Labour begs creditors not to call in loans as party's debt reaches £23m
The Labour Party is so cash-strapped that it has begged two businessmen not to demand repayment of £1.5 million in loans linked to the “cash for peerages” affair.
As the Electoral Commission confirmed Labour had debts of almost £23 million, the party revealed that its “acute cash-flow problems” had led it to ask its creditors to restructure its loans.
But biotech millionaire Sir Christopher Evans, who was furious at being arrested over the affair, is insisting he wants his £1 million loan back in full by Thursday. Another millionaire, Gordon Crawford, is owed £545,000 by Labour but has not been paid since the repayment date expired on 29 August. (AtW's comment: in Kiev's Military Academy we called that situation as technical default...)
In what would be a huge embarrassment to Tony Blair, both men could now take legal action to get their money back.
In a statement, Labour claimed that today’s figures proved that it had done nothing illegal in its handling of the loans as they were all made on commercial terms. (AtW: if they were on commercial terms then administrators would have been called in
)
However, the Electoral Commission insisted it was passing no comment on the commerciality of the deals.
There may also be fresh questions over the party’s deals with its banks, which charged the same interest rate as individual lenders and treated them as unsecured deals.
Proof of the damage caused by the “loans for lordships” affair was underlined when today’s figures showed that donations from private individuals had all but dried up.
Nearly 90 per cent of Labour’s donations are now from unions, up from 74 per cent in the previous quarter of 2006.
The party was heavily criticised by the Commission for failing to submit its donations on time, with the watchdog’s chief executive Peter Wardle warning that such behaviour was “unacceptable”.
When asked about the figures today, Tony Blair denied Labour was now “bankrupt”. He said it was up to an independent inquiry into party funding to decide on new controls on spending.
But the Electoral Commission’s first ever compulsory publication of loans and donations show that the party is in a deep financial hole.
The figures reveal that Labour was due to pay back more than £5 million of debts by the end of the year and a further £11million by next November.
Labour also admitted in its statement that it faced real problems.
“Two of our commercial loans from individual supporters had not been rescheduled and repayment is due. The Labour Party is currently in discussion with these creditors to develop a repayment programme that meets the terms of these commercial loans as soon as possible.
"The need for a repayment programme results from the current acute cash flow problems experienced by the party,” it said.
The party has managed to pay back a £6 million mortgage to its bankers the Co-Operative Bank and the Unity Trust after selling its HQ in Old Queen Street.
Yet it has not paid a penny to any of the 12 businessmen who made £14 million in emergency loans to help bankroll the hugely expensive 2005 general election campaign.
Ten of the businessmen have agreed to reschedule their loans, including the four who were nominated for a peerage.
Chai Patel, Barry Townsley, Sir David Garrard and Sir Gulam Noon lent a total of £5 million and a police inquiry is investigating allegations that their financial help was linked to attempts to get them into the House of Lords. These loans must be repaid in 2007 or 2008.
Sir Christopher Evans, who was knighted by New Labour five years ago, said he was “shocked and dismayed” to be arrested in September. His spokesman was unavailable early today, but in a previous statement Sir Christopher has made clear he is in no mood to do Labour any more favours.
“Repayment was set at the end of November and that remains the case,” his office said this month.
The Labour Party is so cash-strapped that it has begged two businessmen not to demand repayment of £1.5 million in loans linked to the “cash for peerages” affair.
As the Electoral Commission confirmed Labour had debts of almost £23 million, the party revealed that its “acute cash-flow problems” had led it to ask its creditors to restructure its loans.
But biotech millionaire Sir Christopher Evans, who was furious at being arrested over the affair, is insisting he wants his £1 million loan back in full by Thursday. Another millionaire, Gordon Crawford, is owed £545,000 by Labour but has not been paid since the repayment date expired on 29 August. (AtW's comment: in Kiev's Military Academy we called that situation as technical default...)
In what would be a huge embarrassment to Tony Blair, both men could now take legal action to get their money back.
In a statement, Labour claimed that today’s figures proved that it had done nothing illegal in its handling of the loans as they were all made on commercial terms. (AtW: if they were on commercial terms then administrators would have been called in
)However, the Electoral Commission insisted it was passing no comment on the commerciality of the deals.
There may also be fresh questions over the party’s deals with its banks, which charged the same interest rate as individual lenders and treated them as unsecured deals.
Proof of the damage caused by the “loans for lordships” affair was underlined when today’s figures showed that donations from private individuals had all but dried up.
Nearly 90 per cent of Labour’s donations are now from unions, up from 74 per cent in the previous quarter of 2006.
The party was heavily criticised by the Commission for failing to submit its donations on time, with the watchdog’s chief executive Peter Wardle warning that such behaviour was “unacceptable”.
When asked about the figures today, Tony Blair denied Labour was now “bankrupt”. He said it was up to an independent inquiry into party funding to decide on new controls on spending.
But the Electoral Commission’s first ever compulsory publication of loans and donations show that the party is in a deep financial hole.
The figures reveal that Labour was due to pay back more than £5 million of debts by the end of the year and a further £11million by next November.
Labour also admitted in its statement that it faced real problems.
“Two of our commercial loans from individual supporters had not been rescheduled and repayment is due. The Labour Party is currently in discussion with these creditors to develop a repayment programme that meets the terms of these commercial loans as soon as possible.
"The need for a repayment programme results from the current acute cash flow problems experienced by the party,” it said.
The party has managed to pay back a £6 million mortgage to its bankers the Co-Operative Bank and the Unity Trust after selling its HQ in Old Queen Street.
Yet it has not paid a penny to any of the 12 businessmen who made £14 million in emergency loans to help bankroll the hugely expensive 2005 general election campaign.
Ten of the businessmen have agreed to reschedule their loans, including the four who were nominated for a peerage.
Chai Patel, Barry Townsley, Sir David Garrard and Sir Gulam Noon lent a total of £5 million and a police inquiry is investigating allegations that their financial help was linked to attempts to get them into the House of Lords. These loans must be repaid in 2007 or 2008.
Sir Christopher Evans, who was knighted by New Labour five years ago, said he was “shocked and dismayed” to be arrested in September. His spokesman was unavailable early today, but in a previous statement Sir Christopher has made clear he is in no mood to do Labour any more favours.
“Repayment was set at the end of November and that remains the case,” his office said this month.
