daily Telegraph]]|date=27 December 2005 | location=London | first=George | last=Jones | access-date=28 April 2010}}</ref> at the suggestion of Labour fundraiser [[Lord Levy]]. Suspicion was aroused by some that the peerages were a ''[[quid pro quo]]'' for the loans. This resulted in three complaints<ref>{{cite news| url=http://uk.reuters.com/article/uk-britain-honours-chronology-idUKL2025030320070720? | archive-url=https://web.archive.org/web/20160115051046/http://uk.reuters.com/article/uk-britain-honours-chronology-idUKL2025030320070720 | url-status=dead | archive-date=15 January 2016 | work=Reuters | title=TIMELINE – Cash-for-honours investigation | date=20 July 2007}}</ref> to the [[Metropolitan Police]] by [[List of Scottish National Party MPs|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 system in the United Kingdom|honours]].<ref>{{cite news|url=http://www.timesonline.co.uk/article/0,,2-2095914,00.html |title=Criminal probe into 'cash-for peerages' controversy|work=[[The Times]]|date=21 March 2006 | location=London | first1=Philippe | last1=Naughton | first2=Simon | last2=Freeman | access-date=28 April 2010}}{{dead link|date=September 2024|bot=medic}}{{cbignore|bot=medic}}</ref> The investigation was headed by Assistant Commissioner [[John Yates (police officer)|John Yates]] who later resigned over the [[News International phone hacking scandal|''News of the World'' phone hacking scandal]]. During the investigation various members of the Labour Party (including Blair), the [[Conservative Party (UK)|Conservatives]] and the [[Liberal Democrats (UK)|Liberal Democrats]] were questioned, and Labour's Lord Levy was arrested and later released on bail.<ref>{{Cite news|url=http://news.bbc.co.uk/2/hi/uk_news/politics/5174746.stm|archive-url=https://web.archive.org/web/20060714181047/http://news.bbc.co.uk/1/hi/uk_politics/5174746.stm|url-status=dead|title=No surprise as Lord Levy arrested|date=12 July 2006|archive-date=14 July 2006|via=news.bbc.co.uk}}</ref> The investigation continued to have political impact throughout, as a range of stories continued to leak from the police investigation and damaged the government and Labour Party.<ref>{{Cite news|url=http://news.bbc.co.uk/2/hi/6320399.stm|archive-url=https://archive.today/20120712202159/http://news.bbc.co.uk/2/hi/6320399.stm|url-status=dead|title=Blair interviewed again by police|date=1 February 2007|archive-date=12 July 2012|via=news.bbc.co.uk|access-date=29 April 2020}}</ref>
Following the unveiling of the scandal the Labour Party had to repay the loans and was said to be in financial difficulty.<ref>{{cite news | url=https://www.independent.co.uk/news/uk/politics/labour-bankrupted-by-secret-loans-431112.html | title= Labour 'bankrupted' by secret loans | date=4 February 2007 | newspaper=[[The Independent]] | location=London | first=Marie | last=Woolf | access-date=28 April 2010}}</ref> The police investigation was long and involved. It expanded to encompass potential charges of perverting the course of justice, apparently relating to suspected attempts to present evidence to the police in a particular way. At one point the [[Attorney General for England and Wales|Attorney General]], [[Peter Goldsmith, Baron Goldsmith|Lord Goldsmith]], obtained an injunction against the [[BBC]], preventing them from reporting a story they claimed was in the public interest while he argued that the story was [[sub judice]]. This raised the possibility of a conflict of interest, the Attorney General being a political appointee. Tony Blair was interviewed three times as Prime Minister, though only as a witness and not [[Right to silence in England and Wales|under caution]].
After a long review of the police file, it was reported on 20 July 2007 that the [[Crown Prosecution Service]] would not bring any charges against any of the individuals involved. Their decision stated that while peerages may have been given in exchange for loans, it could not find direct evidence that that had been agreed in advance; this would have been required for a successful prosecution.<ref>[http://news.bbc.co.uk/1/hi/uk_politics/6907594.stm "No charges on 'cash for honours'"] {{webarchive |url=https://web.archive.org/web/20071006115430/http://news.bbc.co.uk/1/hi/uk_politics/6907594.stm |date=6 October 2007 }}, BBC.</ref> Notwithstanding the lack of any charges, some{{who|date=June 2018}} considered that the investigation had severely undermined Tony Blair's position, and possibly hastened his resignation as Prime Minister.<ref>{{Cite web|url=https://www.bbc.co.uk/blogs/nickrobinson/2007/07/no_charges.html|archive-url=https://web.archive.org/web/20160115051045/http://www.bbc.co.uk/blogs/nickrobinson/2007/07/no_charges.html|url-status=dead|title=BBC – Nick Robinson's Newslog: No charges|first=Nick|last=Robinson|archive-date=15 January 2016|website=www.bbc.co.uk}}</ref>
==Background==
Historically, hereditary peerages were awarded to members of the landowning [[aristocracy]] and royal favourites. In the late 19th century, peerages began to be awarded to industrialists with increasing frequency. Well-substantiated allegations that titles were sold during [[David Lloyd George]]'s [[Lloyd George ministry|premiership]] led to the passing of the [[Honours (Prevention of Abuses) Act 1925]]. In the second half of the 20th century the granting of hereditary [[peerages]], other than to members of the [[Royal Family]], virtually ceased, giving way to [[life peer]]ages, which have been granted since the passing of the [[Life Peerages Act 1958]]. They are given to a wide range of individuals on the recommendation of the leaders of the major British political parties, including opposition parties.
In May 1998, the then Chairman of the Political Honours Scrutiny Committee, former [[Conservative Party (UK)|Conservative]] Cabinet Minister [[Lord Pym]], told a House of Commons Select Committee that the committee considered a political donation a point in a nominee's favour as it indicated involvement in public life, and that the nominee had "put their money where his mouth is". The [[House of Lords Appointments Commission]] was established in 2000 to check the suitability of those nominated for an honour.
In the summer of 2005, a list of 28 people nominated for [[Life peerage|working peerages]] was prepared. The list contained 11 [[British Labour party|Labour]] nominees, eight [[Conservative Party (UK)|Conservatives]], five [[Liberal Democrats (UK)|Liberal Democrats]], three members of the [[Democratic Unionist Party]] and one member of the [[Ulster Unionist Party]]. The list was referred to the Appointments Commission in the usual way. 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.<ref>{{cite news|url=http://www.timesonline.co.uk/article/0,,17129-1862176,00.html |archive-url=https://web.archive.org/web/20051115193007/http://www.timesonline.co.uk/article/0,,17129-1862176,00.html |url-status=dead |archive-date=15 November 2005 |title=Sleaze row as election donors get peerages|work=The Times|date=8 November 2005 | location=London | first=Greg | last=Hurst | access-date=28 April 2010}}</ref> Some of the Labour peers appointed became known as [[Tony's Cronies]]. In February 2006, stockbroker [[Barry Townsley]], who had donated £6,000 (and loaned £1 million&nbsp;on commercial terms)<ref>{{cite news | url = https://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/03/16/nloans16.xml&sSheet=/news/2006/03/16/ixnewstop.html | title = Labour's treasurer 'kept party in dark over loan deals' | work = [[The Daily Telegraph]] | date = 16 March 2006 | location=London | access-date=28 April 2010}}</ref> to the Labour Party and contributed £1.5&nbsp;m to a City Academy under a government scheme, withdrew his acceptance on the grounds of press intrusion into his private life.
Townsley, who was the subject of an investigation by the [[Serious Fraud Office (UK)|Serious Fraud Office]], was followed by property millionaire [[Sir David Garrard]], who withdrew his name in March 2006. [[Sir Gulam Noon]], the British-Indian food company millionaire, was also nominated by the Labour Party after having made donations and loaned money (he also had his nomination rejected by the Appointments Commission). Sir Gulam told ''[[The Times]]'' newspaper a "senior party man" told him "there was no reason why I should declare this loan because it was refundable". "I was told by this same person that because there was interest on the loan it was a commercial matter and would not come under the same party funding rules as a donation."<ref>{{cite news|url=http://www.timesonline.co.uk/article/0,,17129-2094522,00.html |archive-url=https://archive.today/20081201095336/http://www.timesonline.co.uk/article/0,,17129-2094522,00.html |url-status=dead |archive-date=1 December 2008 |title=Labour official told me to keep quiet|work=The Times|date=20 March 2006 | location=London | first=Rajeev | last=Syal | access-date=28 April 2010}}</ref>
The list of working peers, minus the withdrawn and queried names, was published on 10 April 2006.<ref>[http://www.pm.gov.uk/output/page9311.asp Downing Street press release] {{webarchive |url=https://web.archive.org/web/20080609135440/http://www.pm.gov.uk/output/page9311.asp |date=9 June 2008 }}, 10 April 2006</ref>
==Chai Patel==
On 8 March 2006, [[Chai Patel]], director of the Priory healthcare group, who had donated £100,000 to the Labour Party complained that he was being rejected by the Commission. He said "It is a fact that I have donated, but what is being implicated is that I would be rewarded with a peerage. I have never asked for any favour for the money that I have donated. My children suggested that if I had not given this money, I would not be seen in this light. But I happen to support this Government. I gave money to the party because I happen to believe in what it stands for. I can't change what has happened." Patel stated that he had asked a [[Queen's Counsel]] for advice on whether his human rights were being abused by the Commission.<ref>{{cite web |title=Labour donor 'distressed' by peerage snub |website=[[The Daily Telegraph]] |date=9 March 2006 |archive-url=https://web.archive.org/web/20220214141414/https://www.telegraph.co.uk/news/uknews/1512489/Labour-donor-distressed-by-peerage-snub.html |archive-date=2022-02-14 |url-status=live |url=https://www.telegraph.co.uk/news/uknews/1512489/Labour-donor-distressed-by-peerage-snub.html}}</ref>
On 29 March 2006, Patel withdrew his name from the list of nominees for a peerage. 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.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/4858212.stm|title=Chai Patel withdraws name from peerage list |work=[[BBC]]|date=29 March 2006 | access-date=31 December 2009}}</ref> 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."
==1997 Labour Party commitments==
{{Disputed section|date=April 2011}}
The [[1997 United Kingdom general election|1997 General Election]] Labour Party [[manifesto]] was entitled "new Labour because Britain deserves better".{{Citation needed|date=April 2011}} 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 questions|cash for asking questions]] in the [[British House of Commons|House of Commons]]. A pledge was made to the "reform of party funding to end sleaze" with the commitment to a law to require all parties to declare the source of all donations above a minimum figure, which Labour already did voluntarily. Foreign funding would be banned.{{Citation needed|date=April 2011}} These commitments were delivered in 2000 with the [[Political Parties, Elections and Referendums Act 2000]].{{Citation needed|date=April 2011}}
It also described the need to reform the House of Lords which would end the right by law of hereditary peers to sit and vote in the House of Lords.{{Citation needed|date=April 2011}} This commitment was delivered in 1999 with the [[House of Lords Act 1999]]. In relation to the system of appointment of life peers Labour's stated objective was to ensure that over time party appointees as life peers would more accurately reflect the proportion of votes cast at the previous general election, a commitment that has since been altered so that the two main parties in the House of Lords should instead have approximately equal strength.{{Citation needed|date=April 2011}}
==Loans==
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. On 26 March 2006, ''[[The Independent]]'' confirmed that it was [[Lord Levy]] who had asked Patel to switch using this unsecured loan approach.<ref>{{cite news | url=http://news.independent.co.uk/uk/politics/article353692.ece | title=Money talks: Twelve angry men and one shame-faced Prime Minister | date=26 March 2006 | newspaper=The Independent | location=London | access-date=28 April 2010 | archive-url=https://web.archive.org/web/20071001030501/http://news.independent.co.uk/uk/politics/article353692.ece | archive-date=1 October 2007 | url-status=dead | df=dmy-all }}</ref> He agreed and loaned £1.5&nbsp;m to the party, telling them that he would be prepared to change the loan into a donation at some point in the future. Over the next few days stories were printed which stated that the Labour Party had borrowed £3.5&nbsp;million from private individuals during 2005, the year of a [[2005 United Kingdom general election|general election]]. It was subsequently revealed that a total of £13.95&nbsp;million had been loaned by wealthy individuals to support Labour's election campaign.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4815552.stm | title = Labour was secretly loaned £14&nbsp;m | publisher = [[BBC]] | date = 17 March 2006  | access-date=31 December 2009}}</ref> The figures released mean the bulk of the £17.94&nbsp;m the party spent on its general election campaign was paid for by loans from individuals. The terms of the loans were confidential.
Loans made on commercial terms, at between 1% and 3% above the banking [[base rate]] as was the case here, are not subject to reporting requirements to the [[Electoral Commission (United Kingdom)|Electoral Commission]].<ref>{{cite news | url = http://www.timesonline.co.uk/article/0,,17129-2101193,00.html | title = Your secret loan can stay secret, Labour Party donors were told | newspaper = The Times | date = 24 March 2006 | location=London | first=Rajeev | last=Syal | access-date=28 April 2010}}{{dead link|date=September 2024|bot=medic}}{{cbignore|bot=medic}}</ref> However the Treasurer of the Party, [[Jack Dromey]], stated publicly that neither he nor Labour's elected [[National Executive Committee of the Labour Party|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. Dromey stated that he was regularly consulted about conventional bank loans. As well as announcing his own investigation he called on the Electoral Commission to investigate the issue of political parties taking out loans from non-commercial sources.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4810670.stm | title = Labour loans to be investigated | publisher = [[BBC]] | date = 15 March 2006  | access-date=31 December 2009}}</ref>
''[[Tribune (magazine)|Tribune]]'' reported that Dromey had intended to reveal his inquiry exclusively in the Labour-oriented magazine later that week, but having heard that [[Tony Blair]] intended to announce an inquiry the following day, toured television studios on the evening of 15 March 2006 announcing his inquiry (video). Dromey feared he would be blamed for the debts by an inquiry organised by [[10 Downing Street]] (''Tribune'', 24 March 2006, p.&nbsp;5). Dromey's announcement created much media interest to which Blair had to respond to at his monthly press conference the next day. Blair said he wanted to shake up of the honours system and improve the rules covering party funding.<ref name="Labour 'to name future lenders'">{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4813156.stm | title = Labour 'to name future lenders' | publisher = [[BBC]] | date = 16 March 2006  | access-date=31 December 2009}}</ref>
The affair centred on two aspects of Labour's political fund raising activities. First, to what degree was there a tacit or implied relationship between the large scale donors and their subsequent recognition via the [[British honours system|honours system]]? Second, the rules on party funding (applicable to all political parties in the UK) require that anyone donating £5,000 or more must be named – but loans of any amount do not have to be declared provided they are made on commercial terms. 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.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4816692.stm | title = Lord Levy: Labour's fundraiser | publisher = [[BBC]] | date = 17 March 2006 | access-date=31 December 2009}}</ref> Committee chairman [[Anthony Wayland Wright|Tony Wright]] said:
:"With continuing speculation about whether the system of scrutiny is sufficiently robust and as part of our wider inquiry into current standards of probity in public life, we will be hearing from those charged with scrutinising nominations to ensure that there are robust safeguards against honours for sale."
Another issue was repayment: the Labour Party owed about £14&nbsp;m before the election. The interest on the loans amounted to £900,000 a year and some of the loans had to be repaid within months, either through further borrowing or gifts. In these circumstances, one unanswered question concerned why Lord Levy asked for loans rather than gifts.
It was disclosed on 25 March 2006 that the only persons privy to details of the loans were Tony Blair, Lord Levy and [[Matt Carter (politician)|Matt Carter]].<ref>{{cite news |url=http://news.independent.co.uk/uk/politics/article353512.ece |title=Developer's tower block approved after £200,000 donation to Labour |newspaper=The Independent |date=25 March 2006 |location=London |first1=Colin |last1=Brown |url-status=dead |archive-url=https://web.archive.org/web/20090204093935/http://www.independent.co.uk/news/uk/politics/developers-tower-block-approved-after-163200000-donation-to-labour-471358.html |archive-date=4 February 2009}}</ref>
On 25 March 2006 it was revealed that [[Scotland Yard]] had requested that parliament halt the [[Public Administration Select Committee]] hearing with four of the peerage nominees, Sir David Garrard, Sir Gulam Noon, and Chai Patel, Barry Townsley as it could prejudice the criminal investigation. The assistant commissioner, [[John Yates (police officer)|John Yates]] asked for the parliamentary investigation to be postponed.<ref name=Hencke-2006-03-25>[http://politics.guardian.co.uk/labour/story/0,,1739302,00.html "Scotland Yard asks MPs to delay their inquiry while it questions donors"]  {{webarchive|url=https://web.archive.org/web/20070818205914/http://politics.guardian.co.uk/labour/story/0%2C%2C1739302%2C00.html |date=18 August 2007 }}, ''[[The Guardian]]'', David Hencke, 25 March 2006.</ref>
''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]]. [[Sir David Garrard]], [[Andrew Rosenfeld]], and [[Barry Townsley]] are patrons of Jewish Care; Richard Caring, proprietor of [[The Ivy (United Kingdom)|the Ivy]] in London, had raised £10&nbsp;m for the NSPCC, and Sir David Garrard, Dr. [[Chai Patel]], Andrew Rosenfeld, [[Richard Caring]], and [[Derek Tullett]] are all connected to the [[Community Service Volunteers]].<ref name=Hencke-2006-03-25 />
In July 2006 it was reported that Lord Levy had allegedly told [[Sir Gulam Noon]], a businessman nominated for a peerage, that he need not tell the Lords vetting committee about a loan to the Labour party. On 20 April 2005 Noon had agreed to lend Labour £250,000 on commercial terms, which he did on 28 April. Noon had originally offered to make a donation of between £50,000 and £75,000 but Levy wanted £1&nbsp;m. They then negotiated a loan. A letter sent to Sir Gulam at this time by Labour said that his £250,000 loan was not "reportable" under relevant legislation. On 3 October 2006, Sir Gulam was informed by a Labour official that the prime minister was nominating him for a peerage. On 4 October 2006, Sir Gulam received the nomination forms for joining the House of Lords. These asked him to list his contributions to Labour. Sir Gulam gave the papers to his accountant, who put down the £250,000 on the form along with just over £220,000 of straight donations he had made since 2000. On 5 October 2006 Lord Levy told Sir Gulam that he need not have included the £250,000 on the papers sent to the Lords Appointments Commission, because it was not a donation. Sir Gulam retrieved the papers and submitted a revised document that made no mention of the £250,000. In March 2006, the Lords Appointments Commission found out about the loan. Its chairman, Lord Stevenson, then wrote to the prime minister asking that Sir Gulam's nomination for a peerage be withdrawn.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/5167140.stm| title =Levy's advice to donor revealed | publisher = [[BBC]] | date = 10 July 2006  | access-date=31 December 2009}}</ref>
===Labour Party loans ===
On 20 March 2006 the Labour Party issued the full list of 12 lenders, together with the sums involved:<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4826680.stm | title =Labour reveals secret loans list | publisher = [[BBC]] | date = 20 March 2006  | access-date=31 December 2009}}</ref>
::[[Rod Aldridge]] – £1&nbsp;million – former Executive Chairman of [[Capita]]
::[[Richard Caring]] – £2&nbsp;million – owner of [[The Ivy (United Kingdom)|The Ivy]], London
::Gordon Crawford – £500,000 – Chairman of London Bridge Software
::[[Sir Christopher Evans]] – £1&nbsp;million – Founder of Merlin Biosciences
::[[Sir David Garrard]] – £2.3&nbsp;million
::[[Nigel Morris]] – £1&nbsp;million – co-Founder of [[Capital One]] and Director of [[The Economist Group]]
::[[Sir Gulam Noon]] – £250,000 – Chairman of Noon Products Ltd
::[[Chai Patel]] – £1.5&nbsp;million
::[[Andrew Rosenfeld]] – £1&nbsp;million – Chairman of [[Minerva plc]]
::[[David Sainsbury, Baron Sainsbury of Turville]] – £2&nbsp;million – Government Minister
::[[Barry Townsley]] – £1&nbsp;million – Chairman of Insinger Townsley
::Derek Tullett – £400,000 –
::Total: £13,950,000
One of the lenders, [[Lord Sainsbury of Turville]] was, until November 2006, a [[government minister]]. Initially Lord Sainsbury incorrectly announced that he had reported the loan to the [[Department of Trade and Industry (United Kingdom)|Department of Trade and Industry]]'s [[Permanent Secretary]]. He later apologised for unintentionally misleading the public by confusing disclosures about a donation of £2&nbsp;m with the loan for the same amount which in fact he had not reported. He faces an investigation by [[Sir John Bourn]], head of the [[National Audit Office (United Kingdom)|National Audit Office]], for a possible breach of the [[ministerial code]].<ref>{{cite news | url = http://news.ft.com/cms/s/9b260140-c2ae-11da-ac03-0000779e2340.html | title = Sainsbury faces inquiry about £2&nbsp;m loan | newspaper =[[Financial Times]] | date = 3 April 2006 }}</ref>
===Conservative Party loans===
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&nbsp;million:<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4864542.stm| title =Conservative lenders unveiled | publisher = [[BBC]] | date = 31 March 2006 | access-date=31 December 2009}}</ref>
::[[Henry Angest]] – £550,000 – Chairman and Chief Executive of the [[Arbuthnot Banking Group]] PLC
::[[Michael Ashcroft, Baron Ashcroft]] – £3.6&nbsp;million
::Cringle Corporation – £450,000
::[[Vivien Duffield|Dame Vivien Duffield]] – £250,000
::[[Johan Eliasch]] – £2.6&nbsp;million
::Graham Facks-Martin – £50,000
::[[Michael Hintze]] – £2.5&nbsp;m – owner of CQS Management
::[[Irvine Laidlaw, Baron Laidlaw]] – £3.5&nbsp;million
::Alan Lewis – £100,000
::Raymond Richards (deceased) – £1&nbsp;million
::Victoria, Lady de Rothschild – £1&nbsp;million
::[[Leonard Steinberg, Baron Steinberg]] – £250,000
::[[Charles Wigoder]] – £100,000 – Chief Executive of [[Telecom Plus]]
::Total: £15,950,000
The identity of 10 backers it had repaid – including a number of foreign nationals – was not revealed. These loans had totalled £5 million. Some of these lenders were concerned not to reveal their identity fearing that it might compromise their existing business arrangements with the government.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4841748.stm| title = Tory lenders 'feared reprisals' | publisher = [[BBC]] | date = 24 March 2006  | access-date=31 December 2009}}</ref> Their details, including one foreign backer, will be provided "in confidence" to the [[Electoral Commission (United Kingdom)|Electoral Commission]].<ref>{{cite news | url = http://www.timesonline.co.uk/article/0,,17129-2116017,00.html| title =Backers repaid to stay secret will be named by Tories | newspaper = The Times| date = 3 April 2006  | location=London | first=Philip | last=Webster | access-date=28 April 2010}}{{dead link|date=September 2024|bot=medic}}{{cbignore|bot=medic}}</ref> Initially the party had sought not to disclose to anyone the names of two lenders who requested confidentiality.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4867094.stm| title =Tories to maintain lender secrecy | publisher = [[BBC]] | date = 1 April 2006  | access-date=31 December 2009}}</ref>
The party had an outstanding £16&nbsp;million bank loan and £4.7&nbsp;million was owed to local Conservative Party associations.
The Electoral Commission welcomed the decision to publish the list – but said it had written to the party asking for more details on the loan terms.
==Criminal investigation==
{{prose|date=November 2020}}
Corrupt procurement and award of honours is legislated against by the [[Honours (Prevention of Abuses) Act 1925]] and the [[Public Bodies Corrupt Practices Act 1889]]<ref>{{cite news|url=http://www.timesonline.co.uk/article/0,,6-2094231,00.html |title=This dishonourable affair|work=The Times|date=20 March 2006 | location=London | first=William | last=ReesMogg | access-date=28 April 2010}}{{dead link|date=September 2024|bot=medic}}{{cbignore|bot=medic}}</ref> and the [[Metropolitan Police]] investigated the three complaints that they had received under these Acts. The police are also investigating whether false declarations were made to the [[Electoral Commission (United Kingdom)|Electoral Commission]], which is an offence under the [[Political Parties, Elections and Referendums Act 2000]].<ref>{{cite news | url = http://news.independent.co.uk/uk/politics/article485495.ece | title = Labour figures 'in the frame' over peerages-for-loans scandal | newspaper = The Independent | date = 17 May 2006 | location = London | first1 = Colin | last1 = Brown | access-date = 28 April 2010 | archive-url = https://web.archive.org/web/20070930190456/http://news.independent.co.uk/uk/politics/article485495.ece | archive-date = 30 September 2007 | url-status = dead | df = dmy-all }}</ref> On 27 March they gave MPs more details of its inquiry into the complaints<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4856190.stm | title = In full: Police letter on loans | publisher = [[BBC]] | date = 29 March 2006  | access-date=31 December 2009}}</ref> and the [[Public Administration Select Committee]] agreed to postpone its hearing on this issue in order not to prejudice possible police action.<ref>{{cite news|url=http://politics.guardian.co.uk/funding/story/0,,1741263,00.html|title=MPs postpone loans inquiry|newspaper=The Guardian|date=28 March 2006 | location=London | first=Matthew | last=Tempest | access-date=28 April 2010}}</ref> The criminal inquiry and the Electoral Commission investigation both stretch back to 2001.<ref>{{cite news| url=http://news.bbc.co.uk/1/hi/uk_politics/4929458.stm|title=Cash for peerages probe widened |publisher=[[BBC]]|date=22 April 2006 | access-date=31 December 2009}}</ref>
6 April 2006 – Electoral Commission announced that its own investigation was to be suspended until the police completed their inquiries. The Electoral Commission was not satisfied that election funding laws had not been breached.<ref>{{cite news| url = http://news.bbc.co.uk/1/hi/uk_politics/4883672.stm|title=Commission suspends loans probe |publisher=[[BBC]]|date=6 April 2006 | access-date=31 December 2009}}</ref>
===Metropolitan Police investigation===
* 13 April 2006 – The Metropolitan Police arrested former government adviser [[Des Smith (headteacher)|Desmond Smith]] under the [[Honours (Prevention of Abuses) Act]]. Smith, [[headteacher]] of [[All Saints Catholic School and Technology College]], was a council member of the [[Specialist Schools and Academies Trust]], which helped the government recruit sponsors for the [[Academy (England)|City Academy]] programme.<ref>{{cite news| url=http://news.bbc.co.uk/1/hi/uk_politics/4906504.stm|title=Headteacher held in honours probe |publisher=[[BBC]]|date=13 April 2006 | access-date=31 December 2009}}</ref> Lord Levy was the President of The Council of the Specialist Schools and Academies Trust.
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* 12 July 2006 – Lord Levy was arrested by the [[Metropolitan Police]] in connection with the enquiry.
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* 20 September 2006 – Businessman [[Christopher Evans (businessman)|Christopher Evans]] was arrested by police in connection with the enquiry.
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* 22 November 2006 – The police questioned a serving Cabinet minister, for the first time, as a witness in the investigation, [[Secretary of State for Health]] [[Patricia Hewitt]].<ref>{{cite news| url=http://news.scotsman.com/politics.cfm?id=1735012006|title=Hewitt becomes first Cabinet member questioned over cash for honours |newspaper=[[The Scotsman]]|date=23 November 2006|location=Edinburgh}}</ref>
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* 14 December 2006 – Police questioned Prime Minister [[Tony Blair]] at [[Downing Street]] as a witness; he was not arrested or interviewed [[Right to silence in England and Wales|under caution]].
*
* 15 December 2006 – Police questioned [[Jack McConnell]], the [[First Minister of Scotland|First Minister]] of [[Scotland]].<ref>[http://news.bbc.co.uk/2/hi/uk_news/scotland/6292033.stm "Honours police quizzed McConnell"] {{webarchive |url=https://web.archive.org/web/20160305112813/http://news.bbc.co.uk/2/hi/uk_news/scotland/6292033.stm |date=5 March 2016 }}, [[BBC News Scotland]], 23 January 2007</ref>
*
* January 2007 – Police questioned, [[Right to silence in England and Wales|under caution]], [[John McTernan]], the Director of Political Operations at [[10 Downing Street]] seconded to the [[Scottish Labour Party]] to run its campaign for the [[2007 Scottish Parliament election|Scottish Parliament general election]] of 3 May 2007.<ref>[http://news.bbc.co.uk/2/hi/in_depth/6293191.stm "Honours probe quiz for No 10 aide"] {{webarchive |url=https://web.archive.org/web/20160424042901/http://news.bbc.co.uk/2/hi/in_depth/6293191.stm |date=24 April 2016 }}, [[BBC News Scotland]], 24 January 2007</ref><ref>[http://election.scotsman.com/topics.cfm?tid=782&id=80932007 "Blair aide sent to stem SNP tide"]{{dead link|date=December 2016 |bot=InternetArchiveBot |fix-attempted=yes }}, ''[[The Scotsman]]'', 16 January 2007</ref><ref>[http://news.scotsman.com/politics.cfm?id=123682007 "Now Holyrood election chief quizzed in peerages inquiry"] {{webarchive |url=https://web.archive.org/web/20070528130714/http://news.scotsman.com/politics.cfm?id=123682007 |date=28 May 2007 }}, ''[[The Scotsman]]'', 24 January 2007.</ref>
*
* 19 January 2007 – [[Ruth Turner (political advisor)|Ruth Turner]], Director of Government Relations at [[10 Downing Street]], was arrested by police under the [[Honours (Prevention of Abuses) Act]] and also on suspicion of [[perverting the course of justice]]. She was later released on bail.<ref>{{cite news|url=http://news.bbc.co.uk/2/hi/uk_news/politics/6279729.stm|title=Honours police arrest Blair aide|publisher=[[BBC]]|date=19 January 2007 | access-date=31 December 2009}}</ref> She was the first salaried Government official to be arrested in the inquiry, which followed a search of 10 Downing Street's computer systems by an independent IT expert.<ref>{{cite news|url=https://www.theguardian.com/uklatest/story/0,,-6360573,00.html |title=Email 'mole' led to aide's arrest |newspaper=The Guardian |date=21 January 2007 |location=London }}{{dead link|date=May 2016|bot=medic}}{{cbignore|bot=medic}}</ref>
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* 26 January 2007 – [[Prime Minister of the United Kingdom|Prime Minister]] Tony Blair was questioned in [[Downing Street]] for a second time—once again, as a witness and not [[Right to silence in England and Wales|under caution]]. At the request of police the 45-minute interview was not publicly revealed until 1 February 2007, for what they described as "operational reasons". A [[Metropolitan Police]] spokesperson stated that Blair was only being "interviewed as a witness" but declined to state whether the interview related to alleged breaches of the [[Honours (Prevention of Abuses) Act]] or alleged [[perversion of the course of justice]].<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/6320399.stm|title=Blair interviewed again by police|publisher=[[BBC]]|date=1 February 2007 | access-date=31 December 2009}}</ref> However, on 25 June 2007 Channel 4 news reported that the police had originally asked for an interview under caution, and that Blair had said that this would require him to resign as Prime Minister. The police had then re-considered and interviewed him as a witness, rather than suspect.<ref>{{cite news |url=http://www.channel4.com/news/articles/politics/domestic_politics/the+times+blair+nearly+resigned/577652|title=The times Blair nearly resigned|publisher=[[Channel 4]]|date=26 June 2007}}</ref>
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* 30 January 2007 – Lord Levy was arrested again on suspicion of conspiracy to [[pervert the course of justice]], while still on bail from the previous arrest. He was subsequently bailed.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/6314881.stm|title=Honours Police arrest Lord Levy|publisher=[[BBC]] | date=31 January 2007 | access-date=31 December 2009}}</ref>
*
* 7 February 2007 – The [[Crown Prosecution Service]] confirmed that head teacher [[Des Smith (headteacher)|Des Smith]] will not face any charges.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/6335169.stm|title=Honours probe teacher not charged|date=7 February 2007|publisher=[[BBC]] | access-date=31 December 2009}}</ref>
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* 20 February 2007 – On reporting to a police station under her bail terms, [[Ruth Turner (political advisor)|Ruth Turner]] was interviewed for a second time and re-bailed.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/6381961.stm|title=Police question Blair aide again|date=21 February 2007|publisher=[[BBC]] | access-date=31 December 2009}}</ref>
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* 2 March 2007 – The [[Attorney General for England and Wales|Attorney General]], [[Peter Goldsmith, Baron Goldsmith|Lord Goldsmith]] obtained an injunction to prevent the BBC from broadcasting a story about the investigation, relating to an email that the BBC had seen.<ref>[http://news.bbc.co.uk/1/hi/uk_politics/6414113.stm Attorney General halts BBC probe] {{webarchive |url=https://web.archive.org/web/20070901223434/http://news.bbc.co.uk/1/hi/uk_politics/6414113.stm |date=1 September 2007 }}, [[BBC News]], 2 March 2007</ref>
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* 5 March 2007 – After a request to the Attorney General, the BBC was allowed to reveal that the email was sent by Number 10 aide Ruth Turner to Tony Blair's chief of staff, Jonathan Powell, and concerned Labour's chief fundraiser Lord Levy<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/6419275.stm|title=Honours gag e-mail was about Levy | work=BBC News | date=5 March 2007 | access-date=31 December 2009}}</ref> The BBC were still not allowed to reveal the contents of the email.
*
* 6 March 2007 – After both the police and the attorney general failed to obtain an injunction, ''[[The Guardian]]'' newspaper revealed that the police had shifted their focus from whether there was an effort to sell peerages to whether there has been a conspiracy to pervert the course of justice. It emerged that Turner and Levy had a meeting in 2006, an account of which was passed by her lawyers to the police, and the police were seeking clarification of whether Levy had asked Turner to "shape" the evidence she gave to Scotland Yard.<ref>{{cite news|url=http://politics.guardian.co.uk/funding/story/0,,2027366,00.html|title=Cash for honours: key document names Levy | work=The Guardian | location=London | first=Patrick | last=Wintour | date=6 March 2007 | access-date=28 April 2010}}</ref> On the same day, the ''[[Daily Telegraph]]'' newspaper revealed that Ruth Turner had not actually sent the email, because she feared it would be damaging if it fell into the wrong hands.<ref>{{cite news|url=https://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/03/06/nemail06.xml|archive-url=https://web.archive.org/web/20080225055618/http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/03/06/nemail06.xml|url-status=dead|archive-date=25 February 2008|title=No 10 denies leaking cash-for-honours email | work=The Daily Telegraph | location=London | first1=Andrew | last1=Pierce | first2=George | last2=Jones | date=6 March 2007 | access-date=28 April 2010}}</ref> Later in the day the BBC got the injunction against them lifted, and confirmed that their story was similar in substance to that published in ''The Guardian''.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/6423225.stm|title=Blair aide's 'concern over Levy' | work=BBC News | date=6 March 2007 | access-date=31 December 2009}}</ref>
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* 20 April 2007 – The police sent their file on the investigation to the [[Crown Prosecution Service]].
*
* 5 June 2007 – Lord Levy and Ruth Turner were re-bailed in connection with the inquiry.<ref>{{cite news|url=http://politics.guardian.co.uk/funding/story/0,,2095918,00.html|title=Levy and Turner re-bailed in honours inquiry | work=The Guardian | location=London | first=Deborah | last=Summers | date=5 June 2007 | access-date=28 April 2010}}</ref>
*
* 26 June 2007 – On the day before Tony Blair left office The Telegraph<ref>{{cite news|url=https://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/06/28/nblair428.xml|archive-url=https://web.archive.org/web/20070630154904/http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/06/28/nblair428.xml|url-status=dead|archive-date=30 June 2007|title=Actress Questioned on Cash for Honours | work=The Daily Telegraph | location=London | first=Andrew | last=Pierce | date=28 June 2007 | access-date=28 April 2010}}</ref> reports that American actress Courtney Coventry was flown into the UK at taxpayers expense to give evidence in the Cash for Honours investigation.
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* 28 June 2007 – The day after Tony Blair left office as Prime Minister it was reported that the police had interviewed him a third time some time in early June, and again not under caution.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/6249300.stm|title=Blair questioned again by police | work=BBC News | date=28 June 2007 | access-date=31 December 2009}}</ref><ref>{{cite web|url=http://www.thisislondon.co.uk/news/article-23402199-details/Blair+quizzed+again+in+cash-for-honours+probe/article.do|title=Blair quizzed again in cash-for-honours probe|access-date=28 June 2007|archive-url=https://web.archive.org/web/20070701072930/http://www.thisislondon.co.uk/news/article-23402199-details/Blair+quizzed+again+in+cash-for-honours+probe/article.do|archive-date=1 July 2007|url-status=dead}}</ref>
*
* 23 October 2007 – PASC questioned Assistant Commissioner Yates regarding the expenditure of the Metropolitan Police Commission during the Cash for Honours Investigation and the lack of subsequent charges.<ref>{{cite news|url=http://politics.guardian.co.uk/cashforhonours/story/0,,2197982,00.html|title= Detective reveals how Downing Street hindered cash for honours inquiry | work=The Guardian | location=London | first=Patrick | last=Wintour | date=24 October 2007 | access-date=28 April 2010}}</ref>
===Crown Prosecution Service assessment===
The Metropolitan Police team, investigating the affair and led by Assistant Commissioner [[John Yates (police officer)|John Yates]] handed its main file on the cash for peerages inquiry to the [[Crown Prosecution Service]] (CPS) on Friday 20 April. Under English law, it is up to the CPS to decide whether to bring charges against any of the 136 people interviewed.<ref>[http://news.bbc.co.uk/1/hi/uk_politics/6576653.stm Police hand honours file to CPS] {{webarchive |url=https://web.archive.org/web/20071006215010/http://news.bbc.co.uk/1/hi/uk_politics/6576653.stm |date=6 October 2007 }}, [[BBC]], 20 April 2007</ref>
On 4 June 2007 the CPS asked the police to undertake further enquiries,<ref>[http://news.bbc.co.uk/1/hi/uk_politics/6718417.stm 'More inquiries' in honours probe] {{webarchive |url=https://web.archive.org/web/20070910015121/http://news.bbc.co.uk/1/hi/uk_politics/6718417.stm |date=10 September 2007 }}, [[BBC]], 4 June 2007</ref> following reports that the police were pressing for Tony Blair to be called as a prosecution witness in any trial.<ref name=telegraph-20070603>{{cite news | url=https://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/06/03/nhons03.xml | archive-url=https://web.archive.org/web/20080225055639/http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/06/03/nhons03.xml | url-status=dead | archive-date=25 February 2008 | title=Honours police want Blair as a witness | newspaper=[[The Daily Telegraph]] | date=3 June 2007 | access-date=4 June 2007 | location=London | first1=Andrew | last1=Alderson | first2=Patrick | last2=Hennessy}}</ref>
On 7 July 2007 the CPS confirmed that they had all the information they needed from the police to decide whether to bring any charges, and it was confirmed that the new Attorney General, [[Baroness Scotland]], would take no role in the case, to avoid the appearance of political influence.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/6277820.stm|title=Honours inquiry file 'complete' | work=BBC News | date=6 July 2007 | access-date=31 December 2009}}</ref><ref>{{Cite web|url=https://www.yorkshirepost.co.uk/news|title=News &#124; Yorkshire Post|website=www.yorkshirepost.co.uk}}</ref>
On 20 July 2007 the BBC reported that the CPS would bring no charges. 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. Conversely, if one person grants, etc., an honour to another in recognition of (in effect, as a reward for) the fact that that other has made a gift, etc., that does not of itself constitute an offence. For a case to proceed, the prosecution must have a realistic prospect of being able to prove that the two people agreed that the gift, etc., was in exchange for an honour," and that "There is no direct evidence of any such agreement between any two people subject of this investigation"<ref>[https://wayback.archive-it.org/all/20071025023307/http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/20_07_2007_document.pdf Summary of the CPS's decision], BBC News website, 20 July 2007</ref>
<ref>{{cite web |url=http://www.cps.gov.uk/news/latest_news/146_07/index.html |title=CPS decision: "Cash For Honours" case |publisher=Crown Prosecution Service |date=20 July 2007 |access-date=23 July 2017 }}{{Dead link|date=April 2019 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>
==Connection with education funding==
[[Des Smith (headteacher)|Desmond Smith]] was the subject of a ''[[Sunday Times]]'' investigation, which led to his resignation from the [[Specialist Schools and Academies Trust]].<ref>{{cite news| url=http://www.timesonline.co.uk/article/0,,2087-1986324,00.html| archive-url=https://web.archive.org/web/20060117080343/http://www.timesonline.co.uk/article/0,,2087-1986324,00.html| url-status=dead| archive-date=17 January 2006|title=Champagne, then talk of a knighthood |newspaper=The Sunday Times|date=15 January 2006 | location=London | first1=Jonathan | last1=Calvert | first2=Claire | last2=Newell | access-date=28 April 2010}}</ref> At that time a [[10 Downing Street|Downing Street]] spokesman said "It's nonsense to suggest that honours are awarded for giving money to an [[Academy (England)|academy]].".<ref>{{cite news| url=http://education.guardian.co.uk/newschools/story/0,,1687374,00.html|title=City academies adviser resigns after cash-for-honours accusation |newspaper=The Guardian|date=16 January 2006 | location=London | first=Rebecca | last=Smithers | access-date=28 April 2010}}</ref> 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. Downing Street sources said the Prime Minister wanted their political support in the Lords for the controversial policy, adding that the Prime Minister felt that anyone who gave their time, commitment and money to establish an academy – to help children in previously failing schools – "had a strong claim to be considered for an honour". "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."<ref>{{cite news| url=http://observer.guardian.co.uk/politics/story/0,,1754881,00.html | title=No 10 admits link between school donors and peerages |newspaper=[[The Observer]]|date=16 April 2006 | location=London | first=Gaby | last=Hinsliff | access-date=28 April 2010}}</ref>
Garrard gave £2.4&nbsp;m for an academy in [[Bexley]], south London. Townsley gave £1.5&nbsp;m for another in west London.
==Political reaction==
There was widespread support for an enquiry and some calls to revise the process of party political funding.
===Labour Party===
====Tony Blair====
Speaking at his monthly news briefing on 16 March 2006, [[Tony Blair]] confirmed his knowledge of the loans but denied any connection between the large loans from three private individuals and whether they were subsequently nominated for honours.<ref>{{cite news|url=https://www.telegraph.co.uk/news/politics/7503870/A-brief-history-of-political-scandals.html|title= A brief history of political scandals|newspaper=Telegraph|access-date=15 January 2013}}</ref> Blair said all three men were known party donors and would have made excellent Labour "working peers". He suggested that further changes to the honours system might be needed.<ref name="Labour 'to name future lenders'"/>
When questioned, the PM said he did not think Dromey had revealed details of his lack of involvement in the handling of the private loans to undermine or implicate either the PM or [[10 Downing Street]]. Dromey's very public expression of concern – he toured various television channels to be interviewed on the matter – raised suspicion among some supporters of Blair that his actions were deliberately designed to embarrass the Prime Minister and consequently benefit Prime Minister in-waiting Chancellor [[Gordon Brown]]. Dromey denied this, saying he had been forced to go public when his persistent questioning failed to satisfactorily resolve the matter.
The police were reported as pressing for Blair to be called as a prosecution witness in any trial according to reports on 3 June 2007.<ref name=telegraph-20070603 />
====Charles Clarke====
Also on 16 March 2006 the then [[Home Secretary]] stated "The treasurer should know about all the fundraising issues that arise."<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4811994.stm | title = Clarke denies Labour loans rift | publisher = [[BBC]] | date = 16 March 2006  | access-date=31 December 2009}}</ref>
However, he later called into question Dromey's competence, saying he had "serious questions about Jack Dromey's capacity" as Labour treasurer and the fact Dromey did not know about the loans meant "you have to wonder how well he was doing his work" finally adding, "I don't know why Jack behaved as he did." 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.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4830018.stm | title = Clarke targets Labour treasurer | publisher = [[BBC]] | date = 21 March 2006 | access-date=31 December 2009}}</ref>
====Sir Jeremy Beecham====
[[Sir Jeremy Beecham]], chairman of Labour's governing body, the [[National Executive Committee of the Labour Party|National Executive Committee]] (NEC), accused Charles Clarke of speaking out of turn and defended party treasurer Jack Dromey. He said the treasurer "shouldn't be criticised" and had "acted perfectly properly". It was "absolutely clear that the reasons that NEC officers, including the elected party treasurer, did not know about the loans had nothing to do with any failings on their part". 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." In an interview on [[BBC2]]'s ''[[Newsnight]]'' he said Clarke had not read the situation correctly. "I don't know how closely Charles has been involved in all this. He's not been on the National Executive for a number of years. I wouldn't have said it in Charles Clarke's position."<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4831528.stm | title = Clarke accused in £14&nbsp;m loans row | publisher = [[BBC]] | date = 22 March 2006  | access-date=31 December 2009}}</ref>
====Harriet Harman====
In a measure aimed to avoid any conflict of interest, Dromey's wife [[Harriet Harman]] – a minister in the [[Department for Constitutional Affairs]] – relinquished her responsibilities for overseeing electoral reform and House of Lords reform.
====Diane Abbott====
Writing of Dromey's reaction in ''[[The Times]]'' of 17 March 2006, left-wing Labour MP [[Diane Abbott]] said:<ref>{{cite news|url=http://www.timesonline.co.uk/article/0,,6-2089809,00.html |title=Diane Abbott: You're right: it's far from all right, Jack |work=The Times |date=17 March 2006 |location=London }}{{dead link|date=September 2024|bot=medic}}{{cbignore|bot=medic}}</ref>
:"But perhaps Mr Dromey is furious because he has seen things that have not yet been made public. Perhaps facts have finally been revealed to him about new Labour's inner circle and their adventures in influence-peddling and in the world of the super-rich that he really did not know before. And the enormity of what he has discovered may have made him determined that whoever else may be swept away in the ensuing scandal, it will not be him."
====Clare Short====
Former cabinet minister and Blair critic [[Clare Short]] described the issue with characteristic bluntness:
:"What we're getting is a bubble of these clever people who've captured the state, don't need a party, don't need any members, don't have turbulent people having opinions, who then get money from rich people and run our state without consulting anyone else."<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4824278.stm | title = How bad is loans row for Blair? | publisher = [[BBC]] | date=20 March 2006 | access-date=31 December 2009 | first=Nick | last=Assinder}}</ref>
====Ian McCartney====
The Labour Party chairman [[Ian McCartney]] defended the loans with the BBC quoting him as saying:<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4819184.stm | title = Loans defended by Labour chairman | publisher = [[BBC]] | date = 18 March 2006  | access-date=31 December 2009}}</ref>
:"Bear in mind too that we fought the 2005 election in the face of a very heavily funded Conservative campaign – a large part of which was reportedly funded by loans, and targeted at individual Labour MPs."
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. "We need to know who these people are, where they reside, where they pay tax, how much they lent and on what terms. "It is not up to the Tories to claim that they did not breach the law. That's the job of the Electoral Commission. "By failing to provide these details the Conservatives and David Cameron are fuelling suspicion that they have even more to hide."<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4865468.stm | title = Tories reveal £16&nbsp;m lenders list | publisher = [[BBC]] | date = 31 March 2006  | access-date=31 December 2009}}</ref>
====John Prescott====
[[John Prescott]], the [[Deputy Prime Minister]], told the BBC that he was "not happy" he found out about the millions loaned to the Labour Party by reading it in the papers but insisted the loans would later appear in the party's audited accounts. He refused to give a guarantee that Labour had not given peerages for loans, saying "I am bound to say not all the information possibly is out yet and we are still looking at it."
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:<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4821702.stm | title = Prescott in the dark about loans | publisher = BBC | date = 19 March 2006 | access-date=31 December 2009}}</ref> "There's a kind of unhealthy approach to political financing in this country. What we need to do is have a healthy debate."
Prescott himself became involved in accusations of [[influence peddling]] when newspapers suggested he had made planning decisions in favour of [[Minerva plc]], a company chaired at various times by two of the lenders involved, Sir David Garrard and Andrew Rosenfeld. He told BBC One's ''[[The Politics Show]]'' he did not "know anything" about the firm or secret loans to the party.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4846090.stm | title = Prescott denies Labour loans link | publisher = [[BBC]] | date = 26 March 2006  | access-date=31 December 2009}}</ref>
He said he had received the planning requirements for a skyscraper in London and the [[Park Place (Croydon)|Park Place]] shopping centre in [[Croydon]] but felt the decision could be made locally. "I passed it over to Croydon and City of London Corporation. They made the decision, not me. It's quite untrue to say there was a deal or I made the decision."
Of Garrard and Rosenfeld he said, "I don't think I have ever met them. I don't know who the companies are and I certainly don't know if they were giving money to the Labour Party. I am not a great one for circulating among businessmen. I just do my damn job and therefore I resent it when these implications are made. I have not made any money from politics for God's sake. But I am here doing what I can best in public service. My reputation is important to me. My politics is important to me."
"I make my mistakes from time to time and we have to be answerable to you guys but not when it's a lie," he added.
====Lord Falconer of Thoroton====
Amendments to the [[Electoral Administration Act]] to make it a legal requirement that loans to political parties are made public in a similar way to donations were to be urgently considered by [[Lord Falconer of Thoroton]], then [[Lord Chancellor]] according to reports in March 2006.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4823680.stm | title = Secret party loans to be banned | publisher = BBC | date = 20 March 2006  | access-date=31 December 2009}}</ref>
===Conservative Party===
====David Cameron====
"We've got to stop this perception that parties can somehow be bought by big donations either from very rich people, or trade unions, or businesses."
The [[Conservative Party (UK)|Conservative Party]] admitted that it has engaged in similar borrowing (but did not reveal any links to nominations for peerages). Such loans have been reported in party accounts though the annual accounts are not yet published for the period covering the 2005 general election.
David Cameron's proposals are:
:Ban on all loans unless from financial institutions on fully commercial terms
:£50,000 cap on donations
:Tax relief on donations up to £3,000
:State funding of £1.20 per vote won at general elections for parties with MPs, plus annual payment equal to 60p per vote
:New commission to handle honours
:General election party funds limited to £15&nbsp;m
These proposals would also reduce the number of MPs from 650 to fewer than 600.<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4827142.stm | title = Tories will not name key backers | publisher = BBC | date=20 March 2006 | access-date=31 December 2009}}</ref>
====Francis Maude====
Conservative Party chairman [[Francis Maude]] said he "regretted" accepting loans from abroad but insisted it had not broken the law. He said it had to pay back £5m to lenders who wanted to remain anonymous including a number of foreign nationals.
"These loans represent a very small part of our financial backing – I wish we had not done so but we have and we have now set the record clear we have repaid those loans and the matter is perfectly clear," Mr Maude told [[BBC Radio 5 Live]]. "It would clearly have been better if we had not as things turn out but that's the way it is." He insisted the Tories had done nothing wrong and that Labour had been "much less transparent about this whole process than we have."
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.
===Liberal Democrats===
====Sir Menzies Campbell====
Former [[Liberal Democrats (UK)|Liberal Democrat]] leader [[Sir Menzies Campbell]] said that his party had not nominated anyone for a peerage who had loaned it large sums. He said the Lib Dems received loans from three people in the period before the 2005 General Election and had declared their names and the sums lent. 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&nbsp;m to £15&nbsp;m:<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/uk_politics/4824340.stm | title = Sir Menzies urges loans openness | publisher = BBC | date = 20 March 2006  | access-date=31 December 2009}}</ref>
:"There should be no secret loans of any kind, and if the lord chancellor is proposing that in legislation currently before Parliament, that's something we will most certainly support."
==Previous instances==
The expression "cash for peerages" has a long history. Titles have constantly been granted to court favourites and allies. [[James I of England|James I]] was more overt; he created the title of [[baronet]] and sold them for £1,500 each to raise money for his war in Ireland.
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).
In 1976 [[Harold Wilson]]'s resignation honours list was similarly embroiled in what became known as the [[1976 Prime Minister's Resignation Honours|"Lavender List"]] (supposedly hand-written on lavender paper by [[Marcia Williams]]). This, though widely deemed to include some unsuitable and unsalubrious nominees, rewarded Wilson's friends and carried no suggestion of overt reward for money – given or loaned. [[Lord Kagan]], ennobled in the Lavender List, was convicted of fraud in 1980 – for some years he had been funding Harold Wilson's Leader's office. [[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.
In the 1960s, [[Roy Thomson]] had some justifiable claim to a peerage as a Canadian and later British publisher. As even his company history observes, "Roy had noted that all proprietors of newspapers seemed to become members of the House of Lords. 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. He contributed money to charitable bodies which were deemed to improve his chances. Eventually, having bought ''[[The Scotsman]]'', ''[[The Sunday Times]]'' and later ''The Times'', he became sufficiently important to [[Harold Wilson]] that he was given a hereditary peerage as [[Baron Thomson of Fleet]].
As recently as 2004 the issue of large donations to a political party being linked to the award of a peerage arose when [[Paul Drayson]] donated £500,000 to the Labour Party. His company, [[Powderject]] (now part of [[Novartis]]), had also received a valuable government contract to make vaccines.<ref>{{cite news |title=On May 1 Paul Drayson was given a peerage. On June 17 he gave Labour a £500,000 cheque |url=https://www.theguardian.com/politics/2004/aug/25/uk.partyfunding |access-date=2 September 2020 |work=The Guardian |date=2004-08-24}}</ref>
==See also==
*[[List of political scandals in the United Kingdom]]
*[[Reform of the House of Lords]]
*[[Cash-for-questions affair]]
*[[Cash for Influence (disambiguation)|Cash for Influence]]
*[[Political funding in the United Kingdom]]
*[[David Abrahams (businessman)|David Abrahams]]
*[[Tony's Cronies]]
==References==
{{reflist|30em}}
==External links==
* [http://www.timesonline.co.uk/article/0,,2-2580264,00.html 'Loans for Honours' Affair: Media demand explanation about Tony Blair's second police interview – Greg Hurst]{{dead link|date=September 2024|bot=medic}}{{cbignore|bot=medic}}, ''The Times'', 2 February 2007.
* [http://news.bbc.co.uk/1/hi/uk_politics/4828094.stm Guide to peers and House of Lords]
* [https://web.archive.org/web/20160115051046/http://uk.reuters.com/article/uk-britain-honours-chronology-idUKL2025030320070720 TIMELINE – Cash-for-honours investigation], Reuters, 20 July 2007.
{{New Labour}}
{{DEFAULTSORT:Cash For Honours}}
[[Category:British honours system]]
[[Category:Labour Party (UK) scandals]]
[[Category:2006 in the United Kingdom]]
[[Category:2006 in British politics]]
[[Category:House of Lords]]
[[Category:Peerage of the United Kingdom]]
[[Category:Premiership of Tony Blair]]
[[Category:2007 in British politics]]
[[Category:Political funding in the United Kingdom]]
[[Category:Political scandals in the United Kingdom]]