Cash-for-honours: Blair aides await fate as inquiry ends

Police are calling for charges to be brought against two of Tony Blair's closest allies in a file handed to prosecutors following the " cash-for-honours" investigation.

It is understood that Lord Levy, the Labour Party chief fundraiser, and No 10's director of government relations, Ruth Turner, have been singled out in the 216-page dossier. A further 6,300 pages of supporting documents have also been sent by the Metropolitan Police to the Crown Prosecution Service (CPS).

It follows a 13-month inquiry by Scotland Yard into the alleged awarding of peerages to Labour-supporting businessmen in return for secret loans.

The investigation has cast a shadow over Mr Blair's final months in power and threatens to blight Labour's campaign for the 3 May council elections in England, Scotland and Wales.

Police began by investigating whether there had been breaches of the 1925 Honours (Prevention of Abuses) Act, but then widened their investigation to include claims of a cover-up by officials.

Detectives conducted 136 interviews, twice visiting the Prime Minister in Downing Street to question him as a witness. Lord Levy and Ms Turner were arrested and questioned under caution during the investigation. Sir Christopher Evans, a businessman who loaned £1m to Labour, was also arrested. All three, who deny any wrongdoing, remain on police bail.

Last month, John Yates, an assistant commissioner at the Metropolitan Police, told MPs that he had uncovered evidence of offences linked to electoral anti-corruption legislation.

The police file will be examined by Carmen Dowd, the head of the CPS special crime division, who has been working closely with Mr Yates. She will be advised on the strength of the evidence by the Treasury counsel, David Perry. If she concludes there is a case for prosecution, her decision is likely to be referred to Lord Goldsmith, the Attorney General. Although he is a member of the Government and close to Mr Blair, Lord Goldsmith has refused to stand aside from the case, insisting that he is legally obliged to approve any prosecution.

The CPS is expected to take several months to examine the evidence, meaning any conclusion to the case is unlikely to come before Mr Blair steps down as Prime Minister.

Scotland Yard said: "It is now a matter for the CPS to consider the evidence, advise us on whether any further inquiries are necessary and whether any charges should be brought."

The CPS confirmed it received the police file yesterday afternoon, and said: "It will now be reviewed in accordance with the code for Crown prosecutors to determine whether any individuals should be charged with any offences."

Angus MacNeil, the Scottish Nationalist MP whose complaint triggered the police investigation, said: "This is an enormously significant development. It confirms the scale of the case to answer in the 'cash-for-honours' scandal, and we now await the CPS recommendations. The police are to be congratulated for resisting political pressure and conducting such a thorough inquiry at every stage." Police began their inquiry in March last year after receiving allegations that Labour offered peerages to businessmen in exchange for loans.

The first person to be arrested, Des Smith, a former adviser on Mr Blair's school academies programme, has not been charged.