Father knew Lloyd George

With another senior Labour figure arrested over cash for honours and a cover-up alleged, the criminal investigation is drawing Blair into its net. But what lessons can we draw about democracy, accountability and the system of capital itself? Jim Moody examines the issues

Al Capone was eventually brought before the courts for income tax evasion, not the many murders for which he was responsible. So it might be for prime minister Tony Blair MP, who could soon be facing criminal charges in the 'cash for peerages' row rather than for his war crimes in Iraq. With the arrest of Labour's chief fundraiser Lord Levy for the second time on January 30, following the detention of Blair aide Ruth Turner two weeks earlier, and allegations of a cover-up abounding, it is far from fanciful to suggest that Blair himself could well face charges.

In 1922, the coalition (Liberal-Tory) government prime minister, Lloyd George, was embroiled in scandal. Although party financing through selling honours had been going on for some time, the deals were made out of the public gaze, often in the gentlemen's clubs. But under Lloyd George, whose rump Coalition Liberals needed money fast after the Asquith Liberals broke away, the undertaking became larger and more brazen. Lloyd George's underling, MI5 agent Arthur Maundy Gregory, even touted honours in official government letters quoting openly a tariff: a knighthood for £10,000, a baronetcy for £30,000 and a peerage for upwards of £50,000.

In this way, from December 1916 to July 1922 1,500 knighthoods and 91 peerages were awarded, twice as many as in the previous 20 years. For those not quite rich enough to afford a knighthood, Gregory invented the Order of the British Empire: 25,000 OBEs were doled out in four years. In what must have seemed a neat trick, Fleet Street got around 50 'free' honours to keep the press sweet and quiet about the whole thing, including newspaper proprietors William Astor (Viscount Astor), Maxwell Aitken (Baron Beaverbrook), Alfred Harmsworth (Viscount Northcliffe), and his brother, Harold Sidney Harmsworth (Viscount Rothermere). It worked for a while.

At the time that the scandal broke in the second half of 1922, a scurrilous musical hall song summed it up rather well: "Lloyd George knew my father, father knew Lloyd George" (to the tune of 'Land of hope and glory'). Father, of course, was someone with the wherewithal to pay for a knighthood or peerage. Driven by the Tories for their own purposes, once the entrepreneurial campaign became public, a royal commission followed (though only to deal with future actions, not past corruption), and parliament established a political honours scrutiny committee and passed the Honours (Preventions of Abuses) Act 1925. This is the act that makes it an offence to give or accept "any gift, money or valuable consideration" in return for granting an honour.

Labour Party finances have been in a desperate state for some time, what with union contributions plummeting in reaction to New Labour policies. After all, why would anyone pay to get beaten up?

So Blair and his closest minions devised the grand wheeze. Instead of aspirants to ermine crudely buying into the upper house, which the 1925 act had made illegal, they could instead just lend the Labour Party money on low or zero rates of interest, perhaps even until they forgot they had lent it. This, our lawyerly prime minister imagined, would solve the problem. Strangely, though, only a very few got to know about this loan arrangement, not including the Labour Party's treasurer, Jack Dromey (who, when he did find out, was incandescent). Jack's being married to a minister, Harriet Harman QC, had obviously been of no use whatsoever.

But hang on: if Blair's plan was so licit and legal, then surely there could be no harm in its being public knowledge. As we all know, however, openness is not the blessed Blair way, so the cunning scheme remained under wraps. Maybe learned counsel among these schemers really did believe that the 1925 act's "valuable consideration" did not mean what it said.

In late 2005, Blair's recommendation that four big lenders should get peerages was blocked by the House of Lords appointment commission. Not long after, it emerged that this quartet of oligarchs had indeed loaned large amounts of money to the Labour Party, at the suggestion of Labour fundraiser Lord Levy. And without much delay, the incident was then referred to the Metropolitan Police by Scottish National Party MP Angus MacNeil as a breach of the law. Although a dozen wealthy lenders had by then made large loans to the Labour Party, some commentators have suggested that Blair only put up four for peerages in the first instance in what was a pathetic attempt to prevent exactly the blocking move that occurred.

There has indeed always been a thin dividing line between standard, legal practices and out and out corruption. How does capital get its profits, after all? By legalised theft. No doubt the words 'We'll see you all right' never drop from any party official's lips when touting for money from rich political friends. But the political commitment represented by a donor 'lending' thousands could, with more than a pinch of salt, be interpreted as exactly the kind of loyalty needed to become a so-called working peer in the House of Lords. Currying favour with those wielding power in the political world is how aspirant bourgeois players understand things work. That is an expression of the bankruptcy and corruption of the current system.

What is represented by the legal fix that Blair has got himself into arises exactly from the kind of exchange of favours and networking by the elite of capitalism that extreme democrats detest. Backstairs manoeuvres may be their kind of politics, but it is not ours. Working class partisans want instead all patronage to be abolished. Lest we forget: the morality and ethics of bourgeois politicians is just so much hot air, intended more to bamboozle the rest of us into inaction against their kind. The more 'honest' politicians might even, during a claret-induced dinner party bout of effusiveness, tell us that is how politics is: down, dirty and corrupt. It is our job as revolutionaries to expose this kind of lower-level claptrap too. For we intend to forge a power way above these snouts-in-trough political midgets: the real political power of the overwhelming majority, the working class.

That means accountability. After all, what accountability is there in the process of patronage that has traditionally allowed prime ministers to appoint legislators for life without even a pretence of transparency? That is what has passed for perfectly acceptable, 'non-corrupt' bourgeois practice.

Obviously, in recent years there have been moves to give the House of Lords at least a veneer of democracy and no doubt there will be calls for further reform. However, communists are opposed to any second chamber, even one that is fully elected. Such a setup illustrates the liberal bourgeois notion that there needs to be a system of 'checks and balances' to counter 'unwise' measures enacted by elected representatives. In effect, its actions are checks and balances against democracy.

English and then British parliamentarism developed especially under capitalism by allowing a division of labour. Aristocrats were to run political and governmental affairs, while the bourgeoisie in the main got on with making profits in business. This classic compromise, beneficial to both, changed with the extension of the franchise (itself given impetus by Chartist and then women's suffrage agitation) so that the mechanism by which House of Lords acts in synchronicity with the House of Commons developed. And overseeing the whole shebang is the sovereign, topping off the confection that is the UK constitutional monarchy state.

Last weekend The Sunday Telegraph claimed that "Detectives have discovered a hand-written note from Tony Blair among new evidence that has widened significantly the cash-for-honours investigation. It is the first time that the 'paper trail' uncovered by Scotland Yard has led directly to the prime minister." Levy, Turner and multi-millionaire entrepreneur Sir Christopher Evans, the third person to have been arrested and released during the police enquiry, have denied acting illegally, although all three are still in the eye of this particular storm. Blair "is increasingly likely to be called as a witness if charges are brought against senior aides" (January 28).

Early this week, Downing Street blushes were not spared when it was revealed that email software employing military-level encryption has been in regular use. This followed earlier denials that Scotland Yard had indeed uncovered this secret second computer system - from which, allegedly, a series of emails relating to cash for honours had been deleted. So, while the police are gathering evidence, trying to follow an email trail, this might not exactly be helping their investigations into whether or not there has been an offence under the Honours (Preventions of Abuses) Act.

This prompted Angus MacNeil, the SNP MP who triggered the police investigation in the first place, to renew his attack: "This makes it even more important that the prime minister tells us whether his staff have been using a second email system and, if so, was it this Labour system? And have they given the police full cooperation on this - have they told them about all the different computer systems?"

Back in 1838, the People's Charter, which gave birth to the great Chartist movement of the 1840s, called for the annual election of parliament, the only one of its demands still to be achieved. This still forms part of the communist minimum programme, along with the call for elected representatives to take the pay equivalent to that of a skilled worker and to be instantly recallable by their electors. Similar measures of accountability were previously supported by the Socialist Workers Party, but the SWP's popular front turn in Respect has caused it to defer to the wishes of George Galloway and in practice oppose them.

But it is no surprise that such issues of principle can be so easily dropped. After all, matters of democracy and high politics are regarded by the economistic left as the preserve of Labour, Tory and Liberal Democrat politicians - nothing for us workers to worry about. We communists, on the other hand, stress extreme democracy and raise demands that go to the heart of the very existence of the UK monarchical state.