SCOTLAND YARD’S investigation into the loans-for-peerages affair was widened yesterday to include the failure by Tony Blair to tell the Labour Party treasurer about the £14 million involved.

The Times has learnt that the police inquiry has moved beyond investigating only whether the 1925 law banning the sale of honours was breached to take in the decision to keep Jack Dromey, the party treasurer, in the dark about the loans from 12 benefactors.

Under the terms of the Political Parties, Election and Referendums Act passed in 2000, it is an offence punishable with up to one year in prison to knowingly give treasurers false information about donations. Under the same law it is a criminal offence to withhold information from treasurers about donations with intent to deceive.

The only Labour Party figures who knew about the loans were the Prime Minister, Lord Levy, his personal fundraiser, and Matt Carter, who was general secretary of the party. All three will be interviewed by the Specialist Crime Directorate at Scotland Yard.

Mr Dromey, who is married to the government minister Harriet Harman, last month publicly criticised the Prime Minister for not telling him about the loans. He said: “The Labour Party, its institutions, its democracy, needs to be respected, including by No 10.

“I had no idea about the loans that were obtained in secret and that is absolutely wrong. Neither the chairman nor myself, the treasurer, knew anything about what was going on in respect of these loans.”

The police will also look at the money received by the Conservative Party from overseas to see whether it was in breach of election law, which bars “donations by impermissible donors”. Donations from overseas are illegal and can also attract a prison sentence of up to one year, but loans are not.

The Tories returned their money to the overseas lenders last week to avoid them being publicly identified.

As part of their investigation, officers from the seven-strong Specialist Crime Directorate have already been to the Ceremonial Unit of the Cabinet Office, which draws up honours lists. They have written to both party treasurers to demand all documents and e-mails relating to the loan transactions.

The intensifying police inquiry has led the Electoral Commission to suspend its own inquiry into the loans affair. In a statement, it said: “The Electoral Commission has decided to suspend temporarily its enquiries into past loans to political parties pending the outcome of the related police investigation.” It said that it would be “liaising” with police. The commission had asked party treasurers to confirm that the loans were commercial, which meant that they did not have to be declared. A spokeswoman said: “There is potential for the police investigation to overlap with areas we are looking at so it is better for the police to deal with it.”

A Labour Party source said that there was a growing anxiety about the rapidly escalating inquiry. “The police are clearly taking this very seriously and so must we,” the source said.

The police investigation began after complaints from Angus MacNeil, a Scottish Nationalist MP, about the possibility of peerages being sold in contravention of the Honours (Prevention of Abuses) Act 1925.

He said that the investigation was clearly intensifying. “It just goes to show the game some political parties are playing is far more serious than the cosy carve-up they thought it was.”

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