BORDERS peer David Steel is to be probed by the Lib Dems after admitting to doing nothing about a notorious paedophile MP.

Yesterday, the former Holyrood Presiding Officer, shocked the Independent Inquiry into Child Sex Abuse in London, when he said that Cyril Smith had confessed to him in 1979 about spanking boys and conducting “medical examinations” at a council run hostel he had helped set up in Rochdale.

Steel, who sits in the House of Lords as a Liberal Democrat peer, chose not to suspend Smith, who was at the time the MP for Rochdale, but allowed him to continue in office.

Smith stepped down as an MP in 1992 and died in 2010. In April 2014, it was reported that there had been 144 complaints against him. Some of his victims were as young as eight.

Steel had previously denied knowing 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.

The magazine claimed that a series of young boys in Rochdale children’s homes had claimed that as a punishment for minor misdeeds Smith had stripped them, spanked them and bathed their buttocks and on occasion fondled their genitals.

Steel told the inquiry he questioned Smith: “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.”

Inquiry counsel Brian Altman QC asked: “So you understood that he’d actually committed these offences, from what he said to you?”

Steel responded: “I assumed that.”

Altman suggested: “He could for all you knew still be offending against children.” Steel said: “I have to admit that never occurred to me and I am not sure it would occur to me even today.”

Des Wilson, a former Liberal party officer, told the inquiry in a statement that Smith was a “monstrous character” who intimidated Steel.

Wilson wrote: “I have no idea why no action was taken after the Private Eye article, but then I was not around and perhaps Steel did discuss it with him, though Steel’s natural tendency, in my view, would be to hide his head in the sand rather than get involved in a nasty confrontation.”

Steel said Wilson’s statement was a “pardonable exaggeration”.

He also denied Wilson’s claim that the party could not afford another sex scandal so soon after the Jeremy Thorpe affair, in which the previous Liberal leader was accused of trying to murder his male lover.

Speaking to the ITV Border after First Minister's Questions, Scottish Lib Dem leader Willie Rennie said the party were investigating: "The office bearers last night agreed we would instigate an inquiry into this issue, and this evening we're meeting again to consider whether a suspension is appropriate."