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A level-headed guide to the Levy affair

Here are a few facts the police won’t be telling us about the background and consequences of the 'peerages for loans' scandal.

Brendan O'Neill

Brendan O'Neill
chief political writer

Topics Politics

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Britain’s political and media worlds are in a spin over the latest shenanigans in the ‘peerages for loans’ scandal. The arrest and interrogation of Lord Levy – prime minister Tony Blair’s personal fundraiser, confidant, Middle East envoy and tennis partner – has sent ripples through the chattering classes. There are even rumours that Blair will be picked up by the cops next. After a decade of anaemic political scandals involving cash in brown envelopes, extramarital flings and mortgage loanzzz, some in the media seem to be licking their lips at the prospect that, with Levy’s arrest, we finally have a scandal of Italian proportions.

Levy is implicated in the ‘peerages for loans’ debacle. The name says it all: bigwigs in Blair’s Labour Party have allegedly been coaxing wealthy businesspeople to part with their cash in return for titles such as Sir, Lord or Lady and in some instances for a seat in the unelected second chamber, the House of Lords. It has been alleged that in the run-up to the General Election last year, Levy was involved in masterminding the raising of £14million in secret, undeclared loans from Labour-supporting businessmen, four of whom were subsequently proposed for peerages by Levy’s best mate, Blair. Exchanging peerages for money, gifts or any other kind of financial favour is against the law.

So what’s it all about? Here, we look behind the hysterical headlines, and explore how the ‘peerages for loans’ scandal is a product of a political crisis facing all of the mainstream parties – and how the response to the scandal (from the media and the heavy-handed police in particular) is likely only to degrade democracy and debate further still.

Why is the Labour Party running out of money?

The ‘peerages for loans’ scandal stems from the fact that Labour is cash-strapped. The party is rumoured to be in debt to the tune of £20million; it was the dawning realisation that the coffers were pretty much empty that forced Blair and his inner circle to ask their well-off mates to stump up enough millions to cover the General Election campaign last year. Blair and Co’s financial crisis is a consequence of a broader political crisis: the death of politics.

Over the past 10 to 15 years, there has been a drawn-out demise of political parties and movements in Britain and elsewhere in the Western world. The end of the old left-right divide has left politics as an empty sham, with little passionate debate over competing principles or visions. Parties, trade unions and other organisations have become shadows of their former selves, with falling membership rates and declining grassroots support. Political leaders, lacking large or dynamic party organisations through which they might raise both money and support, are forced to look elsewhere for their funding – preferably from big names with big money. Blair’s reliance on rich pals shows the extent to which the political parties have declined as mass movements.

Why do the parties need so much money?

The irony is that the same process of political decline that means the parties have less money than in the past also means they need more of it than ever before. With the demise of party activism and core voter constituencies, the parties have become increasingly dependent on media stunts and advertising for their political campaigns – and that can be expensive.

The Labour Party spent £17.9million on its 2005 General Election campaign, far more than the £10.9million it spent during the 2001 election. Its biggest bill in 2005 was for advertising, which accounted for 29 per cent of its spending. The Tories spent £18million on their election campaign in 2005, their highest-ever campaign budget by a long shot. £8million went on advertising: £280,000 on one cinema advert, £111,000 on ‘women’s press coverage’, and £120,000 on coming up with that silly campaign slogan, ‘Are you thinking what we’re thinking?’ More centrally, the government’s advertising bill rocketed from £40million in 1997 to £138million in 2005. Spectacles and ads have become a substitute for political debate and engagement, part of a desperate attempt by the parties to connect with distant and disaffected voters. Their current financial crises are caused by the fact that they are getting less money from fewer members, but need more money for their media stunts.

What’s new about the wealthy ‘buying’ peerages?

Not much, actually. There may be a law banning the sale of peerages – the Honours (Prevention of Abuses) Act of 1925 – but paying or brownnosing your way into the House of Lords has been going on for ages. The newspaper proprietor Lord Northcliffe – who in the early twentieth century founded the Daily Mirror and took over the Observer and The Times – once declared: ‘When I want a peerage, I shall buy it like an honest man.’ It is against the law to hand over bags of cash for a title (as they used to do in the past); instead there tends to be a wink and a nod behind the scenes to indicate who should be put up for a peerage. They haven’t outlawed ‘peerages for winks and nods’ – yet.

Today’s ‘peerages for loans’ scandal focuses on four individuals who were allegedly promoted for peerages after donating money last year, but there is a broader link between those who donate to Labour and later become peers. Since 2001 Labour has bestowed honours on 12 of the 14 individuals who donated more than £200,000, and on 17 of the 22 who donated more than £100,000; three quarters of those who have donated over £50,000 have been honoured in some way, too. It has long been the case that political parties, from the Liberals in the 1920s to the Tories in the 1980s and Labour today, have rewarded generous individuals with some kind of title. Why do you think Levy, a multimillionaire who has donated loads to Labour, became a Lord in 1997? It wasn’t for being Blair’s tennis partner…. Those currently reeling in shock at revelations that Levy and Blair may have offered peerages for loans should get a grip: this kind of thing has always happened.

What’s wrong with parties rewarding their supporters?

Nothing – is there? Many organisations, from charities to trade unions, reward their big donors by making them honorary chairs or directors or ‘golden members’ or whatever. And it is in the nature of party politics, surely, that leaders do favours for those who fund and maintain their party organisation. Providing financial funding has long been a way of expressing your political support and conviction.

Some have claimed that the central problem with the ‘peerages for loans’ scandal is that individuals have been able to buy influence. Simply because they have more money than Joe Public they can be fast-tracked to a position of power in the House of Lords. That is true, and it is galling that the trend towards oligarchic politics in Britain has been pushed further by Blair and others cosying up to wealthy wannabe peers. But this is fundamentally a problem caused by the existence of the House of Lords itself, rather than by any especially sinister antics on the part of Blair or Levy. How else is somebody supposed to get into the Lords other than by paying for it in some way? It is precisely the anti-democratic nature of the Lords, the fact that it is an unelected second chamber that keeps a check on the elected House of Commons, that means seats can be bought and sold – or ‘granted’ for ‘political services’, to use today’s language – between friends and acquaintances in high places.

The ‘peerages for loans’ scandal is a symptom of the undemocratic nature of Britain’s peerage system, not its cause. We need a political campaign for the abolition of the House of Lords rather than a police campaign to rifle through the personal belongings of some greasy Lord or other.

Should parties be state-funded instead?

All of the mainstream party leaders – Labour’s Tony Blair, the Tories’ David Cameron and the Lib Dems’ Menzies Campbell – are said to favour some kind of state funding for parties, as a way of alleviating their financial crises and ensuring there are no more financial scandals in the future. But why should taxpayers fund political parties? None of these parties has a God-given right to exist, and if they cannot raise enough money or support to keep going, then they should be left to wither away.

What’s more, state funding would likely make the mainstream parties even more spineless and vision-free than they already are. Parties are supposed to be partisan (hence the name); they are meant to put forward their own views and to argue the toss with other parties that disagree with them. State funding would further transform the parties into apolitical managers, making them into kind of Lottery-funded charities rather than organisations with interests, arguments and an agenda. As Mick Hume has argued on spiked: ‘Politicians already act more like glorified state bureaucrats than inspiring popular leaders. To make their organisations more dependent on state patronage than active support would formalise their status as civil servants rather than servants of the people.’ (See State funding is no solution for bankrupt political parties.)

Isn’t there more to politics than sleaze?

You would think so. But another consequence of the decline of political debate is the rise of an obsession with politicians’ personality and behaviour. That is why, during the ‘peerages for loans’ scandal, the media and police have focused myopically on the alleged flaws and criminal behaviour of one Lord Levy, rather than there being any kind of genuine political debate about peerages, the Lords and the state of politics today.

There has been, in recent years, a shift from clashes over political beliefs and actions to spats over individual discretions and bad behaviour. This has happened across the West. As one book on American politics notes: ‘Today’s tactics of political combat – revelation, investigation and prosecution – have moved to the centre stage once occupied by electoral mobilisation.’ On both sides of the Atlantic, scandal has become an actual mode of politics, where you try to oust your opponents by exposing their private lives rather than challenging their public, political views. In this sense, Labour has no one but itself to blame for the ‘peerages for loans’ scandal – after all, it came to power on a ticket of challenging Tory corruption and promised that it would be, in Blair’s words, ‘whiter than white’. Having elevated good personal behaviour as the prime measurement of a politician’s worth, Labour cannot now be surprised to find itself being hammered over Levy’s and others’ alleged antics.

Will the police investigation into this scandal make politics better?

No – in fact it will help further to degrade democracy and debate. Scotland Yard’s involvement in this affair shows that there is no political crisis so bad that it cannot be made worse by the involvement of police officers. Indeed, the police’s seeming determination to chase the alleged culprits behind ‘peerages for loans’, coupled by the attempt by certain sections of the media to use this issue to push Blair over the edge, shows that the response to the scandal has been far worse than anything contained in the scandal itself.

The argument seems to be that politics is a dirty business, which needs to be monitored by the police and other jumped-up unelected outfits. What we are witnessing is effectively the creeping criminalisation of political belief and conviction, where even donating to a party can be tarnished as something suspect and sinister. This can only heighten cynicism about politics, and make politicians even more cautious and guarded than they are already these days. The police should mind their own business, and the media should inject some perspective – both practical and political – into their discussions of the ‘peerages for loans’ debacle.

Visit Brendan O’Neill’s website here.

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Topics Politics

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