Andrew Pierce of The Times explains the row over loans to the Labour Party row after the party treasurer demanded a full investigation claiming he had been kept in the dark over the 'donations'.

What are the rules governing party funding? Has Labour broken them?

The laws, which were brought in by the Labour Government, stipulate that any donation of £5,000 or more has to be declared as does the name of the donor. The loans system is a breach of the spirit of that law. As the loans are attached to an undeclared rate of interest, they are regarded as a commercial transaction and therefore are confidential in the same way you would expect any loan you have with your bank to be treated in confidence.

Where do the other parties stand on this?

All three parties have been using loans since the new rules came into effect in 2001. Only this week The Times revealed that the Lib Dems, who have led the criticism of the loans-for-honours row, take loans themselves. However, unlike Labour and the Tories, the Lib Dems do declare the name of the lenders to the Electoral Commission. They do not reveal the scale of the loans but specify in their quarterly returns to the Electoral Commission the notional amount of interest that would have to be paid on each loan at 1 per cent above the base rate. From that it is possible to deduce, with the help of a calculator, the size of the loans.

Is anyone looking into this problem?

The Electoral Commission is supposed to have conducted an investigation into the system of loans after it was exposed by The Times last year. But if it has, no-one has ever heard of its conclusions. The commission is now to be investigated by the Committee on Standards in Public Life, which is seeking specifically to find out what happened to the loans inquiry.

Why is Lord Levy's role so controversial?

Lord Levy is Tony Blair's personal fundraiser and answers only to the Prime Minister. There is no comparable figure in either of the other main parties. He is also Blair's personal envoy to the Middle East. He is not elected and not accountable to the Labour Party.

Why the outburst from the Labour treasurer?

Jack Dromey, the Labour treasurer, is clearly furious he was not in the loop about the loans although the then general secretary, Matt Carter, and Ian McCartney, the chairman, knew all about them as did the Prime Minister. Of course Mr Dromey is a Gordon Brown man as is his wife Harriet Harman, the Constitutional Affairs minister. One of the Chancellor's first jobs when he becomes Prime Minister will be to sack Lord Levy.

Will the loophole be closed?

The Tories are conspicuously absent from the airwaves as they are up to their neck in loans. There will be huffing and puffing about the need for state funding. But don't hold your breath. Which political party is going to pledge in its manifesto to make voters pay even more money for their political parties? It's not exactly a vote winner.

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