Article by John Blundell in The Business

THERE is an excess of prissy comments on the revelations that many wealthy men find themselves ennobled not long after their cheques to party headquarters have cleared. It has always been so. There are a few peerages created for genuine achievement in the arts or sciences or on the battlefield. Most peers, certainly the hereditary ones, are created as rewards for political services – either sleeping obediently through Cabinet meetings – or for cash.

Do romantics think past ennoblements were born of high mindedness? Nobility is not bequeathed to many for nobility. The creation of peerages has always been about co-opting or silencing the powerful. So it should be. So it will always be. The present fashion for suggesting an elected House of Lords is to misread many centuries of history. It has always been a prescriptive institution. Sometimes membership is simply ex officio, such as with the archbishops or the higher judges.

Daniel Defoe, the English secret service agent in Edinburgh, negotiating the Act of Union with Scotland in the opening years of the 18th century wrote back to his masters in London, arguing that, although gold was a helpful lubricant, the most effective patronage was to hint to those Scots peers disposed to endorse the Union they may see their ranks enhanced – lords to earls, earls to marquis, and some to a dukedom. If you look up the aristocrats of Scotland some of the most august titles can be dated to these events. Specifically they were Argyll, Seafield, Annandale, Carmichael, Glasgow, Stair and Lothian – the current Tory MP Michael Ancram being the Marquis of Lothian.

So, Defoe has a really hot idea for Tony Blair. How about reopening the lists for titles with far greater appeal than footling life peerages? The market price seems quite open. It is £1m (E1.43m, $1.75m) per ennoblement though it helps to have done some ancillary good works or charitable gestures.

A New Labour earldom could have a tariff of, say, £5m. If I had the readies I’d be willing to be a marquis for, shall we say, £10m. Dukedoms are not to be granted so lightly, but for about £50m donated (or loaned!) to the party of fairness and equality, any problems could be swept aside.

Let there be no priggishness from the Conservatives or Liberal Democrats. They trade contributions for these vanity appointments as willingly as Mr Blair’s courtiers. A sweep through the past will confirm the truly noble of spirit receive no honours – or decline them politely – as did Michael Foot and Enoch Powell. Note also some wealthy men make a point of saying no honour is sought. Stuart Wheeler gave the Tories £5m stipulating no gong or gonglet.

Politics needs to be funded. We may disagree about the specifics but any democratic political system needs money just like anything else. Yet we can all share the view that recent disclosures are disfiguring. It is as extraordinary as it is comical that Jack Dromey, the Labour Party’s Treasurer, was totally in the dark about the subtle trading Lord Levy, the Party’s chief fund­raiser, was performing.

The implied scandal is a healthy opportunity for reform. It would be a liberation for every party if they were freed from the hunt for cash. One horrible suggestion is that we nationalise or subsidise each party from taxation. That will neuter or anaesthetise what has to be the open swirling nature of politics. The Labour Party would have been locked out of its rise throughout the 20th century from its first meeting in 1900 to its first government in 1924. State funding is already creeping in. The Conservatives took £4.18m last year. People may have little liking for Michael Howard, but they funded him.

I would like to see the rank stench of trade union donations and big corporate cheques cleaned away. Let us abolish them. Blue-collar trade union members have no greater urge to grant cash to Labour than innocent shareholders want their ABC plc to send money to Conservative Central Office. Both parties dislike this endless search for cash. It would be easy to free them from this messy business. But the answer is not the nationalisation of politics, it is to give it back to all of us. By making party funding totally dependent on authentic membership, politicians would be exempt from this present grubby market. Peerages make life brighter for the rest of us and they could be rewarded for true distinction – including business dynamism. Everyone agreed, for example that those two hyper-­energetic entrepreneurs James Hanson and Gordon White enhanced the Upper House when they were restyled as Lords Hanson and White. Signalling an approval or endorsement of commercial success would itself send a nourishing signal to the wider culture. It would not be possible to calibrate this by turnover or profits, but we all know a true entrepreneur when we see one. Freddie Laker should certainly have been a peer under these criteria. As matters stand business success seems to be only honoured if money has been exchanged. I am all for markets – but for open ones.

This topic is easy to resolve. Just as only individuals can vote so only those individuals can pay towards their party. It is the supporters that should pay – and only them. And to ensure a reasonable flow of money it may be sensible to set a modest threshold for tax relief. If the first £100 to an authorised party was tax deductible, parties would overnight be returned to their membership. This simple notion would be entirely wholesome.

There would be some loose ends to tidy up. For example, should payments in kind be banned? Gifting free poster sites, or phone systems, or computers, or free air tickets can be of greater value than cash. My hunch is they should be blocked too.

What is it that political parties spend these mystery millions on? Mostly it is utterly banal – office space and facilities, salaries and research and polling. There is a surge in the money cascades at, or rather just before, elections. I have my doubts anybody’s mind is altered by a party political broadcast but there seems no denying the Saatchi “Labour Isn’t Working” campaign of 1979 enhanced Margaret Thatcher’s tussle to win.

Remember how shrivelled our parties are now. The big membership organisations are the Royal Society for the Protection of Birds, the Royal National Lifeboat Institution or the National Trust. They are vibrant and purposeful. Political parties are tiddlers, mostly populated by old stalwarts or cranks with little real political input.

Lloyd George, the ace manipulator of peerage patronage, argued it was the cleanest way to do an unlovely job. He acclaimed the simple charm of a baronetcy – a hereditary knighthood – and then in a gesture of superb symmetry gave one to the journalist interviewing him.

The urge to reform what looks either squalid or absurd in daylight could lead us to the horror of state subsidies in politics. That would be as numbing as it has been in every other sphere.

John Blundell is Director General of the Institute of Economic Affairs.