Labour finance chief quits after just a month

The Labour Party's new finance director is to quit after only a month in his job, warning the party it may struggle to raise the £20m it needs to fight the next general election.

The decision by Howard Attree to leave Labour's Millbank headquarters is a setback for the party as it gears up for the election expected in just over a year. Last night aLabour insider told The Independent that Mr Attree's warning over the state of the party's finances was "a wake-up call" to Labour.

Millbank officials fear that some big financial backers may be reluctant to give money because a Bill going through Parliament will force them to disclose how much they donate. As a result, Labour may have to ask the trade unions to inject an extra £10m at a meeting later this month which is due to thrash out a new financing agreement for the party.

The Labour leadership sought to play down Mr Attree's plans to leave his post after next month's local council elections. Officials said he had retired from his previous post as treasurer of Brighton and Hove Council and was working part-time for Labour. They said his review of Labour's finances would recommend that a full-time director was needed because the new law on political funding would make the rules more complicated, and said he had decided that he did not want to work full-time again.

Officials denied speculation circulating at Millbank that Mr Attree had warned of problems with the party's computers and a new membership system run by the private sector. However, one reason for a shortfall in finances is a continuing fall in total membership - a problem worsened by protest resignations over Mr Blair's attempts to stop Ken Livingstone becoming Labour's candidate for Mayor of London.

"There are problems with cash flow," one party source admitted. "But this is not unusual when a government is in mid-term."