Steve Richards: Darkness descends to engulf Blair's denouement

The darkness that marks Tony Blair's final months gets darker still. The cash for honours investigation began as a serious diversion. It ends by threatening to overwhelm all other matters, reducing serious policy issues to minor matters as Downing Street languishes in a fearful gloom.

Let us separate the substance of the police investigation from the politics. No one knows for sure what evidence the police have got, and what they suspect has been kept from them. Evidently, they sense a cover-up of significance. Lord Levy is the second ally of Blair's to be arrested on suspicion of a conspiracy to pervert the cause of justice. He denies the allegation. So did Ruth Turner, Blair's senior aide who was arrested on the same grounds less than a fortnight ago. Downing Street insiders are adamant that they have co-operated fully with the inquiry. Evidently, the senior officers involved have their doubts - apparently they are as focused now on what they suspect to be a cover-up as they are on the original allegations.

While it is not clear how the investigation will end, the political repercussions are immediate. The investigation is sapping morale in Downing Street at a time when those around Blair were already facing the challenging and unsatisfying prospect of working for a Prime Minister who will be gone before very long. When I met a Blair ally recently, who had left Downing Street recently for a new job, I asked him how he felt about his new vocation. Without hesitation he referred to his previous job: "I feel guilty for leaving them at such a time." He was referring to the nightmare of the police investigation.

The consequences spread beyond the traumatised Downing Street entourage. Before yesterday's developments, some Labour MPs were stirring, wondering how much damage Blair is doing to his party by staying on until July. Already all the key players are struggling to adapt to the uniquely awkward political choreography. Gordon Brown waits, wondering how much he should say about his future plans during this strange interim. Cabinet ministers look towards their next boss while implementing Blair's policies. Senior civil servants await a Brown administration, too. Meanwhile, the Conservatives maintain a lead in the polls.

Into this unprecedented situation comes the most extraordinary wild card. As Blair insists unrealistically that he has still much to do in the time left to him as Prime Minister, a police investigation intensifies. He has been a leader with a remarkable ability to compartmentalise, to focus on the issue in hand.

But the latest twists of the investigation must test even his powers of concentration. He is at the centre of the drama, the leader of the party with the powers of patronage that are being subjected to the most intense scrutiny. Others have been arrested, but this is about the Prime Minister as the space around him to act politically has narrowed sharply already.

The investigation could end without a dramatic denouement, in which case the police officers will have many questions to answer. But for now, the inquiry is making Blair's final days almost impossibly bleak.