Party to fight election £9m in the red

12 April 2012

Labour is heading into the general election nearly £9 million in the red, latest figures have revealed.

MPs' fears that money as well as power are draining away from the party were underlined as it emerged that a combination of outstanding loans, fewer donations and pension liabilities had left it with a huge deficit.

With visibly fewer stalls at this year's conference, income from the annual gathering also appeared to have been hit as businesses and lobbyists drift towards the Conservatives. Charles Clarke, the former Cabinet minister, said recently that Labour's finances were so dire that raising cash for an election campaign seemed "almost impossible". Fresh analysis of Labour's accounts highlight Mr Clarke's worries. Although the party is nominally in the black to the tune of £2.6 million, once a one-off VAT repayment and its outstanding loans are taken into account, its real balance stands at a deficit of £8,907,106.

Party finance chiefs have managed to get the deficit down from a record high of £41 million. General election co-ordinator Douglas Alexander warned delegates that finances were "constrained". The party was £4 million in the black in 1998 and 2000 but the "cash for peerages" affair, followed by "donorgate", appear to have led to a drying up of large donations from businessmen and Labour now relies increasingly on union funding.

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