Andrew Grice: The day sleaze seeped in beneath the door of No 10

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The Independent Online

At 4pm yesterday, Labour began a fightback on the issue of party funding. In upbeat mood, officials sent out a national newspaper advertisement in which 28 prominent figures -from Sir Alex Ferguson to the Star Trek actor Patrick Stewart - declare they are "proud" to fund the party.

The timing could hardly have been more unfortunate. At exactly the same moment, it was revealed that Lord Levy, the party's chief fundraiser, had been arrested by police investigating the "cash for honours" affair. It was also a case of bad timing for Downing Street officials. It was in the middle of the daily afternoon briefing for Westminster journalists, whose mobile phones rang repeatedly.

But there is no doubt about for whom the timing was worst of all. After promising to stand down at some point before the next general election, Tony Blair has been struggling for months with the question that even his closest allies admit he needs constantly to answer: what is the point of him staying on? He has produced some policy answers, on pensions and nuclear power. But his third term has been dogged by noises off. The speculation about his departure date started immediately after last year's election and has rarely gone away. Nor have the problems in Iraq.

The spectre of sleaze has also cast a shadow over the past year. The link between Mr Blair's flagship city academy programme and honours was bad enough when it erupted in April with the arrest of Des Smith, an adviser and headmaster. But Blair aides were optimistic that the police inquiry, prompted by the Scottish National Party, would not get too hot and would end without any charges being brought.

Whatever the outcome, the arrest of Lord Levy will be a landmark in the Blair years, the moment when the tide of sleaze allegations seeped in beneath the heavy black door of No 10.

Labour will no longer be able to claim that the years of "Tory sleaze" were worse than what the country has seen since 1997. John Major may have had some funny friends in Jeffrey Archer and Jonathan Aitken but there was not even a whiff of financial sleaze around the former Tory prime minister.

In recent days, some close allies have been urging Mr Blair to defy Gordon Brown by staying on until his original target date of 2008, despite the widespread expectation that he will stand down next spring after clocking up 10 years in Downing Street. Yesterday's devastating news makes next spring look an ambitious goal.