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Last Updated: Tuesday, 21 March 2006, 15:14 GMT
Labour to overhaul funding system
Tony Blair
Mr Blair: Denies giving peerages for cash
Labour's National Executive Committee is to take back its "rightful responsibility" for all the party's funding to make it more "transparent".

The decision follows the row over the 14m in secret loans arranged by Tony Blair's chief fundraiser Lord Levy.

After meeting on Tuesday the NEC said the party would bring in new rules and disclose publicly all new loans.

This comes amid claims, denied by Mr Blair, that those lending money were being rewarded with peerages.

You can see from today's papers that actually if you donate money or loan money, when it comes out it brings a whole degree of innuendo, scrutiny
Dr Chai Patel
Labour donor

Labour treasurer Jack Dromey prompted the investigation when he said he, and all the other elected party officials, had only learned through the media about the loans.

In a statement after the meeting, which Mr Blair attended for more than an hour, the NEC said it "agreed that the entire issue of party funding needed to be addressed and the system made more transparent".

The NEC's planned measures include:

  • A review of events, followed by a report "covering lessons to learn for the future", with a "series of revised processes and protocols"

  • All future commercial loans agreed by the party would be publicly declared, including their sources

  • To co-operate fully with the inquiry by civil servant Sir Hayden Phillips, who is carrying out a review of party funding

Ministers are hoping to use the Electoral Administration Bill, which is currently in the House of Lords, to ensure all future loans have to be declared.

Rod Aldridge - 1m
Richard Caring - 2m
Gordon Crawford - 500,000
Prof Sir Christopher Evans - 1m
Sir David Garrard - 2.3m
Nigel Morris - 1m
Sir Gulam Noon - 250,000
Dr Chai Patel - 1.5m
Andrew Rosenfeld - 1m
Lord David Sainsbury - 2m
Barry Townsley - 1m
Derek Tullett - 400,000
Total: 13,950,000

Defence Secretary John Reid told BBC Radio Five Live he hoped those who had lent Labour money did not feel they had been "demeaned unjustly... but I suspect that some of them may feel they have been".

NEC chairman Sir Jeremy Beecham said: "It's an internal party office matter in a sense.

"Party officers - I'm one of them, Jack Dromey's another - were not advised of this situation when it arose last year and we feel that we should have been, but that advice should have come from within the party office, not from Number 10."

Ahead of the meeting one of the donors, Dr Patel, told BBC Radio 4's Today programme he felt "very hurt" by the publicity surrounding his loan.

He said: "There's been an allegation that there's a direct relationship between people giving to causes they believe in and seeking, or even buying, honours."

Dr Patel said he was asked by Mr Blair's fundraiser, Lord Levy, to provide a loan rather than a donation, and said there were "categorically no strings attached to this".

'Grave damage'

He said a loan was preferable because it did not have to be publicly disclosed. "You can see from today's papers that actually if you donate money or loan money, when it comes out it brings a whole degree of innuendo, scrutiny, some suggestions that there may be other reasons and other motives for giving money."

Click below to find out how the UK's political parties are funded

Lord Strathclyde, the Tory leader in the Lords, said the Upper Chamber had "been gravely damaged by what will inevitably be known as the 'loans for peerages affair'".

Simon Hughes, the Lib Dem party president, said Labour's lenders' list raised "serious questions about the connections between the direction of government policy and the influence of its major contributors".

All three parties have received loans. The Liberal Democrats have named the people who have lent them money.

But Conservative treasurer Jonathan Marland says he is not prepared "under any circumstances" to disclose where his party's loans come from.

Former senior civil servant Sir Hayden Phillips is reviewing how parties are financed, with a brief to look in detail at the possibility of state funding.

How Labour spent its millions in the election campaign


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