A wholesale traffic in dishonourable power

WHO GOVERNS Britain, Philip Toynbee once asked, and gave the reply: the governing class. Under John Major's premiership, the governing class - whether represented by John Birt in the BBC, Norman Lamont in the Treasury, or the recipients of political honours - seems to have been granted the right to apply different standards than are applied to the rest of us. Far from ensuring the application of common standards, John Major continues to enjoy, and may even have increased, the patronage accruing to the prime minister of the day.

He has done this in two ways: first, by continuing to reward with knighthoods the private-sector industrialists whose companies have given money to the Conservative Party; and second, by disproportionately increasing the number of Conservatives in the House of Lords, so distorting the main purpose of the Life Peerages Act 1958.

Under Margaret Thatcher, according to figures provided by the Labour Research Department, of 174 private-sector industrialists given peerages or knighthoods, 85 were connected with companies that had given a total of pounds 13.6m to the Conservative Party or to front organisations laundering money for the party. Under Mr Major, an even higher proportion - 13 out of 17 knighthoods awarded to private-sector industrialists - have been given to people connected with companies that have donated more than pounds 3m to the Conservatives since 1979.

The Labour Party, too, has not hesitated to use the honours system to reward financial contributors. A number of the dubious characters honoured in Harold Wilson's resignation list in 1976 had helped to pay the expenses of his private office during the opposition years between 1970 and 1974.

Individual trafficking in honours has of course been illegal since the Honours (Prevention of Abuses) Act 1925. This was passed to prevent any repetition of the sale of honours that occurred under Lloyd George's government, through the auspices of his agent, Maundy Gregory, called by Lord Birkenhead 'the Cheerful Giver'.

Individual trafficking, however, seems to have been replaced by a system of bulk purchase. Conservatives object, and perhaps rightly so,

to the political levy by means of which members of affiliated trade unions contribute to the Labour Party, unless they take the trouble to opt out. But is the system by which contributors to the Conservative Party are rewarded with honours anything more than a rich man's political levy?

Party leaders cannot be blamed for using the honours system in this way. It is the inevitable consequence of a structure of party funding dependent upon the whims of company chairmen or the inertia of individual trade unionists. The solution, applied long ago in most Continental democracies, is the public funding of political parties.

This would have two beneficial consequences. First, companies can become genuinely apolitical, with peerages and knighthoods being awarded to industrialists on the basis of genuine merit rather than on the size of their political contributions. Second, Labour would no longer be dependent on the trade unions for funds. This would enable it to dispense with the block vote and become a genuine social democratic party like its Continental counterparts.

The second way in which Mr Major has ensured that the governing class continues to receive its share of benefits is by continuing to appoint life peerages disproportionately to the benefit of the Conservative Party. The Life Peerages Act of 1958 was intended, in the words of Lord Home, to modify the hereditary principle 'so as to enable the socialist point of view to be put more effectively from the other side of the House'.

Because the Lords was so dominated by Tory hereditary peers, it would have atrophied unless a leavening of Liberal and 'socialist' peers could be added. The implication then was that life peers would be apppointed primarily from the Liberal and Labour parties.

Since Edward Heath's premiership, however, Conservative prime ministers have used the Act to increase disproportionately Conservative representation in the Lords.

Labour prime ministers - Mr Wilson and James Callaghan - did appoint a disproportionate number of Labour peers. But they had more excuse, in that they sought to redress an unfavourable balance. Even this has been insufficient to combat the Conservative bias of the House of Lords.

Thus the 1958 Act, far from benefiting Labour, has become another instrument of prime ministerial patronage. The result is that we are perhaps the only democracy in the world in which the party composition of one of the chambers of the legislature is dependent on the wishes of the executive.

The Political Honours Scrutiny Committee, which exists to ensure the suitability of individual recipients of honours, is unable to make recommendations concerning party balance in the House of Lords. It ought not, however, to be a matter of overwhelming difficulty for the parties to agree on the proportions of peers to be created, on the same basis, perhaps, as the ratio of party political broadcasts.

The scrutiny committee could then ensure that this party balance was observed, or else a new committee might be created for this purpose. The question is, however, whether Mr Major's desire to create a classless society is strong enough to persuade him to relinquish the patronage that goes with his office.

The fox, it has been said, knows many things, but the hedgehog knows one big thing. By contrast with Baroness Thatcher - a hedgehog, whose reforming broom swept ruthlessly through so many areas of British life - Mr Major is a fox. He is a compulsive tidier, Mrs Mopp to his predecessor's Boudicca. Yet the real fox, although he may know only little things, can raise big issues without realising it. So it is with the recent 'reform' of the honours system, which has, inadvertently, raised a large constitutional question.

In Britain, the financing of political parties and the awarding of honours - functions that in other democracies are performed constitutionally - remain the prerogative of the political parties and their leaders. It is, indeed, our rigid and ossified party system that prevents the gap between the governing class and the governed from being bridged.

It is time to bring our party system under constitutional control so that there is some further reference point over and above the interests of the party leaders. That, indeed, is the fundamental case for a written British constitution.

The author is Reader in Government, Oxford University, and a Fellow of Brasenose College.

Andrew Marr will be assessing the Government's first year in office tomorrow.