Escaped! Scot free, the lot of them. Spats, Fingers, Joe the Dip, Johnny the Wallop, Smoochy Sue, all got clean away and nobody laid a finger on them. They pulled off the great Labour party funding heist and where are they now? Round at Snipcock and Tweed with their memoirs and then off to join the gang in Marbella.

And what does the chairman of the august Commons select committee on public administration do about all this? Does he raise the alarm and read the riot act? He does not. Investigating the affair last week, Tony Wright threw a tizzy fit at the poor honest copper, John Yates, who had just endured that most painful experience, being royally shafted by the British Establishment.

There is no longer serious doubt over the facts of the cash for peerages affair. Two years ago four rich but otherwise unexceptional citizens, Chai Patel, Sir David Garrard, Sir Gulam Noon and Barry Townsley, were suddenly seized with an overwhelming urge to give Tony Blair some £5m between them. Such was the urge that when so-called friends of Blair replied, “No, no, my dear chap, let’s call it a loan and keep it to ourselves,” they smelt only gardenias. As men of substance they knew that many people, when offered £1m, murmur about “treating it as a loan” but remember only the gift when the wampum has gone down the plughole.

The next thing was a miracle. At this very moment Her Majesty the Queen, no less, was seized with a similar urge concerning these same four gentlemen, one of them domiciled abroad. They were just the coves she needed to put the nation back on its feet as members of her House of Lords.

The place was crying out for their mix of judgment, sagacity and experience in public affairs. Their shoulders were made for the ermine. Pursuivants had even begun doodling with their coats of arms, of loans rampant sinister and cheques couchant with gorges or. So their names, in customary fashion, “went forward”.

Such at least is the lesson according to St Blair. The reality is that selling honours is illegal under the Honours (Prevention of Abuses) Act, 1925. Donating secretly to party funds is illegal under the Political Parties, Elections and Referendums Act, 2000. The word is not dodgy, ill-advised or even philanthropic, it is illegal. The response of those involved should not be: oh come on, everyone does it, give me a break. It should certainly not be to tell an inquiring policeman that, if he presses his case, the prime minister would have to resign and then where would we be, which was the gist of Downing Street’s obstruction of Yates. The proper response, if there is a case to answer, is to stand trial.

Nor are these laws akin to those banning the seduction of the monarch or the clipping of the coinage, outdated rules that parliament has not come round to repealing. They were introduced to stop specific sharp practices, one of them as recently as seven years ago. While it might be peeving to parliamentarians that the original complaint was brought by maverick Scots and Welsh MPs, that should not matter. The MPs were convinced of a prima facie breaking of laws designed to protect the dignity of public life and, like good citizens “having a go”, they told the police.

For good measure the honours scrutiny committee appeared to sympathise. It had declined to approve three of the names, most unusually given the dodgy ones it has been approving for years.

For all this, when the police decided to proceed with their inquiry I knew it would get nowhere. The canaries would not sing. There would be massive perjury and perversion of the course of justice. Evidence would be concealed and, even if a smoking gun were found, the government’s lawyers would make sure no prosecution came to court. As a result, guilty parties would appear to be exonerated and escape disclosure. This is precisely what has happened. The £1m cost of the inquiry might as well have gone to a children’s home.

The alternative course would have been for Wright’s committee to take up the allegations, which Yates had explicitly asked him not to do. Selling honours is a victimless crime whose only casualty is the reputation of parliament and politics. It would have been appropriate for the Commons to sit in judgment, using whatever powers of subpoena it could muster. Only if evidence of illegality emerged would the police have been invited to take action.

Given what everyone knows about the past sale of honours, “everyone” should have been encouraged to stage a “truth and reconciliation” exercise. Wright and his colleagues would then have had overwhelming moral authority to kill the old honours system and initiate a new one, preferably with nothing to do with political parties.

The procedure by which Yates’s inquiry was murdered was worthy of Putin’s Russia. He was clearly regarded as “going too far” in questioning the prime minister and his closest aides, Jonathan Powell and Ruth Turner. When he apparently found evidence both of honours sale and of attempts to pervert justice in a cover-up, the Establishment had to eliminate him.

The attorney-general, who would need to approve any prosecution of Blair or his associates, was Blair’s political buddy and launderer of the Iraq war. He was himself an ennobled Labour donor. He therefore said he would take advice from the director of public prosecutions. But he turned out to be a friend of the prime minister’s wife, so he in turn delegated the matter to a deputy at the Crown Prosecution Service and took advice from an outside QC, David Perry.

He, it emerged, has frequently been employed by the government, not least in defending ministers over the Iraq war. He was a more than safe pair of hands.

Perry was asked if he thought Yates’s case stacked up. We can imagine ministers ricking their necks with winks, grimaces, frowns and nods. The hapless Perry thought deep and advised no.

The evidential test for a prosecution under the 1925 act should, in his judgment, be “unambiguous”, which appeared to mean contested by nobody. Yates, to put it mildly, had failed to pass it. The matter was therefore closed and everyone went on holiday.

Can anyone imagine another judicial system behaving thus? The British have long been smug about the integrity of their public life. They boast the philanthropy of their foreign wars, the cool-headedness of their police, the prudence of their finance houses and the independence of their judiciary.

As a result Gordon Brown, as chancellor, loved to incant that Britain can afford “the lightest touch regulation” of any western political economy. Who needs all those inspectors when the British are so damned honest, he implied.

These assumptions have taken a nasty shock in the past six months.

Institutions as varied as ITV, Northern Rock, the army in Basra and the political establishment have displayed the downside of “light touch” regulation. Under Blair and Brown, the parliamentary ombudsman and the standards commissioner have been obstructed and/or hounded from office at the instigation of Downing Street, simply for doing their jobs.

The nation’s most senior scrutineer, the comptroller and auditor-general, has had to resign over an expenses scandal. A clear election pledge on a European Union referendum has been flagrantly broken. The crudest abuse of the honours system since Lloyd George has passed off without demur by an apparently partial prosecution process.

Cash for honours is not wholly dead. The case is back with Wright’s committee. If it can somehow drag the public’s attention back to an apparent breach of both the letter and the spirit of the law it will do something to restore credit to parliament and especially the Commons (the Lords is tight as a drum on this matter).

If Brown really wants to import into public life the ethics of Calvin and Knox, he has an uphill road ahead of him. He talks liberal on constitutional change yet he shirks the detail, such as Lords reform, party financing, cleansing the honours system and ending the MPs’ expenses racket.

The reason, it has become increasingly clear, is that Britain’s new prime minister is all mouth and no muscle.

simon.jenkins@sunday-times.co.uk

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