It seems that each week sees Tony Blair and his New Labour government sink further into the mud of the “cash for honours” row. Downing Street was forced to admit last week that Blair had been interviewed again by police investigating whether peerages were being exchanged for secret loans to the Labour Party.
The news only emerged after a six-day media blackout. Such discretion was not afforded to Blair’s fixer Lord Levy. He was arrested for a second time on Tuesday of last week, this time on suspicion of conspiracy to pervert the course of justice.
This follows the dawn arrest of Ruth Turner, another key Blair aide.
The “cash for honours” scandal is a symbol of much deeper corruption in a system where business and politics increasingly mesh. New Labour’s privatisation plans for public services and schemes like academy schools mean that there are more opportunities for these kind of scandals to develop.
All this drama plays out at a time when the Labour Party is in crisis – over the wars in Iraq and Afghanistan, over its neoliberal restructuring plans for the NHS and other public services, but also over its impending change of leadership.
The “cash for honours” investigation acts like a slow burning fuse within this explosive mixture. We cannot predict when it will blow – there is always the possibility that the government will smother the affair as it did with the Hutton and Butler reports into the Iraq war.
But if it does blow, it is likely to bring the whole New Labour household tumbling down.
This kind of government crisis is not new. They normally break out when a government faces a number of problems, has been in power for a number of years and disappointed many of its supporters. This was what happened with the Watergate crisis that brought down Richard Nixon’s US government in the 1970s, and the sleaze that hit the Tories in the 1990s.
A previous British government was poleaxed by a “cash for honours” scandal. The police are investigating whether Labour’s financial affairs contravene the Honours (Prevention of Abuses) Act of 1925 – passed by parliament in the wake of a scandal that fatally weakened the government of David Lloyd George.
The crucial year was 1922. Britain had emerged victorious from the First World War four years previously, and the wartime prime minister Lloyd George had taken advantage of the prevailing patriotic fervour to call a general election in 1918.
This was the “khaki election” where Lloyd George promised “homes fit for heroes” to those who had fought in the First World War. Soldiers and their families never saw these homes.
Lloyd George’s own Liberal Party had split during the war, and his faction joined up with the Tories to form a “national government” coalition that was swept to power in a landslide.
But beneath the surface appearance of a confident, united and victorious British ruling class lay deeper forces that were to tear apart Lloyd George’s coalition and destroy the Liberal Party. Global capitalism was emerging from the shock of the First World War to find itself in crisis on multiple fronts.
Workers’ movements across Europe were challenging the ruling class for power, most notably in Russia where the 1917 revolutions had torn down a dictatorship and brought the working class led by the Bolsheviks to power. Germany and much of eastern Europe were also convulsed in revolution.
Lloyd George was ruthless in fending off these threats to the power of his class. At the Versailles negotiations that ended the war, he insisted on imposing punitive sanctions on a defeated Germany to cripple its economy.
He also pulled together a coalition of the victorious imperial armies to attack revolutionary Russia from all sides, plunging the first workers’ state into a devastating civil war.
The British Empire was also in trouble – 1918 would turn out to be the peak of its dominance, with new anti-colonial forces emerging across the globe that would ultimately bring it down.
Nowhere was this more evident than in Ireland, where a civil war was raging between British forces and a nationalist movement.
In 1921 Lloyd George was forced to sue for peace with the Irish movement and grant independence to the south of the nation. This move enraged the hardline Unionist faction of the Conservative Party which started agitating for a Tory withdrawal from the national government coalition.
The split in the Liberal Party compounded Lloyd George’s woes. Cut off from the majority of his party, Lloyd George desperately wanted funds to launch his own political project. He latched onto selling peerages as the swiftest way of raising the dosh.
The prime minister’s fixer was a theatrical impresario called Maundy Gregory, who approached shady but rich businessmen desperate for respectability and political influence.
The sale of honours was brazen, with a published list of prices – £10,000 for a knighthood, £30,000 for a baronetcy and a cool £50,000 (£8 million in today’s prices) for a peerage. The cash raised went straight into Lloyd George’s personal political fund.
The blatancy of Lloyd George’s operation – and the unsavoury characters that were being ennobled – led the Tories to smell blood. The publication of the July 1922 honours list, which included convicted tax evaders and fraudsters, was the crunch point.
The Tories blew the whistle on the whole affair and the newspapers turned on Lloyd George – hypocritically, given that all Britain’s leading newspaper owners had been made peers under the prime minister’s scheme.
Lloyd George was forced to concede a parliamentary debate on the issue and promise to clean up his act.
In the event, the prime minister managed to temporarily defuse the scandal by appointing a royal commission into the issue. But he was fatally weakened by the whole affair.
By October that year another crisis – this time an imperial adventure where British and French troops were defeated by Turkish forces in Chanak – was the final straw for the Tories.
A revolt by backbench MPs – what became the 1922 Committee – forced the party’s leadership to pull the plug on Lloyd George.
He resigned in disgrace and spent the rest of his career in the political wilderness. The once all powerful Liberal Party was wiped out, smashed between the increasingly business-oriented Conservatives and the ascendant Labour Party.
So what does all this tell us about the nature of the state under capitalism? The ruling class did not have a problem with selling honours as such – it was the brazenness of Lloyd George’s operation that was his undoing. Flogging off political influence is acceptable, but getting caught is not.
This sense of “decency” was new. During the 1600s, seats in the House of Lords were openly sold by the monarchy to boost the royal coffers and buttress the crown’s political influence in parliament.
It was only during the late 1700s that the power to appoint peers transferred to the prime minister.
The ascendent parliamentary political order was supposed to be based on Enlightenment principles such as democracy and reason, rather than brute power or the divine rights of kings.
Along with this came the idea that political honours and privileges should be based on “merit” rather than cold cash. Publicly, the system had to be seen to be clean – what went on in private was another matter.
This kind of institutionalised hypocrisy is inherently unstable, and when the ruling class gets into trouble it turns upon itself.
There are deeper connections between the sleaze surrounding Blair today and that which brought down Lloyd George in 1922.
While on the surface there seems to be an impregnable political consensus stretching from New Labour to the Tories – based around imperialism abroad and neoliberalism at home – underneath this project is running into trouble.
In these periods different factions of the ruling class jostle against each other for power, and shady deals behind closed doors begin to come to light. This can fuel public anger that further increases the crisis for the ruling class.
The anger people feel at watching political leaders cutting deals with business leaders can easily dissipate into passive cynicism – people shrug their shoulders and say, well, it’s always been like this, what can you do?
This is precisely what the ruling class would like us to think. Politicians are perfectly happy if we join in with their hypocrisy – by being privately cynical while keeping up surface appearances.
Their weakness – and our strength – is if we hold onto our sense of outrage and use it to build an alternative power from below. The stench of corruption coming from our leaders is an indicator of their rottenness and decay – and it is up to us to seize every chance we get to end their system for good.