LABOUR IN BRIGHTON: New money makes old Labour's poverty a distant memory

Paying for politics: Blair's leadership has transformed party finances as the Tories struggle with an pounds 11m overdraft
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The Independent Online
Labour is well on the way to supplanting the Conservatives as the wealthiest political party in Britain.

The Tories may have the highest income - and historically have been able to count on more cash than their rivals at election time - but they are now paying the price for running up a huge overdraft in the early Nineties. While they grapple to bring it down, Labour is putting millions aside for the next general election. Accounts released to party delegates in Brighton for the annual conference this week show that Tony Blair has had a galvanising effect on the party's financial as well as political fortunes.

Last year, delegates are told, Labour's general election fighting fund doubled to pounds 4.5m. The Tories, who meet next week in Blackpool, will be exhorted by their leaders to try even harder. Their accounts show a good surplus in their last financial year of pounds 2.95m but that came at the expense of further cuts at Central Office and they offer no indication of where the cash for the next general election, now less than two years away, will come from.

All three parties are overdrawn. The Tories pared pounds 4.5m off their deficit last year which now stands at pounds 11.37m; Labour has cut its deficit from a peak of pounds 2.5m in 1992 to the present pounds 1.1m, while the Liberal Democrats have reduced their overdraft to pounds 150,000.

Despite that, the Liberal Democrats remain the poor relation. Unlike Labour, their work for the general election, to quote the chair of the party's finance committee, Tim Clement-Jones, is already "stretching our fund-raising capacity to the limit". While their accounts are in good shape, the party needs every extra penny they can get if they are to fight the next election on anything remotely approaching a level playing field - hence initiatives such as targeting Asian businesses for support.

While the Liberal Democrats have not put a foot wrong politically, the three parties' accounts show it is power or the real prospect of power that brings in the money. In a year of sleaze, splits over Europe and plunging poll ratings, the Tories still brought in pounds 12.7m of donations, an increase of 35 per cent. As ever, the party stoically refuses to break that down between companies and individuals. While supporters still seem happy to pay, the Tories' dismal political performance may account for a slump in takings from the sale of books and souvenirs - a major factor in a pounds 900,000 drop in sundry income. A resurgent Labour, by contrast, saw its earnings from publications more than double, from pounds 131,000 to pounds 335,000.

With Labour having almost doubled its membership to 350,000 since Mr Blair took over, his party is clearly riding the crest of a financial wave. Even so, he ignores the unions at his peril. They still account for about half of total income. As for all those people rushing to join, they do not come cheap. In the accounts,expenditure on "membership processing" has gone up from pounds 547,000 to pounds 605,000.

The worry for the Tories is that while they have slashed the Central Office operation to the bone, it still eats money. Massively unpopular with the constituencies - last year almost 500 local associations failed to pay their full Central Office quotas with more than a dozen contributing nothing at all - staff costs at Smith Square continue to rise, up from pounds 5.7m to pounds 5.9m last year.

As delegates gather in Brighton and Blackpool, they might reflect that they are making a vital contribution to party coffers. Annual conferences have become a vital part of the political year - not just for buoying up delegates and guaranteeing a media platform for a week. They are also big business. In 1993, Labour made a total profit of pounds 26,000 from its conference.

Last year, in Blackpool with Mr Blair, it made pounds 119,000. This week's profits should be even higher.

How the main parties are funded

Labour

Income:

Donations and

subscriptions pounds 2.37m

Unions pounds 4.32m

Other sources pounds 2.23m

Total income pounds 8.92m

Expenditure : pounds 8.48m

Surplus pounds 0.44m

General Election fund pounds 4.5m

Overdraft pounds 1.1m

Tories

Income :

Donations pounds 12.73m

Constituencies pounds 0.86m

Other sources pounds 1.71m

Total income pounds 15.30m

Expenditure pounds 12.35m

Surplus pounds 2.95m

General Election Fund N/A

Overdraft pounds 11.38m

Lib Dems

Income :

Donations pounds 0.59m

Levies from English, Scottish and Welsh branches pounds 0.46m

Other sources pounds 0.26m

Total income pounds 1.31m

Expenditure pounds 1.31m

Surplus pounds 0.005m

General Election fund N/A

Overdraft pounds 0.15m

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