Background
1. This Committee has a longstanding interest in
the administration of the honours system, the award of peerages
and standards of conduct in public life. In 2004 our predecessor
committee conducted a major inquiry into the honours system.[1]
In 2005, we embarked on a wider inquiry into the entire field
of ethics and standards in public life.[2]
Subsequently on 14 March 2006, partly in response to allegations
concerning the possible offer of peerages in exchange for financial
assistance to political parties, we announced that, as part of
our inquiry into ethics and standards, we would investigate whether
the system of scrutiny for propriety of honours and peerages for
political service was satisfactory.
2. Following the subsequent announcement by the Metropolitan
Police that they were to conduct a criminal investigation into
the allegations, we met privately with representatives of the
police and the Crown Prosecution Service (CPS). They advised us
of their concerns that our inquiry, if conducted wholly in public,
might prejudice their investigations. Having taken legal advice,
we agreed to a "short pause" in our inquiry, writing:
The matters alleged go to the heart of the political
and parliamentary process, and we think it vital that Parliament
should investigate as soon as possible. The sub judice rule does
not apply in this case. No criminal charges have yet been made.
We have discussed the implications of continuing a high profile
inquiry for future court proceedings with the police and Speaker's
Counsel. In the light of advice, we have decided to have a short
pause in our inquiry, of no more than a matter of weeks, to allow
the police to tell us whether there is a realistic prospect of
charges being brought. We wish to make it clear that we will resume
our investigation as soon as possible.[3]
In the event, "as soon as possible" proved
to be considerably longer than we had envisaged or the police
had anticipated.
3. After careful consideration, we concluded that
there were some elements of our inquiry, not dealing with the
particular allegations, which could safely be conducted in public
without potentially compromising any putative criminal proceedings.
We took evidence in public from the Cabinet Secretary and members
of the House of Lords Appointments Commission (HoLAC), and in
July 2006 we published our interim findings.[4]
As we explained at the time:
We believe it is essential that allegations of
criminal activity are properly investigated and, if prosecuted,
result in a fair trial. However, these important principles must
be balanced against the ability of the House and its Committees
to investigate matters of direct concern to Parliament. This inquiry
began before any police investigations were contemplated, and
concerns matters on which Parliament may be asked to make decisions
before any proceedings are concluded. We do not believe that the
nature of our inquiry need pose any danger to the investigation
or trial process. But we recognise the point made by the police
and CPS that there may be a possibility that parts of our inquiry,
if conducted in public, could jeopardise the investigation and
the integrity of any trial process, not least because of the likely
nature of the associated reporting and publicity.
It became our intention therefore to proceed
in ways which minimised the risks identified by the police while
still exploring the policy issues involved. For this reason we
announced that we would hear evidence in public from the Cabinet
Secretary and members of the House of Lords Appointments Commission
and produce an interim report on our findings so far. We would
take further evidence and produce a further report in due course.[5]
The Government has understandably awaited the outcome
of the police investigation and of our own inquiry before responding
to our interim report.
4. On 20 July 2007 Carmen Dowd, the Head of the Special
Crime Division at the Crown Prosecution Service, announced that
there would be no criminal proceedings arising out of the so-called
"Cash for Honours" investigation.[6]
The announcement followed the investigation by the Metropolitan
Police which had commenced in March 2006 after they received a
number of complaints, including one from a Member of this House.
The CPS subsequently announced on 8 October 2007 that there was
also insufficient evidence to charge any individuals in relation
to the Conservative Party.[7]
5. Our interim report looked briefly at the question
of whether political honours are appropriate, with particular
focus on resignation and dissolution honours (explained in Chapter
3). It also touched on the appointment process for the House of
Lords and the role of the House of Lords Appointments Commission.
However, it did not, and could not, consider the appropriateness
or otherwise of the legal framework in respect of the system of
honours and peerages:
It is too early to explore the legal safeguards
and remedies which should govern propriety in this area, and this
report does not attempt it, since we do not know what the outcome
of the current police investigation may be, nor how the way the
1925 Act is framed may affect that investigation. We will review
the law as it affects public life and corruption as part of a
further report, once the police investigation is complete and
the lessons from it are available. We have invited the police
to contribute to this review.[8]
This report is the product of that review.
Scope of the inquiry
6. The decision of the CPS not to bring any charges
removed all of the reasons for delaying our inquiry. We recommenced
our evidence sessions in October 2007, hearing from Rt Hon Lord
Stevenson of Coddenham and Rt Hon Lord Hurd of Westwell of HoLAC;
from Assistant Commissioner John Yates of the Metropolitan Police;
from Carmen Dowd of the CPS; from David Perry QC, who led the
team of independent counsel assisting the CPS; from the academic
experts Dr Meg Russell, Professor Justin Fisher and Dr Michael
Pinto-Duschinsky; and from the Cabinet Secretary, Sir Gus O'Donnell.
We are grateful to all those who gave evidence to us, as well
as to all those who submitted written evidence. We are particularly
indebted to our legal advisor, Mr Christopher Sallon QC, whose
contribution to our deliberations was invaluable.
7. On restarting our inquiry, we made it clear that
it was not our intention to continue the police inquiry by other
means. As our press statement in July 2007 said, the police investigation
was thorough and exhaustive, and had access to material that would
not have been available to us.[9]
8. Nor would it be right for us to use any material
which was given to the police, unless already in the public domain.
Although we gave this some consideration, it was ultimately our
view, informed by legal advice, that information collected by
the police, on the understanding that it would go no further,
should not be disclosed in a public forum where it could be used
against the people who provided it. We were unwilling to circumvent
this by carrying out our inquiry in private, as we believed there
to be an overwhelming public interest in these matters being examined
in public. As such we were careful not to ask for information
which should properly remain confidential, and all of our witnesses
were similarly careful.
9. Just as we did not want to re-run the investigation,
so it is not our role to scrutinise the performance of the police.
We have not seen the evidence they collected and therefore cannot
pass judgement on the way they went about their inquiry, although
we were concerned about the sources of the running media commentary.[10]
It is apparent, though, that the investigation was meticulous
and thorough. We are grateful to the police for keeping us informed
about the progress of their inquiry. In addition to the public
evidence sessions already mentioned, we took private evidence
from the police and CPS on two occasions. The transcript of our
session on 15 May 2006 was subsequently published;[11]
and we are publishing the transcript of a further session on 13
July 2006 together with this report.[12]
10. Our purpose in this inquiry has been to consider
the policy and regulatory issues arising from the matters investigated
by the police. Notwithstanding the lack of charges, it is clear
that real damage has been done by the whole episode to public
trust in political life. The suggestion that peerages could be
traded for donations or loans to political parties is a serious
one, and deserves to be taken seriously. We set out to consider
the systems that allowed damaging allegations to be made, and
how to build a framework for the award of peerages in which the
public could have confidence. In particular, we heard variously
that some or all of the following deserved investigation:
- the conflation of honours with
peerages;
- the adequacy of the legal framework for the prevention
and detection of offences with respect to the sale of honours,
loan funding and public sector corruption more generally;
- the role of the Electoral Commission in the regulation
of political parties;
- the effects on political behaviour of donor-based
funding;
- the patronage powers of party leaders; and
- the appointments process for the House of Lords.
11. We have not looked, except tangentially, at the
matter of party funding, as this was the subject of a recent report
from the Constitutional Affairs Select Committee and the review
by Sir Hayden Phillips.[13]
Aside from that, however, this report considers each of these
areas in turn.
1 Public Administration Select Committee, Fifth Report
of Session 2003-04, A Matter of Honour: Reforming the Honours
System, HC 212 Back
2
Public Administration Select Committee, Fourth Report of Session
2006-07, Ethics and Standards: The Regulation of Conduct in
Public Life, HC 121 Back
3
Public Administration Select Committee, Third Special Report of
Session 2005-06, Inquiry into the Scrutiny of Political Honours,
HC 1020 Back
4
Public Administration Select Committee, Fourth Report of Session
2005-06, Propriety and Honours: Interim Findings,HC 1119 Back
5
As above, para 20 Back
6
Crown Prosecution Service, CPS decision: "Cash For Honours"
case, 20 July 2007 Back
7
Crown Prosecution Service, Charging decision in Conservative
Party Honours allegation, 8 October 2007 Back
8
Public Administration Select Committee, Fourth Report of Session
2005-06, Propriety and Honours: Interim Findings, HC 1119,
para 21 Back
9
"PASC Statement on Propriety and Honours", Public Administration
Select Committee press notice 47/2006-07, 24 July 2007 Back
10
We were assured by Mr Yates that he was confident that no evidence
had ever been put into the public domain in an improper way (see
Qq 256-258). Mr Yates has clarified, subsequent to his oral evidence,
that he was incorrect to suggest to the Committee that he had
never met a lobby journalist. Back
11
Public Administration Select Committee, Fourth Report of Session
2005-06, Propriety and Honours: Interim Findings, HC 1119,
Ev 1-11 Back
12
Qq 1-143 Back
13
Constitutional Affairs Select Committee, First Report of Session
2006-07, Party Funding, HC 163; Sir Hayden Phillips, Strengthening
Democracy: Fair and Sustainable Funding of Political Parties,
15 March 2007 Back
