Bankruptcy hanging like a cloud over Labour's election campaign

[Hopeless Romantic]

An impoverished Labour Party will be unable to return fire against the Conservatives’ pre-election advertising blitz for months, amid fears that it could emerge from the campaign bankrupt.

David Blunkett, the former Home Secretary and chairman of Labour’s election development board, said the party was going into an election at a greater financial disadvantage than any time since 1983, when it suffered a landslide defeat.

Labour has been forced to scrap a planned manifesto meeting of its National Policy Forum on cost grounds, just before a campaign in which Conservatives are preparing to out-spend it by a factor of about three to one, The Times has learnt.

Mr Blunkett said the party lacked the “big money and big charisma” that sustained it when Tony Blair was leader. He added: “We are trying to be careful so we don’t end up bankrupt after the election if this all goes pear-shaped.”

The gulf in campaign funding emerged as the two parties traded blows over policies on tax and public services yesterday. Tory billboard posters, dominated by a huge photograph of David Cameron, went up in 1,000 locations across the country — a £400,000 advertising blitz that Labour admitted it could not afford.

Mr Blunkett confirmed last night that the party had a campaign budget of only £8 million. The bulk of this money comes from trade unions and is being held back until the polling date is announced, probably in April.

Although he suggested efforts to raise more individual donations could yet swell the fund to about £10 million, Mr Blunkett sought to present the looming battle as a David and Goliath clash.

The Tories, who were narrowly out-spent by Labour at the last election, are expected to raise about £25 million for this campaign.

A legal limit on election expenditure by the main parties has been set at about £18 million. But, with individual candidates allowed to spend up to £40,000 each this year, further sums can be channelled into local Conservative associations as part of a multimillion-pound campaign for target seats that has been funded by Lord Ashcroft and other benefactors.

In the first three months of last year, the Conservatives had almost double the donor income of Labour and, while there is little evidence as yet of a bulging Tory campaign war chest, the party’s treasurers are confident they can now cash in dozens of funding pledges. “We will work like stink to get as much money as we can,” said a senior party source, “and we certainly won’t be borrowing a penny.”

Both main parties ended the last campaign in the red. The Tories cut their debts to £4.9 million by the end of 2008 by selling off property, while Labour — which is understood to have considered going into administration two years ago — has pared down the money it owes to £11.5 million. This is still a large enough sum to make Labour technically insolvent if it was an ordinary business, according to a leading City accountant last night.

Cost-cutting measures have forced Labour to operate with about half the staff it had in 2005. Labour officials say the six-figure sum needed to hold a pre-election policy forum meeting scheduled for last month was better spent campaigning. The manifesto process instead will be completed through a less formal consultation involving National Executive members, union leaders and the Cabinet.

The financial problems afflicting Labour hit hardest in 2006, amid allegations that big individual donations and loans were linked to honours. Sir Gulam Noon, the curry magnate, who lent Labour £250,000 before being nominated for a peerage, said yesterday that he had not been contacted about funding this year’s election campaign, even though he remains a committed party supporter. His loan was repaid in full in July 2008, but others who chose not to convert loans into donations, including Rod Aldridge, the former head of Capita, and Richard Caring, the owner of The Ivy restaurant, are still owed money.

Mr Blunkett, in his comments to The Times, warned that the Conservatives had an “absolutely clear strategy for buggering us after the next election” if they win power. He said this involved capping all donations, including those from the unions, Labour’s financial mainstay, at £100,000. Other measures such as redrawing constituency boundaries to the Conservatives’ advantage and banning Scottish or Welsh MPs from voting on English laws, would also help to keep Labour out of power or even “wipe us off the face of the map,” said Mr Blunkett.

A Tory spokesman confirmed yesterday that cutting the number of MPs and changing the constitution remained official policy but indicated that a cap on union donations would be hard to achieve without political consensus.

The spokesman defended the big spending advantage the Conservatives will have over Labour. “All advertising by the Conservatives is paid for by the party and is a fraction of the £540 million of taxpayers’ cash the Government spent on PR last year,” he said.

The Tories have also attacked the Government’s use of Whitehall officials to draw up the Labour dossier published yesterday on the true cost of Conservative policies — a view being echoed by civil service union leaders today. In a letter to The Times, Jonathan Baume, general secretary of the FDA, said that there was growing disquiet about the potential abuse of officials for political means.

http://www.timesonline.co.uk/tol/news/politics/article6976038.ece

[BolivarianHero]

1. Wow...British people are gullible..

They gave more money to the Blair Labourites than at any other time in party history?

[muriel_volestrangler]

2. Not necessarily gullible at all

Peter Mandelson once said New Labour was "intensely relaxed about people getting filthy rich". So the rich realised they'd be just as well off under New Labour as under the Tories, and saw which way the electorate would vote after 18 years of Conservatives, and donated to Blair's New Labour, to ingratiate themselves with the new government.