The British National Party faces a financial and political crisis with crippling debts and an internal rebellion which could spell the end of the far-right group as a significant electoral force.
The party has a deficit of at least £500,000 and could face up to 12 claims of unfair dismissal from workers who lost their jobs following the BNP's disastrous showing in the May elections.
A pledge by party leader Nick Griffin to step down in 2013 has failed to quell a growing revolt in the anti-immigrant party which has been hit by a series of high-profile resignations, including its legal officer and its sole representative on the London Assembly. A permanent schism in the far right has been made more likely by the formation of a BNP splinter faction where the founding of a new party has been openly discussed. This month the party leadership sent letters to a group of 20 BNP members, including its former national elections officer, Eddy Butler, banning them from a post-election rally with Nick Griffin to discuss its future.
Lee Barnes, the party's senior legal adviser until he resigned this month, yesterday described the BNP as a "dead brand" and claimed it was "technically insolvent". The Electoral Commission confirmed the BNP's latest annual accounts, due last month, have not been submitted and it is still investigating the previous year's records after auditors refused to sign them off.
The spiralling fortunes of the party come as its extremist rivals, the anti-Islamic English Defence League, plans a show of strength today in Bradford, home to one of Britain's largest Muslim communities. West Yorkshire Police are putting extra officers on the city's streets amid warnings that several thousand people could attend the protest and a counter-demonstration by Unite Against Fascism.
Anti-extremist campaigners said the combination of financial difficulties and schism within the far right were proving a toxic combination for Mr Griffin, who earlier this month survived an attempt to force a leadership ballot. Sonia Gable, of the anti-fascist magazine Searchlight, said: "The BNP is in deep financial trouble, with debts it can never pay, and in the throes of its most serious internal political crisis since Nick Griffin became leader.
"Although most of his critics are aware of the strength of the BNP brand name and still hope to reform the party from within, the absence of any means of doing so in the face of Griffin's powers could yet result in the party's destruction as an electoral force."
The Independent understands that the BNP, which predicted a "political earthquake" at the general election but suffered a comprehensive reversal by losing all but two of its 28 sitting councillors, is mired in outstanding debts to a succession of suppliers, including the Royal Mail, and allegedly owes money to settle an employment tribunal case brought by its former chief administrator.
One senior BNP figure claimed the scale of the deficit is closer to £600,000 and said the party cannot find a bank willing to re-finance its debt, which is also being increased by the cost of fighting legal actions against Unilever, after the BNP used an image of a Marmite jar in an election broadcast, and the Equality and Human Rights Commission (EHRC) over the party's alleged failure to change its constitution to allow non-white members.
The source said: "We will fight this but the pressures are mounting. There is a sound of rats abandoning the ship and it does not look good for us to be doing our dirty washing in public. The next two months will decide whether we survive as a serious presence."
Mr Griffin, whose attempt to unseat Margaret Hodge as MP for Barking in east London ended with a dismal third place some 18,000 votes behind the former Labour minister, denied that the BNP was close to collapse and insisted the deficit represented only a quarter of the party's £2m annual income.
But he confirmed the depth of the crisis facing the party last week in a plea to its 4,200 members for donations of £150,000 "to ensure our survival". Without urgent funds, he said, the BNP would "go back to being a 'fringe party'".
The BNP leader, an MEP for North West England who was widely ridiculed for his performance on BBC1's Question Time last year and was last month banned by Buckingham Palace from attending the Queen's garden party, is dogged by an increasingly bitter civil war fuelled by a spate of resignations from the BNP's upper echelons over its management and political direction.
Much of the criticism has focused on a call centre set up in Belfast by Jim Dowson, a former Orangeman and a key lieutenant of Mr Griffin who has co-ordinated the party's fundraising operation, and attempts to set up a new BNP administration centre in Gloucestershire. Michaela MacKenzie, a long-standing activist appointed to run the centre, won an employment tribunal case against the BNP for unfair dismissal in June but claims Mr Griffin reneged on an agreement to pay damages by last month.
Speculation that the party is on the verge of unravelling has been heightened by Mr Griffin's decision to dismiss or suspend about 30 members or BNP workers in the aftermath of the May election, which saw the party's high-profile campaign to take control of the London borough of Barking and Dagenham, where it had been the second-largest party, end ignominiously in the loss of all its councillors.
Nationally, the BNP increased its vote by 1.2 per cent to 564,331 but it failed to secure any Westminster seats. The Independent has been told that up to 12 former party employees are taking legal advice after losing their jobs in recent weeks. A stampede of departures began on the eve of the general election when Simon Bennett, the party's webmaster, resigned and took down the BNP website, Facebook and Twitter pages before polling day, and then issuing a diatribe against Mr Griffin, describing him as "pathetic, desperate and incompetent". Earlier this month Richard Barnbrook, the BNP's sole representative on the London Assembly, resigned the party whip citing unspecified serious allegations circulating within the party, although he remains a member.
Simon Darby, the deputy leader, resigned in July but said Mr Griffin retained his support. Opponents of Mr Griffin, led by Mr Butler, have set up a breakaway movement, the BNP Reform Group, where members are openly discussing moves to set up a new anti-immigrant party.
Mr Barnes said yesterday: "The BNP brand is a 'dead brand' in that it no longer has any support among the masses that could act as a basis for a rebrand. The association with Griffin, the ammunition provided to its critics by Griffin and the history of the party are such that it can survive, but it can never take power. It is a total waste of time being involved in the BNP."
Mr Griffin and the BNP declined to comment when contacted by The Independent.
Who's who in the BNP's world
The embattled Cambridge graduate and convicted racist has been leader of the BNP for 11 years, broadening its appeal beyond its racist and anti-immigrant core towards disaffected elements of the mainstream electorate. A disastrous performance in the May elections, which saw defeat for Mr Griffin in Barking, forced him to pledge to stand down by 2013.
The main threat to Mr Griffin as party leader, Mr Butler is a former National Front member who became the head of the BNP elections machine, honing its tactic of highly localised campaigns in traditionally working-class areas with a high immigrant population. Mr Butler stood against Mr Griffin in last month's BNP leadership contest but could only muster 214 of the 814 votes. He is the founder of the anti-Griffin BNP Reform Group.
The former senior legal adviser to the BNP resigned earlier this month saying that the party "cannot be trusted with political power". Once considered a close ally of Mr Griffin with intimate knowledge of the BNP structure, he now attacks the BNP leader for a lack of financial transparency in the party.
The sole BNP member on the London Assembly until he resigned the party whip this month, Mr Barnbrook is one of the more colourful far-right characters. As an art teacher in the Eighties, he made an art film with numerous male sex scenes, insisting it was not pornography. He was for a time engaged to Simone Clarke, a dancer at the English National Ballet. He has demanded an investigation into "high-level wrongdoings" in the BNP.
From Mussolini to the BNP's 'modernisation'
The far right in Britain can trace its roots to the 1920s when a small number of fascists, impressed with the oratory and politics of Benito Mussolini, decided to import his authoritarian nationalism. Sir Oswald Mosley, right, built on their work by founding the British Union of Fascists, which claimed to have significant support but never fought a general election and was eventually banned at the outbreak of the Second World War.
Post-war, the far right followed its familiar path of internal division and fragmentation until the National Front was founded in 1967, fomenting opposition to the arrival of immigrants from the West Indies. Its popularity peaked in the 1970s, when it claimed 20,000 members and gained 16 per cent of the vote in a by-election.
Dogged by revelations of links to neo-Nazi groups, the NF splintered in the 1980s. A senior NF figure, John Tyndall, founded a new faction: the British National Party. Nick Griffin, a former NF national organiser who has denied gas chambers were used in the Holocaust, joined the BNP in 1995 and became leader in 1999, seeking to "modernise" the party by changing its policy on compulsory repatriation.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies