Live by the gong, die with a crash: Corruption does bring down governments, Michael Meacher warns the Conservatives

IN THE past half century Japan, Italy and France have all had long periods of right-wing, single-party rule: 46 years in Japan, more than 40 years in Italy, 23 years in France. And all became mired in wide-ranging corruption that brought their governments down. Is Britain, now in its 15th year of unbroken Conservative government, going the same way?

It has been all too readily assumed, as one expose about the abuse of public funds has followed another in recent weeks, that these were individual acts, the inevitable consequences of greed in a cynical, materialistic world. What has been missed is the underlying pattern of a full-scale government-business complex, now emerging in Britain on the scale that has afflicted other countries that have been through lengthy periods of single-party government.

There has already been extensive documentation of the link between company political donations and honours. Five per cent of companies donate to the Tory party, yet more than 50 per cent of the honours awarded to industrialists in the Thatcher-Major era - 100 out of 199 - have gone to directors of firms that contribute to Tory funds. Sir Hector Laing, former chairman of United Biscuits, received a peerage and his successor a knighthood. United Biscuits has been the Tory party's largest corporate donor over the 15 years since 1979, at pounds 1,004,000. The second largest donor, Hanson, which has given pounds 852,000, has had peerages awarded to its chairman, , Lord Hanson, and the chairman of its US subsidiary, Lord White. The third largest donor, Taylor Woodrow (pounds 837,000), has benefited from a peerage for its founder and a knighthood for its chairman. And so it goes on.

But companies expect more than gongs and peerages for their financial services. There is now evidence they are getting it on a scale previously unrecognised.

Quangos perform a triple function for the Tory government. Firstly, they act as a 'corrective' to growing Labour control of elected local authorities. Second, they offer an alternative power structure for the exercise of both national and local influence in key areas of public life. As privatisation, market testing, trusts, and hived-off executive agencies proliferate, so do the opportunities to exert real and direct power in hitherto unreachable areas of the public services.

Third, quangos have enormously multiplied the scope for patronage and reward. The latest Public Accounts Committee report, The Proper Conduct of Public Business, identified 1,444 quangos, although that excluded educational trusts. Within five years there will probably be 2,500, and by 1996 it is estimated they will control pounds 54bn of public funds, nearly a quarter of total government expenditure. The prospects for board members of quangos are enticing: large fees without the bother of elections and with little or no accountability outside the audit.

Membership of these quangos reads like a Tory nomenclatura. Payment varies from high levels (Lord Wyatt, chairman of the Tote, gets pounds 92,000; Lord Crickhowell, chairman of the National Rivers Authority, pounds 53,000, and Lord Belstead, chairman of the Parole Board, is on pounds 45,000) to the rather lower levels of NHS trust chairmen (up to pounds 19,000).

The mutuality of interest between appointment to quangos and the receipt of funds is striking from the financial accounts. Sir Christopher Benson, appointed to chair the Housing Corporation, is also chairman of Sun Alliance, which donated pounds 50,000 to the Tory party in 1992. Neil Clarke, chairman of British Coal, was formerly chief executive of Charter Consolidated, which gave pounds 26,000 to the Tories. Sir David Nickson, who until recently chaired Scottish Enterprise, is a non-executive director of three companies contributing to Tory funds, including pounds 70,000 from Scottish and Newcastle Breweries and pounds 53,000 from Hambros. And so on.

It is becoming clear, despite strenuous efforts to conceal it, that this individual form of patronage has been amply supplemented by a corporate dimension. The notorious pounds 234m Pergau hydro-electric power project in Malaysia, funded (possibly illegally) by ODA monies, was awarded without competitive tendering to Balfour Beatty and to Cementation. Similarly, in 1987 another large contract went, without tender, to a single British company, Biwater, including again a pounds 60m grant from the Aid & Trade Provision. Both deals were signed after personal intervention from Mrs Thatcher as Prime Minister.

Another pounds 250m of taxpayers' money has been allocated over the last 15 years to foreign aid projects which the National Audit Office or overseas aid pressure groups have assessed as unviable or poor value for money. The beneficiaries of these projects, all with substantial aid grants, have been firms known for their Tory party loyalties. These include a power station in Bangladesh built by GEC, a dam in Sri Lanka built by Balfour Beatty, two power stations in Sudan built by NEI, and two power stations in Burma built by John Brown Engineering.

The final element in this web of money politics is the Whitehall-industrial complex. Long years of single-party rule have blurred the dividing line between the civil service and party politics, as the Scott Inquiry is revealing; it seems that officials may have connived with ministers at concealing from Parliament the truth over arms to Iraq.

Moreover, both for ministers and mandarins the City-industry boardroom link has markedly intensified. Norman Tebbit privatised BT and is now a board member. Lord Walker privatised British Gas and is now on its board. Sir Norman Fowler privatised National Freight and is now on the board. Sir Peter Middleton, formerly Permanent Secretary to the Treasury, is deputy chairman of Barclays. And there are scores of other examples.

Of course, financial patronage by outside economic interests is not new in British political life. The left has regularly depended on trade union subscriptions and the right on big business bank-rolling their organisations and political campaigning. But in the past 10 years the barriers that separated the political and business spheres of influence, or at least limited their overlap, have been eroded. A kind of government-business osmosis has developed whereby the rhetoric of the market permeates the whole style, manner and relationships of government. Public values and private interest have become indistinguishable. In Japan it is called the 'black mist'.

Systemic corruption in the end destroyed the Liberal Democrat hegemony in Japan and the Christian Democrat dominance in Italy, and it played a major part in bringing down the Gaullists in France. The signs are that the corruption machine is about to engulf the Tories in Britain.

The author is Labour spokesman on public service and citizens' rights.

Hamish McRae is on holiday.