What’s the political impact of Labour’s cash crisis?

Of all the stories of woe for Tony Blair and Labour in the Sunday papers this morning the one that seems to have the most long term significance is this in the News of the World – the first part of which is reproduced above.

The story goes on to list the money that has to be paid back: “..£2.3MILLION to property developer Sir David Garrard in April, £1.5MILLION to Priory Clinic founder Dr Chai Patel in August, and £250,000 to curry magnate Sir Gulam Noon in October… The party must find another £1MILLION to pay back banking chief Nigel Morris in September and £2MILLION to former minister Lord Sainsbury…Before the next election it will also have to repay £2MILLION to fashion magnate Richard Caring, £1MILLION EACH to former Capita chairman Rod Aldridge and property entrepreneur Andrew Rosenfeld and £400,000 to stockbroker Derek Tullett…Added to that it owes £11MILLION to the Co-operative Bank and another £4MILLION to the Unity Trust Bank…”

It’s hard to see how a General Election could be fought by Labour with that mountain of debt around its neck and this must, surely, rule out any notion of an early election. It’s no wonder that senior figures want a cap on expenditure.

The Tories who are fundraising very effectively with their new leader will have the capability to outspend Brown’s party many times over.

Clearly a major life-line will be the trade unions but what would be the conditions? Could Gordon be forced into a policy straight-jacket that of itself would make winning the next General Election that much harder?

In addition the taunts from the Tories and the Lib Dems if the party is forced into accepting urgently needed cash on onerous terms could affect the whole political environment. It could also be used to take the gloss off Gordon’s economic performance as Chancellor.

The latest General Election betting prices are here.

Mike Smithson