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Labour facing cash flow problems Labour facing cash flow problems
(about 2 hours later)
Labour has admitted facing "acute cash flow problems" as Electoral Commission figures reveal the main political parties owe a total of £60m in loans. Labour has admitted facing "acute cash flow problems" as Electoral Commission figures revealed the main political parties owe a total of £60m in loans.
The figures show the Tories owe £35.3m, Labour £23.4m and the Lib Dems £1.1m. The Scottish National Party owe £525,393 and Plaid Cymru £352,000. The figures show the Tories owe £35.3m, Labour £23.4m and the Lib Dems £1.1m. The Scottish National Party owes £525,393 and Plaid Cymru £352,000.
It is the first time parties have had to declare all loans above £5,000.It is the first time parties have had to declare all loans above £5,000.
Labour said that despite rescheduling most debt, it is still struggling to repay loans to two of its donors. Labour said that despite rescheduling most debt, it was still struggling to repay loans to two of its donors.
In a statement Labour said it was in the midst of a "difficult financial year" and was restructuring to cut costs and to extend the repayment date of most of its loans.
LOANS OUTSTANDING Conservatives: £35.3mLabour: £23.4mLib Dems: £1.1mSNP: £525, 393Plaid Cymru: £352,000Respect: £34, 878UKIP: £19,200LOANS OUTSTANDING Conservatives: £35.3mLabour: £23.4mLib Dems: £1.1mSNP: £525, 393Plaid Cymru: £352,000Respect: £34, 878UKIP: £19,200
In a statement Labour said it was in the midst of a "difficult financial year". But two commercial loans from individuals have not been rescheduled and repayment is due.
It said it was arguing for a future where "political parties should live within their means" - and was restructuring to cut costs and to extend the repayment date of most of its loans. The loans are understood to be from biotechnology entrepreneur Sir Christopher Evans, who is owed £1m, and computer tycoon Gordon Crawford, who lent £500,000.
But it said two commercial loans from individuals had not been rescheduled and repayment was due. Labour said it was holding discussions with them as "any organisation that is seeking to manage its cash flow in difficult circumstances" would do.
'Difficult circumstances' Law change
The individuals are understood to be biotechnology entrepreneur Sir Christopher Evans, who is owed £1m, and computer tycoon Gordon Crawford, who lent £500,000. While the Conservatives owe more than Labour, they have said that almost £16m was spent on buying the freehold of the party's former headquarters in Smith Square - which it is now looking to sell.
Labour said it was in discussions with them as "any organisation that is seeking to manage its cash flow in difficult circumstances" would do.
The Electoral Commission figures come as police investigate whether party donors received honours in return for cash. All involved deny wrongdoing.
A change in the law in September means all loans of £5,000 and above to main political party offices have to be declared, bringing rules for loans into line with those for donations.A change in the law in September means all loans of £5,000 and above to main political party offices have to be declared, bringing rules for loans into line with those for donations.
DONATIONS Conservatives: £2,867,019Labour: £3,227,340Lib Dems: £629,903SNP: £52,430Plaid: £12,250 Co-operative Party: £142,036 Ukip: £17,913Green Party: £138,396Scottish Greens: £31,373DONATIONS Conservatives: £2,867,019Labour: £3,227,340Lib Dems: £629,903SNP: £52,430Plaid: £12,250 Co-operative Party: £142,036 Ukip: £17,913Green Party: £138,396Scottish Greens: £31,373
Previously any loans made with a commercial rate of interest did not have to be declared.Previously any loans made with a commercial rate of interest did not have to be declared.
Former Labour party treasurer Lady Prosser told the BBC that the debt was a result of new legislation. Former Labour Party treasurer Lady Prosser told the BBC that the debt was a result of new legislation.
She said some major donors were "rather shy" about being named - for fear of being accused of "giving money to buy something".She said some major donors were "rather shy" about being named - for fear of being accused of "giving money to buy something".
The commission also revealed that during the third quarter of this year, the Conservatives received donations worth £4m, Labour got £3.2m and the Lib Dems £1.1m. The figures showed that in the third quarter of 2006, the Conservatives received donations worth £4m, Labour £3.2m and the Lib Dems £1.1m.
'More influence'
Electoral Commission chief executive Peter Wardle said the parties had made "good progress" in reporting loans but some had struggled to report donations on time.Electoral Commission chief executive Peter Wardle said the parties had made "good progress" in reporting loans but some had struggled to report donations on time.
Labour declared £207,155 of donations late, the Tories £168,259 and the Lib Dems £23,181.Labour declared £207,155 of donations late, the Tories £168,259 and the Lib Dems £23,181.
'Unacceptable'
Mr Wardle said: "It is unacceptable that the Labour Party has failed to report a significant amount of donations to the national party on time.
"Labour have taken steps to improve their reporting procedures as a matter of urgency and we're working closely with them to ensure this happens."
In response a Labour spokesman said the party "takes the issue of late donation reporting seriously" and is "determined to remedy" the situation.
BIGGEST LENDERS Allied Irish Bank: £18.45m to Tories (mortgage provider)Co-operative Bank and unions: £15.3m to LabourLord Alliance: £250,000 to Lib Dems
Lib Dem chief executive Lord Rennard said the size of the amounts owed by Labour and the Conservatives could have an impact on the health of democracy.Lib Dem chief executive Lord Rennard said the size of the amounts owed by Labour and the Conservatives could have an impact on the health of democracy.
BIGGEST LENDERS Allied Irish Bank: £18.45m to Tories (mortgage provider)Co-operative Bank and unions: £15.3m to LabourLord Alliance: £250,000 to Lib Dems
He suggested that if people loaned money, rather than donated it, they could have more influence as they could threaten to call in their loan if they did not agree with a particular policy.He suggested that if people loaned money, rather than donated it, they could have more influence as they could threaten to call in their loan if they did not agree with a particular policy.
Conservative chairman Francis Maude said 90% of Labour's donations in the quarter had come from unions, showing "how Labour's dependence on the unions continues to grow".Conservative chairman Francis Maude said 90% of Labour's donations in the quarter had come from unions, showing "how Labour's dependence on the unions continues to grow".
"Who knows what is being promised behind closed doors for the latest slew of cash revealed today?" he said."Who knows what is being promised behind closed doors for the latest slew of cash revealed today?" he said.
CPS file
Labour, meanwhile, said they would be asking the Electoral Commission to examine whether loans from individuals to the Conservatives had been fairly described as being on commercial terms, if the interest charged for them was lower than that charged by banks.Labour, meanwhile, said they would be asking the Electoral Commission to examine whether loans from individuals to the Conservatives had been fairly described as being on commercial terms, if the interest charged for them was lower than that charged by banks.
HAVE YOUR SAY Like the NHS, political parties will have to live within their means Martin, UK Send us your commentsHAVE YOUR SAY Like the NHS, political parties will have to live within their means Martin, UK Send us your comments
The Electoral Commission figures come as police investigate whether party donors received honours in return for cash. All involved deny wrongdoing.
The cash-for-honours investigation began early this year after it was revealed the Labour Party had been given secret loans ahead of the last election, and that some of those lenders had subsequently been nominated for peerages.The cash-for-honours investigation began early this year after it was revealed the Labour Party had been given secret loans ahead of the last election, and that some of those lenders had subsequently been nominated for peerages.
The inquiry has been widened to look at the other main parties.The inquiry has been widened to look at the other main parties.
Police have spoken to 90 people, including some of Tony Blair's closest advisers, and, from the Conservative side, former leader Michael Howard.Police have spoken to 90 people, including some of Tony Blair's closest advisers, and, from the Conservative side, former leader Michael Howard.
Metropolitan Police Assistant Commissioner John Yates has said he hopes to present a report to the Crown Prosecution Service in January. No-one has been charged.Metropolitan Police Assistant Commissioner John Yates has said he hopes to present a report to the Crown Prosecution Service in January. No-one has been charged.