Loans-for-peerages furore leads to Labour finances shake-up
Tuesday, 21 Mar 2006 17:14
Loans-for-peerages furore leads to Labour finances shake-up
Labour party finances will in future be controlled by the National Executive Committee (NEC) following the recent controversy over commercial loans to the party.
The party's ruling body today confirmed it will take back its "rightful responsibility" for the control of finances and fundraising.
The NEC's announcement comes after a committee meeting, attended by senior Labour figures, where the 'secret loans' issue was discussed.
Party treasurer Jack Dromey last week revealed that he was unaware of almost £14 million worth of loans donated to the party until details about it emerged in the newspapers.
He has launched an internal investigation into the loans and reported back on his findings to the NEC today, while Labour fundraiser and prime ministerial advisor Lord Levy also attended today's meeting for more than an hour.
The NEC also said that it would produce a report about the loan issue and would declare all future loans, whereas current regulations stipulate that only donations must be declared.
It will also fully co-operate with the review of party funding carried out by Sir Hayden Phillips, it said following the meeting today.
Earlier, one of the businessmen revealed to have been one of the Labour party's biggest donors revealed that he was "very hurt" by the media furore surrounding his £1.5 million loan.
Dr Chai Patel, the head of the Priory health centres, loaned the party the cash ahead of the general election last year.
But speaking ahead of today's NEC meeting, Dr Patel revealed that he had initially wanted to provide the money as a gift.
"I agreed to a donation of £1.5 million, which is now in the public domain," he told the Today programme after revealing he had been contacted by Lord Levy last summer.
"A few days later [Lord Levy] phoned me to say that I could now donate the money as a loan rather than as donation."
Yesterday, lord chancellor Lord Falconer said that the government will make an amendment to a bill currently before parliament to "urgently" deal with the loans issue and make it illegal for political parties not to declare such donations.
