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Last Updated: Wednesday, 22 March 2006, 10:29 GMT
Labour moves to close funding row
By Nick Assinder
Political Correspondent, BBC News website

Labour's ruling executive has probably done what it can to ensure there are no future "loans-for-lordships" rows - mainly by, in effect, stripping the prime minister of his role in overseeing the money collections.

Tony Blair
Mr Blair faced a meeting of Labour's ruling executive
Although the fact that the body has had to state it is "resuming" its oversight responsibility might provoke questions over why and how it relinquished it in the first place.

But the attack on party treasurer Jack Dromey by Home Secretary Charles Clarke has served only to keep the issue alive - as have moves to have the police investigate the affair.

Even some usually supportive Labour MPs are suggesting Mr Clarke's characteristically robust assault on Mr Dromey has badly backfired by appearing to be part of a campaign to rubbish him.

It will also add to suggestions that Mr Clarke suspected Mr Dromey's actions in igniting the affair were prompted by a desire to remove Tony Blair in favour of Gordon Brown - a suggestion Mr Clarke dismissed.

And his assault was swiftly slapped down by NEC chairman Sir Jeremy Beecham - only minutes after he was attempting heal the rifts the row had caused.

Similarly demands for the police to investigate any alleged abuses of the honours system might be brushed aside as "opportunistic" but it will also keep the issue alive for the time being.

Move on

All this came after what was claimed to be an entirely blame-free and constructive meeting with the prime minister, in which Labour bosses set down a series of tightening-up measures which should keep things well above board in future.

As such, Labour and the other big parties are now all in the same boat, insisting the time has come for changes to the way parties are funded, based on complete transparency.

There certainly seems to be a desire within Labour's ruling national executive committee (NEC) to move on, amid claims the row was seriously damaging the party.

But the outcome of this meeting will do nothing to answer the continuing questions over why would-be donors were asked to secretly lend money instead of openly giving it.

Neither will it stop the questions over whether or not these loans came with guaranteed peerages attached - something that has been fiercely denied by all concerned.

And the claims that the government, and Tony Blair in particular, is now as tainted by sleaze as John Major's government will be hard to throw off.

Done damage

It also seems clear that there is a lingering resentment, even anger, among some senior party members at the "disrespect" they claim the prime minister showed to the NEC over fund raising.

Labour Party Treasurer Jack Dromey
Party treasurer Jack Dromey was in the dark
Relations between Tony Blair and the wider Labour Party have often been uneasy and this affair has placed significant further strain on them.

The notion that the prime minister and a close group of trusted aides - including controversial fundraiser Lord Levy - have been operating with scant regard to the party has been gaining ground.

So, while there may be a desire to move on, this row has undoubtedly done damage and left a significant legacy.

And there is also the real prospect that some of the big lenders will now demand their money back - potentially landing the party in serious financial difficulty.

If that happens there will be a further dilemma over precisely how Labour finds that cash.



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