THE trade minister and former Labour chairman Ian McCartney is expected to be interviewed by police investigating the loans for honours affair within days.

It is thought he will become the first minister to be questioned by Scotland Yard over the affair since the police launched their investigation into allegations that the party had offered peerages in return for loans.

McCartney, party chairman at the time, signed the papers nominating lenders for peerages while he was in hospital in 2005 for a triple heart bypass operation.

It is understood he was unaware that those being nominated for peerages had lent money to Labour only months before.

A well placed source close to the inquiry said it was likely that McCartney would be interviewed, possibly as early as this week, for the purpose of “information gathering”. There is no evidence that the minister did anything illegal.

The police launched their investigation following complaints from the Scottish National party and others under the 1925 law that makes it illegal to reward with a “title of honour” anyone who has given “any gift, money or valuable consideration”.

The law was introduced after David Lloyd George, the Liberal prime minister, was caught offering peerages and honours for money.

Initially some MPs doubted the police would take the allegations seriously, but officers recently said they had made “significant progress”and have already urged MPs on the Commons public administration committee to call a halt to their own investigation until the inquiry is complete.

One of the millionaire businessmen nominated for a peerage last night revealed the role the prime minister and Cherie Blair played in securing a loan for the Labour party from him.

Sir David Garrard, a property developer, said Labour’s chief fundraiser Lord Levy introduced him to the couple at a party at his north London home in 2002.

Garrard said each of the dinner guests had been given 10 minutes to speak about their favourite subjects. He talked about an idea for providing housing for low paid public sector workers.

“Blair listened but asked me how I knew it could work,” he said. “I said he ran the country — he could surely get this to work as well.”

Garrard, who was already a sponsor of a city academy in Bexley, south London, was recognised for his services to charity with a knighthood in the 2003 new year honours.

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