Blair and the £14m questions

Scotland Yard is now investigating Labour's secret loans scandal. So how serious is it for the Prime Minister, a key mover in the affair?

1. Why did the Labour Party need to raise £14m in the first place? And why was this money raised as loans rather than gifts?

The party was strapped for cash for the general election campaign, and needed an urgent injection of funds to prevent it being outspent by the Tories. Lord Levy, the party's fundraiser-in-chief, advised that millionaires were more ready to give loans than donations because it avoided the embarrassment of disclosure of names. Tony Blair and ex-General Secretary Matt Carter knew about the secret loans deal. But senior figures such as Gordon Brown and John Prescott did not were kept out of the loop.

2. Can the loans be converted into donations at a later date?

Yes. There is nothing to stop the loans quietly being turned into donations when the dust has settled. Some of the lenders, such as Chai Patel, actually offered donations but were told to make them loans.

3.Over what time period are the loans to be repaid? And what plans are in place for the repayment of the loans?

The repayment terms are believed to be between 3 to 5 years, but are being kept secret. The lenders were told that they could have the loans rolled over and renewed indefinitely if they are not paid off within the term.

4. The Labour party have said that the loans are at "commercial rates". What does this mean. For instance, is the interest repaid monthly?

Interest is base rate plus 2 per cent. The party has made provision in its accounts to start repayments this year. But it is not like paying a regular mortgage. Repayments are being made over several years, and are likely to be flexible.

5. Have any of the loans been repaid yet?

No. Officials said it would cause "difficulty" if the lenders asked for their money back.

6. Are there any beneficial tax implications, either for the party or the lender

No. Parties are not charitable institutions and lenders cannot claim tax relief. But that could change. Meanwhile, the lenders will have to pay tax on any interest paid to them ... if they claim it.

7. If a business in financial trouble were to seek an unsecured £2m loan from a bank, what would the reaction be?

The risk factor would substantially increase the interest rate payable by at least a percentage point or two, and there would be tighter policing of the repayments. Any defaults would lead to the loan being called in. That is not going to happen with these loans.

8. Did the Tory party first use the loan system? If so, do we now know who loaned them money?

Yes, Lord Ashcroft led the way by loaning the Tory party £2.5m but he said in his biography he wants the money back. The Tories are said to have gained around £20m in loans but so far have refused to reveal lenders' names.

9. If Labour has done nothing wrong, why has the past week seen a series of admissions and initiatives?

It's a case of cleaning the stable after the horse has bolted. They know it stinks, but they are getting rid of the smell by a dose of party funding reform.

10. With more bad news from Iraq, the continuing schools rebellion and the aftermath of the Jowell affair, can Tony Blair shrug this one off? Or does the loan scandal hasten his exit from Downing Street?

The "Teflon Kid" survives again, but it won't last for long. His credit rating with the party has plummeted. His personal poll ratings have slumped and there were more calls yesterday by Tony Robinson, actor and former NEC member, for him to go. They will grow by the time of the party conference in September unless he sets the date for handing power to Gordon Brown, who takes centre stage today.