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  • Sunday, March 26, 2006

    New Labour's little red bank book

    The Sunday Herald takes a look at the New Labour sleaze scandal, and the financial bankruptcy of the Labour Party by the Blairites:

    With a parliamentary investigation by the administrations committee looking at the loans, Labour’s NEC carrying out their own inquiry and Scotland Yard investigating potential illegality under the 1925 Honours (Prevention of Abuses) Act, which followed Lloyd George selling peerages, it is now likely that some of the 12 major lenders so far named will demand their money back. A demand to repay what some believe are loans totalling £20m (adding in the interest costs) is a financial nightmare for Labour. Although some point to the sale of its £6m headquarters in Old Queen Street in Westminster, property experts say profit from the sale will only generate at most £500,000 for the party. And that is a drop in Labour’s stormy financial ocean.

    Falling membership, falling membership income, unions legally unable to swell Labour’s coffers, the loans loophole for gong-seeking millionaires closed and the serious prospect of having to pay back the loans that got the party out of trouble less than a year ago, all point to Blair’s successor struggling to financially deliver the general election campaign that will be needed to defeat David Cameron’s Conservatives.

    One former treasury adviser, now working in a leading city firm, says: “The disclosure of these loans, and the embarrassment it will have caused to the individuals’ names, taints the entire process of political patronage. Those in the position to donate, may simply retreat fearing that any financial link to government will be damaging. Other ways will be found to benefit from a close link to government. Either way, the Labour Party have closed this avenue of funding. They needed generous loans to bail them out last time. Next time? There will be no next time. ”

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