Labour is facing a black hole in its finances running into millions of pounds after a string of its backers indicated that many of the huge loans made to the party would have to be repaid.
As many as seven of the 12 backers revealed by the party on Monday are still expecting repayment, it was revealed yesterday. Reports suggested that Sir David Garrard, who lent Labour £2.3m, Rod Aldridge, who loaned £2m, Chai Patel, who lent £1.5m, Sir Christopher Evans, who lent £1m, Barry Townsley, another £1m lender, and even Lord Sainsbury, were expecting the money totalling nearly £10m to be repaid.
In several cases the repayments are said to be due later this year, creating an acute problem for the party as it recovers from the crippling cost of last year's general election campaign.
Last night, a Labour spokesman refused to comment on claims it was planning to sell its Old Queen Street headquarters in Westminster as part of an effort to clear its debts.
Some senior figures at yesterday's meeting of the party's ruling national executive warned that Labour's financial position would be parlous if the 12 donors who lent £13.9m demanded repayment. One said: "We would be in difficulty if they asked for their money back immediately."
The party is said to have up to £23m in debt and faces a crisis as loans come up for repayment. Labour ran up a £2.8m overdraft last year in the months before the election. Its total income of about £29m in 2004 was outweighed by spending of more than £32m. The party's most recent accounts, for 2004, showed it was running a deficit of £6.4m, although the party had overdrafts and short-term loans of £7m.Reuse content