Alan Watkins: The Case of the Twelve Red-Bearded Dwarfs: truly a fable for our troubled times

In his account of The Case of the Twelve Red-Bearded Dwarfs, the great humorist Beachcomber (J B Morton) tells us of the decision to call the entire Cabinet as witnesses. Morton used to write a column in the Daily Express, over many years, though Lord Beaverbrook, the proprietor, failed to find it funny. He kept it on because other people seemed to like it, to his puzzlement.

In the more recent case of the Missing Millions and the House of Lords, members of the Cabinet have likewise been interviewed by the constabulary, but the case has yet to come to court. Mr Tony Blair, it seems, has still to be called to assist the police with their inquiries.

But Mr Gordon Brown (I am going by the newspaper reports already published) will probably be seen, among others. The former former party chairman, Mr Ian McCartney, has certainly been seen - an office invented by Mr Blair after the 2001 election, whose first occupant was Mr Charles Clarke.

Mr Brown has apparently said that he knows nothing about such matters, being preoccupied night and day with considerations of high finance rather than the lower variety. But Ms Ruth Kelly was closely involved with Mr Blair's pet scheme for city academies when she was at Education. And there was a whole menagerie of small creatures - and some of them not so small, such as Mr Jonathan Powell - frolicking in the hedgerows and ditches of No 10.

When commander John Yates ("Yates of the Yard") began his investigations some months ago, there was a disposition to depreciate their importance. I told them, but they wouldn't listen. In this respect, the commentating classes, or most of them, united with the denizens of Downing Street. The intrepid - even if imprudent - commander was merely going through the motions, for the sake of form.

Honours had always been bought and sold; had been traded from long before the days of Maundy Gregory and David Lloyd George. The constitution of the 18th century was based on corruption and little else.

The system had been mitigated by merit, or the appearance of merit, and refined by Victorian piety: but the system was in all essential respects the same. After all, what was wrong with sending a generous citizen to the Lords and calling his wife a Lady? The political parties benefited; no harm was done; indeed, simple happiness was provided for one and all.

What has happened is the direct consequence of the successive Labour governments' actions since 1997. The link was weakened between Labour and the trade unions: partly because New Labour wanted the connection to seem less strong and partly because the unions were themselves less prosperous than they had once been.

At the same time, the law had restricted the activities of the parties because of the excesses of the Major government (even if these seemed tame enough by the standards of what was to come later). The result of this was that Mr Blair and assorted apparatchiks thought up a wheeze to circumvent the law by turning gifts into loans; or not, as the case might be.

Last week the Attorney General, Lord Goldsmith, intervened; or, rather, the Attorney kept as quiet as he decently could in the circumstances, leaving others to ask the questions instead. The first thing he said was that he would not abdicate from his responsibilities as the chief law officer of the Crown. He went on to modify this later, in a letter to his Shadow, Mr Dominic Grieve, by saying that he would appoint an independent QC to review any material by the Crown Prosecution Service.

Two of the Acts under which prosecutions might be brought, those of 1889 and 1906, require the Attorney's consent. The perhaps more likely use of the Political Parties, Elections and Referendums Act 2000, the Theft Act 1968 or the Honours (Prevention of Abuses) Act 1925 does not need this consent. But a prosecution can always be withdrawn by the Attorney General, as distinct from being instigated on all occasions.

This was what happened in 1924, when Ramsay MacDonald's minority government was defeated by the Liberal and Conservative parties together. The cause of the defeat was the withdrawal of the prosecution of the Workers Weekly. The withdrawal had been undertaken by the Labour Attorney General, Sir Patrick Hastings. He was a leading barrister of his day, more flashy than his successor Lord Goldsmith, though equally innocent of politicians and their wily ways.

Lord Goldsmith agonised over the legality of the Iraq war before coming down on Mr Blair's side after Herculean exertions of the spirit. It is perhaps worth remembering that Lord Kilmuir, the Lord Chancellor in 1956, sent Anthony Eden a memorandum saying that the Suez war was illegal, and he survived in the Conservative government for another six years.

At all events, at the start of the MacDonald government, the Cabinet passed a motion to the effect that no political prosecution should be undertaken during its period of office. Whether the Cabinet was correct to issue this instruction is arguable: perhaps not. What was not in dispute was that the view was recorded, that the prosecution was clearly political and that, from a variety of reasons, Hastings undertook and then withdrew the prosecution.

The first Labour government duly fell. MacDonald's successor, Stanley Baldwin, gave an undertaking that the Cabinet minute would be expunged, as it presumably was. Baldwin and his successors, himself echoing A J Balfour, re-echoed the lofty orthodoxy that the Attorney General was the purveyor of disinterested and dispassionate legal advice to the Government.

Of course, it is not as simple as this. It never is. In periods of industrial unrest, notably during the two world wars of the 20th century, the Attorney General would ask the advice of ministers such as the Home Secretary and the old Minister of Labour; while, for their part, ministers would make their views only too clearly known to the Attorney about whether prosecutions should or should not be undertaken.

Similarly, in the Nigerian civil war, the Labour government got the Attorney, Sir Elwyn Jones, to prosecute unsuccessfully Mr Jonathan Aitken and others for breaching the Official Secrets Act, though by the time the case came to court Edward Heath was in power.

From what one can see, any prosecution about honours is more likely to be withdrawn or otherwise impeded than it is to be vigorously pursued by those set in authority over us. And yet, the political classes - in the press as much as around the Prime Minister - have so far been proved wrong. The fate of MacDonald and his Attorney General serve only to remind us of their downfall in 1924.