LORD Steel, the Liberal Democrat peer, has been suspended from the party after telling an inquiry he "assumed" historical allegations about Cyril Smith were true but they were "nothing to do with me".

Police investigated allegations about the abuse of teenage boys at the Cambridge House hostel, Rochdale, in 1969 but no prosecution was brought.

The Scots former Liberal party leader admitted believing in 1979 that child abuse allegations against Sir Cyril Smith were true, but admitted doing nothing to assess whether he was a continuing risk to children.

He told an independent inquiry into child sexual abuse the late MP for Rochdale confirmed in a conversation that reports of child sexual abuse in the media were accurate.

But rather than suspend and investigate the MP, Steel allowed him to continue in office. Smith stepped down as an MP in 1992 and died in 2010.

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A Scots Lib Dem spokesman has said: “Following the evidence concerning Cyril Smith given by Lord Steel to the Independent Inquiry into Child Sexual Abuse on 13th March 2019 the office bearers of the Scottish Liberal Democrats have met and agreed that an investigation is needed.

"The party membership of Lord Steel has been suspended pending the outcome of that investigation. That work will now commence.

"It is important that everyone in the party, and in wider society, understands the importance of vigilance and safeguarding to protect people from abuse, and that everyone has confidence in the seriousness with which we take it.

"We appreciate the difficult work that the Independent Inquiry into Child Sexual Abuse is doing on behalf of the victims and survivors of abuse, and the country as a whole.”

Steel’s statement was made on the day the inquiry was criticised as a waste of money by the Conservative leadership hopeful Boris Johnson.

Steel, 80, has previously appeared to deny knowing whether Smith was a child abuser. In an interview with the BBC’s Newsnight last year, he said the allegations were “scurrilous hearsay”.

Under questioning, Steel said he confronted Smith about the allegations of child sexual abuse in 1979 after reading them in Private Eye magazine.

A series of young boys in Rochdale children’s homes had claimed that their local MP had stripped, spanked and bathed their buttocks and on occasion fondled them, the magazine claimed.

Steel told the inquiry he questioned Smith about the allegations during a meeting in the House of Commons. “What I said to him was: ‘What’s all this about you in Private Eye?’ “He said, rather to my surprise, ‘It is correct’ that he had been in charge of or had some supervisory role in a children’s hostel, that he’d been investigated by the police, and that they had taken no further action, and that was the end of the story,” the peer said.

The allegations of sexual assault against Smith were investigated by Lancashire police in 1969 but no action was taken.

Steel said that he did not question Smith further about specific child abuse claims but concluded that the allegations were true.

Asked why he did not take it further, Lord Steel, who was elected Liberal Party leader in 1976, said he "saw no reason to go back to something that happened during his time in Rochdale" and the events happened "before he was even a member of the Liberal Party or an MP".

"I don't think we went into detail on individual bits of the story," Lord Steel told the inquiry.

"He just accepted that the story was correct, and obviously I disapproved, but it was, as far as I was concerned, past history. That was the end of it."

Inquiry counsel Brian Altman QC later asked: "So you came away from that meeting, Lord Steel, not really knowing if he'd committed these offences at all?"

The peer replied: "Well, I assumed he had because he said that the account was correct. Why would he have been investigated if he hadn't done something that was possibly wrong?"

Mr Altman continued: "So you understood that he'd actually committed these offences from what he said to you?"

Lord Steel responded: "I assumed that."

The QC then asked: "Wasn't that all the more reason to take matters further and hold some form of inquiry?"

The peer answered: "No, because it was, as I say, before he was an MP, before he was even a member of my party.

"It had nothing to do with me."

When questioned on the idea that children could still have been at risk, Lord Steel said: "I have to admit that didn't occur to me and I'm not sure it would occur to me today."