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Sale of Honors

The Liberal politician David Lloyd George (later 1st Earl Lloyd George of Dwyfor) characterised the House of Lords as "five hundred men chosen at random from the ranks of the unemployed". In 1916 David Lloyd George replaced Herbert Asquith as Prime Minister at the head of a coalition government that relied heavily on the Conservative Party. This split the Liberal Party between the Asquith Liberals and the Lloyd George Liberals. The Asquith Liberals controlled the party and its funds, so David Lloyd George needed money, and the easiest ways of raising money was to sell honours. Between December 1916 and July 1922 over 1,500 knighthoods were awarded. A total of 91 peerage titles were awarded within the same five-year period, twice as many as had been created in the previous twenty years. A knighthood was available for 10,000-12,000, a baronetcy for 30,000 to 40,000, with a peerage title costing upwards of 50,000. Since there were men with cash who couldn't afford a knighthood, the Order of the British Empire was invented to fill the gapt. Over 25,000 people were given the OBE over a four year period, with the 'honour' earning the nickname of the Order of the Bad Egg.

Maundy Gregory worked as an honours broker under Conservative, Liberal and Coalition governments, securing funds for their parties and significant profits for himself. As Prime Minister, David Lloyd George established a general tariff for titles, which Gregory enforced and from which he took commission. In this period titles were given to ex-convicts, including one man convicted of trading with the enemy in the First World War, and un-discharged bankrupts. Even during this peak period, the sale of honours was found offensive by the public and the press. The 1925 Act delimits what is criminal behaviour and what is not. For example, it is not illegal to nominate someone for an honour or a peerage on the basis of past contributions to a party, as long as those contributions were not made on an explicit understanding that they would lead to any specific reward. Parties are free to nominate whom they like without setting out any reasons. Indeed, they could explicitly state that a particular nominee is being put forward for their past financial contributions. Put simply, it is not illegal for parties to appoint donors to the House of Lords purely on the basis that they have made donations in the past. Nor is it illegal to give cash in the hope of one day being honoured.

Political parties continued after 1925 to reward large donors with knighthoods and peerages and the 1925 Act arguably permitted them to do so. There were several instances of peerages that were given to generous donors during Baldwin's premiership of 1924-29. In some cases the expectation of an honor as the reward for a contribution was openly expressed. In September 1927, the Banker (a newspaper) argued that many of those obtaining honours were "gross illiterate profiteers, doubtful in their reputations, vulgar in their lives.shovelled into the House of Lords, created baronets and knights, merely upon the strength of the money they had obtained in preying upon England in the most awful crisis of her affairs". It seems clear that, apart from tidying up the residue of the Lloyd George era, [the Conservative Party Chairman] did not fundamentally change his party's attitude towards honours. It is perhaps true that no bargains were made, and in this sense honours were not "sold"; but since subscribers received honours and a high proportion of honours went to subscribers to the Party, the net result was not very different.

The only successful prosecution under the 1925 Act was that of Maundy Gregory, who was not prosecuted until 1933 - most likely because the high profile of many of his clients afforded him protection. Even in a case where the accused's guilt was plain, a whistleblower was required to secure the conviction. In December 1932 Gregory and his aide approached Lieutenant-Commander Edward Whaley Billyard-Leake, promising a knighthood in exchange for 12,000. On receipt of a letter from Gregory, Billyard-Leake handed it to the Treasury Solicitor and made a statement on his dealings with Gregory. He later gave evidence against him, and Gregory eventually pleaded guilty. Nonetheless, the police did not pursue charges against anyone who had bought an honour.

The main effect of the 1925 Act was to replace a system of blatant sales of honours with a more subtle system. It should be noted that all the main parties have participated in what may be called indirect sales of honours ever since. However, the contrast between the Lloyd George system and that which emerged following the passage of the 1925 Act was significant in that there no longer were blatant and direct deals to exchange money for an honour.

The Political Honours Scrutiny Committee was set up in the 1920s in order to scrutinise any candidates put forward by the Prime Minister personally through any of these mechanisms, and to decide if there was anything in the past history or character of the individual which rendered him or her unsuitable for an award. Its only concern was with propriety; it did not comment on the merits of an award. The Political Honours Scrutiny Committee was abolished in 2005. The majority of its functions had already been transferred to the House of Lords Appointments Commission.

The events which became known as the "cash for honours" or "Loans for Lordships" affair actually concerned the award of peerages. A peerage is more than just an honour. A peerage does of course convey an honorific title on the person to whom it is awarded, but it also bestowed a seat in the House of Lords, and a vote on proposed legislation (albeit in a revising chamber). While any sale of honours would be deplorable because it devalues the honours system as a whole, and hence all deserving recipients of honours, it is nonetheless less constitutionally significant than the sale of peerages. The sale of peerages is the sale of seats in Parliament.

Political parties' needed funding for the May 2005 general election campaign. The two largest parties were heavily dependent on undeclared loan funding to get themselves through an expensive campaign. The Political Parties, Elections and Referendums Act 2000 ("the 2000 Act"), embodied the most extensive reforms of British political finance since the Corrupt Practices Act of 1883. Under the 2000 Act there was no legal requirement for parties to declare loans taken out on "commercial" terms. The Electoral Commission failed to give an advisory opinion before the general election of 2005 on the meaning of a loan on "commercial terms". The distinction between the rate of interest paid by banks to depositors and demanded from borrowers was not the only ambiguity about the meaning of "commercial terms".

It was publicly known two weeks before the poll that one of the major parties - the Conservatives - had received loans of no less than 16 million. The Labour Party borrowed 11,950,000 in undeclared loans from wealthy individuals between April and October 2005. The first reports that certain nominees to the House of Lords had been blocked (or, more accurately, queried) by the House of Lords Appointments Commission emerged in newspapers in November 2005. In March 2006, the identities of those nominees became public, as did the fact that the four nominees in question had all made undeclared loans to the Labour Party in 2005. The police investigation commenced in March 2006, following a complaint that an attempt had been made to confer peerages in contravention of section 1 of the Honours (Prevention of Abuses) Act 1925 ("the 1925 Act"). The complaint alleged that a number of individuals had agreed to make substantial loans to the Labour Party on the understanding that they would be rewarded by the grant of a peerage. Faced with unfolding controversy, Prime Minister Tony Blair announced on 23 March 2006 that he would no longer make any additions or subtractions from the list of names produced by the independent Honours Committees.

The sale of British titles is prohibited by the Honours (Prevention of Abuses) Act, 1925. However, misleading advertisements for lordships of manors sometimes appear in the press and on the internet. A manorial lordship is not an aristocratic title, but a semi-extinct form of landed property. Lordship in this sense is a synonym for ownership. According to John Martin Robinson, Maltravers Herald Extraordinary and co-author of The Oxford Guide to Heraldry, "Lordship of this or that manor is no more a title than Landlord of The Dog and Duck." It cannot be stated on a passport, and does not entitle the owner to a coat of arms.

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Page last modified: 16-07-2016 15:42:27 ZULU