Leading article: The sleazy business of selling influence

Here is a simple question: If the Labour Party's acceptance of loans from three wealthy individuals was entirely innocent, as the Government maintains, why were these loans kept secret? Yesterday, we learnt thateven the party's treasurer was not aware of these financial arrangements. In the absence of any adequate explanation for such secrecy, we have little choice but to conclude that the Government is in the sleazy business of peddling influence.

Sadly, this is not a particularly shocking revelation. The fact that a hefty donation to the governing party has enabled the rich to command the services of the Government has been true for many years under both Conservative and Labour administrations. Tony Blair was handed power by an electorate fed up with Conservative sleaze and desirous of a cleaner political system. Instead, one of his biggest failings has been a readiness to support the business interests of those who have made big donations to Labour Party coffers. In 1997, he attempted to exclude Formula One racing from the ban on tobacco sponsorship to please the Labour donor Bernie Ecclestone. And a few years later, the Prime Minister made a personal appeal to the Romanian Prime Minister on behalf of another donor, Lakshmi Mittal. Such actions may stop short of outright corruption, but they are still a distasteful abuse of public office.

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More often, though, big donations have bought honours rather than crude financial influence. Of the 23 people who have donated more than £100,000 to Labour, 17 have been granted a peerage or a knighthood. The three businessmen who lent money to Labour were all nominated for peerages. The Prime Minister's defence of his conduct does not stand up to scrutiny. Mr Blair argues that he cannot exclude people from the peerage simply because they donate money to the Labour Party. No one would disagree with this. But the fact is that a number of people have made it into the House of Lords over the years for no other reason than their generosity to the Labour Party. This demeans the body politic and sullies the reputation of those appointed to the Upper House for genuine distinction or public service.

This tacky trade would arguably be less damaging to the public good were it not for the fact that a peerage comes with substantial political influence. As we have seen recently, members of the House of Lords continue to have a vital legislative role. And a seat in the Lords can also be a route into the Government for the unelected, as the careers of two generous donors, Lord Drayson and Lord Sainsbury, attest. This is one more reason why reform of the House of Lords should not be delayed. The sale of honours also emphasises the need to address the problem of the funding of political parties in a democracy. Schemes such as blind donations, matched state funding, campaign spending caps all need to be explored if such corruption of our political system is to be contained. Britain is by no means alone in facing this problem. Nor is it a problem for the Labour Party alone.

But that does not let Mr Blair off the hook. In the absence of an adequate funding system for political parties, the best guarantee against such corruption is openness and transparency. If we know who has given large sums of money to a party, we can scrutinise its behaviour and hold it to account on that basis. The attempt by the Government to conceal the existence of these latest loans by classifying them as separate from donations is the true scandal. Mr Blair's defenders point out it was Labour that introduced the legislation making large donations declarable. But all this shows is that the Prime Minister tried to circumvent his own rules. Mr Blair once promised New Labour would be "purer than pure". He cannot now complain when he is held to that standard.