Labour cash crisis makes snap election unlikely

Gordon Brown is unlikely to call a snap general election this autumn because Labour is still deeply in the red and fears it could be outspent by the Conservatives.

Speculation that the Prime Minister will soon seek his own mandate from the voters has been fuelled by a series of opinion polls since he took over from Tony Blair giving Labour a clear lead over the Tories.

A YouGov survey for yesterday's Daily Telegraph gave Labour a nine-point advantage, enough to double its Commons majority of 69.

Labour sources insisted that the state of the party's finances would not prevent an election this October if Mr Brown wanted to cash in on a continuing poll lead.

But one senior figure admitted: "Finance is not the crucial factor, but is an important one. We would be in a stronger position next year."

One minister admitted: "The money isn't there, and the party machine isn't strong enough to be geared up for an autumn election."

In an attempt to balance its books, Labour reduced its number of staff from 302 at the end of 2005 to 188 by the end of last year.

Although Mr Brown has asked Ed Miliband, the Cabinet Office minister, to produce manifesto ideas by this autumn, Labour plans a relatively quiet August - hardly a sign that an election is imminent. The party's high command has told officials to "have a good rest" before resuming normal political hostilities in September.

In contrast, the Tories plan to launch a summer offensive against Mr Brown, including an ad campaign. "We're quite happy for the Tories to pour money down the drain when everyone's on holiday," a Labour insider said.

Labour sources say the party's financial position has stabilised since individual donations dried up after the "cash for honours" affair erupted. At the end of 1995, Labour was £27m in the red, a figure that was cut to £25m by the end of last year. An upsurge in individual donations since it became clear Mr Brown would be the next Labour leader has allowed the party to pay off more of its debts.

Membership, which plummeted from more than 400,000 in 1997 to under 200,000, is on the rise again.

Although Tory finances are buoyant, its MPs left Westminster for their summer break gloomy about the latest polls. Yesterday Tory backbenchers insisted that there was no need to "panic" and talk themselves into a summer crisis. But there was more coded criticism of Mr Cameron.

Derek Conway, Tory MP for Old Bexley and Sidcup, said lessons needed to be learnt from recent setbacks like the party's third place in the Ealing Southall by-election. He said that Mr Cameron could not be a "different brand" to the Conservative Party as some his advisers wanted.

Some Tory MPs believe Mr Cameron let Mr Brown off the hook over the Government's decision to cut spending on flood defences, by going ahead with a long-planned visit to Rwanda at the height of the floods. A former Tory minister said: "There is a sense that we have allowed the Prime Minister to get away with painting himself as the saviour of flooded communities when there are strong arguments that could have been made that he is actually the villain of the piece."

Party finances

* LABOUR

Performance: £814,000 loss

Income from donations: £5.4m

Total income: £25.8m

Total expenditure: £26.6m

Overall state: £25m in debt

* CONSERVATIVES

Performance: £4.2m surplus

Income from donations: £19.9m

Total income: £30.8m

Total expenditure: £26.6m

Overall state: £9m in debt

* LIBERAL DEMOCRATS

Performance: £80,000 surplus

Income from donations: £2.5m

Total income: £3.95m

Total expenditure: £3.87m

Overall state: £169,000 in debt

Source: Accounts submitted to Electoral Commission