Blow to UKIP as key backer withdraws support

The UK Independence Party suffered a major setback last night when its biggest financial backer withdrew his support.

Paul Sykes, a Yorkshire businessman, said he was taking the step as a result of the party's plans to stand against the Tories in every constituency at the next election and its rejection of calls not to challenge Eurosceptic MPs.

Mr Sykes said that he opposed what he perceived as UKIP's attempts to "kill" the Conservatives at the next election. He expressed support for Tory policies on Europe.

Mr Sykes has spent nearly £6m on campaigns and donated half of the party's £2m fighting fund for this year's European elections, which significantly boosted the profile of the party with a four-fold increase in the number of its MEPs.

Reports of his decision coincided yesterday with David Davis, the Shadow Home Secretary, warning that the surge in support for UKIP could cost the Conservatives up to 50 seats at the next election.

He said that the hardline anti-European party, which forced the Tories into fourth place at last week's Hartlepool by-election, could emulate the performance in 1997 of its forerunner, the Referendum Party.

His comments laid bare the Tory high command's jitters at the potential impact of UKIP. At present the Tories have 165 MPs. To lose a third of that number would take them to an historic low and would be calamitous for the party's future.