The Honours system is corrupt, everybody knows this. It is a means of rewarding cronies and sucking up to high society. Now most people seem to think that this a good reason to scrap the whole thing or at least reform it but that misses the point. As it is if you donate large amounts of money to political parties, or serve out a career in the civil service without spilling the beans you will be rewarded with a gong. If the OBEs, MBEs, KCMGs etc didn't exist then the politicians would still want to give something in return for services rendered so what would the various donors receive instead?
There would almost certainly be an expansion of patronage in the public sector, quangos already provide helpful sinecures for political allies so would become even more politically loaded. Posts that are in the gift of the PM would be stuffed full of cronies. For instance in the USA many ambassadorships are essentially reserved for large party donors of the President's party (obviously this only applies to the good countries, crap countries get professional diplomats), this is the sort of thing which could easily spread to Britain if we lose knighthoods to fob them off with.
The honours system doesn't create corruption, it merely channels what sleaze there is into a less harmful channel.
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