Labour Party facing financial meltdown

MONEY is too tight to mention. At least for the Labour Party – which, according to insiders, is simply in the red.

As if it were not bad enough that the UK economy has been described as even more vulnerable to the credit crunch than other developed economies, the governing party's own finances also appear to be in a mess.

So much so that there is no guarantee that Labour's auditor, Horwath Clark Whitehill, will sign off the accounts in three weeks' time. It will only give its seal of approval to the accounts if it deems the Labour Party is a "viable going concern".

This means that, theoretically, the party could go bankrupt under Gordon Brown's stewardship. It has to repay 7 million in loans by July and another 6 million by the end of the year – unless it can convince lenders to hold off calling them in.

One source with close links to Downing Street and activists has mooted the unlikely idea of Mr Brown being forced to stand down as Labour leader if the party goes into administration.

Meanwhile, even if the party had the money, Labour would not be inclined to spend too much on the Henley by-election, to be held on 26 July.

The southern English seat is such a Conservative stronghold – about to be vacated by Boris Johnson, who won the London mayoralty from Ken Livingstone – that Labour insiders admit their candidate will probably lose the deposit.

The famous election that never was also cost the party around 2 million, spent largely on leaflets for marginal constituencies.

In the midst of the meltdown, the Prime Minister has not, apparently, relinquished his authoritarianism. He has admonished the "freelancing" attempts by John Hutton, the Business Secretary and Jack Straw, the Justice Secretary, for hinting to voters that there would be a retreat on fuel and vehicle excise duty taxes.

It is reminiscent of his recent behaviour, when according to a No10 mole, he phoned Alan Johnson, the Health Secretary, at 7am to ask him why the Today programme had flagged up an interview with him when it had not been "cleared" with the PM. A weary Mr Johnson replied that he had not yet even left home.

It turns out Today had an interview with Alan Johnston, the Scottish journalist who had been held hostage in Gaza.