New Labour sleaze merchants

Capitalism inevitably means corruption, says Eddie Ford

In recent weeks New Labour has been dogged by allegations of sleaze - primarily the 'cash-for-peerages' scandal. All this escalated at the weekend when Jack Dromey, nominally the Labour Party's treasurer, angrily revealed that neither he - nor indeed any other elected official on the national executive committee - had been informed about the fact that before the last general election £14 million in loans from wealthy individuals had being covertly channelled into the party by Tony Blair's close confidante, Lord Levy (or 'Lord Cashpoint'). In turn, these individuals were recommended for peerages by Blair.

Unsurprisingly, Dromey's revelation caused uproar - with senior party members muttering about the "disrespect", if not contempt, that Blair so demonstrably displayed towards the NEC and the party as a whole. Seeing how the party spent almost £17 million on the general election campaign, logic suggests that enormous chunk of this expenditure was actually financed from these secret loans. Some see the interests of Gordon Brown behind this revelation. Dromey is a top TGWU bureaucrat and it is certainly true that wide sections of trade union officialdom want to see Brown moving from No11 to No10 Downing Street sooner rather than latter.

Not that Labour Party sleaze is a new phenomenon, of course. Ramsay MacDonald loved mixing in the company of the aristocracy and the captains of industry. Famously he received a Daimler car as a present from a biscuit company. But with New Labour there has been a qualitative development. Neoliberalism means that there is ever closer interweaving between the state and capital. Given the parasitism of finance capital that can only result in endemic corruption. Instead of private companies bringing the supposed efficiency of the market there comes cronyism, a further hollowing out of democracy and innumerable bungs and backhanders.

The increased involvement of big business with the Labour Party and the effects on its politics have been well documented in recent years (eg, George Monbiot's Captive state: the corporate takeover of Britain and Dave Osler's Labour Party plc). Such works have exposed the myriad financial and personal connections between New Labour and big business. Think about Bernie Eccleston, Railtrack, the air traffic control and London Underground privatisations, PFI hospitals, education action zones, blind trusts, cash for access, cash for passports, not to mention peerages for donors.

In many respects, the sleaze associated with the John Major years looks a bit tame compared to life under Blair. Not surprisingly popular disenchantment has reached new depths - again inevitable with finance capitalism, given the absence of a viable working class alternative. Fewer and fewer can be expected to maintain membership of any mainstream party and fewer and fewer will vote. Politics therefore becomes the preserve of careerists who, lacking a mass membership base, must turn to other means of financing their bulky, hellishly expensive and top-heavy electoral machines.

Communists are hardly fans of Clare 'bomber' Short - a mouthy hypocrite who in the past has engaged in disgraceful red-baiting. However, we find it hard to disagree with her diagnosis of the current situation: "What we're getting is a bubble of these clever people who've captured the state, don't need a party, don't need any members, don't have turbulent people having opinions, who then get money from rich people and run our state without consulting anyone else."

The Labour Representation Committee was similarly troubled, and through its chair, John McDonnell, issued a terse press release calling upon the Labour Party NEC to commission a "fully independent investigation" and an emergency recall conference of the party (March 16).

Much more embarrassingly for the Blairites (after all, who cares what mere members, officials and representatives of the Labour Party think?), a police investigation has been launched as to whether the undisclosed loans violated the Honours (Prevention of Abuses) Act 1925. This little known and little used act - introduced after Lloyd George was found to have liberally dished out peerages in return for cash donations - makes illegal "any gift, money or valuable consideration as an inducement or reward for procuring or assisting or endeavouring to procure the grant of a dignity or title of honour". Anyone found guilty could face imprisonment for up to two years or an unlimited fine.

Revealing New Labour's arrogance to the full, the instinctive response of Charles Clarke - the permanently bullying home secretary - was not to show the appropriate amount of contrition but instead to shoot the messenger. Thus, Clarke offered the opinion that that he had "serious questions about Jack Dromey's capacity" as Labour treasurer, on the grounds that if he did not know about the loans then "you have to wonder how well he was doing his work". The fact that he was deliberately bypassed by Blair seems to have escaped Clarke's attention.

Now involved in a simmering civil war with the Blairite coterie, the NEC has stated the party will bring in "new rules" and henceforth publicly disclose all new loans. Furthermore, the NEC will claw back its "rightful responsibility" for all the party's funding in order to make it more "transparent". The executive also ordered a "review" of events, followed by a report "covering lessons to learn for the future" with a "series of revised processes and protocols".

Almost miraculously, 'transparency' is suddenly all the rage. Hence David Cameron announced his own 'anti-sleaze package'. This included a 25% cut in the general election spending limit to £15 million (£20 million is the current limit) and a possible total ban on loans to political parties, as opposed to donations. Significantly, however, the Tories refuse to reveal who gave them loans for the 2005 general election. Apparently, a 'trivial question'. Inevitably, the whole issue of state funding of political parties has come to the fore - with Oliver Letwin, for one, coming out in favour of such a system.

Many countries place a cap on donations and/or have a certain measure of state funding. For instance, in France a ban on contributions from corporations and trade unions has been in effect since 1995. Individuals can donate up to a tax-deductible €4,600 (£3,000) per year to candidates, with state funding amounted to approximately €80 million (£55.5 million) by 2002. As for the Republic of Ireland, donations to parties are capped at a maximum of €6,348 (£4,000) from any one donor in any given year, while in Germany state funding of parties in 2003 amounted to approximately €300 million (£208 million). Even the US, the land of free enterprise, provides $20 million for each main presidential candidate and imposes limits on individual donations to political parties.

But when all is said and done, all these limits, caps, restrictions and laws guaranteeing transparency amount to very little. Because the capitalist class is an extreme minority in society, it must, it does, find ways round every such law and every such regulation. Loans instead of donations illustrates what is a general characteristic. Other means to extend the influence of big business include not only fat brown envelopes. There is the funding of political assistants, sponsorship deals, opera and sports tickets, etc, etc. Money is used to seduce, money is used tame and eventually money calls the tune. State funding makes no difference. Political machines simply grow bigger and bigger and with that so does their appitite.

Communists oppose the state funding of political parties. Effectively, it gives the state the right to police working class organisations - and to decree what is a 'legitimate' political party and what is not. Naturally, to receive state funding all sort of strings would be attached - like a declared commitment to 'proper' parliamentary politics and to respect the 'rule of law'.