Honours chairman 'shocked' by loans

The chairman of the House of Lords Appointments Commission said he was "shocked" to learn of loans made to the Labour Party by people nominated for peerages by former prime minister Tony Blair.

Lord Stevenson was giving evidence to the Commons public administration committee, which is continuing the investigation it was obliged to suspend while police examined cash-for-honours allegations.

The Crown Prosecution Service announced in July that no charges would be brought in relation to loans to Labour, and confirmed this week that there would be no prosecutions arising from loans to the Conservatives.

The scandal developed after Lord Stevenson's commission contacted Blair in February 2006 to tell him that some of those nominated to become working peers were not appropriate, and the list became public.

Lord Stevenson told the committee the existence of loans, which under existing rules did not have to be declared as long as they were offered on commercial terms, were not the reason why the nominees were judged improper to be ennobled.

"We had given our advice to the prime minister without knowledge of the loans which subsequently came to light," he said.

But he told the committee: "I personally was, and am, quite shocked by the expedient of loans.

"I am not saying they were illegal, but I was quite shocked. It is a bit like tax avoidance."

Lord Stevenson told MPs that his personal preference would be for the "honorific" aspect of the upper house to be separated from its legislative function.

"It would be much more appropriate to be in normal clothes and offices," he said after questioning my Labour MP Paul Flynn.

And he suggested peers would be better known as "mols", or "members of the Lords".

The six-strong commission recommends non-party life peers - 42 have been ennobled so far - and vets party nominations for peerages.

Lord Stevenson drew a distinction between "suitability" and "propriety", saying: "It's our view that the political parties through the prime minister of the day put forward people they regard to be suitable to be in the House of Lords, and it's not part of our job to check that."

"We are there to check for propriety," he said.

Both Stevenson and commission member Lord Hurd said they favoured moving the body onto a statutory footing.

Lord Hurd, who answered fewer questions than Lord Stevenson, said the commission was in a "holding position" while waiting for Lord reform, and described it as "coasting".

They confirmed that Blair has not yet submitted the traditional list of names for his resignation honours, almost four months after stepping down as prime minister.

Lord Stevenson confirmed that the commission will vet Blair's list, should he produce one, although Lord Hurd pointed out "it's not compulsory".