Labour's £34m fundraising puts Tories in the shade

Conservatives are biggest spenders as Brown's party uses cash to pay off debts

The Conservatives out-spent Labour by more than £5m last year as Gordon Brown's party was forced to put the breaks on campaigning to deal with its debts, figures revealed yesterday.

Detailed accounts from all parties, revealed by the Electoral Commission, showed that the Tories engaged in a £31.9m spending spree last year, almost all of the money they raised and well above the £26.2m spent by Labour.

However, Labour managed to raise more money than its rivals. Its income hit £34m, compared to the £32.4m raised by the Conservatives. Labour benefited from a £4.6m windfall after a court ruling allowed it to claim back VAT and interest dating back to 1977.

But Labour used its higher income to shore up its significant debts ahead of the next general election. It cut its total outstanding debts by £1.2m last year and also removed a £3.5m slice of its outstanding loans. While it paid off loans worth around £1m, £2m lent by the former science minister, Lord Sainsbury, was converted into donations, along with £300,000 originally lent to the party by curry tycoon, Sir Gulam Noon.

In contrast, the Tories chose to spend their money on the campaign trail, including Boris Johnson's mayoral campaign and its successful bid to win the Crewe and Nantwich by-election in May 2008. It meant that the party was only able to chip £250,000 off its debts, which now stand at £7.5m. Tory chairman Eric Pickles defended the spending splurge, arguing that it had helped his party's "electoral resurgence".

The Tories' income fell by more than £1m last year, though Mr Pickles said that donations had held up well, despite the recession. The party's treasurers also noted the need to diversify away from a few, big donors. They are working on a plan to copy Barrack Obama's successful fund-raising method of using the internet to attract numerous, but much smaller donations.

Labour's income from affiliations, including trade unions, was up slightly to £8m in 2008. However, there was evidence that the party was being hit by falling membership and private donations. Membership subs were down 11 per cent to £3.9m and donations sank from £11.2m to £9.5m.

The Liberal Democrats appeared to be struggling to cover the costs of their campaigning as its spending outstripped income by more than £500,000 last year. When its pension fund was factored in, Nick Clegg's party made a loss of £670,000. It has eaten away at the party's reserves, which have now fallen to £460,000 from more than £1.1m in 2007. Its treasurer, Duncan Greenland, admitted that with a general election looming, it was "vital to build the party's fund-raising capacity".

Party income... and outgoings

* The Tories spent £31.9m last year, having raised a total of £32.4m

* Labour's income was £34m last year. The party spent £26.2m

* The Liberal Democrats had an income of £5.5m but spent £6m. Its reserves more than halved to £460,000

* The Greens' income was £546,000 in 2008, with the party spending at £541,000

* UKIP's income fell to £602,000. It spent £589,000