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Session One -
Grant Shapps questions Sir Gus O'Donnell
Q249 Grant
Shapps: Do you believe that it is
public-spirited to give money to political parties?
Sir Gus
O’Donnell: Fortunately, Hayden Phillips is
having an inquiry into party funding and he will be able to look at all of
those things.
Q250 Grant
Shapps: It is not a trick question; I am
just interested to find out whether you think that it is for the public good
that individuals come forward and donate money or lend money to political
parties. In society is this something to be praised and honoured or is it
something to be, frankly, looked at in a sceptical manner, of “What are they
after”?
Sir Gus
O’Donnell: I do not have a view about that,
as Cabinet Secretary.
Q251 Grant
Shapps: It seems to me what we have ended
up with is a situation where, if you give money nowadays, the only option
that a government might have in order to thank that person is to stick them
in a legislative body, the House of Lords. On reflection, might it have
been a mistake to prevent people who had donated money from receiving
honours?
Sir Gus
O’Donnell: People who had donated money
were not prevented from receiving honours. The honours system assesses
people on their merits. The principle is that you should not be ruled out
from receiving an honour because you have made a donation to a political
party.
Q252 Grant
Shapps: That comes back to my earlier
question. Unless you believe that it is somehow public-spirited, for the
public good, that people come forward and give cash to political parties, or
lend it in recent cases, then there would not be a reason to give them an
honour. Is that right?
Sir Gus
O’Donnell: Honours are not given because of
donations.
Q253 Grant
Shapps: They used to be, did they not?
Sir Gus
O’Donnell: How far back can you go?
Chairman:
We are in the Lloyd George Room.
Sir Gus
O’Donnell: In this room, I guess you should
go back a long way, and that is precisely why the 1925 legislation was
implemented and all the rest of it, but my point is, the principle about
honours is when the committees are assessing these things, they assess
whether an individual deserves one in terms of their overall contribution to
society. The fact that they have given a donation is something that the
committees will know about now, but that is simply because the independent
chairmen have decided they would like to know rather than not know.
Q254 Grant
Shapps: You are aware that the 1925 Act has
only been used once, of course, to successfully prosecute. Would you say
there have never been honours bestowed since that time – I think that was in
1933 – for political donations? What is your perception of the system that
you are trying to clean up?
Sir Gus
O’Donnell: My perception of the system is
that there were perceptions that it was not very…
Q255 Grant
Shapps: So it was not true; it was just a
perception?
Sir Gus
O’Donnell: I do not know. I would be
pre-judging cases that were not ever brought. What I am saying is I am
responsible for the machinery backing up the honours system now, and I think
what we have now is a good system.
Q256 Grant
Shapps: Is it not the case that actually
what has happened here is the Prime Minister removed the ability to give an
honour, which actually, in practical terms, means nothing – an OBE, an MBE,
which has no value other than the letters after your name – and instead
narrows his options down into only being able to give people that he wanted
to benefit for having made donations or lent money membership of the House
of Lords, which does have real power, because it helps to make the laws of
this country, and in fact he has just narrowed himself down into a dead end?
Sir Gus
O’Donnell: First of all, I think you
dismiss the honours system too quickly, in the sense that if you have been
to one of these events at the Palace, as I say, this latest one, 85 per cent
of them MBEs and OBEs, for those people this is not a trivial matter. This
is a huge recognition.
Q257 Grant
Shapps: You are confusing two points. I am
not saying it is trivial at all. I think it is a huge privilege to be given
an OBE. What I am saying is there is no legislative ability attached to
receiving an OBE. You cannot then make laws for the country. What the
Prime Minister has done – this is what I am putting to you and I would be
interested in your comments – is to ensure that the only place that he could
reward people who had given money to political parties was via the House of
Lords, a place where laws are made for this country. In fact, that is far
worse than the earlier system, which simply gave people gongs.
Sir Gus
O’Donnell: The Prime Minister, and, I
think, all leaders of political parties, are attempting to put people into
the Lords who they think will make a strong contribution to the governance
of this country. That is the principle they take, and they are responsible
for their nominations. Their nominations now go to HOLAC, who do a much
stronger scrutiny than there has been before, and that is the way the
process works.
Q258 Grant
Shapps: In which case, I am still not clear
on the original point. It is not public-spirited, in your mind, to give
money to political parties? That should never be rewarded in any way, shape
or form by public administration, effectively, by the Government?
Sir Gus
O’Donnell: I said I did not have a view
about whether it is public-spirited or not. I think there is a genuine
issue about how you fund political parties in this country. To what extent
do you want to have state funding? To what extent do you want to allow
donations from businesses, unions, individuals, whatever? That is what
Hayden Phillips is looking into. When it comes to honours, basically, my
experience of the independent chairs has been that they have assessed people
on their merits and actually, whether they have given a donation or not has
been a fairly third-order issue; it is just something they want to be aware
of. It is not something they see as critical in the decision whether to
give one or not.
Session Two -
Grant Shapps questions:
LORD STEVENSON OF CODDENHAM, RT
HON LORD HURD OF WESTWELL
and MRS ANGELA SARKIS
Q1 Grant
Shapps: Can you remind us how members of
your Commission are made up, other than the political members, how you are
actually appointed? This question could be to Angela Sarkis.
Mrs Sarkis:
There were originally seven members of the Commission. There are now six
because one has stepped down early through other pressures of work. The
political nominations…
Q2 Grant
Shapps: Those I understand. I am
interested in the so-called independents.
Mrs Sarkis:
We were appointed through open competition. The jobs were advertised. We
applied for those jobs and went through the normal process of application.
Q3 Grant
Shapps: The Prime Minister plays what role
in that?
Mrs Sarkis:
It was his office who actually did the recruitment.
Lord
Stevenson of Coddenham: To be very precise
– and I do not quite know who within government did it – there was a rather
intimidating interview panel chaired by the then Head of the Civil Service,
Sir Richard Wilson. I imagine that panel then made a recommendation to the
Prime Minister but that was exactly what happened, and there were
head-hunters, you will not be surprised to hear.
Q4 Grant
Shapps: The answer, as I understand it, is
that you are in fact appointed by the Prime Minister but via that panel.
Mrs Sarkis:
That is correct.
Q5 Grant
Shapps: So in a sense, we do have the Prime
Minister’s own people to an extent sitting on a committee to decide on
appointments which quite often will come via the Prime Minister. So there
is a little bit of a circular connection here, is there not?
Mrs Sarkis:
No, I do not accept that at all. We are certainly not the Prime Minister’s
people. We are incredibly independent individuals. I can give you my
assurance of that. But that apart, we recognise and take that role very,
very seriously, being independent on this Commission. We know the
importance of the work. We have already been discussing the significance of
what we do. We need to ensure that the independent people are bringing an
independent view and an independent perspective, which at times will be
different to the political appointees.
Q6 Grant
Shapps: Nonetheless, we must accept that
the Prime Minister must have liked you at the point that he appointed you,
otherwise there would be no point in him having appointed you.
Lord
Stevenson of Coddenham: Does the Prime
Minister know you?
Mrs Sarkis:
No, he does not.
Lord
Stevenson of Coddenham: I see where you are
driving to. I just do not think it is right actually. It was very remote
from the Prime Minister. The Head of the Civil Service did it. It was
unbelievably post-Nolanesque proper, and we have operated very independently
and we have no complaints.
Q7 Grant
Shapps: Thanks to this leak in fact we have
seen the demonstration of your independence. It just occurred to me that
might be in the same way that members go to the House of Lords, politically
appointed, and then end up being terribly independent because they are there
for the rest of their lives. Do you consider that there is ever a sense of
civic virtue in giving money to political parties?
Lord
Stevenson of Coddenham: Gosh! Can I say I
think the issue as to the ethics, the civic virtue or whatever the
expression was you used to the Cabinet Secretary earlier on, is not a matter
for this Commission. We have a narrow job that starts when we receive the
names from Number 10 and send the advice in. We might individually have our
own views about the funding of political parties, but as a Commission we do
not.
Q8 Grant
Shapps: Let me ask it the other way
around. Does it rule out an individual now?
Lord
Stevenson of Coddenham: No, donations and
loans absolutely are not a means, with any automaticity, of getting a
peerage, but they are not a bar to getting a peerage, and to some extent
that is what we exist for.
Q9 Grant
Shapps: Just to understand this process, if
you had a candidate in front of you and you could not really determine any
other reason why this politically suggested candidate had been placed in
front of you other than the fact they seem to have given £1 million or £2
million to a political party, you would then automatically reject them?
Lord
Stevenson of Coddenham: We would not reject
them. In that hypothetical situation, we would be likely to advise the
Prime Minister in the terms that it was difficult to see that they were a
worthy candidate.
Q10 Grant
Shapps: That type of hypothetical situation
is the type of thing that we may have seen in recent times.
Lord
Stevenson of Coddenham: You may have done,
yes.
Q11 Grant
Shapps: Would you say that, as a
Commission, you have become more activist in your role?
Lord
Stevenson of Coddenham: What do you mean by
“activist”?
Q12 Grant
Shapps: Simply that if you go back a few
years, it is quite clear the politically appointed people who had donated
money could still make their way into the Lords. It seems that now,
certainly in the last year, it is almost impossible for that to happen
because you are much more activist than you were.
Lord
Stevenson of Coddenham: No. I am very glad
you asked the question. To make something absolutely clear, we have not by
dint of what has happened over the last six months acquired sharper teeth or
been more activist or tougher. It just happens that the list we have
received, which most unfortunately was leaked, which made the whole process
infinitely more difficult for everyone, contained a number of people about
whom we advised the Prime Minister in a certain way and we did not see
previous lists as having people about whom we would give that advice. We
have not raised the strength of our scrutiny.
Q13 Grant
Shapps: I hear what you are saying but
there is something which does not add up here. On the one hand, you are
saying that there was never a time in the past where your recommendation to
the Prime Minister was not accepted; in fact, you went as far as to say if
that had ever happened, you might want to consider resigning or going public
or something else. So you are very clear that your recommendations have
always been accepted, but on the other hand, we know that you have, quite
rightly, in recent times – you have suggested that that hypothetical might
be true – actually prevented people who have given money and apparently done
nothing else from getting a peerage. How can both be simultaneously true?
In the past we know that people have been made peers because of the money
they have given to political parties, and yet you say you have not become
more activist. You must have become more activist in your approach.
Lord
Stevenson of Coddenham: No. If I go back
to the fundamentals, the dialogue we had a moment ago, giving a donation or
a loan does not ipso facto rule you out of getting a peerage, nor,
ipso facto, does it get you a peerage. It is our job to vet for
propriety people who come on political lists and with particular attention
but not exclusive attention to those who have given donations or loans, and
I have shared with you the judgments we make in doing that, and that means
that some people who have given loans/donations we will see as credible
nominees and others we will not. To go back to the question, these are
subjective judgments. I do not see us as having become more or less
activist.
Lord Hurd of
Westwell: What we have done is we have
continually tried to tighten and complete our procedures. The Chairman has
already given one example, which concerns loans. We are now removing any
conceivable scintilla of doubt – we do not think there was a reasonable
doubt, but in future there will be absolutely no doubt that loans have to be
declared in the certificate we get. Another change we have made which has
not been mentioned is we decided to shift the requirement from the Chief
Whip to the chairman of the party. Why? Because – and this was our
experience on Honours Scrutiny – the Chief Whip does not always necessarily
know. He knows the parliamentary aspect, but that is only one aspect. We
thought that the chairman of the party was more likely to be in a position
to be able to sign a certificate in good faith on the whole range of
political activity, and that was a change which I think tightened it up. So
we may be becoming more effective by tightening our own procedures.
Q14 Grant
Shapps: So let me understand this
correctly. You are saying you do not regard yourselves as becoming more
activist as a Commission, but you do think that the rules that you have
adopted have tightened up, which might actually in effect come to the same
thing. You are giving us a patchwork picture of your work and, for reasons
of confidentiality, you cannot fill them all in, but at the same time, you
are asking us to believe that it is only in the last set of nominations that
four people were effectively rejected, that you have never recommended
rejection prior to that, and that the Prime Minister has always agreed with
your recommendations. That makes it sound like it is only recently that you
have started rejecting on the grounds of cash.
Lord
Stevenson of Coddenham: I understand that
and, just to recap, there is a paper which sets out the evolution of our
processes. It is very clear and, as Douglas has said, we have tried,
frankly, to remove ambiguity. There was ambiguity as to what a donation
was: if people were giving money from their companies or overseas trusts or
whatever. We should be as specific as possible. If I can be very specific,
at the time we did that, we were just as watchful for those kinds of
donations as we are today. So I really do not think we have become more
activist. I think perhaps we have learned how to be more systematic. I
would accept that completely.
Q15 Chairman:
Just on Grant’s earlier question, Jack Straw was on the Today
programme this morning. His strong argument was that giving money to a
political party is a good thing to do. It is, in Grant’s language, an act
of civic virtue. As Gordon will remind us in a moment, we have the Prime
Minister saying that people who give money to government programmes like
academies ought to be in the Lords because these are good people doing good
things. Yet your approach is to regard a donation as a potential
disability.
.
