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Honours inquiry finds 'valuable information'

The net was closing on Downing Street last night after the detective leading the inquiry into "cash for peerages" allegations involving Tony Blair said he had uncovered "significant and valuable information".

John Yates, deputy assistant commissioner of the Metropolitan Police, issued a carefully worded letter to a Commons committee raising the prospect of a prosecution. "Major developments" had been made and have yet to be made public, said Mr Yates, who hopes to send a report to the Crown Prosecution Service in January for a decision on a prosecution.

His remarks gave the clearest signal so far that he believes he has enough evidence to put a case for prosecution to the CPS.

Detailing 90 interviews carried out by his team, Mr Yates told Tony Wright, the Labour chairman of a Commons committee also investigating the abuse of the honours system, that the investigation was still making "considerable progress" and had acquired "significant and valuable material". He added: "Due to the possibility of future criminal proceedings and the need for further inquiries, I do not believe it would be appropriate to comment further." But he said he was entering the "final stages of the investigation", and "assuming the co-operation of the parties and individuals involved, I hope to be able to forward a file to the CPS in January 2007." He said: "Any submission to the CPS will involve careful consideration by them of what are likely to be complex and sensitive legal issues."

His team have interviewed 35 Labour members, 29 Tories, four Liberal Democrats, and 22 "non-party" individuals. Some, including the past leader of the Tory party Michael Howard, have been interviewed as witnesses. Mr Blair has not yet been interviewed.

Leaks from the inquiry have caused growing alarm in Downing Street, including the disclosure that millionaires including Sir Gulam Noon, the so-called curry king, had been told to make loans rather than donations, even though they would have been content to be named. Those arrested and questioned under caution included Lord Levy, the chief fundraiser.

Hazel Blears, the Labour Party chairman, said last night that she had been interviewed. "The police have been to see me once to discuss the inquiry in general terms and certainly I obviously wasn't around at the time that these transactions took place," she said.

There were reports at the weekend that an informal complaint by Downing Street had been made to Sir Ian Blair, the Metropolitan Commissioner and Mr Yates's boss, about the leaks. Mr Yates denied his team had been the source. "This is endorsed by the fact that major developments in this inquiry are not in the public domain," he said.

Some members of the Commons Public Administration Committee were threatening to demand the renewal of their own inquiry which has been suspended, unless there was evidence of police action.