Honours list: The short journey from political donor to a seat in the House of Lords

The relation between big donors and parties is mutually beneficial, and a tendency to reward them with gongs inevitable

What price honours? Year after year, large party donors appear on the New Year honours list (Jack Sullivan/Alamy)

“This is pretty obvious stuff, really. They give them money and then what happens afterwards? They become peers, or whatever.” So a Liberal Democrat fund-raiser described to me a system that is supposed to reward the most deserving people in our society. Every year we have a new set of recipients of honours on 1 January but, as regular as clockwork, this and the other series of appointments made during the course of the year inevitably are littered with the names of people who have donated serious money to political parties. This week’s list promises to be no different.

The statistics speak for themselves. From 2006 to 2012, donors giving £50,000 or more were 6,000 times more likely to receive a peerage than the man on the street. For Tony Blair’s chief of staff Jonathan Powell, it’s “clearly true” that your chances of a gong are “greatly enhanced by donating to a political party”.

This sort of explicit deal is illegal – and the parties aren’t stupid enough to agree to this. All the fund-raisers I spoke to were clear that they rejected such advances. But in the 80 years since Maundy Gregory became the only person ever to be prosecuted for selling gongs, the correlation between cash and honours has remained strong.

Unless you believe that big donors are just very, very lucky, year after year, there has to be an underlying explanation. Disturbingly, those involved in this system admit that honours can be used to reward big donors. “Every one of the [donors] had done other things for the party”, says a former Liberal Democrat fund-raiser Lord Razzall.

But, he adds, “if they’d done just those other things and not given the money, chances are they probably wouldn’t have ended up in the House of Lords”. It’s the money that talks.

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“You have no idea the number of people who will suggest in return for a large donation they would like to be Lord X,” says Lord Razzall. “I would come across it once a month.” The parties are always desperate for money and so it’s no surprise that they will do their best to make the most of this desire. As such, they have become experienced in walking a fine line between the illegal act of selling honours and other, legal means of inducement.

As one former senior official of a major party told me, in his time there was a well-known system known as the “nod and a wink”. There was no explicit deal, but a big donor would be given an indication that he’d be “looked after”.

It’s the fund-raisers who are on the front line and unsurprisingly they trumpet the virtues of their benefactors. As Lord Razzall confirmed to me, “It makes a fund-raiser’s job easier” if a big donor is rewarded with an honour. “The Treasurer of the party will be lobbying the leader to put people in [the House of Lords] who he thinks will be valuable for fund-raising for the party, and people who will have given money.” Similarly during the “cash for honours” affair, it emerged that Lord Levy made a number of recommendations to Tony Blair, “sometimes successfully and sometimes not”.

There is another trick up the parties’ sleeves. They say that when someone gives, this is a sign of dedication to the cause. In one sense, it is true that donating is a form of commitment but this proves little. While you may have given because you believe in the party (as many donors do), the true motive can easily be one of self-interest. If money shows commitment and commitment leads to an honour, we might conclude it is money itself is what leads to an honour.

Meanwhile, the system of oversight leaves the parties free to do almost as they please. The House of Lords Appointments Commission is relatively powerless and accepts party leaders’ choices in all but the most exceptional circumstances. As a senior commission source explained to me, all it can do is “look at someone and say, ‘Is it conceivable that if they hadn’t given the £1m, they’d have been nominated for anything else? If the answer to that is yes, through they go’.”

Most worrying of all, there is no way of knowing if people have, in fact, been breaking the law by directly selling honours. Destruction is mutually assured, so any deal will stay secret. A parliamentary committee concluded a few years ago that any successful prosecution would be unlikely unless the culprits were caught “red-handed”, but still the law remains unchanged, allowing a free-for-all.

The sad truth is that the parties don’t relish their power but are compelled to use it. They all struggle to raise the funds they need to mount a proper general election campaign – or in some cases, to stay afloat at all – and so they need donors to fill the coffers. The prospect of an honour – even without a promise – undoubtedly helps in some cases. Politicians do not set out to push at the margins, but are forced into it by the reality of the situation.

Many donors do donate out of the best of intentions, for genuinely altruistic or ideological reasons. Similarly, people who have had made a fortune will often be well-placed to make an excellent contribution in the House of Lords. Likewise, many philanthropists who deserve recognition for their charity work will also happen to be donors – and they should not be excluded.

The trouble, though, is that, as Harold Wilson’s press secretary Joe Haines once said, “Taint one honour and all are tainted.” The honours list is like Groundhog Day, with the big donors appearing time after time – and it seems that some of them are only there because the money has tipped the balance in their favour.