Cash-for-Honours scandal

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The Cash-for-Honours scandal (also known as Cash for Peerages, Loans for Lordships, Loans for Honours or Loans for Peerages) was a political scandal in the United Kingdom in 2006 and 2007 concerning the connection between political donations and the award of life peerages. A loophole in electoral law in the United Kingdom means that although anyone donating even small sums of money to a political party has to declare this as a matter of public record, those loaning money at commercial rates of interest did not have to make a public declaration.

In March 2006, several men nominated for life peerages by then Prime Minister Tony Blair^[1] were rejected by the House of Lords Appointments Commission. It was later revealed they had loaned large amounts of money to the governing Labour Party,^[2] at the suggestion of Labour fundraiser Lord Levy. Suspicion was aroused by some that the peerages were a quid pro quo for the loans. This resulted in three complaints^[3] to the Metropolitan Police by Scottish National Party MP Angus MacNeil, Plaid Cymru parliamentary leader Elfyn Llwyd, and a third individual who continues to remain unidentified, as a breach of the law against selling honours.^[4] The investigation was headed by Assistant Commissioner John Yates who later resigned over the News of the World phone hacking scandal. During the investigation various members of the Labour Party (including Blair), the Conservatives and the Liberal Democrats were questioned, and Labour's Lord Levy was arrested and later released on bail.^[5] The investigation continued to have political impact throughout, as a range of stories continued to leak from the police investigation and damaged the government and Labour Party.^[6]

Following the unveiling of the scandal the Labour Party had to repay the loans and was said to be in financial difficulty.^[7] The police investigation was long and involved. It expanded to encompass potential charges of perverting the course of justice, apparently relating to suspected attempts to present evidence to the police in a particular way. At one point the Attorney General, Lord Goldsmith, obtained an injunction against the BBC, preventing them from reporting a story they claimed was in the public interest while he argued that the story was sub judice. This raised the possibility of a conflict of interest, the Attorney General being a political appointee. Tony Blair was interviewed three times as Prime Minister, though only as a witness and not under caution.

After a long review of the police file, it was reported on 20 July 2007 that the Crown Prosecution Service would not bring any charges against any of the individuals involved. Their decision stated that while peerages may have been given in exchange for loans, it could not find direct evidence that that had been agreed in advance; this would have been required for a successful prosecution.^[8] Notwithstanding the lack of any charges, some^[who?] considered that the investigation had severely undermined Tony Blair's position, and possibly hastened his resignation as Prime Minister.^[9]