MPs agree to postpone loans probe

MPs have today agreed to a police request not to interview key witnesses in their investigations into the loans for peerages row.

The decision by the public administration committee comes after Scotland Yard warned such a move could prejudice the criminal inquiry into whether political parties have offered honours in return for loans, or for sponsoring a city academy.

Chairman Tony Wright had previously insisted that his committee must not be put off its inquiries for too long. When the MPs first agreed to suspend their probe in March, he warned the matter went “to the heart of the political and parliamentary process”.

But today he said he had been told that interviewing certain people – thought to include Lord Levy, Labour chief fundraiser and a key ally of Tony Blair – might “conceivably cause some difficulties on a legal front later down the process”.

Mr Wright told reporters that “we certainly don’t want that to happen”, but also said he had given police a deadline of July to report back to them, insisting: “We certainly don’t want the police inquiry to drag on into an infinite future – this is no blank cheque.”

And this morning the committee began a wider review into the loans for peerages row by interviewing Lord Stevenson, chairman of the Lords Appointments Commission, which prompted the furore by blocking some of Mr Blair’s nominees for the upper House.

Under terms of parliamentary privilege, the committee can effectively do what it wants, but the MPs were unlikely to want to compromise any police probe.

Officers are looking at whether political parties had offered honours to wealthy businessmen in return for loans to support their electoral campaigns last year. Both the Conservatives and Labour deny the claims.

Scotland Yard is also investigating allegations that the government tried to persuade backers to sponsor the prime minister’s flagship city academy scheme by offering them a peerage. This has been vehemently denied.

In a statement last night, Metropolitan police deputy assistant commissioner John Yates accepted the “quite proper aim” of the public administration committee to pursue the allegations of political impropriety.

But he warned: “We are seeking the continued co-operation of all interested parties so that their enquiries do not unwittingly undermine the criminal investigation.”

He also made clear that although the police investigation was at an early stage, “significant progress has been made”, including the arrest and bailing of one man, and the interviewing of several other individuals under caution.