Labour took around £14 million in unknown loan donations

Labour took around £14 million in unknown loan donations

	Published : Sat, 18 Mar 2006 14:05 By : James Rowe Print this Story

LONDON: Britain's Labour Party confirmed it had received nearly 14 million pounds in secret loans from supporters in 2004, 10 million pounds more than it had admitted on previous occasions.

The admission came in a statement by a spokesperson, who said the party had received a total of 13,950,000 pounds as loans and these loans were "in full compliance" with party funding rules.

The issue came to light after the party's treasurer Jack Dromey said he has been kept in the dark about loans of 4.5 million pounds advanced to the party by three wealthy businessmen during the last elections, who were allegedly offered peerages in return for the favour. Accusing Downing Street of keeping elected party officials "in the dark", Dromey has said he is conducting an inquiry into the entire issue.

The party spokesperson said Friday: "The Labour Party has received 13,950,000 pounds in commercial loans from individuals. These loans were taken out in full compliance with the rules of the Political Parties, Elections and Referendums Act.

"As set out in our statement yesterday, the National Executive Committee officers will next week propose that all future commercial loans agreed by the party be declared publicly, including their sources. The loans will be recorded in our annual accounts 2006 (covering January to December 2005) in the usual way. These accounts will be published in June."

Prime Minister Tony Blair, caught in the controversy of "loans against honours", had proposed reforms of both the honours system and the rules on party donations. But the admission that the party had received such a huge sum as loans is likely to complicate the matters for him and the party, political analysts felt.

Blair confirmed Thursday he is aware of the loans raised by the party from individual supporters but he did not inform the House of Lords Appointments Commission about the loans when he nominated the three persons for peerages.

Under electoral rules in Britain, loans availed of by political parties at commercial interest rates are not required to be declared to the Electoral Commission for publication in its quarterly register of donations to parties. The commission now intends to plug this loophole by bringing loans too under its purview.

Meanwhile, Dromey's wife Harriet Harman, who is constitutional affairs minister in Blair's cabinet, said she is quitting her ministerial responsibility for electoral administration and House of Lords reform in order to avoid a conflict of interest.

Blair's office also said the government is appointing Sir Hayden Philips to undertake review of party funding. He is expected to interact with all major political parties.

Conservative leader David Cameron said he is unhappy with the present system of party-funding and called for a clean-up of the system.

Cameron is suggesting a cut by 25 per cent of election spending limits, which is meant to bring down the pressure on fund-raisers. He has also promised that when the conservatives get to power, they will re-establish the independent honours scrutiny committee to decide who should receive knighthoods, OBEs and MBEs. At present, honours are awarded based on the recommendation of the prime minister. The scrutiny committee, set up in 1923, was scrapped last year when some of its responsibilities were given to the House of Lords Appointments Commission.

Labour chairman Ian McCartney reassured party MPs that money raised in loans had been spent legitimately and was not part of any secret fund. He said the party had acted within electoral law and used "every single penny" to get its MPs elected.