John Yates, an assistant commissioner of the Metropolitan police who is leading the loans for peerages inquiry that resulted from this newspaper’s investigations, is to be congratulated for his tenacity. The Labour spin machine has been working away trying to rubbish the investigation and pass the scandal off as a thing of no consequence. Mr Yates may have felt that he was being handed a poisoned chalice — everybody else who has investigated the inner workings of Downing Street under this government has ended up as a victim — but he has stuck to his task. He has also behaved with discretion; the stories emerging in recent weeks about the inquiry have come from Whitehall and Westminster, not Scotland Yard.

Mr Yates has two weapons at his disposal: the Honours (Prevention of Abuses) Act of 1925 and the Political Parties, Elections and Referendums Act of 2000. Tony Blair, when he eventually faces the assistant commissioner across the table, will be asked serious questions under both. Even for a lawyer this may be a rap from which he will struggle to escape. He has famously used the Downing Street sofa for everything from thinking up the third way to planning the Iraq war. When he is interviewed by the police, under caution, we would advise a straight-backed chair.

The hardest thing to prove will be a straightforward crime under the 1925 act. In 81 years Arthur Maundy Gregory is the only person to be convicted under the act for selling honours; he was jailed for two months in 1933. There is plenty of circumstantial evidence that honours have been sold in recent years but proving it is another matter. Fortunately for Mr Yates, the 2000 act, introduced by Mr Blair’s own government, gives him another weapon in his armoury.

Were these loans to the Labour party just disguised donations, thereby contravening both the spirit and the letter of the act? Were they at commercial rates? If not, the law has been broken. Why did the prime minister tell Labour’s national executive committee in March, as we reveal today, that Labour accepted loans because donors wanted to preserve their anonymity? This suggests that the party was prepared to connive with rich donors to ride roughshod over its own laws. In fact it may be worse than that. At least some of the lenders have told us they were only too happy to donate money and for their identities to be revealed. The suggestion that donations should be converted into loans came from the Labour party, not from them. It appears the party had something to hide.

Mr Blair, no doubt, will try to wriggle free by saying that he left it to others to deal with the details of party funding. But Lord Levy, aka Lord Cashpoint, has let it be known that he will not take the rap. Downing Street officials may have known about the scam, and some have been interviewed by the police, but it seems it was being run from the top. The body is in the library and it looks as though Mr Blair is holding the dagger. It could be that the prime minister will be relying on another friend, Lord Goldsmith. The attorney-general has the final say on any prosecution and, while he bowed to pressure last week by agreeing to appoint an “independent senior counsel” to advise him, the impression remains that the government is acting as both judge and jury. If it concludes there is no case to answer, few will believe it. And Labour will deserve everything the voters can throw at it.