Friday, March 17, 2006


Loans for Honours and Sod's law Strike Blair

Just when you fall over in the kitchen you don't want the wall cupboard to come carshing down on top of you. Sod's Law, of course, says it will. And so Tony finds he's moved on from the debacle of the education vote to be hit smartly by the disaster of the loans scandal. And it's not just the rightwing press, this time it's the Party Treasurer, sainted Jack Dromey of Grunwick fame, who just happens to be married to a government minister, who is pointing the finger.

What has happened? It seems substantial loans- at 2 per cent above the base rate- from rich Labour sympathisers-maybe £10 million in all- have flowed into the party but it seems Dromey knew nothing about them. In addition it seems three of the people lending money were also up for honours although two of them have since withdrawn themselves from such consideration.

What questions arise from this?

a) Who fixed up the loans? The answer here could be Lord Levy, Tony's tennis partner and ace fundraiser whose dinners for fat cats generally seem to end with the cheque book being passed around.

b) Where did the money go? If Dromey does not know, this is a bit worrying. One assumes it went into the pot to pay the £20 odd million big parties need to survive each year. But if it did, Dromey would surely know about it and he didn't.

c)Why was the process so secretive? This is also worrying. People don't usually seek to exclude light unless darkness favours what they are up to. It seems this funding operation was restricted to Blair, Levy and the donors concerned.

d)Was it illegal? No, all parties receive loans, often on a commercial basis. But it seems Labour's bank will no longer fund its overdraft and so other sources were pursued as the aprty is heavily in debt.

e) Were the loans given in exchange for honours? It looks a bit like it, though this is being vehemently denied. The Guardian today names the top twenty donors to Labour and, surprisingly, not all of them have received honours. Two, one of them actor Patrick Stewart,(who gave £120,000) recieved a measly OBE, something which both recipients might have got anyway; three received CBEs, again, nothing special about them in my view; Seven received knighthoods, although two of them are also currently nominated for peerages; three received peerages but, also surprising, five got nothing at all. It seems one cannot say bunging Blair a million will buy you that coronet. Of course it may help, and a knighthood seems a surer bet, but it can in no way be guaranteed. At least on the basis of what we know so far.

f) When were the loans due to be repaid? We don't know but Lord Haskins, himself a big donor so he should know, said on Radio 4 this morning that he reckoned that such loans would eventually elide into outright gifts. Their initial loan status was merely to get around the rule about declaring gifts.

Has Blair defused it with his instant reforms? Maybe. He acted very quickly-suspiciously so say some, as if this was a pre-arranged 'Plan B', to make noises about state funding and making loans as transparent as gifts. Cameron has followed suit, illustrating that all the parties are in something of the same boat on this problem. But the damage has been done- Labour seems to be floating on a sea of sleaze, just like Major towards the end. It has almost certainly damaged Brown too but he might be able to offer himself as the puritan son of the Manse who will come in a scourge the Augean Stables of Blair's administration. It's been a another bad week for Labour and this issue has some way to run yet.

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