Bruce Anderson: Blair must face the full force of the law

The 'cash for peerages' affair involves a perversion of the law and threatens our institutions

Mr Blair has failed in yet another basic duty: to prevent his country from being made to look ludicrous in the eyes of foreigners. In the 19th century, the great cartoonist Sir John Tenniel depicted an imaginary conversation between Benjamin Disraeli and the Sultan of Zanzibar, a principality notorious for its reluctance to abolish slavery.

"Ah, Sheikh Ben Dizzy," says the Sultan, "I would love to abolish slavery, but you see - Conservative Party very strong in Zanzibar." On Saturday, Mr Putin said something similar. "Tony, I gather that you too are having trouble with the oligarchs: Gulam Noonovsky; Michael Levovitch. Terrible nuisance aren't they?! Some of mine ended up in gaol; I gather yours may do the same."

We should restrain our laughter at Tony Blair's deserved discomfort. The "cash for peerages" affair involves a perversion of the law. It also threatens our institutions. From the outset of his campaign against Tory sleaze, Mr Blair's motives were much more sinister than they appeared. He saw a great opportunity to inflict lasting damage on the Tory Party's funding, and on its personnel.

The Tories had always raised a lot of money from quoted companies and rich men. Even before 1997, the quoted companies were becoming less reliable. Their directors were afraid of criticism from shareholders, especially as they could no longer claim that they were supporting the Tories to protect themselves from being nationalised by a Labour government.

Labour's new rules of disclosure on gifts and soft loans set out to discourage rich men and private companies from supporting the Tories. Though there is nothing wrong with disclosure, the new Labour law was reinforced with two sinister elements.

The first was the campaign of vilification against Tory businessmen. New Labour portrayed them as fat cats and, in all probability, crooks. Trusting your money to a Tory businessman was as safe as trusting your child to a Belgian cabinet minister.

In the late Nineties, the second prong of Labour's assault was described to me by a successful businessman. "You feel that if you cross them, they'll get you. There are no overt threats, nothing as crude as that, but you get the impression that it is just not sensible to annoy Mr Big in Downing Street." Labour's hope was that it could sharply reduce the funding that the Tories got from business whilst protecting their own trade union contributions; they were also happy to use the authority of government to encourage party fundraising. As John Major said yesterday, the Tories who were accused of sleazy dealings were many miles from Downing Street. In Mr Blair's case the sleaze suppurates out from the centre: Don Blair-eone.

There is a charge that is at least as grave as sleaze in the pursuit of anti-Tory malevolence: hypocrisy. No government has ever acted in such a hypocritical and dishonest way as Labour did on party funding.

In the year 2000, the Government passed a law that it never had any intention of obeying. The New York hotelier Leona Helmsley said that taxes were for little people. Tony Blair obviously thought that only election losers obeyed the law. He acted as though he had been an absolute monarch in the Middle Ages. How could the law apply to him? He was the law. The Prime Minister is now being made aware there is nothing in English criminal law which says that none of the above shall apply to the Prime Minister. The arrest of Lord Levy has removed his last hope of leaving No 10 in a dignified manner. It is inevitable that his departure shall be overshadowed by writs and ridicule.

If this were France or Italy we would expect nothing better than a legal pantomime. Chirac, Berlusconi: that is how they order things on the Continent. It is not how we are used to running our affairs. Anyone who believes in the integrity of British government ought to hope that Tony Blair is brought to book for his efforts to corrupt our political system.

Confronted with all this, any Tory's natural instinct is to gloat. That could be dangerous. There is a risk that even in the final phase of moral implosion, Mr Blair's anti-Tory manoeuvres could spell more trouble for the Tory party. Mr Blair has unlimited reserves of chutzpah. In the dock, he would behave like a man accused of killing his parents, trying to solicit the court's sympathy on the grounds that he is an orphan. Mr Blair will claim that both parties have had problems with their finances. Perhaps at the time he should have been more sympathetic to the Tories' difficulties. He hopes that they will now accept his difficulties and accept that there is only one solution: state funding. There was a moment when David Cameron appeared to be sympathetic to this argument. That was foolish. There was only one group of people who would never accept the need for a state subsidy: the taxpayers would have to provide it.

They would have a simple message for the politicians: do what any family has to do, earn your money honestly. If you can't raise the money, don't spend it.

Sensing the public mood, the Liberals would exploit it, knowing that if the two main parties accepted state funding, it would pass into law. The Liberals would have the luxury of opposing first, and benefiting later. They would urge the voters to reject both old Tory sleaze and new Labour sleaze. The Tories would be most unwise to give them that opportunity, or to help Tony Blair to weasel his way out of the muck heap of his own squalor.

There is an obvious point. No harm ensues if rich men pay large sums to support political parties. Nor does anyone suffer if respectable rich men who have run important businesses should end up in the House of Lords. They would be able to speak from experience. They could offer all governments valuable advice.

Nor would it matter if they were able to use their wisdom and knowledge to influence government policy, as long as there was a full disclosure of their personal financial interests. It would be wholly unacceptable if they were able to use their wealth to bribe ministers and political parties in order to change government policy, but until Tony Blair became Prime Minister, it was universally accepted that that could never happen. This is a further reason for hoping that Mr Blair has an ignominious encounter with the criminal law. That would act as a terrible warning to all his successors.

Mr Blair inherited a perfectly good method of financing political parties. For his own malign purposes, he chose to pervert it. There is a simple way of dealing with that: eliminate the perversions; punish Tony Blair and return to the old arrangements.