The big danger in the new political party donation rules

If you live in the UK, you won't have failed to notice that Tony Blair's premiership may finally have been brought to a close thanks to the revelation that several businessmen had secretly donated £14 million to the Labour Party, and then popped up on the list to be given peerages.

This in itself was a story. Then it got really interesting when the Labour Party treasurer – clearly furious – disclosed that he knew nothing about the loans. Tony Blair was forced to reveal that, basically, Number 10 had been taking secret loans. This fits in very neatly with one of the key charges laid down against the government at the moment – that Number 10 is effectively running everything and ignoring everyone else, thereby undermining all the institutions that this country has spent thousands of years building up.

Then it turns out that Tony Blair's man, Lord Levy, had actually asked the businessmen to give the money as loans rather than donations. Why? Because donations have to be disclosed, and “loans” don't. The clear intention was that the repayment of the loans would be waived at the end of the year, so Number 10 gets the money and no one has to know about it.

In return, the businessmen get the prime minister's ear and a peerage into the bargain. Of course this is all denied outright and there is no proof for it but then you have to ask the question: what would constitute proof? If this *were* going on, how would it look, what would be in place. Approach it from that angle and, well, that is exactly what is going on. It all stinks to high heaven.

Inquiry

So now the Commons Public Administration Committee has launched an inquiry into the affair and is expected to come with new rules that enable political parties to get hold of vital money but reduce the subsequent influence that money may bring on policy and honours.

And here is my real, real concern: if MPs aren't extraordinarily careful we are going to end up with the American model where so-called soft money is there in abundance and where, most dangerously, companies become large and public donators.

The reason why we all think this current saga stinks is because it was individuals giving the money. There's something bent about one man personally handing over millions of pounds. For one, 99.9 percent of people in the country couldn't afford to give the Labour Party one-and-a-half thousand pounds, let alone one-and-a-half million. But mostly the question is: don't you have something better to spend it on?

The only answer is that they are getting political favours – which of course they do. Seats on committees, honours, small tweaks in legislation – all the dodgy political dealing that has existed time immemorial.

The individual nature of the “loans” today caused one of the businessmen, Rod Aldridge, the chairman of Capita to stand down because he said “there have been suggestions that this loan has resulted in the group being awarded government contracts. This is entirely spurious”. Well of course there have been bloody suggestions! Capita – or Crapita as Private Eye calls it – has been awarded government contract after government contract, and more often than not it has completely cocked it up, and gone way over budget. And then it gets another one.

People have been looking into possible corruption with Capita and the government for ages because of this insane situation. What they didn't know of course was that its chairman had secretly donated Number 10 personally, millions of pounds.

But would there have been this fuss if it has been Capita and not Eldridge that had given the money, openly?

The answer is No. It would have been an open donation, and the government would be able to argue that each contract had been decided in an open, transparent and independent bidding process. That would be bollocks of course, but you wouldn't be able to show otherwise.

What everyone has learnt from this is that individuals can't give money. But just you wait, this time next year we will see the donations by companies skyrocket. It will be the exact same process underneath – men run companies and make company decisions, not legal company formations.

If one company makes a donation and wins a contract, other companies will make donations just to make sure. And it will in the government's interests to make those companies win contracts so more companies donate. And starved for cash, political parties will be forced to take this money and what it entails. Soon, politicians will simply get used to it.

The result is that big companies run the show, that big companies get massive political influence – which is absolutely the last thing we need.

If this happens, we will all be harkening back to the day when it was just a matter of giving a peerage to a rich man.