Labour yesterday suspended four of its local parties in Birmingham and launched an urgent inquiry into allegations that housing renovation grants have been used to "buy" votes from party members who could influence the selection of parliamentary candidates.
Peter Coleman, the party's director of organisation, has been appointed to head an inquiry after allegations that up to £2m of public money could be involved.
It is claimed that rival groups have been advising party members on how to jump the 9,000-long queue for grants. Up to 50 per cent of grants in one ward are said to have gone to party members. Four constituency parties in Labour-held seats - Ladywood, Perry Barr, Small Heath and Sparkbrook - have been suspended and will be unable to meet or operate while the inquiry lasts. Theresa Stewart, the leader of Birmingham City Council, has asked the district auditor to scrutinise all grant applications.
Birmingham Small Heath, the seat of Roger Godsiff, disappears under the boundary reorganisation, part of it moving into Birmingham Sparkbrook, the seat being vacated by Roy Hattersley, the former deputy leader of the party. Ladywood is held by Clare Short and Perry Barr by Jeff Rooker, who is seeking a police inquiry.
The allegations are a deep embarrassment for Labour which has made much capital out of allegations of vote-rigging in Westminster and Wandsworth councils' housing policies.
Fiona Gordon, the party's regional secretary, said: "We are taking the allegations very seriously and have taken tough action to ensure they are investigated fully."
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