SCOTLAND Yard provoked anger in Downing Street last night by saying that police had uncovered “significant and valuable material” in the loans-for-honours investigation.

John Yates, the Assistant Commissioner of the Metropolitan Police, who is leading the inquiry, suggested that there could be explosive revelations that would be revealed when the investigation was complete.

“The major developments in this inquiry are not in the public domain,” he said, adding that considerable progress had, in his view, been made. The “lack of detail” so far was a consequence of the need to keep the inquiry’s progress confidential, he said.

Officially, No 10 refused to comment. But last night a source questioned police motives for saying that they had uncovered significant material. “We intend to maintain the high moral ground. We will leave it to others to speculate why the police are writing a letter like this at a time like this,” the source told Channel 4 News. Tony Blair is expected to be interviewed imminently.

The information was disclosed in a letter to the Public Administration Select Committee, saying that Mr Yates hopes to send a file to the Crown Prosecution Service in January, although this may be delayed if police uncover “additional lines of investigation”. Police had been expected to report in October, but this was delayed because of the volume of evidence. Mr Yates said that he had interviewed 90 people, including 35 from Labour, 29 from the Conservatives and 4 from the Liberal Democrats.

A further 22 people without ties to a party were interviewed and police have liaised with the Electoral Commission and the House of Lords Appointments Committee.

The letter also responded to claims that the police had leaked information to the media about the investigation. On Monday The Times reported that No 10 had made an informal complaint about Scotland Yard’s handling of the investigation. The office of Sir Ian Blair, the Metropolitan Police Commissioner, received the complaint last week, according to Westminster sources.

Reports at the weekend suggested that No 10 was furious over leaks about the investigation. Downing Street sources are reportedly suggesting that they believe any trial would not now be fair.

Mr Yates said yesterday: “It would seem perverse to suggest [as some commentators have] that it is the police inquiry team who are responsible for placing matters in the public domain. I say this in view of the very significant time invested by us in persuading you and your committee to do precisely the opposite.”

Downing Street has been threatening to make a formal complaint if there is no change in the way in which the investigation is dealt with.

Mr Yates continued: “I have, however, conducted a further review of our own operation security. I am confident that this remains very tight.” He said that security continued to be monitored at the “highest levels”. Until now Sir Ian has excluded himself from the investigation because of his links with the Prime Minister.

In his letter, Mr Yates appeared to acknowledge that the length of the investigation was having a damaging political impact. “There is clearly a great public interest in resolving these matters as soon as possible.” The issue of political parties accepting loans will be reignited on November 28, when the Electoral Commission reveals details of outstanding loans to political parties, and the terms on which they have been given.

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