Tony Blair could be interviewed soon over cash for peerages

Tony Blair

Tony Blair will be interviewed as early as next month by the police in the "cash for peerages" corruption inquiry, authoritative sources have revealed.

The current Scotland Yard investigation is considered to be "in the balance" as far as uncovering proof of criminal action, The Independent has been told.

A senior legal source said: "The question of any charges is currently in the balance - it could go either way."

The Prime Minister will be interviewed in either August or September before the Labour Party annual conference. He will be questioned about what he knew of the allegations that millionaires were nominated for peerages in return for making massive loans to the party in the run-up to last year's general election.

News that Mr Blair will be interviewed in the next nine weeks will cast a shadow over the Labour conference which starts on 28 September in Manchester and is already being dominated by talk of whether he will use it to disclose when he is standing down.

The detectives interviewing the Prime Minister are expected to include Assistant Deputy Commissioner John Yates, who is leading the corruption investigation.

The last Prime Minister to be interviewed in a corruption inquiry was David Lord George in the 1920s.

Detectives from the Metropolitan Police's Specialist Crimes Directorate police have questioned 48 people so far, 13 of them under caution. Three individuals - understood to be Labour lenders - refused police requests to be questioned about Labour's secret loans that totalled £13.9 million ($41.11 million).

Two files have been submitted to the Crown Prosecution Service so far.

The police inquiry is understood to be making good progress, although it remains a tricky investigation. One source described the findings so far as "pretty fishy, although not necessary something that will lead to criminal charges".

Lord Levy, the Labour Party fundraiser and Tony Blair's close friend, has already spent two days being questioned by the police.

A source said: "Lord Levy is clearly at the centre of the inquiry."

It is understood that the police decided to arrest Lord Levy because he is considered to be the key individual in the case and that detectives discovered that some of the people they had previously questioned under caution had failed to produce all the documents that had been requested.

The police have already interviewed at least two Government ministers about the cash-for-honours allegations, it was disclosed yesterday.

A spokeswoman for Lord Sainsbury, the Parliamentary Under Secretary of State for Science and Innovation, confirmed he had been questioned by detectives during their investigation.

In April, Lord Sainsbury faced a possible probe into an alleged breach of the ministerial code after admitting he had failed to disclose a £2m loan he had made to the Labour Party - despite publicly stating that he had.

He apologised for "unintentionally" misleading the public, blaming a mix-up between that loan and a donation - also of £2 million - he had made at about the same time.

Lord Sainsbury has an estimated fortune of between £1 billion and £2 billion, stemming mainly from his family's supermarket empire.

Ian McCartney, the Trade Minister and former party chairman, has also been questioned. A spokesman for Mr McCartney said: "He voluntarily offered to speak to police. "He was interviewed as a witness, but he wasn't cautioned and did not attend a police station."

Downing Street refused to disclose yesterday whether the two ministers were receiving legal advice from Government lawyers - if they are then tax payers would be funding what is supposed to be an inquiry involving the Labour Party.

A spokeswoman for Defence Minister Lord Drayson denied speculative reports on the internet that he had also been interviewed as part of the police probe.

- INDEPENDENT