Joseph Sinclair, a lawyer, research associate at Spotlight on Corruption, and recent alumnus of Sussex’s Corruption and Governance MA, writes about the recent controversy over Peter Cruddas’ appointment to the Lords and the shortcomings in the criminal laws that govern the purchasing of honours.

Peter Cruddas: Appointment to the Lords & Controversy

In December 2020, the Prime Minister appointed Peter Cruddas to be a Conservative peer in the House of Lords. He is described on the Lords’ website as “a businessperson, philanthropist, and Conservative Party donor and former co-treasurer [of the Conservative Party]”. As a donor, he had given £50,000 to Boris Johnson for his 2019 leadership campaign and in total over £3m to the Conservative Party since 2007 (£1.2m since Boris Johnson became PM) as well as £1.5m to the Vote Leave campaign. Cruddas’ appointment was especially controversial because, after undertaking a vetting process, the House of Lords Appointment Commission had told the PM that they could not support the nominee.

In a letter to the Commission, Johnson revealed that the Commission’s concerns related to “allegations made during Mr Cruddas’ term as Treasurer… and the judgement (sic) reached by the Court of Appeal in subsequent libel action”. The Financial Times put the allegations in the following terms:

“The former Conservative party treasurer resigned from that post in 2012 in a “cash for access” scandal in which he was caught in a sting by undercover reporters from the Sunday Times posing as international financiers.

Mr Cruddas had effectively said that if they donated large sums, they would have an opportunity to influence government policy and gain commercial advantage through meetings with the prime minister and other senior ministers, according to a court ruling that also found aspects of the newspaper’s reporting had libelled the then party treasurer.”

Johnson said in response that the most serious allegations were found by the Court of Appeal to be untrue and libellous. An internal Conservative Party investigation had cleared him of wrong-doing. The Electoral Commission also found that no evidence that any rules had been breached. Moreover, Johnson wrote, Cruddas’ “broad range of experiences and insights across the charitable, business and political sectors will, in my view, allow him to make a hugely valuable contribution to the work of the House”. He stated that this choice to depart from the Commission’s advice was a “clear and rare exception”. As the Commission’s chair said, “the Commission provides advice but does not have a veto. Ultimately, appointments are a matter for the Prime Minister”.

Electoral Commission records have since shown that Cruddas donated a further £500,000 to the Conservative Party £500,000 three days after he was admitted to the Lords. The Deputy Leader of the Labour Party suggested that the two were connected: “They put him in the House of Lords with a life peerage and he coincidentally gives the Tories half a million quid.”

Cash for Peerage: A Criminal Offence?

When a curious series of events occur, such as a large payment to the party of the Prime Minister that appointed you to the Lords, people may look to the criminal law for guidance. As one commentator observed, “it’s one helluva ugly fact pattern”.

On this occasion, the Honours (Prevention of Abuses) Act 1925 has been taken from the dusty top shelf. It was enacted following allegations that the former prime minister, David Lloyd George, was said to have a price list for peerages. A baronetcy went for £40,000 (or £2.3m in today’s terms).

It is worth outlining the offences in the 1925 Act in full:

1) If any person accepts or obtains or agrees to accept or attempts to obtain from any person, for himself or for any other person, or for any purpose, any gift, money or valuable consideration as an inducement or reward for procuring or assisting or endeavouring to procure the grant of a dignity or title of honour to any person, or otherwise in connection with such a grant, he shall be guilty of a misdemeanour.

2) If any person gives, or agrees or proposes to give, or offers to any person any gift, money or valuable consideration as an inducement or reward for procuring or assisting or endeavouring to procure the grant of a dignity or title of honour to any person, or otherwise in connection with such a grant, he shall be guilty of a misdemeanour

If convicted, you can be sentenced to a period of up to two years’ imprisonment and/or a fine not exceeding £500. Eight years after the Act received royal assent, Lloyd George’s “notorious honours broker”, Maundy Gregory, was the first person to be convicted for offering a knighthood to a naval commander for £10,000. He found himself in prison for two months and compelled to pay a £50 fine.

Maundy remains the only person to have been convicted under this Act. On this point, Francis Wheen observed that “[a] visiting Martian might reasonably infer that no other “abuse” has occurred… Anyone with a GCSE in modern history could swiftly put the Martian right”. Indeed, research by the University of Oxford looked at 303 Lord Nominations vis-à-vis donations since 2001. Its conclusions were “…wholly in keeping with the theory that lifetime appointments to Britain’s Upper House are being sold to wealthy donors”. Candidates that one might not expect to be appointed to the Lords, ie. not former parliamentarians, major public officeholders, or people nominated by an internal party election, made up 31.1% of nominees but 97.9% of the donations generated from nominees. 28 individuals made up over 95% of those donations.

80 years after the 1925 Act was put on the statute book, Lord Levy, Labour’s then chief fundraiser, was arrested and questioned by police pursuant to a possible infraction of the 1925 Act. This followed a complaint made by the SNP MP, Angus MacNeil, that financial support was being rewarded with honours. Tony Blair found himself to be the first sitting prime minister interviewed by police during a criminal inquiry. Speaking to the Times, MacNeil said:

“The thing about this 1925 Act is that it is so simple… you don’t have to be a lawyer to understand what it says. Don’t sell honours. Don’t buy honours. If you do you’ll be banged up for two years maximum…”

The investigation did not result in any charges being brought, despite costing £1m and taking 16 months to complete. In a statement, the Crown Prosecution Service said there was insufficient evidence to provide a realistic prospect of conviction. Speaking to the 1925 Act, they explained:

“If one person makes an offer in the hope or expectation of being granted an honour, or in the belief that it might put him/her in a more favourable position when nominations are subsequently being considered, that does not of itself constitute an offence. Conversely, if one person grants an honour to another in recognition of (in effect, as a reward for) the fact that the other has made a gift, that does not of itself constitute an offence.”

It is likely that any investigation into Cruddas, Johnson or the Conservatives would yield a similar result. And the reason is a simple one. How do you show a magistrate or jury that, as Angus MacNeil puts it, an honour was either bought or sold? There is unlikely to be evidence of an explicit agreement. Cruddas had been a senior member of the Conservative party and given handsomely to it and Johnson well before his peerage. Notwithstanding the controversy, his credentials do not make his appointment an irrational one. Indeed, the Prime Minister had plenty to point to.

The 1925 Act: a Dead Letter Before it was Passed?

If Maundy had a time machine, he might feel disappointed to be the only person to have been convicted. Or he might be heartened at the chance of another go. Certainly, the nature of cash for honours has not changed all that much. The most ardent criticism of the Act and its short-comings were made nearly 100 years ago by the Lords who debated it in 1925. Their remarks remain as relevant today.

Lord Newton speaking in the Lords:

“Under the theory of the [1925 Act] I go to some noble friend of mine, for choice, possibly, shall I say, to my noble friend Lord Younger, and I say or write to him:—”Dear Younger, I am very anxious to become a Viscount, and if you will secure this for me I am prepared to contribute a handsome sum towards the building of the new ladies’ dining room at the Carlton Club, for which I gather funds are urgently needed.” Presumably, that is how I should act under the [Act]. Of course, Lord Younger, Lord Banbury, or whoever it might be, are law abiding people and it would be their duty to inform the Public Prosecutor, or the Attorney-General, or some important person of the sore and denounce this. Under the Bill I should be liable to a penalty not exceeding £500 and, possibly, to two years’ imprisonment. But I am not so simple as the members of this Commission. I should not set about it in that way at all. I should approach Lord Younger or Lord Banbury in some secluded place, possibly in this House-there is not usually much congestion here—and I should do it verbally, and it would be impossible to convict me, because there would be only my word against his, and they would be just as likely to believe me as either of my two noble friends.”

Viscount Haldane said:

“There are cases which I have seen which the Bill will cover, but the more delicate thing is the attempt which is made by persons who desire honours, or by persons who are acting in their behalf, to put forward quite unworthy considerations for the granting of the honour… [T]here is a class of persons who are quite unscrupulous in these matters, who go and say: “I can get you a knighthood or a baronetcy if you will only put yourself in my hands.” There is not much discussion of the reward at the time, but the reward is discussed afterwards, and the result of what is done is that various subtle means are resorted to for creating a favourable attitude towards the claim of the person concerned. That happens on a very large scale, and I am afraid it will not wholly cease to happen even if this Bill becomes law.”

Earlier still when the Bill was debated in 1923:

“I desire to say that I attach just the same importance to [the Act] as was attached to the Prevention of Corruption Act of 1906. Everybody said about that Bill: “What a splendid thing”; yet everybody knows that to-day, notwithstanding that Act, corruption goes on very much as it did before the Act was passed.”

Judicial Review to the Rescue?

The Good Law Project has written to the Prime Minister with an intention to sue. Their letter notes that the £500,000 payment was Cruddas’ biggest single donation to date. If GLP are able to surmount difficult procedural points, then their challenge seems to have two main heads: bias and irrelevant considerations.

To the first, they say that a “fair-minded and informed observer… would conclude that there was a real possibility or danger of bias” in the PM’s decision-making. Cruddas made a £250,000 donation one month before the appointment was public knowledge, and £500,000 after he became a peer. This was in the face of the House of Lords’ Appointment Commission’s advice that he should not be appointed. Where the Prime Minister was considering a party donor, “it was incumbent upon him to ensure his decision making demonstrated a fair and impartial process and to ensure it was clear that any risk of bias had been removed”.

In the second, GLP argue that the appointment was influenced by his significant donations:

“The fact that a person has made significant donations to a political party, or is likely to do so, is (or should be) irrelevant to determining whether they warrant an honour, or whether they are an appropriate appointee to the House of Lords… In addition to viewing the appointment in the context of the “cash for access” scandal, a clear inference is that the past donations taken in whole or in part on the basis of such consideration is unlawful”.

If the court agreed with the GLP, it gives rise to important considerations: what is relevant and how is it to be assessed? Is it left to the court to decide with each tranche of appointments which are objectively irrational? How might the courts treat nominations by those not in power? For example, would Corbyn’s nomination of Shami Chakrabati after the controversial report into anti-Semitism in the Labour party pass that threshold? Though the oversight would be welcome, it puts the court in a position where it is answering uncomfortable political questions with which it ought not to be concerned.

Concluding Thoughts

Without seeking to pre-empt the outcome of any litigation, these are ambitious arguments. But they highlight the significant short-comings and concerns in the appointment process. As Meg Russell at UCL’s Constitution Unit says, the PM’s powers are largely unfettered as to who and how many people are appointed: “This unregulated patronage is one of the last vestiges of pure prime ministerial ‘prerogative’ power”. There are no parameters beyond those which the PM considers relevant. He can appoint friends, former members of the Conservative party, and donors without issue. Indeed, several Prime Ministers have done so in the past.

The Cruddas controversy will undoubtedly play into the on-going narrative of “Tory Sleaze”. However, it is unlikely anything will come of it. No one will go to prison. And voters seem not to care. Time will tell what happens with the GLP’s challenge. What these events show is that the inferences of impropriety will persist until the power to appoint Lords is removed from party politics and finances altogether. If we are not resolved to elect the Lords, then the answer lies in the institution that already exists: the House of Lords Appointment Commission. This should be charged with discerning, vetting, and appointing future peers according to the needs of the House. The means to achieving this are political but the impetus seems to be lacking.