Lord Levy arrested in honours row

Lord Levy, Labour’s chief fundraiser, has been arrested and bailed by police officers investigating the cash for peerages affair.

The peer is a close friend of Tony Blair and the arrest is a major embarrassment for the prime minister. Downing Street refused to comment, saying it was a “party matter”.

A statement from Lord Levy’s lawyer denied he had done anything wrong, saying: “He has not been charged and does not expect to be, as he has committed no offence.”

The 61-year-old was arrested this morning on allegations of offences under the Honours (Prevention of Abuses) Act 1925 and the Political Parties, Elections and Referendums Act 2000.

Lord Levy, nicknamed Lord Cashpoint for the millions of pounds he brought into the Labour party, apparently went to see police voluntarily and was surprised to find himself under arrest.

In the statement, his lawyer said he believed the arrest was unnecessary as he was cooperating fully with the Scotland Yard investigation.

Lord Levy was named earlier this week as the person who told a wealthy businessman not to declare a £250,000 loan he made to the Labour party to the committee vetting his nomination for a seat in the House of Lords.

Gulam Noon was told by an official that because the loan was made on a commercial basis, there was no need to make it public. The BBC named this official as Lord Levy, although Sir Gulam himself refused to confirm this.

Today’s arrest is the second in the investigation into the cash for honours scandal, which is probing claims that political parties were offering peerages to wealthy backers in return for donations or loans.

Scotland Yard is looking into allegations against both Labour and the Conservatives, although both parties vehemently deny any wrongdoing.

Following today’s arrest, a Labour party spokesman told politics.co.uk: “The Labour party has and will continue to cooperate fully with this police investigation and because of ongoing nature of the investigation we will not be commenting further.”

Speaking to BBC News 24, shadow home secretary David Davis refused to comment on reports about Lord Levy, but said the arrest “demonstrates that the police are taking the cash for peerages case seriously, which is a good thing”.

He added: “It is obviously very serious for Tony Blair – Lord Levy is the most senior fundraiser for Tony Blair, he is very close to Tony Blair and been his envoy abroad. It has serious implications for the Labour party.

“This whole cash for peerages affairs has done a great deal to bring the whole of politics into disrepute. I am pleased the police are taking it extremely seriously, and I want to see this whole issue cleared up once and for all.”