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Last Updated: Tuesday, 16 May 2006, 14:00 GMT 15:00 UK
Lords watchdog 'in dark on loans'
House of Lords, with peers in their ceremonial dress for the State Opening of Parliament
MPs postponed their inquiry in March
The watchdog which decides whether people are fit to join the House of Lords says it has not always been told about their loans to political parties.

Lord Stevenson, chairman of the Lords appointments commission, was being questioned by MPs investigating "cash for peerages" claims.

Police are also investigating the allegations and have asked the MPs not to question key witnessses now.

The MPs say they will press on with their inquiry but delay some hearings.

Committee chairman Tony Wright said he did not want it to be said that the committee had undermined the chances of potential prosecutions.

The MPs would soon publish an interim report on the general procedures and decide in July whether to summon in the autumn major players, likely to include chief Labour fundraiser Lord Levy.

"We have taken the view that we are certainly not going to discontinue our inquiry," he said, arguing that Parliament should investigate such issues.

Wide inquiry

Scotland Yard's Deputy Assistant Commissioner John Yates, who is leading the police probe, says his inquiry has made "significant progress" but is still at a relatively early stage.

The investigation remains focused on whether peerages were offered in exchange for loans to political parties or sponsorship of the government's flagship city academies.

It covers the Conservatives and Liberal Democrats, as well as Labour.

The police have been careful not to leak information but BBC political editor Nick Robinson said one person familiar with the inquiry had said documents had produced "pretty significant evidence".

All those involved deny that peerages were offered as a reward for loans or donations.

The commission has been briefed on some loans on lists past and present and has evidently not been briefed on others
Lord Stevenson
Chairman, Lords appointments commission

The Lords appointments commission became embroiled in the controversy initially when it was revealed they had advised against the appointment of some businessmen who were nominated to be Labour peers.

Speaking publicly for the first time about the affair, Lord Stevenson said with one exception the loans issue had only blown up after the commission vetted the nominees for propriety.

But he revealed that it had been the first time the commission had tried to block nominations for peerages in its advice to Tony Blair.

Future warning

Lord Stevenson refused to discuss the specific cases but said the commission had known about nominees who had given money to city academies or held government contracts.

He told the Commons public administration committee: "There was a newspaper story about a loan and we moved very quickly to ask all three political parties if there were any loans from any of the nominees."

Cabinet secretary Sir Gus O'Donnell
Sir Gus O'Donnell was also questioned by the MPs

Party chairmen have to sign certificates about potential peers' personal and financial links to their parties.

In future these forms would have a banner warning that the commission expected to be told "anything that could conceivably affect a peerage", said Lord Stevenson.

He said: "The commission has been briefed on some loans on lists past and present and has evidently not been briefed on others.

"We only know what we have been told."

Honours shift

The committee also grilled Cabinet secretary Sir Gus O'Donnell, the UK's top civil servant.

He said he did not become much involved in party political nominations for peerages - saying they were handled by party leaders and then vetted for propriety by the Lords appointments commission.

Sir Gus said he thought all party leaders chose people for the House of Lords who they thought would make a strong contribution to governing the country.

There was now stronger scrutiny of the appointments than before, he said.

And asked about sponsors of the government's flagship city academies getting peerages, Sir Gus said it was reasonable for party leaders to nominate people who were experts in education if that was a priority for them.

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