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Labour facing cash flow problems Labour facing cash flow problems
(about 3 hours later)
Labour has admitted facing "acute cash flow problems" as Electoral Commission figures revealed 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 owes £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 was still struggling to repay loans to two of its donors. While the Tories owe more, Labour loans need to be repaid sooner - £1.5m is due now, £17m by the end of 2007.
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.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
But two commercial loans from individuals have not been rescheduled and repayment is due. But biotechnology entrepreneur Sir Christopher Evans, who gave a £1m commercial loan, and computer tycoon Gordon Crawford, who lent £500,000, want their money back imminently.
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. Labour said it was holding discussions with them, as "any organisation that is seeking to manage its cash flow in difficult circumstances" would do.
Labour said it was holding discussions with them as "any organisation that is seeking to manage its cash flow in difficult circumstances" would do.
Law changeLaw change
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. Sir Christopher has said repayment is expected "within a matter of months" and a further £17m from Labour lenders is due to be repaid by the end of 2007.
The Conservatives owe more than Labour, but say almost £16m was spent on buying the freehold of the party's former headquarters in Smith Square - which it now hopes to sell.
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 figures showed that in the third quarter of 2006, the Conservatives received donations worth £4m, Labour £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''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.
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 DemsBIGGEST 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.
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. Meanwhile Labour Party chairman Hazel Blears has written to Francis Maude, questioning whether all Tory loans were received at commercial rates, and whether all lenders are based in, or trade in, the UK.
Labour has said they would be asking the Electoral Commission to examine individuals' loans to the Conservatives.
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 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.