Blair ally Lord Levy arrested

Police have arrested Lord Levy, chief fundraiser to the Labour Party and close associate of Tony Blair. Lord Levy was arrested by the Specialist Crime Directorate of London’s Metropolitan police as part of an on-going investigation into the cash-for-peerages row which has troubled the Labour government since the start of the year. He was bailed on Wednesday afternoon without charge pending further enquiries.

In a statement, Lord Levy said the arrest was “totally unnecessary”. A spokesman also said: "He has not been charged and does not expect to be, as he has committed no offence."

The cash-for-peerages affair erupted earlier this year, after an independent body reported that Tony Blair had sold peerages (the title of Lord) to businessmen in exchange for secret donations to the Labour Party. This potentially breaks the Honours (Prevention of Abuses) Act of 1925 which was originally introduced after Prime Minister Lloyd George was caught selling peerages for personal funds.

The ruling Labour Party admitted soon after that it had borrowed over £14 million before the last general election in 2005. The opposition Conservative Party also admitted it had been loaned £16 million by wealthy businessmen. It’s believed that as chief fundraiser, Lord Levy arranged the Labour Party’s loans.

All political parties deny any wrong-doing, although the arrest of one of the Prime Minister’s closest allies is going to provide yet more scandal for the already troubled party.

Downing Street has so far declined to comment on what they call a “party matter” and Levy himself has accused the police of “over-reacting”. Some politicians have commented that the situation could be very serious for Mr. Blair.