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Last Updated: Thursday, 30 March 2006, 07:43 GMT 08:43 UK
Tories seek OK to reveal lenders
Tony Blair during his trip to Australia
Ministers strongly deny giving favours in return for loans
The Tories are contacting people who have lent the party money, to ask for permission to publish their names.

The party had resisted the move, saying the lenders had a right to anonymity.

But after Labour published a list of backers who secretly lent the party almost 14m, Deputy PM John Prescott demanded the Tories follow suit.

On Wednesday the Electoral Commission said it was not yet satisfied that the multi-million pound secret loans to parties were within the funding laws.

Its chairman Sam Younger told BBC News he would use legal powers if necessary to make parties reveal information about loans.

Meanwhile, the Metropolitan Police is investigating complaints from the Scottish National Party that the law on selling peerages had been broken. It says the inquiry could widen into a corruption probe.

All the political parties and the people who have lent or donated money have denied any favours were given for the loans.

Supporting evidence

The Electoral Commission wrote last week to the parties asking them to confirm all loans were on commercial terms.

Such loans do not have to be declared under funding rules, but donations - or loans the parties do not intend to repay - do.

If necessary, we would be prepared to exercise these powers to obtain the information we require
Electoral Commission

The commission said replies from the political parties had failed to satisfy its concerns, and it is now asking for some supporting evidence to be provided.

While Mr Younger threatened legal action if necessary, he said he hoped there could still be an "agreed way forward".

This would allow a focus on "the most important thing - getting a system... for the future that provides that full transparency on all the income parties receive".

Labour and the Conservatives have said all undeclared loans in last year's general election campaign complied with the rules covering party funding.

The commission says doubts over whether the loans were really on commercial terms were raised by reports quoting both lenders and party representatives.

'Baring teeth'

It says it will ask for "an explanation of their rationale for concluding that loans were made on commercial terms and asking them to provide supporting evidence for their decision".

BBC political editor Nick Robinson said the commission was "baring its teeth, for the very first time".

Meanwhile, Chai Patel, who lent Labour 1.5m, has withdrawn his name from Tony Blair's list of nominees for a peerage amid the "cash for titles" row.

The millionaire businessman said that at no time did he have any expectation of a reward nor had he been offered anything in return.

His nomination to become a Labour peer was blocked by the House of Lords Appointments Commission.

Three other millionaires who lent the Labour party money and who were nominated for peerages - Sir David Garrard, Gulam Noon and Barry Townsley - have already withdrawn their names from the list.

They were among 12 businessmen who secretly loaned the Labour party almost 14m in the run-up to the general election.




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