Propriety and Peerages

Inquiry concluded

Calls for tighter vetting of honours and peerages

On the 18 December 2007 the Public Administration Select Committee published its report into propriety and peerages. The report is the culmination of the Committee’s inquiry into questions of propriety in the system for awarding peerages. The inquiry, temporarily suspended during the Metropolitan Police investigation, looked not just at what happened, but also what might be done to restore public confidence. The Committee concludes that an “immediate and proper response” is needed from the Prime Minister.

The Committee is critical of the Political Parties, Elections and Referendums Act 2000 - which created a loophole in the law allowing "commercial" loans not to be declared without defining what "commercial" terms might be - but is also critical of political parties, arguing that "having designed the loophole, parties did not have to dive through it so assiduously".

The report concludes that "a deliberate attempt was made to stretch the loophole on commercial loans as far as it would go. Having agreed legislation to make party funding transparent, parties appear to have gone to some lengths to get around it. The letter of the law may not have been broken, but the spirit of the law was quite clear."

A Government response to the report is expected by 19 February and will be published.

The Committee first announced that it would conduct an inquiry into ethics and standards in public life on 21 November 2005. On 14 March 2006 it stated that as part of its inquiry into ethics and standards it would be asking whether the scrutiny of honours and peerages for political service is working. Seven days later the Metropolitan Police announced they were to conduct an inquiry into allegations that offences had been committed under the Honours Act 1925.

The Committee’s Third Special Report of the Session 2005-06 was published on 27 March 2006 and announced the Committee’s decision for a short pause in its own inquiry to allow the police to tell the Committee whether there was a realistic prospect of charges being brought.

Following meetings with the Metropolitan Police and the Crown Prosecution Service the Committee decided to proceed with its inquiry in ways which minimised the risks identified by the police while still exploring the policy issues involved. On the 13 July the Committee published its findings so far in an interim report and undertook to produce a further report once the police investigation was complete and the lessons from it available.

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. The Committee announced the resumption of its inquiry on 2 October 2007 and after considering further evidence published its report on 18 December 2007.