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Last Updated: Wednesday, 29 March 2006, 11:33 GMT 12:33 UK
Police 'could widen loans probe'
The Houses of Parliament
The loans furore continues to rumble on
Police investigating complaints about secret loans to Labour say they have not ruled out extending their inquiry into claims of corruption.

The Metropolitan Police said last week it was examining allegations that laws on selling peerages had been broken.

Amid questions about big donors winning government business contracts or planning deals, Scotland Yard has told MPs the inquiry could widen.

Labour and its donors have denied any favours were given for the loans.

Whilst it may be too early for us to widen our investigation into the arena of corruption, I certainly have not ruled this out
John Yates
Deputy assistant commissioner, Metropolitan Police

Deputy assistant commissioner John Yates met the Commons public administration committee this week to ask MPs to postpone their hearings on the loans furore to avoid prejudicing possible police action.

In a letter to the committee, Mr Yates quoted from a previous parliamentary report saying prosecution was "the only credible deterrent for any briber".

He said: "Whilst it may be too early for us to widen our investigation into the arena of corruption, I certainly have not ruled this out."

Mr Yates stressed the inquiries were at an early stage and charges were "not imminent".

Ministers have strongly denied claims they sold peerages or that loans to Labour helped some businessmen win government contracts or planning deals.

Those lenders who have spoken publicly have also strongly denied they expected any reward in return for their donation or loan.

Poll spending rise

The Guardian newspaper has reported the Tories could face police questions about how they have nominated people for peerages.

But Scotland Yard says the complaints it is investigating all relate to the Labour Party.

The Conservatives have not revealed the names of all the people who lent them money for last year's election campaign.

Conservatives - 2.03
Labour - 1.88
Lib Dems - 72 pence
Source: Electoral Commission

In the Commons on Wednesday, Labour MP Martin Salter suggested a "Chinese heroin baron" might have funded the Tories in 1994.

The latest twist comes after both Labour and the Tories said all undeclared loans in last year's general election campaign were in line with rules on party funding.

The Electoral Commission has set a deadline of 1700 BST on Wednesday to confirm loans were made at commercial rates. If not, loans must be classed as donations.

The commission is still waiting for a response from the Lib Dems, who say they have not benefited from such loans.

Deputy Prime Minister John Prescott told MPs on Wednesday that the stories about loans had caused concern on all sides of Parliament.

England - 34.9m
Scotland - 3.6m
Wales - 2.2m
Northern Ireland - 556,552
Source: Electoral Commission

The UK should increasingly move towards state funding of political parties, he argued.

The Electoral Commission has also revealed that political parties and campaign groups spent a total of 42.3m on last year's general election - up from 26.7m.

This is more than 50% more than was spent on the 2001 general election.

Labour and the Conservatives each spent about 17.9m, while the Lib Dems paid 4.3m. The limit was 18m per party.

Public perception

The largest proportion of money spent on the 2005 campaign - 37% - went on advertising, 22% was paid for sending material to voters and 10% on rallies and events.

Electoral Commission chairman Sam Younger said there had been real progress in the quality of the parties' election accounts.

"Without financial transparency, the public's perception of the integrity of the democratic process is damaged," he said.

"However, we are aware that further work is needed to make the sources of political funding clearer, whether it is money for election campaigns or the day to day running of parties, particularly on the issue of loans."

The commission's figures mean the Conservatives spent 2.03 for each of its 8.79 million votes at the last general election.

One MP speaks out on the issue

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