Tale of a 'pounds 1m knight' who never was

Viscount Cranborne, Leader of the House of Lords and a Cabinet member, yesterday took the argument over the funding of political parties into new territory by floating the idea that companies and individuals should get tax relief on contributions.

Rejecting calls by Liberal Democrat and Labour peers for an inquiry into party funding, Viscount Cranborne defended the right of individual donors to anonymity and suggested the German system of tax relief for political donations "might well be worth exporting". He rejected more state aid.

The three-hour debate was also illuminated with the admission by a former Conservative Party treasurer that an offer of pounds 1m had been made to him in exchange for a title.

In a brief intervention intended to bolster the Government's case, Lord Chelmer, party treasurer from 1965 to 1977, said that no one had ever given him any money in the hope of receiving a benefit.

But the 80-year-old peer, who said he would have made a speech had he not been so ill, indicated a substantial offer had been made. In a faltering delivery, perhaps best not taken too literally, he said: "One man entered into a deal to give pounds 1m under certain circumstances which I was not able to fulfil ... when he died, on his gravestone he was still 'Mr'.''

Opening the debate, Lord Jenkins of Hillhead, leader of the Liberal Democrat peers, called for an independent inquiry into party funding - preferably by the Nolan committee - and said the Conservatives were defending a line that would not hold even for the next five years. Even if they won the next election, the current of public opinion was such there would be reform.

"The Prime Minister is one of the most experienced evacuators of untenable positions ... But how much better it would be for him, and maybe ultimately for his party, if for once instead of waiting to be pushed by the eruption of some new scandal into the panic setting-up of an ill-thought-out inquiry, he were to be ahead of the game."

Cautioning against compounding "the sins we are inclined to by condemning those we have no mind to", Lord Jenkins said it was nevertheless clear strong efforts had to be made "to retrieve the desperately low standing of the political class, and indeed of the political process".

While the recent actions of a number of MPs were "squalid and wholly unacceptable", they were not likely seriously to pervert the course of government. Lord Jenkins thought it was "very rare" that a minister would alter a decision in according to those who subscribed to the party and those who did not. If there was a danger, it was more subtle: "Where a decision is marginal, the desire to please those whom it is helpful to please is a natural human reaction."

Baroness Young, a former minister, said they should remember that everyone was human and "prone to sin", but she deeply resented the suggestion that a lot of people were taking bribes of one sort and another. "One of the most dangerous things about politics nowadays is to make these kind of allegations, unsubstantiated by evidence at all and then to assume that they're true."

She said that 70 per cent of all the Conservative Party's income in 1992- 93 was raised in the constituencies. Of the remainder, 60 per cent came from companies and was disclosed in their accounts, and the rest came from individual donations.

Lady Young put much of the blame for the low standing of politicians on the media - it denigrated public institutions and no longer adequately reported Parliament, she maintained. What was needed was a measure of trust in people, not another inquiry.

For Labour, Baroness Gould of Potternewton said the party fully supported the need for an independent inquiry into funding. Its aim should be "not to stop political parties raising money, but to make sure it is raised in an open and demo- cratic way".

But Viscount Cranborne warned that an inquiry could "usurp the proper functions of Parliament itself". In a florid exposition of the Government's refusal to extend the remit of the Nolan inquiry to political party funding, he said that as the authority and respect of MPs and others in political life had increasingly been called into question, people had turned to the great and the good.

"It's as if we are beginning to live in a rather crude neo- Platonistic age in which the country relies on a race of disinterested guardians to resolve matters of ethics, of government and of public morals.

"We must be careful in general that inquiries conducted by committees, however eminent, do not become so much of a habit that they begin to usurp the proper functions of Parliament itself."