Following the arrest of Des Smith, former member of the Specialist Schools and Academies Trust council, the focus of attention has moved away from loans to the Labour party and towards donations and sponsorships of schools.

This may prove to be something of a red herring. On the face of it, Smith was caught red-handed offering honours in return for money. As first reported in the Sunday Times on the 15th of January:

On Friday, Smith told a reporter posing as a donor’s PR assistant that “the prime minister’s office would recommend someone like (the donor) for an OBE, a CBE or a knighthood�.

“Really?� replied the reporter. “Just for getting involved with the academies?�

“Just for, yes, they call them ‘services to education’,� replied Smith. He went on: “I would say to Cyril’s office that we’ve now got to start writing to the prime minister’s office.�

There can be little doubt about it - the offer of honours was made. But this is not in return for giving money to the Labour party, it is in return for giving money to schools.

Of course, any financial transaction leading to an honour is something that can be regarded as corrupt, when the object of the transaction is primarily to procure the honour. However, I can't see very much wrong with rewarding people for donating money to schools, which is surely the sort of thing the honours system is designed to encourage.

Many famous honours recipients are chosen not because of their celebrity status, but because of some work they've done, or donation they've made, for a charitable purpose. They get their medal, the charity gets their money and the whole thing can be regarded as entirely good. If a trip to Buckingham Palace and a medal helps to secure millions of pounds for education, or cancer research, then who can complain?

Well, there are two reasons.

The first is that, through his closeness to Lord Levy and thus the Prime Minister, Des Smith had an unfair advantage in fundraising due to his apparent ability to procure honours for his donors. Other fundraisers, such as Mike Smithson cannot make such pledges and are thus less able to get the donations that their organisations need.

Secondly, the honours in question were not limited to minor honours - a seat in the House of Lords was offered if the donation was large enough. This crosses a line between a simply honourific title, and a position of political influence. Again, I've got nothing against genuine philanthropists getting seats in the Lords, but this should not be done as part of some shady dealings involving the Prime Minister's aides.

In my opinion, this adds considerable weight to the argument for an elected House of Lords. It also adds weight for a more open and transparent honours system. I hope we do not go so far as to stop rewarding those people who donate large sums to charity, but we do need to ensure that favoured donors are not simply able to buy seats in the Lords.

Earlier in the post, I referred to Des Smith as a "red herring". The reason for this is simple: the focus of attention is now on him, rather than on the people who "loaned" money to the Labour party (and the Tories). Whilst the two strands may be connected, I would very much hope that the police keep in mind that buying political influence through donations/loans to parties themselves is far worse than buying influence through genuine philanthropy.