Cash for honours: The electronic trail might take Blair to court

The cabinet minister could not have been more adamant: "If Tony Blair is in the witness box it will be a disaster. Someone will call him as a witness if this goes to trial."

Crossing his fingers, he added: "It would be disastrous. Hopefully it won't happen. Inshallah!"

Following the arrest of Ruth Turner, one of the Prime Minister's closest aides, last week, it is perhaps not surprising that members of the Cabinet are now invoking God to come to their aid.

The police inquiry which they curtly dismissed as opportunism a few months ago is swiftly gaining ground. Files of evidence are now in the hands of Crown Prosecution Service with the prospect of charges growing every day.

Not only is the Scotland Yard investigation under the 1925 Honours (Prevention of Abuses) Act gathering pace, but the police are also making solid progress in their investigations into breaches by Labour of electoral law.

The Electoral Commission, which has been advising the police on the Political Parties, Elections and Referendums Act, is expected to recommend that the Act is tested in court and that Labour be tried for breaching its terms on disclosure of commercial loans.

What is more, Labour's attempts to keep secret millions of pounds in loans made by millionaire supporters before the last election are being seen as supporting evidence in the case on the abuse of the honours system.

There is fresh talk of another police interview for Mr Blair. Even if the Prime Minister is not charged, ministers fear that Labour may be brought to court and the PM cross-examined, if not as a defendant then as a witness, where he could be asked anything by lawyers.

"It could be extremely embarrassing, and Blair would not have the same kind of protection he would have as a defendant if he is called to give evidence as a witness," said one QC. "In many ways it would be worse."

During Prime Minister's Questions on Wednesday, Mr Blair's communications chief David Hill chewed his nails as his boss was asked by Tory MP Bill Wiggin: "Will he confirm that if a close aide is charged he will leave office?" Labour MPs sitting behind the Prime Minister stared nervously at their shoes as Mr Blair snapped back: "I have absolutely nothing to say about that inquiry at all."

Mr Blair was possibly the only politician not talking about the latest revelations in the cash-for-honours inquiry. There was open talk in the tea rooms of forcing the Prime Minister to resign early as a damage-limitation exercise. "We are leaking support to the Conservatives," said one former cabinet minister. "How can we fight the May elections with Blair in office and all these cash-for-honours headlines dogging us?"

One senior aide to the Prime Minister said that the hope now was that, if there are charges, Mr Blair would not be dragged to court as a serving Prime Minister. With the police inquiry expected to drag on until the end of February, a trial would not take place until after Mr Blair leaves office, which is expected in July.

John McTernan, director of political operations, who worked with Ms Turner in choosing names for peerages, has been interviewed again by the police. Jonathan Powell, Mr Blair's chief of staff, has also been interviewed again. And unlike their first round of interviews these have not been cosy, informal chats, but, it is believed, grillings under caution.

The newly resolute mood in Scotland Yard is a sign of frustration that it has not been given the complete picture by the Labour Party. Senior figures in Government say that Downing Street, despite its protestations about aiding the police, has not been as helpful as it could have been.

One senior Whitehall figure said that although No 10 had not withheld information requested by Scotland Yard, it had done nothing to help them actively to find evidence. "They only give them what they ask for. They don't say 'you want to look here and you want to look there'," he said.

But the police have proved persistent. They have followed an email trail which has shown inconsistencies and compared witness statements, which have not always added up. Emails deleted from aides' personal queues have been discovered by police who have trawled through a secret back-up archive set up by Downing Street to store files that had been erased.

Government sources say that before Christmas six plainclothes police officers, trained in recovering missing computer files and emails, went into Downing Street and the Cabinet Office where they spent days downloading emails from computers belonging to staff who drew up Tony Blair's honours list. The police looked through the secret internal Downing Street email system and other emails used for communications between journalists and outside organisations.

They even took away emails sent to Mr Blair himself. The emails referred to potential nominees for the honours list, including Labour donors. Others are believed to have discussed conversations between Jonathan Powell and Lord Levy, who preferred to communicate with Downing Street by phone.

The emails are understood to refer not only to those who were nominated for peerages but also to donors who did not make it to the final nomination stage. Sir Christopher Evans, whose loan of £1m is being repaid by Labour, is thought to have been among those names floated as a possible peer. Notes the biotechnology tycoon took of a conversation he had with Lord Levy give a rare insight into New Labour schmoozing. The note referred to talk of "a K [knighthood] or a big P [peerage]?".

According to one linked to the world of New Labour fundraising, donors were often flattered with talk of honours. Although no explicit offers were made, the impression was firmly given that they were "Labour's kind of people".

But many who were schmoozed by Labour, never made it to the shortlist. Some are counting their blessings that they did not. Four Labour lenders had their nominations blocked by the Lords' watchdog, their names paraded across the front pages, and were interviewed by Scotland Yard. Like Mr Blair, they could yet be summoned to court to give evidence.

Questions for the PM in the witness box

1. How did Mr Blair expect the Labour Party to pay back £14m of loans, plus interest? Did he think donors would convert them into donations or roll them over like an "overdraft facility"?

2. Why did Downing Street not direct the police to deleted emails, or give the police access to them in the first place?

3. Did he or his aides ever give the impression that millionaire Labour donors would be rewarded with honours?

4. Why did he and his officials go to such elaborate lengths to keep the loans secret?

5. What role did his fundraiser, Lord Levy, play in suggesting people for peerages and in preparing their nomination forms?

How the police built their case

Police trawl through Downing Street's emails, including deleted ones from personal files.

Scotland Yard IT experts discover that emails sent by senior aides to Tony Blair have been deleted.

Evidence is presented to the Crown Prosecution Service. But CPS experts identify holes in the evidence.

Downing Street aides are presented with deleted emails about the nomination of people for honours.

Police collect the files, with the new evidence, and prepare to submit them as evidence to the CPS.