Leading article: The price of a peerage

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The Independent Online

Every so often, however, a chink opens on practices which suggest that the link between money and political influence may be closer than we like to believe. The advantages of entrenched power being what they are, it may be no coincidence that such revelations tend to cluster in the twilight of a government, rather than at its bright, optimistic dawn.

The latest chink has been opened by Dr Chai Patel, head of the Priory Group and a major Labour Party donor, who has complained that his elevation to a peerage is being blocked by the Lords Appointments Commission. Dr Patel's decision to make his complaint public has prompted a spate of new allegations about how eloquently money talks when parties consider their nominations for the House of Lords.

And while talk of "peerages for sale" may no longer shock, it is hardly palatable - which is surely why New Labour figures rushed out with half-denials. Alastair Campbell said that "plenty of people" had been awarded honours who had made no donations whatsoever. But it was Lord Falconer who took the award for disingenuousness, when he tried to reverse the argument by saying that there could hardly be a ban on donors receiving honours. That is one way of putting it.

One aspect of the Dr Patel saga, however, should still have the capacity to shock. And this is the extent to which regulations requiring political parties to disclose donations are apparently being circumvented by the parties' new enthusiasm for loans. Loans, it seems, have to be declared only if they are advanced at a preferential interest rate.

No one has suggested that only the Labour Party has accepted loans from wealthy individuals. What is incontestable, though, is that such loans ride a coach and horses through the rules of disclosure and the restrictions on the amount an individual may donate. Thus, a measure introduced to increase transparency has apparently had the perverse effect of reducing it.

It has long been clear that the funding of political parties needs an overhaul, as does the way in which membership of the House of Lords is conferred. Both were recommended for far-reaching change by the Power inquiry last month. What has come to light following Dr Patel's complaint shows once again that these are weak points of our political system and they need to be addressed.