The potentially explosive consequences of a police investigation into the sale of peerages (seats in the UK’s House of Lords) are passing many by. One political columnist even wrote: “The loans-for-peerages imbroglio” may be distasteful, but “it will probably have little effect on the date of Tony Blair’s departure.”

Meanwhile, the prime minister’s supporters argued that it was time to ‘move on’ and have a ‘serious’ debate about different sources of political financing, while lobby journalists assured me that the police would never dare take on Downing Street. “Everyone does it,” said everyone in the know, so there is no reason to get excited. Maybe. But the cynical are just as likely as the politically naive to miss what is going on under their noses. Those who assume the fix is always in can on occasion be flummoxed by events. Perhaps an overdue bout of flummoxing is on the way, for much of what is coming out of Parliament is close to disgraceful.

No one bothers to deny that Britain is the only democracy in the developed world where seats in the legislature are for sale. Not for sale indirectly — there are many countries where you can’t run for election without substantial resources behind you — but openly for sale like luxury cars on a showroom forecourt which any rich buyer can take away. They don’t deny it because the corruption of Parliament is undeniable. The correlation between the honors lists and those who give money to the major political parties as well as Blair’s pet projects is too strong.

The Westminster village’s insouciance is perhaps forgivable because Britain has no history of police investigations into dirty money in politics. It is impossible to imagine a similar scandal in the US or Europe because they have democratic second chambers.

If they didn’t and George W. Bush or Silvio Berlusconi were selling places in their respective senates, then a special prosecutor in the case of the US, or independent prosecutors in the case of Italy, would have got to work years ago.

The novelty of the present situation is that the British police are taking political corruption in its own backyard seriously for the first time in living memory. Scottish Nationalist MP Angus MacNeil whose complaint began the inquiry, is certainly impressed. He met John Yates, the deputy assistant commissioner of London’s Metropolitan Police (the Met) who is heading the investigation, last week and said he did not strike him as anyone’s stooge.

It seemed to MacNeil that the Met has grasped a basic point that has eluded many at Westminster: The sale of honors is a crime and has been since 1925. If the police aren’t going to allow themselves to be nobbled, and I’ve no reason to think that they are, then New Labour may be in deep trouble.

Honest officers who know the law and want to enforce it tend not to let off a burglar if he protests that “everyone does it.” Nor are they impressed by cries that “it is time to move on.” A crime is a crime and the question becomes whether detectives can get the evidence to make the charges stand up in court.

The case of Maundy Gregory, the only other British political operator to be convicted of selling honors, may help them with their inquiries. Gregory was a spy and blackmailer who worked as (World War I premier) Lloyd George’s bagman. He raised £150 million at today’s prices for his master and made a small fortune for himself.

The 1925 act was meant to stop him, but it had no effect whatsoever. Gregory had too much dirt on how Lloyd George’s Liberals and their Tory (Conservative) allies had sold peerages to profiteers from the World War I to be caught by new laws. The fate of Victor Grayson, a brave and flamboyant Labour politician, was a warning to those who wished to challenge him.

Grayson threatened to expose Gregory in 1920 when he announced: “This sale of honors is a national scandal. It can be traced right down to 10 Downing Street and to a monocled dandy with offices in Whitehall. I know this man and one day I will name him.” Grayson disappeared soon after that. He was last seen being taken into a house owned by Gregory. His body was never found, but most historians reasonably conclude that Gregory had him murdered.

What did Gregory in the end was that he tried to corrupt an honest man. He offered Lt. Cmdr. EW Billyard-Leake a knighthood for £10,000. Unlike most of the spivs who bought honors from the Lloyd George government, Billyard-Leake had served with distinction in the war. He was disgusted and turned Gregory in.

Perhaps I am the one who is being naive, but if the modern equivalents of Billyard-Leake are out there, then Tony Blair’s New Labour may not be as in control of events as Westminster believes and the ghost of Victor Grayson may yet enjoy a belated vindication as it watches on from an unmarked grave.