Dominic Lawson: The sweet irony of Tony Blair brought down by the excesses of Thatcherism

New Labour had allowed itself to be lulled into thinking that 'if the Tories can get away with it, so should we'
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The Independent Online

Do not believe those cynics who write that embarrassment over "cash for peerages" allegations is the only reason that the Prime Minister has announced his latest (fifth? sixth?) attempt to reform the House of Lords. Do not believe them, because they are not cynical enough.

Those actually inside the Downing Street nexus point out that the real reason for Mr Blair's reawakening of interest in this apparently intractable constitutional question stemmed from Gordon Brown's speech two months ago to the Fabian Society.

Mr Brown's lengthy perorations on Britishness captured the media's attention. But the passage which galvanised Mr Blair's advisers was this: "Founding our constitution on liberty within the law means restricting patronage. I would apply this approach to constitutional questions such as the issue of House of Lords reform." Which, translated, means: One of my first acts as Prime Minister will be to clear up the corrupt constitutional mess I will have inherited from my money-mad neighbour.

It's hardly surprising that the Prime Minister, if he is as obsessed with his legacy as we are led to believe, would immediately commission his constitutional Mr Fixit, Charlie Falconer, to sound out the Lords about a new settlement. It's equally unsurprising that this development has been greeted by Mr Brown's more childish acolytes with moans that Mr Blair " is stealing Gordon's policies".

None of the above should be taken to mean that I am not intrigued by the investigations of New Scotland Yard's Specialist Crimes Directorate into the Labour Party's alleged breach of the Honours (Prevention of Abuses) Act 1925. Ever since the Prime Minister was reported to have changed government policy on cigarette sports advertising after listening closely to the sound of Bernie Ecclestone's money, journalists - and Mr Blair's opponents in the Labour Party - have waited for a moment like this.

The Ecclestone case, however, was potentially much more scandalous than "cash for peerages". In the Ecclestone affair, it was claimed that government policy was for sale. In the case now under investigation by Deputy Assistant Commissioner John Yates, all that is alleged to be up for sale is a seat on a red bench. Yes, that bench is in a legislative assembly. But the truth about people who covet peerages is that their demands end once they have acquired ermine.

This, in essence, was Lloyd George's defence of his practice of selling honours. As he told a Tory fundraiser: "You and I know that it is a far cleaner method of filling the party chest than the methods used in the United States. Here a man gives £40,000 to the party and gets a baronetcy. If he comes to the leader of the party and says 'I subscribe heavily to party funds, you must do this or that' we can tell him to go to Hell."

Lloyd George, however, took a very large commission off the top - many millions of pounds in today's money. Neither that, nor the original sale of honours was an offence at the time. But long after the 1925 Act was passed, Maundy Gregory, who brokered the deals, continued to sell honours, and he was duly tried and convicted in 1933 under the same law which has now been cited by Mr Yates.

After he was released, Maundy Gregory spent the remainder of his life in exile in Paris funded by a pension paid for by ... the Conservative Party. Gregory knew the value of his silence, as well as his services.

It is not, of course, that ancient secret which has persuaded David Cameron to refrain from tackling Mr Blair on the peerage issue. He knows that the Conservative Party in much more recent times has behaved in a way which, to the average voter, would seem indistinguishable from New Labour's conduct.

The practice of taking in loans from wealthy individuals at commercial rates, which are then "forgiven" by said individuals when the letter from Buckingham Palace arrives, has for many years been an element of Conservative Party fundraising.

I suspect that in other respects too, New Labour had allowed itself to be lulled into thinking that "if the Tories can get away with it, so should we". In 2004, Ian Duncan Smith proposed just four men for peerages: Stanley Kalms, Leonard Steinberg, Irvine Laidlaw and Greville Howard.

The only thing that these four had in common was that they had either given substantial amounts of money to the Conservative Party, or in Greville Howard's case, substantial consultancy fees to Mr Duncan Smith personally.

In fairness, Greville Howard is also a former Tory MP, and considerably brighter than the vast bulk of old Labour members whom the Prime Minister has kicked into the upper house as a means of getting more Blair Babes (of both sexes) into the Commons.

The Prime Minister's advisors should have been aware that the House of Lords Appointments Commission had been most uneasy about Mr Duncan Smith's list of working peers, especially after the Liberal Democrats commented at the time that the system had now become institutionally corrupt. It was inevitable that, in order not to become itself an object of ridicule, the Commission would finally make a stink if either of the two main party leaders continued to abuse the system.

And how else can one describe Mr Blair's proposal to elevate to the peerage Barry Townsley, a stockbroker who lent £1m to New Labour and gifted £1.5m to Mr Blair's pet project City Academies? Mr Townsley - as he will now continue to be called, since he has withdrawn his name from Mr Blair's list of nominations - was banned from the floor of the Stock Exchange for six months in the 1980s following his part in the "Galloping Major" share dealing scandal.

How strange and, yet, how sweet it is that the "purer than pure" Tony Blair could be brought down through a direct, if inadvertent, link to the excesses of the Thatcher years.