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Brown to answer 'crisis' claims Brown to answer 'crisis' claims
(about 2 hours later)
The Conservatives say Labour is "in crisis" after its general secretary resigned in a new row on party funding.The Conservatives say Labour is "in crisis" after its general secretary resigned in a new row on party funding.
Peter Watt stood down after it emerged that property developer David Abrahams donated nearly £600,000 to the party, over four years, via three associates.Peter Watt stood down after it emerged that property developer David Abrahams donated nearly £600,000 to the party, over four years, via three associates.
Prime Minister Gordon Brown faces tough questions later at a press conference.Prime Minister Gordon Brown faces tough questions later at a press conference.
Shadow chancellor George Osborne said it was "beyond belief" Mr Watt had not objected to the donation and said Labour was "now officially in crisis". Tory leader David Cameron accused the government of demonstrating "an indifference for the law" over issues like the donations and lost data discs.
He demanded to know if Mr Brown had been aware of the money, adding: "Everything Gordon Brown promised about his premiership - competence, honesty and change - has been blown away in the last few weeks." 'Complacency'
'Defies credibility' He told business leaders at the CBI conference: "They say you've got to have this bit of security, that bit of compliance, and whether it's their own government departments or their own party machines, they simply don't obey the law.
"There is a time in the life of every government when it slips over from complacency into arrogance, and from arrogance into even indifference for the law. I say we've reached that point and it is time for real change in our country."
I have to accept we made a terrible error in this situation Dianne HayterLabour's NEC Another crisis for Brown Key figures react
Shadow chancellor George Osborne said Labour was "now officially in crisis".
It comes amid a torrid week for the prime minister which has seen loss of millions of child benefit records, the ongoing Northern Rock crisis and attacks from former army chiefs.It comes amid a torrid week for the prime minister which has seen loss of millions of child benefit records, the ongoing Northern Rock crisis and attacks from former army chiefs.
Francis Maude, who represented the Conservatives in negotiations about party funding told BBC Radio 4's Today programme Peter Watt had been head of compliance for the Labour Party, before becoming general secretary.
I have to accept we made a terrible error in this situation and I apologise to party members Dianne HayterLabour's NEC Another crisis for Brown Key figures react
He said: "Frankly it defies credibility that Peter Watt did not know that this most basic of compliance rules was in place. You wonder, if that was the case, which is hard frankly to believe, you wonder what else has been going on there?"
He added: "This kind of looks like institutionalised cheating on the system and adds to this general sense that there now is of the kind of whiff of decay and frankly, greed."
Mr Watt resigned after telling a meeting of officers of Labour's National Executive Committee he had known about the arrangement with Mr Abrahams, but said he had believed he had complied with reporting obligations.Mr Watt resigned after telling a meeting of officers of Labour's National Executive Committee he had known about the arrangement with Mr Abrahams, but said he had believed he had complied with reporting obligations.
Electoral CommissionElectoral Commission
But Francis Maude, who represented the Conservatives in negotiations about party funding told BBC Radio 4's Today programme it "defied credibility" that Mr Watt did not know "this most basic of compliance rules".
Under the law, those making donations on behalf of others must give details of who is providing the money.Under the law, those making donations on behalf of others must give details of who is providing the money.
Mr Abrahams gave the money through colleagues Janet Kidd and Ray Ruddick, and solicitor John McCarthy.Mr Abrahams gave the money through colleagues Janet Kidd and Ray Ruddick, and solicitor John McCarthy.
DONORS Ray Ruddick - £196,850Janet Kidd - £185,000 since 2003John McCarthy - £202,125 since 2004Source: Electoral Commission Your reaction to donor rowDONORS Ray Ruddick - £196,850Janet Kidd - £185,000 since 2003John McCarthy - £202,125 since 2004Source: Electoral Commission Your reaction to donor row
Labour is investigating the donations and the Electoral Commission has also asked the party to explain. It has also emerged that Hilary Benn initially turned down a £5,000 donation for his deputy leadership campaign from Mr Abrahams, because it was made in Janet Kidd's name.
He later accepted it when Mr Abrahams wrote him a cheque in his own name and reported it as required. Labour is investigating the donations and the Electoral Commission has also asked the party to explain.
Dianne Hayter, from Labour's National Executive Committee, told the BBC they thought they had "thorough and complete" systems in place to check donations were legitimate - but Mr Watt had not told the NEC that the donations had come from Mr Abrahams.Dianne Hayter, from Labour's National Executive Committee, told the BBC they thought they had "thorough and complete" systems in place to check donations were legitimate - but Mr Watt had not told the NEC that the donations had come from Mr Abrahams.
'Deep shock''Deep shock'
Asked about her reaction when she heard the news, she said: "First of all, disbelief and then when I was absolutely convinced this was the case - deep shock. I was amazed."Asked about her reaction when she heard the news, she said: "First of all, disbelief and then when I was absolutely convinced this was the case - deep shock. I was amazed."
She said the donations had been made over a number of years, in smaller amounts and the individuals who sent them in had been "checked out".She said the donations had been made over a number of years, in smaller amounts and the individuals who sent them in had been "checked out".
Mr Watt said he had resigned "with great sadness"Mr Watt said he had resigned "with great sadness"
"I have to accept we made a terrible error in this situation and I apologise to party members and I apologise to the British people." She said she had to accept a "terrible error" had been made but said it was not "institutionalised corruption" and she was confident it was a "one off".
She said the party would work with "all the relevant authorities" like the Electoral Commission to make systems were in place to ensure it did not happen again.
'One off'
But she added: "I disagree completely that this is institutionalised corruption or sleaze or anything. I myself am confident it was a one-off."
BBC political editor Nick Robinson said he had been told there may be a fourth person "used as a cover" to make payments on behalf of Mr Abrahams.
It's a whole sleazy area; it needs cleaning up because of lack of public confidence Vince CableActing Lib Dem leader
According to the Electoral Commission, Mr Ruddick has donated £196,850; Mrs Kidd has donated £185,000 since 2003; and Mr McCarthy £202,125 since 2004.According to the Electoral Commission, Mr Ruddick has donated £196,850; Mrs Kidd has donated £185,000 since 2003; and Mr McCarthy £202,125 since 2004.
Newspapers report that Mr Ruddick and Mrs Kidd are listed as directors of a property company, Durham Green Developments, which won planning permission for a multi-million pound business park - and Durham City Council had confirmed Mr Abrahams was involved in negotiations.Newspapers report that Mr Ruddick and Mrs Kidd are listed as directors of a property company, Durham Green Developments, which won planning permission for a multi-million pound business park - and Durham City Council had confirmed Mr Abrahams was involved in negotiations.
Acting Liberal Democrat leader Vince Cable said that "an enormous can of worms had been opened up" regarding party funding reform and that the government should have brought in new regulations.Acting Liberal Democrat leader Vince Cable said that "an enormous can of worms had been opened up" regarding party funding reform and that the government should have brought in new regulations.
"In the Queen's Speech there was no reference whatever to promised legislation on party funding, which is the problem. "It's a whole sleazy area; it needs cleaning up because of lack of public confidence, " he said.
"It's a whole sleazy area; it needs cleaning up because of lack of public confidence. There was no promise to do anything about it."
A ComRes survey suggests that Labour has suffered a six-point slump to 27% in a month, giving the Tories a large lead despite falling one point themselves to 40%.A ComRes survey suggests that Labour has suffered a six-point slump to 27% in a month, giving the Tories a large lead despite falling one point themselves to 40%.
It surveyed 1,002 adults by telephone on 23 to 25 November and the results were weighted.It surveyed 1,002 adults by telephone on 23 to 25 November and the results were weighted.