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New Tory sleaze row as donors who pay £3m get seats in House of Lords

The Conservative Party has been accused of abusing the honours system by systematically offering seats in the House of Lords to a select group of multimillionaire donors who pay more than £3 million to the party.

Jonathan Calvert, George Arbuthnott, Tom Calver 

An investigation by The Sunday Times and Open Democracy reveals that wealthy benefactors appear to be guaranteed a peerage if they take on the temporary role as the party treasurer and increase their own donations beyond £3 million. In the past two decades, all 16 of the party’s main treasurers — apart from the most recent, who stood down two months ago having donated £3.8 million — have been offered a seat in the Lords.

Among them was Peter Cruddas, a billionaire whose peerage was pushed through by Boris Johnson against the recommendation of the Lords appointments commission. One of the commission’s members has broken the panel’s silence over the process, saying the prime minister’s decision to “override what we did … left a bad taste in my mouth”.

The role of Conservative treasurer has become the most ennobled job in Britain — ahead of holders of the great offices of state, leaders of the country’s institutions and charitable organisations and even former prime ministers.

As well as Cruddas they include the City millionaires Lord Spencer, Lord Fraser, Lord Lupton and Lord Farmer, who were ennobled in the past seven years. The mining mogul Sir Mick Davis turned down the offer of a peerage.

Farmer said it had become “a tradition” for Conservative prime ministers to hand out a peerage to the holder of the party’s top fundraising role. The former vice-chairman of the party Lord Brownlow was also given a peerage in 2019 shortly after his donations to the party topped the £3 million mark.

The alleged use of seats in the Lords as an arm of party fundraising is particularly controversial because — unlike other honours, such as knighthoods — peers fulfil an important role in the legislative process as a check and balance for new laws.

There is widespread concern in the Conservative Party about the way successive prime ministers have abused their control over appointments to the Lords by rewarding benefactors. Six former Tory ministers expressed deep unease about the practice.

One said it was a “scandal in plain sight” — widely known and accepted in the party. A former party chairman said: “The truth is the entire political establishment knows this happens and they do nothing about it … The most telling line is, once you pay your £3 million, you get your peerage.”

The party never publicly acknowledges the practice. One former minister said there was “a law of omerta” forbidding any discussion of the link between donations and seats.

A Conservative spokesman said: “We do not believe that successful businesspeople and philanthropists who contribute to political causes and parties should be disqualified from sitting in the legislature.”

Lord Fowler, a Conservative former cabinet minister and later Lord Speaker, said: “Most big contributors want something: it may be influence over the direction the party is taking; it may be a particular policy; it may be an honour. All have clear dangers for a political party.”

Many other Conservative donors have also been ennobled alongside the party’s treasurers: 22 of the party’s main financial backers have been given peerages since 2010. This includes nine donor treasurers. Together they have given £54 million to the party.

Only two Labour Party donors and five Liberal Democrat financial backers have been ennobled over the same period. The parliamentary watchdog has blocked six further peerage nominations for Conservative donors on the grounds of impropriety over those 11 years.

A Tory insider said his party was dangling peerages before donors like “carrots” and everyone in the party was aware of the “cynical operation”. He cited the case of one donor he knew who had been enticed into giving £1 million to the party because he had been persuaded by a treasurer that the donation could lead to an ennoblement.

There is no suggestion any of the donors named in this investigation requested or were promised a peerage or were directed or offered to pay any particular sum to secure an honour. However, numerous Conservative sources have been highly critical of the way the party appears to be using peerages to reward large donors. They say it is morally corrupt and wrong.

Many of the ennobled donors have made minimal spoken contributions to the House, despite the party justifying their peerages on the basis of their business or financial experience. The donors often stop or severely curtail their handouts once they are accepted into the House.

Lord Jay, a former chairman of the House of Lords appointments commission, said donations were increasingly becoming a factor in prime ministers’ selection of new peers.

“It would be better if people were appointed on the basis of the contribution they will make as lords, rather than on other factors such as how much money they’re giving to the party,” he said.

Clamour is growing in Westminster to reduce the size of the House of Lords. Successive Conservative prime ministers have used peerages to reward their friends and cronies, and there are now more than 800 peers, which makes the Lords the world’s second-biggest political chamber behind the annual Chinese Congress.

Since Johnson became prime minister 96 peers have been created.

Cruddas and Brownlow did not respond to requests for comment. Lupton declined to comment. Lawyers for Spencer denied he had taken the role as party treasurer and made donations to secure a peerage. Farmer said he donated to the party because he wanted a Conservative government.

Anneliese Dodds, the Labour Party chairwoman, said last night: “The stench of sleaze emanating from Boris Johnson’s government grows by the day, with even a former Conservative prime minister calling his administration ‘politically corrupt’.

“Labour would stamp out sleaze, with a tougher system to restore the public’s faith in our democracy and politics.”

Residents’ fears grow over risks from district heating networks

Many DHNs [district heating networks] have successfully cut emissions and prices for households. However, those that are poorly designed and inadequately maintained have left some customers enduring freezing homes and enormous bills.

Cranbrook? – Owl

Anna Tims 

It was during a night in June that two radiators exploded in Luca’s house, jetting scalding water across the bedroom of his six-year-old son and bringing down the ceilings of the ground-floor rooms. By a fluke the family was away.

“If my son had been in his bed he would have been severely burned,” says Luca. “The disaster was inevitable. In the 10 years since I bought the house, not once have the pipes and radiators been serviced, and similar things have recently happened in neighbouring properties.”

The London housing estate where Luca lives is supplied with heating and hot water by a district heating network (DHN) operated by Southwark council.

DHNs generate heating from a central source to a whole community via a network of insulated hot water pipes, eliminating the need for individual household boilers.

There are about 14,000 in the UK run by councils, housing associations and private companies, supplying nearly 500,000 homes. They’re considered to be a cheaper, greener alternative to traditional systems, and the Climate Change Committee has estimated they need to account for 18% of the UK’s energy supply if the country is to meet its 2050 net zero target.

Many DHNs have successfully cut emissions and prices for households. However, those that are poorly designed and inadequately maintained have left some customers enduring freezing homes and enormous bills.

They are unable to switch supplier because they are locked into contracts of 25 years or longer, as soon as they buy a property supplied by a DHN. And they cannot get redress for poor service via the energy ombudsman because the sector is largely unregulated.

Campaigners have warned that thousands more people risk being trapped with unaccountable providers, as more networks are rolled out without statutory regulations.

Currently there are no controls on consumer tariffs and no technical standards to which new networks must adhere.

Developers who are required to install DHNs as a planning condition are free to choose the cheapest option, which may not be suiable, and some councils, which run their own networks, lack resources and expertise.

“There are good, well-run networks, but we cannot be confident this will become the norm, even when legislation is belatedly brought in to cover this growing sector,” says Ruth London of the campaign group Fuel Poverty Action.

The damage to Luca’s home was so extensive because DHNs operate at higher pressure and temperatures than ordinary systems, and already leaking pipes were overwhelmed.

Since the flood, the family has been living in temporary accommodation funded by their insurer. He says that he heard nothing from the council for the first three months, until the Observer intervened.

Southwark has now offered to replace the radiators, but until the malfunctioning network is overhauled, the family fears they could burst again.

Luca asked to be disconnected from the scheme so he could switch to a private supplier, but was told that, as a freeholder, he would have to pay a £39,500 fee. With this type of scheme, leaseholders and social housing tenants are not allowed to switch because their share of the costs would have to be passed to other residents.

Councillor Stephanie Cryan, Southwark’s cabinet member for council homes and homelessness, told the Observer: “I am very sorry this issue has taken some time to resolve for this family.

“While we identified a leak back in January, and we can replace all of the radiators, the wider issue is much more complex and, to date, we have been unable to come to a solution in terms of disconnection from the district heating system.”

Seventeen other Southwark residents who approached the Observer reported spending weeks in unheated homes during winter, and five-figure bills to maintain the system that let them down.

Giancarlo Niccoli was asked to pay £13,700 towards repairs of the network on his estate, after his one-bedroom flat was left without fully functioning heating for six months.

He was still billed the annual tariff of £1,000, plus a 10% administration charge, while paying for electric heaters to see him through the winter.

“The council sends multiple engineers to do the same job poorly, and then it needs repair again, at our expense, months later,” he says.

“I once had to move out while my flooring was pulled up because a botched repair caused leaks.”

Southwark insists the costs are allowable within the terms of his lease, irrespective of service standards, a fact supported by a tribunal to which Niccoli took his complaint.

In April, the council launched a compensation scheme which awards residents £3 for each day the system isn’t working, a sum residents claim is inadequate to cover electric heaters.

Jack Lewis, from the Southwark Group of Tenants Organisation, says any added heating costs are particularly concerning given the recent cut in universal credit and rising energy prices. “We will continue to lobby the council to implement immediate payments to compensate for the cost of additional heating measures,” he says.

Southwark council, which supplies a number of council estates via DHNs, admits its systems are not of a good enough standard. It is estimated that it would cost £350m to modernise its networks, some of which date back to the 1960s.

The council told the Observer that the money was not available, partly because of government policy. Increased discounts to encourage council tenants’ right to buy their homes, and the abolition of “rent convergence” – which allowed councils to increase social housing rent – have dented its budget.

The borough has the largest concentration of social housing in the capital. “We have always played catch-up on maintenance across a huge housing stock,” it says.

“The government could cap the bills for leaseholders and pay the difference to councils – then the investment for works can continue, because the money has to come from somewhere.”

DHN customers in other local authority areas have reported similar problems. The government recently pledged £300m for new low-carbon heat networks, and £4.175m of grants to overhaul existing infrastructure. It’s also developing an additional funding scheme to improve the efficiency of networks.

Three years after the Competition and Markets Authority called for regulation of the sector to protect customers, the Department for Business, Energy and Industrial Strategy (BEIS) told the Observer that it was a work in progress.

“The government is committed to legislating to implement heat networks regulation within this parliament,” it says. “This will include consumer protection rules which ensure all heat network consumers receive a fair price, a reliable supply of heating, and transparency of information.”

According to Ruth London, government funding is welcome but insufficient to remedy the problems with existing networks.

For Luca, the promises are too late, and he is fearful of moving back into his house when repairs are complete.

“My trust in the heating network has gone,” he says. “I really feel I’m being held hostage by a system that doesn’t deliver on what it should, and literally endangered my son’s life.”

Morning Neil – Any regrets about your “Aye” vote last week?

As the “Storm in a Sleazecup” sweeps into a second week.

All those Tories who went along with the attempt to subvert the standards regime have been left looking stupid for making themselves complicit with the squalid scheme, only to see the government retreat less than 24 hours later.

Andrew Rawnsley 

Paterson is the bad apple – and Johnson made sure to spread the rottenness 

“For months, they lobbied anyone they could find. They spread noxious rumours about members of the committee. They tried to get the speaker to block the publication of our report. They endlessly misrepresented the process, claiming that witnesses statements were ignored (they weren’t), that Paterson was denied a fair hearing (he wasn’t), that the commissioner decides the sanction (she doesn’t), and that there was no appeal (there was). They lobbied individual members of the committee – which is itself a breach of the rules of the House, which can lead to a suspension.”

Chris Bryant (chair of the standards committee and MP for Rhondda) 

This week’s appalling parliamentary shenanigans prove the saying about bad apples. As Benjamin Franklin put it, “the rotten apple spoils his companions”. That’s exactly what happened with Owen Paterson.

Nobody doubts that what he did was wrong. He took more than £9,000 a month – more in a year than the average cost of a house in the Rhondda – to lobby on behalf of Randox and Lynn’s Foods. Dozens of Tory MPs – including some of his closest friends – told me that my committee’s report was crystal clear and he was caught “bang to rights”.

Yet 250 MPs voted for a motion that would suspend judgment on the matter. Let’s leave aside for a moment the fact that the motion changed the rules in the middle of a disciplinary process, which is surely the polar opposite of due process and natural justice – and that it did so for a named individual (ditto).

Let’s focus on the bullying and determination with which the government machine set about trying to give Paterson a “get out of jail free” card. For months, they lobbied anyone they could find. They spread noxious rumours about members of the committee. They tried to get the speaker to block the publication of our report. They endlessly misrepresented the process, claiming that witnesses statements were ignored (they weren’t), that Paterson was denied a fair hearing (he wasn’t), that the commissioner decides the sanction (she doesn’t), and that there was no appeal (there was). They lobbied individual members of the committee – which is itself a breach of the rules of the House, which can lead to a suspension.

Apparently some Conservative WhatsApp groups are full of libellous comments about the commissioner, who has been repeatedly and viciously calumniated in the press. I have worked closely with some of these MPs. A tiny part of me even admires their loyalty to their friend and political ally. But I say this to them: your friendship has blinded you to the truth.

In the eyes of the public, this may have damaged the whole of parliament and not just the Tories who voted for the nonsensical. I tried to warn the house that the government was leading us into a quagmire. Some brave Conservative souls warned the prime minister. But he doubled down and dragooned his MPs through the lobbies, spoiling 250 MPs with the Paterson rottenness and tarnishing parliament.

Even after Paterson resigned, again preposterously claiming his innocence, Downing Street refuses to rule out the idea that he has been or may be offered a peerage. Clearly that would be appalling.

What needs to happen next? The bare minimum is that the Commons rescinds Wednesday’s motion and approve the standards committee’s report on Paterson. That may seem unnecessary. Paterson is no longer an MP, so the House can’t sanction him any longer. When Denis McShane resigned after an adverse committee finding in 2012, that report was never put to the house. But in this case the house has considered the report – and parked it in an ambiguous layby.

The Commons must now declare beyond doubt that Paterson’s conduct was corrupt and unacceptable and abandon the ad hoc committee the government wanted to set up under John Whittingdale. I hope that can happen on Tuesday. The prime minister has to admit that he got it badly wrong and call off the troops, who still seem intent on attacking the commissioner. Jacob “grand old duke of York” Rees-Mogg needs to apologise for the damage he has done to parliament’s reputation. Otherwise what remains of his reputation will never recover.

As for the standards system, my guess is that voters want more independence, not less. We have few enough checks and balances in the British political system as it is. The standards committee has been looking at proposals and will produce a report on possible changes before Christmas. The house can consider them in the new year. But above all everyone needs to respect the rule of law and the independent process.