THE Sunday Times can reveal details of the alleged plot that Tony Blair’s inner circle hatched to subvert the police inquiry into the cash for honours scandal.

Sources have revealed that Lord Levy, Tony Blair’s chief fundraiser, allegedly asked the prime minister’s most senior advisers to lie to police by telling detectives he had no involvement in the honours system.

A written record of the discussion reveals his suggestion was overruled by Ruth Turner, a senior No 10 aide, who drew up what she believed was a more “credible” strategy.

She allegedly said they should claim Levy was asked for “advice” and “character references” about potential peers. Police believe this might also be misleading because his input was far more significant.

It also emerged this weekend that:

- Jonathan Powell, Tony Blair’s chief of staff, was present at a meeting last summer when the alleged cover-up was discussed. He will be reinterviewed under caution shortly;

- Detectives have recently obtained a new document that is said to be “as damaging” as the Turner memo outlining the “cover-up” strategy;

- The government is set to disband key watchdogs, including the Committee on Standards in Public Life and the House of Lords Appointments Commission, that helped bring the honours scandal to public attention.

A senior Whitehall source said police believed they had evidence to contradict the defence offered by key figures in the scandal. Police are now said to be confident of charging Levy with breaching the 1925 Honours Act, which bars the sale of honours, and with perverting the course of justice, although the final decision will be made by prosecutors.

Police are also understood to be bullish that Sir Christopher Evans, the biotech tycoon who secretly lent Labour £1m, will be charged with breaching the Honours Act amid allegations that he attempted to procure a peerage.

Sources close to No 10 say Blair’s inner circle accepts that the police are determined to bring prosecutions. “This investigation has been going on for a year now. It would be surprising if there were not prosecutions,” said a No 10 insider.

The Downing Street strategy for responding to the police inquiry is contained in a document written by Turner that was selectively leaked last week to cast her in a favourable light.

It is understood that Turner had prepared the memo for Powell but it is not known whether it was sent. She subsequently passed it to her lawyers and the police obtained the document only in January.

Turner’s failure to alert police to the document is understood to have prompted her early morning arrest at her home. Officers are thought to have been tipped off that it had been written.

Last week it was revealed that, in the memo, Turner expressed her concern that Levy wanted her to “shape” her evidence.

However, The Sunday Times has now established the nature of this evidence — Levy’s role in the awarding of honours — and the fact that Turner and other No 10 aides were discussing a far wider strategy for countering the police investigation.

The document was written after a meeting last summer attended by Levy, Powell and Turner to discuss the police inquiry.

A well-placed source claimed the meeting was also attended by John McTernan, Downing Street’s director of political relations.

The source said police had not yet come to a conclusion on the likelihood of charges against the Downing Street aides. The Crown Prosecution Service (CPS) said this weekend it had received 11 separate police submissions on the case. The latest police file was submitted only on Wednesday, prompting speculation that it contains potentially new material about Levy’s contacts with Turner, Downing Street’s director of government relations. Levy and Turner have denied wrongdoing.

Three key pieces of written evidence are at the centre of the inquiry, including one that has only recently been recovered by detectives.

Those who have seen some of the documents that form the central focus of the investigation say they are surprised at the apparent naivety of those who wrote them. “I think people were surprised that anyone would be so stupid as to put those sorts of things in writing,” the source said.

The Turner memo is regarded as so crucial to the inquiry that it was the subject of a successful attempt by Lord Goldsmith, the attorney-general, to gag the BBC eight days ago. The injunction was lifted after some of its contents were selectively leaked.

A statement issued by Levy’s solicitors described reporting of the leaked material as “partial, contradictory, confused and inaccurate”. They also called for an investigation by police into the source of the leaks.

The cash for honours investigation began a year ago after The Sunday Times revealed that Blair had secretly borrowed millions of pounds from wealthy businessmen he subsequently planned to honour.

Initially, detectives probed breaches of the Honours Act and electoral laws, but this year they began to investigate whether key Blair advisers had sought to pervert the course of justice.

In January Turner was arrested on suspicion of perverting the course of justice. Levy was later arrested on suspicion of conspiring to pervert the course of justice.

A CPS spokeswoman said the police had given no indication as to when the inquiry would be completed. However, officials have suggested it could last into next month and, possibly, the run-up to the local elections at the beginning of May.

The final decision on whether to bring charges will rest with Carmen Dowd, the senior CPS solicitor who is supervising the case. Dowd is being advised by David Perry QC, a top criminal barrister, who was involved in the prosecution of Jonathan Aitken, the former Tory minister who admitted acts tending to pervert the course of justice in 1999.

The attorney-general has the right to overrule any decision by the CPS to press charges. Sources expect the CPS to take at least two months before announcing its decision.

In another development on the row over standards, it emerged that five watchdogs that have been critical of ministerial sleaze, government practice and appointments are likely to be merged into a “super-regula-tor” on public ethics. They include the Committee on Standards in Public Life and the Lords Appointments Commission.

The plan was inadvertently disclosed by Professor Robert Hazell, an adviser to the Commons public administration select committee (PASC).

The government is confident the PASC will recommend far-reaching change in a report next month. It has refused to renew the contract of Sir Alistair Graham, chairman of the standards committee, before publication.

Other bodies to be merged are the Civil Service Commissioners, the Commissioner for Public Appointments and the Advisory Committee on Business Appointments.

In an academic newsletter, Hazell wrote: “[The PASC] . . . recommended pulling them together into a public ethics commission, to be accountable to, and funded by parliament.”

A spokesman for the PASC called the recommendation a “draft” conclusion that had yet to be agreed.

A Whitehall source said: “The government appears to be using the cover of a PASC report to be abolishing some of their most persistent and damaging critics. These bodies were established to be independent and to draw problems to public attention as parliament had failed in this duty in the past.”

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