Have honours been abused to boost a controversial education policy?

Until the arrest yesterday of the City Academies fundraiser, Des Smith, I thought that Tony Blair would escape from the “cash for peerages” row relatively unscathed.

After all the Prime Minister has survived an awful lot, from Bernie Ecclestone through to David Kelly and the Hutton hearings, that those legendary Teflon qualities would see him through almost anything.

Now I am not so sure. For abusing the honours system to underpin the controversial city academy strategy could be much more damaging to him than raising the money so that Labour can fight the Tories.

For the injection of private money into setting up these schools has been a key weapon in pursuing a policy that seems to many to be about wresting control from local authorities – moves that do not command widespread support within Labour.

Donors who have given to city academies are supporting a key part of the Government’s educational strategy so it’s no wonder that figures like education minister, Andrew Adonis, have been keen on promoting them. This is from the original Sunday Times report in January which sparked off the whole affair.

“..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.”

Smith was even more confident about the prospect of securing an honour if the donor was willing to give as much as £10m.

“You could go to the House of Lords and get a lord . . . become a lord,” he said.

“So, if you invested in five city academies over, say, a 10-year period, it would be . . .” said the reporter.

“A certainty,” said Smith.

There is so much there that could provide the spring-board for taking the inquiry right into the heart of Governnment and Downing Street. When a process like this is under way it’s going to be very hard to stop it.

Blair could be under threat and I have slightly reduced my positions on him surviving until the end of next year in the “When Will Blair go” markets.

I should declare an interest. My day job is as an educational fundraiser and for a decade, until last year, I was Director of Development at Cambridge and then Oxford Universites. I am now at York and I am only too aware of the seriousness of competition that the city academies fundraising programme has presented us with.

There are only a limited number of people about who can make seven and eight figure gifts and since way before the Sunday Times report I have been concerned about the competitive advantage the honours system has given the Government.

Mike Smithson