Select Committee on Public Administration Second Report

1  Introduction


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

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Prepared 18 December 2007