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EDITIONS
Monday, 22 July, 2002, 08:53 GMT 09:53 UK
Labour admits funding crisis
Labour general election poster
Labour spent millions on last year's election campaign
Labour's general secretary has admitted the party faces "financial challenges" after a leaked report revealed it was 6m in debt.

An internal party document obtained by the BBC showed Labour is facing the worst financial crisis in its history.

The party's general secretary, David Triesman, admitted cash was tight and that next year's elections for the Scottish Parliament and Welsh Assembly would "prove a real test" for Labour.


We have financial challenges to face

David Triesman, Labour general secretary
But he pledged to find a way through the financial difficulties and boost the party's dwindling membership.

"We have financial challenges to face," Mr Triesman said in a speech to Labour's first rural conference in Shropshire.

"The newspapers seem to think there's nothing else that preoccupies us.

"It is true that there are those kinds of problems, but we are making difficult choices and we are working our way through them."

He said the party had to increase membership.

"For those who, in the newspapers today (Sunday), believe that we will not find the resources and not contest those elections, well they had better find out what reality is like," he added.

'Election debts'

Labour's Millbank headquarters has set aside 200,000 for redundancies across the UK, although these are unlikely to be compulsory.


I am sure the unions will respond in the way they nearly always do

John Monks, TUC General Secretary
TUC General Secretary John Monks said he was sure the unions would come to Labour's aid - despite disagreements with the party over pensions, employment law and public sector pay.

"I think most people recognise we will only sort out these problems with the government and not in some way against it," Mr Monks told BBC News 24.

But he added: "The unions have been signalling they can not afford their existing level of support for the government for some time.

"There was a big spend before the election and now the cheques are coming in and the party's strapped for cash."

F1 boss Bernie Ecclestone
Bernie Ecclestone's 1m gift caused trouble for Labour
"I am sure the unions will respond in the way they nearly always do," Mr Monks added, even though many unions were "rather strapped for cash" themselves.

A Labour spokesman said: "Parties inevitably have debts after General Election campaigns and we are working to our business plan agreed with the bank to deal with the current situation."

Matthew Taylor, of the IPPR think-tank, told BBC Radio 4's Today programme that trade unions were questioning what they were receiving in return for their donations to Labour.

State funding

Labour peer Lord Haskins, a party donor, said he had reservations about large political donations from individuals or trade unions.

"The public is suspicious that there is a trade off," he told Today, suggesting that state funding of political parties might be the solution.

The leaked document says: "Sizeable repayments to the bank are expected in 2003.

"This was not the case in 1999 and represents a significant challenge."

'Good state'

The document, which was sent to members of Labour's National Executive Committee, is likely to lead to fresh calls for a shake-up in the rules governing party funding.

But senior Labour backbencher Jeremy Corbyn said this was not the answer.

He said Labour needed to "re-connect" with ordinary people and stop chasing big corporate sponsors.

Conservative leader Iain Duncan Smith suggested the solution to Labour's funding crisis could be for Chancellor Gordon Brown to grant tax relief on small donations.

He told Sky television the Tory finances were in a "good state", with the majority of recent funding coming from smaller donors, which is where he thought the future lay for political funding.

Big corporate donors have reportedly been scared away by sleaze scandals, such as the one involving Formula One boss, Bernie Ecclestone, who returned a 1m donation to Labour after claims he had tried to influence policy.

 WATCH/LISTEN
 ON THIS STORY
The BBC's John Pienaar
"Labour's relationship with the unions is at a turning point"
Labour MP Jeremy Corbyn
"I think they have to set out very clearly... what is at stake"
TUC General Secretary John Monks
"The unions too are rather strapped for cash"
See also:

21 Jul 02 | Politics
12 Jun 02 | Politics
20 Sep 00 | Politics
03 Jan 01 | Politics
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