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Labour in Blackpool: Whitty says Blair's 79,000 pounds campaign bill not excessive: Labour leader denies NEC row over variation in candidates' funding. Colin Brown reports

EXPENDITURE of pounds 79,000 on the leadership election by Tony Blair's camp was not excessive, Larry Whitty, the general secretary of the Labour Party, said last night.

Mr Whitty, who is being moved from his post by Mr Blair, defended the Labour leader's campaign bill, after the disclosure yesterday that it dwarfed the campaign budgets of his two rivals, Margaret Beckett and John Prescott, who each spent pounds 17,000.

The party's national executive last week imposed new rules to stop a repeat of such high spending on a leadership election.

The NEC fixed a ceiling on spending of pounds 25,000 and ordered the disclosure of the identity of any donors of more than pounds 2,000 to leadership campaigns.

The issue could be raised at the conference on Thursday when it endorses a motion calling on the next Labour government to introduce legislation to ensure that all substantial donations by companies to political parties are made only after a ballot of shareholders and employees, with some state funding for political parties.

Barry Cox, director of corporate affairs at London Weekend Television, and an old friend of Mr Blair, held a fund-raising evening at his Hackney home with 'Labour luvvies' - supporters among writers and television personalities.

Those who made donations to Mr Blair's campaign included Melvyn Bragg, the broadcaster and novelist, Ken Follett, the thriller writer, and Greg Dyke, the former chief executive of LWT.

David Puttnam, the film producer, promised money after being contacted by Mr Cox. Other donations were made by Jon Norton, a banker who lives with Mo Mowlam, Labour MP for Redcar, A total of pounds 88,000 was raised by the Blair campaign team.

Mr Blair said last night that there had been no row at last week's national executive over the differences in campaign funding between the three leadership candidates and added: 'The issue was not raised at the NEC.'

He said the reason for his own expenditure was that because of swift speculation after John Smith's death that he would be elected as leader. 'My office almost immediately had to operate on a completely different basis than we had before.' His office had had to take on extra staff simply to deal with a massive increase in the volume of correspondence.

The Labour leader's supporters were also furious at the report in the Independent On Sunday which said it had caused a 'very fraught meeting' of the NEC.

One close friend, who claimed the report was 'completely untrue', added: 'More money was spent than anticipated because the moment he was established as a frontrunner he was inundated with correspondence and inquiries. The workload for the office grew 20-fold from the moment he was looking set to become Labour's next leader.

'He needed money to take on a large number of staff very quickly,' the friend added.

Robin Cook, a Blair supporter and Shadow Cabinet member, said that he read the report 'with interest'.

He went on: 'Tony Blair won handsomely in all parts of the Labour movement and I am quite sure he would have done so whatever had been spent.'