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Scotland Yard to investigate 'Loans for peera -

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(generated from captions) modern war and those who reject its existence. Well, Tony Blair is also facing increasing pressure over allegations that peerages were used as inducements to gain millions of dollars in loans for Britain's Labour Party. Scotland Yard has now been called in

to investigate how more than $30 million were raised in the 'Loans-for-Lordships' scandal. From London, Europe correspondent Jane Hutcheon reports. At the instigation of Tony Blair's political enemies, the police are now sniffing around 10 Downing Street to see whether honours were sold for cash. This will not be a skewed investigation by way of some tin pot inquiry, perhaps chaired by somebody who's friendly to those accused,

but this will be by Sir Ian Blair and the Metropolitan Police. More than 80 years ago, prime minister Lloyd George sold honours for the equivalent of $36,000 each. That lead to the practice being outlawed. But of the 12 millionaire lenders named by the Labour Party this week,

this one insists he wasn't offered a peerage.

There were no categorically no strings attached.

At no time did I have an implicit or explicit conversation about rewards, nor would I have wanted them. Earlier, Prime Minister Tony Blair appeared

before his party's National Executive Committee to explain why the loans were kept secret. After the meeting, he made no comment, but the party Executive did. Well, fundraising will no doubt continue. The point is it will be increasingly supervised from within the National Executive

and there will be no further gaps in communication. More seriously, the Labour Party now appears to face a $24 million hole in its finances as its benefactors demand repayment. According to analysts, this affair has done the Prime Minister a lot of harm. Nine years ago, he came to power on a platform of honesty. Now growing numbers of Britons simply don't believe him.

And as Tony Blair's successor, Gordon Brown, prepares to hand down the budget, trust within the party is at a low ebb. I think it is more serious now for Tony Blair, because there's been this constant criticism of him and the Labour Party.

For now, 'Teflon Tony' holds firm,

with no indication of an exit date. Jane Hutcheon, Lateline.