Landmark report makes powerful case for Lords and party funding reform

The Oxford University Department of Economics have just published a discussion paper entitled “Is there a market for peerages? Can donations buy you a British peerage? A study in the link between party political funding and peerage nominations 2005-14“. The authors are Andrew Mell, Simon Radford and Seth Thévoz (the latter two of which have written for Liberal Democrat Voice in the past).

We’ve had a succession of “cash for peerages” scandals for over a century. What this study does is to provide a cast-iron scientific, evidence-based case to demonstrate the link between donations and peerages. It doesn’t single out individuals but proves that the phenomenon is endemic across the three main parties.

The report separates out peers who were what it calls “the usual suspects” (who were parliamentarians, former senior party staff, council leaders or ex-council leaders etc) from “others”. The authors painstakingly collated donations and loans data including those related to the families, companies and unions of newly created peers. Using a sophisticated algorithm, the team then tested a number of hypotheses:

Hypothesis 1: There is no statistically significant difference between the donation behaviour of nominees from the “usual suspects” and nominees from outside the “usual suspects”.

Hypothesis 2: Big donors are just as likely to be nominated to the Lords as anyone else.

Hypothesis 3: Members of the House of Commons are as likely to be big donors as members of the House of Lords.

The report found donations or loans of £33.8million related to the 92 “other” peerages created in the period, as opposed to £735K for the 210 “usual suspects” peerages. That’s a relatively damning couple of statistics.

Through statistical methods, the report rejects the three hypotheses and concludes:

This has been the first full-scale analysis of the relationship between cash and peerages for all parties in Britain across a sustained period of time. While rumors of “cash for peerages” have long dogged the reputation of the House of Lords, the lack of a strong evidence base has hindered efforts to test the validity of such assertions. This article seeks to allow some greater precision in the continuation of debates around this, and around questions on the role of money in politics.

Crucially, all three hypotheses have been disproved, and the relationship between donations and nominations has been found to be significant. This is thus wholly in keeping with the theory that lifetime appointments to Britain’s Upper House are being sold to wealthy donors.

Over on the Social Liberal Forum website, one of the report’s authors, Seth Thévoz writes about the work:

By focussing on the ‘big picture’ and the numbers involved, rather than individual cases, our study made some startling discoveries, including the sheer improbability of so many people from the three parties’ small pool of big donors all being nominated to the Lords, which is equivalent to winning the National Lottery five times back-to-back.

Seth goes on to say:

Allegations of ‘cash for peerages’ are toxic, because they strike at the heart of two major problems: the way that parties are funded, and ongoing lack of democracy at Westminster. Traditionally, Liberals and Liberal Democrats have been at the forefront of pleading an articulate, coherent case for constitutional reform to involve citizens and communities. If cries of ‘cash for peerages’ continues to recur, then it will be to the shame of this government – and the Deputy Prime Minister who took personal responsibility for overseeing constitutional reform – and liberals will have a lot of making up to do to convince voters that they are serious about this issue. Now is the time to be ambitious in leading the debate, not following, and certainly not by being the subject of a string of tawdry donation scandals. It is at times like this that liberals need to ask themselves why they went into politics in the first place, and what they can do that is true to those ideals.

This is a very serious and compelling academic report which will, hopefully, provide some much-needed impetus to the debate over second chamber and party funding reform, leading to much overdue action to finally put all this behind us.

* Paul Walter is a Liberal Democrat activist. He is currently taking a break from his role as one of the Liberal Democrat Voice team. He blogs at Liberal Burblings.

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  • In June 2010 we might have thought that this would all have been cleaned up before now. As LDV reported at the time —

    What does the Deputy Prime Minister do? Nick Clegg’s new responsibilities
    By Helen Duffett | Thu 3rd June 2010 – 8:54 pm
    Follow @helenduffett
    As a result of the formation of the coalition Government, a number of responsibilities will be transferred from the Secretary of State for Justice to the Deputy Prime Minister.

    Nick Clegg has already been given special responsibility for political and constitutional reform; now Prime Minister David Cameron has listed the powers which will help Clegg bring this into effect:

    Introducing fixed-term Parliaments
    Legislating to hold a referendum on the alternative vote system for the House of Commons and to create fewer and more equal sized constituencies
    Supporting people with disabilities to become MPs
    Introducing a power for people to recall their MP
    Developing proposals for a wholly or mainly elected second Chamber
    Speeding up implementation of individual voter registration
    Considering the “West Lothian question” i.e. that Scottish MPs vote on matters affecting England, but not vice versa.
    Introducing a statutory register of lobbyists
    Reforming party funding
    Supporting all postal primaries

  • John Barrett 23rd Mar '15 - 10:53am

    Over 30 years ago, when I joined the party, it was pointed out to me that any donor of large amounts of cash to a political party, who did not have a peerage, would have to be a very stupid person indeed. In the years following, it became as clear as could be that this was “normal” practice as a route into the Lords.

    For the following 25 years we campaigned against such things, for Lords reform, and against peerages being handed out to friends of the leaders of both the Labour and Conservative parties.

    In the last five years we have just joined in with the other two parties and have followed their lead.

    While there will always be good hard working peers from a variety of backgrounds, sadly we are no longer alone on the moral high ground when it comes to appointments to the Lords.

  • matt (Bristol) 23rd Mar '15 - 11:19am

    Well, John Barrett, that’s because the way Blair ‘reformed’ the Lords mired all parties in the same hypocrisy. Deliberately?? Possibly.

  • Helen Dudden 23rd Mar '15 - 12:13pm

    I happen to like the House of Lords. Some have proved to be of great use within legal issues.

    It should be earned, not just something you would expect for supporting a political party.

    Nothing is worth having, unless it is earned.

  • Good and timely piece about “cash for access”. With the recent media exposés concerning the paying of MP’s/parties for access to ministers, I was beginning to wonder when people would connect the dots and look again at the awarding of peerages to major party donors. I mean if £10,000 buys you a single meeting with Nick Clegg, paying out £500,000 as a donation to the LibDems for a lifetime’s participation in government in a role where access is only limited by your ability to get people to meet with you.

    I’m glad that we have a published research report on the matter, that can be used to inform any press outcry that I suspect is just around the corner… The question in my mind is whether the LibDem’s should take a lead on this issue and declare the short-listing criteria it will use for selecting candidates the party will consider potentially offering peerages to. Because as we all know any formal reform will take years, whereas the party can very quickly change its rules.

  • Good work, guys.

  • Lords reform in the current Parliament was killed off by the Tories. Post-May, it needs to be back on the agenda. ’nuff said.

  • @John Grout: It was killed off by the Tories in this parliament when the Lib Dems killed off the boundary changes in the Commons that would have lost the Lib Dems half their seats.

    If the Lib Dems pull off a tactical coup at the general election by holding onto most of their seats for another five years, then they may judge that dropping the once-in-a-generation opportunity at Lords reform was worth it. Maybe. I doubt the electorate will see it that way, though.

    If, on the other hand, the Lib Dems lose half (or more?) of their seats anyway, then they may ask themselves what it was all for. Personally, I think it was a monumentally stupid, short-termist tactical mistake from Clegg.

  • Yes, they were the first to indicate that a Tory backbench rebellion was brewing on Lords reform. But the Lib Dem response was pretty ill-judged. Instead of holding to the line “We made sure Lib Dem MPs voted for things they didn’t believe in, like fees, and welfare reforms, and NHS reforms, now you need to keep your part of the deal on something that’s in the coalition agreement”, we decided to link it to the unrelated issue of boundary changes, and threatened tit-for-tat retaliation. Publicly throwing our toys out of the pram like that was not smart politics, and allowed Lords reform to be reduced to a bargaining counter, rather than arguing it on its own merits, or as a key component of the coalition agreement.

    Why did it even take until 2012 to release the bill anyway? A draft bill was supposed to be out by December 2010, and took until May 2011, followed by another year of foot-dragging. As John Tilley says, Nick was personally in charge of the constitutional reform agenda, and Lords reform in particular, so it’s not as if this was an area of policy dominated by Tory ministers.

  • Paul Pettinger 23rd Mar '15 - 7:33pm

    Delighted that the three academics/ anti-corruption campaigners are Liberal Democrats, and are giving renewed vigour to the campaign to reform our political system in the next Parliament, both in and outside the Party

  • Of course the wider point is that the parliamentary party are not the party- WE are. So any MP who doesn’t push for Lords Reform as a matter of priority should get it in the neck from the people who put them in office in the first place.

  • Abolition of the House of Lords is the radical answer.
    The route to doing it is via a Federal Britain ie NI,Welsh,English and Scottish Parliaments for all domestic matters anda small elected UK Parliament to deal with defense,foreign affairs and currency.

  • Tony Miller 24th Mar '15 - 8:38am

    Ironically, probably without realising it, the Daily Telegraph has made the same case for reform with its “cash for access” traps. An unlikely ally, but help should be grasped from whatever quarter, even if holding one’s nose.

  • Roger H 24th Mar ’15 – 8:29am
    “Abolition of the House of Lords is the radical answer.
    The route to doing it is via a Federal Britain ie NI,Welsh,English and Scottish Parliaments for all domestic matters anda small elected UK Parliament to deal with defense,foreign affairs and currency.”

    I agree with Roger H.
    A slight quibble — I would substitute English Regional Parliaments for for domestic matters alongside NI, Wales amd Scotland Parliaments. The Elected European Pariament should take care of foreign affairs (defence being a tool of foreign affairs).

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