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Socialism Today 103 - September 2006

Honour & New Labour

RECENT CASH-for-honours allegations, which go to the top of Tony Blair’s ruling clique, underline the rank hypocrisy at the rotten heart of New Labour. An editorial in The Guardian (15 April) reckoned that a knighthood can be had for £10,000 and a peerage for £50,000. One of the cornerstones of Blair’s election campaign in 1997 was attacking the previous Tory government’s long record of sleaze. But the choking stench of cronyism pollutes the air over Westminster, as it has always done.

Police began investigating after the House of Lords appointments commission blocked four of Blair’s nominations for peerages because they had made undisclosed loans to his party. No charges have been made, but the first arrest came on 13 April when former government adviser, Des Smith, was taken in for questioning, under the 1925 Honours (Prevention of Abuses) Act. As a member of the Specialist Schools and Academies Trust (SSAT), his job had been to find wealthy sponsors for the ‘city academy programme’, which allows businesses to run schools, a central plank of New Labour’s privatisation of education.

But Smith bungled. He was caught on tape by an undercover reporter saying that people funding academies could expect honours, and that cabinet minister, David Miliband, was worth approaching for a knighthood. Miliband denied he had ever done such a thing, while Smith ‘categorically denies’ the allegations against him. As a result of the sting, however, Smith resigned from the SSAT in January.

Other examples of the incestuous relationship between big business and Blair’s regime have been unearthed. For instance, Weber Shandwick, a lobbying and PR firm, is being paid £2.5 million over two years by the Department for Education to promote academies to companies. It introduces prospective ‘investors’ to Lord Adonis, junior education minister, the architect of the academy scheme. The PR firm, whose chief executive, Colin Byrne, used to run New Labour’s press office, also acts as lobbyists for Coca-Cola, Nestlé, Microsoft and Lockheed Martin, the US arms manufacturer. (The Observer, 23 April)

So, a company which lobbies politicians on behalf of major multinationals is hired by Downing Street to drum up financial backing for one of the government’s flagship policies. This is not against the law. It is, however, very cosy. It reflects New Labour’s market culture: it’s a capitalist party, absolutely.

Property developer, Sir David Garrard, and stockbroker, Barry Townsley, two of the four blocked nominees, put £2.4 million and £1.5 million respectively into London academies. Another millionaire, Chai Patel, had been nominated for a peerage after donating £100,000 to New Labour and making a secret loan of £1.5 million.

On 12 July, Lord Levy (aka ‘Lord Cashpoint’) was arrested and questioned under the 1925 act, and the Political Parties, Elections and Referendums Act 2000. He is now out on police bail. The well-connected Michael Levy joined Blair’s circle in 1994. In the run up to the 1997 election, he set up a trust fund to finance Blair’s private office. Once the election was in the bag, Michael was given a peerage, becoming Lord Levy. As well as being Blair’s Middle East envoy, he was president of the SSAT.

Lord Cashpoint brokered £14 million in secret loans to New Labour in the run up to the 2005 election. It is alleged that Levy told Sir Gulam Noon to rewrite an application for a peerage to remove any reference to the £250,000 he had lent the party. The question haunting Blair and his inner circle is how high up the greasy pole the police investigation will reach.

Science minister, Lord Sainsbury, and Ian McCartney, former New Labour chairman, were among the 48 (Labour and Tory) questioned. Billionaire Sainsbury is New Labour’s biggest donor, giving £6.5 million from 2002-05 and more than £10 million since 1999. He was made a life peer just after New Labour’s victory in 1997, and became a minister in 1998. In April this year he publicly apologised for not disclosing an additional £2 million loan, but only after he had said that he had disclosed it.

The 1925 act makes it illegal to reward with a "title of honour" anyone who has given "any gift, money or valuable consideration". The New Labour government changed the rules so that donations to political parties over £5,000 have to be declared. Loans do not if they are made at commercial rates of interest. They can then be regarded as business transactions rather than gifts. According to The Observer (16 July), "… senior Labour figures always knew that many of the loans they received from millionaire backers would be converted to donations in the future". In essence, that is what is being investigated: were these loans or were they donations in disguise, and who knew about it.

All the establishment parties have been exploiting this loophole. In fact, Tory leader, David Cameron, refused to give police the names of lenders on the grounds of commercial confidentiality. The Tories have admitted that they got £16 million from 13 backers, the Liberal Democrats admit to £850,000.

At times, the scandal has uncovered some surreal, murky, even macabre, dealings: "Mr McCartney, the minister for trade, is a former party chairman who signed papers nominating three of Labour’s lenders for peerages while he recovered from a triple heart bypass in hospital. Claims that Mr McCartney was pressured to sign the documents when he was seriously ill have been strongly denied by the deputy prime minister, John Prescott". (Guardian Unlimited, 14 July)

Prescott has been criticised for failing to declare gifts he received at the ranch of Philip Anschutz, the US billionaire owner of the Millennium Dome in London. Anschutz wants to turn the dome into a giant casino. Prescott says that this is irrelevant because he is not involved in granting gambling licences. Although many fruitless hours could be spent trying to work out exactly what he does, Prescott is the deputy prime minister, a position which, it must be assumed, carries some influence in government circles.

To the capitalist ruling class, sleaze and corruption scandals can pose the danger of undermining support for the political establishment, which is already at an all-time low. They help to expose the true nature of the state: the superficial democracy hiding systemic corruption and exploitation. The extreme arrogance of the Blair regime, its anti-working class policies, and its belligerent, pro-US foreign policy, have exacerbated this process – illustrated by the fact that Labour won the election with the smallest proportion of the popular vote ever recorded.

The cash-for-honours scandal has also revived calls for the state funding of political parties. Working-class people should not have to fund hostile political parties through taxation. And workers’ organisations have to defend the right to fund campaigns and parties which represent their interests. Over 100 years ago, the trade unions were instrumental in setting up the Labour Party as their independent voice in parliament.

The political bankruptcy of New Labour means that unions should help develop a new, independent political organisation of the working class by supporting socialists and those campaigning against cutbacks in local and national elections. They should back initiatives such as the Campaign for a New Workers’ Party, including financially. They should not be giving money – paid for by the subs of rank-and-file union members – to a government which is sacking their members through privatising and cutting public services, which has maintained the repressive anti-union laws introduced by a series of Tory governments, and which is tied to the purse strings of big business.

Manny Thain


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