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Last Updated: Tuesday, 28 November 2006, 22:36 GMT
Labour facing cash flow problems
Tony Blair
Labour said it had been a "difficult financial year"
Labour has admitted facing "acute cash flow problems" as Electoral Commission figures revealed the main political parties owe a total of 60m in loans.

The figures show the Tories owe 35.3m, Labour 23.4m and the Lib Dems 1.1m. The Scottish National Party owes 525,393 and Plaid Cymru 352,000.

It is the first time parties have had to declare all loans above 5,000.

While the Tories owe more, Labour loans need to be repaid sooner - 1.5m is due now, 17m by the end of 2007.

In a statement Labour said it was in the midst of a "difficult financial year" and was restructuring to cut costs and to extend the repayment date of most of its loans.

Conservatives: 35.3m
Labour: 23.4m
Lib Dems: 1.1m
SNP: 525, 393
Plaid Cymru: 352,000
Respect: 34, 878
UKIP: 19,200

But biotechnology entrepreneur Sir Christopher Evans, who gave a 1m commercial loan, and computer tycoon Gordon Crawford, who lent 500,000, want their money back imminently.

Labour said it was holding discussions with them, as "any organisation that is seeking to manage its cash flow in difficult circumstances" would do.

Law change

Sir Christopher has said repayment is expected "within a matter of months" and a further 17m from Labour lenders is due to be repaid by the end of 2007.

The Conservatives owe more than Labour, but say almost 16m was spent on buying the freehold of the party's former headquarters in Smith Square - which it now hopes to sell.

A change in the law in September means all loans of 5,000 and above to main political party offices have to be declared, bringing rules for loans into line with those for donations.

Conservatives: 2,867,019
Labour: 3,227,340
Lib Dems: 629,903
SNP: 52,430
Plaid: 12,250
Co-operative Party: 142,036
Ukip: 17,913
Green Party: 138,396
Scottish Greens: 31,373

Previously any loans made with a commercial rate of interest did not have to be declared.

Former Labour Party treasurer Lady Prosser told the BBC that the debt was a result of new legislation.

She said some major donors were "rather shy" about being named - for fear of being accused of "giving money to buy something".

The figures showed that in the third quarter of 2006, the Conservatives received donations worth 4m, Labour 3.2m and the Lib Dems 1.1m.

'More influence'

Electoral Commission chief executive Peter Wardle said the parties had made "good progress" in reporting loans but some had struggled to report donations on time.

Labour declared 207,155 of donations late, the Tories 168,259 and the Lib Dems 23,181.

Lib Dem chief executive Lord Rennard said the size of the amounts owed by Labour and the Conservatives could have an impact on the health of democracy.

Allied Irish Bank: 18.45m to Tories (mortgage provider)
Co-operative Bank and unions: 15.3m to Labour
Lord Alliance: 250,000 to Lib Dems

He suggested that if people loaned money, rather than donated it, they could have more influence as they could threaten to call in their loan if they did not agree with a particular policy.

Conservative chairman Francis Maude said 90% of Labour's donations in the quarter had come from unions, showing "how Labour's dependence on the unions continues to grow".

"Who knows what is being promised behind closed doors for the latest slew of cash revealed today?" he said.

Meanwhile Labour Party chairman Hazel Blears has written to Francis Maude, questioning whether all Tory loans were received at commercial rates, and whether all lenders are based in, or trade in, the UK.

Labour has said they would be asking the Electoral Commission to examine individuals' loans to the Conservatives.

Like the NHS, political parties will have to live within their means
Martin, UK

The Electoral Commission figures come as police investigate whether party donors received honours in return for cash. All involved deny wrongdoing.

The cash-for-honours investigation began early this year after it was revealed the Labour Party had been given secret loans ahead of the last election, and that some of those lenders had subsequently been nominated for peerages.

The inquiry has been widened to look at the other main parties.

Police have spoken to 90 people, including some of Tony Blair's closest advisers, and, from the Conservative side, former leader Michael Howard.

Metropolitan Police Assistant Commissioner John Yates has said he hopes to present a report to the Crown Prosecution Service in January. No-one has been charged.

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