Why debt-ridden Labour faces going bust: 'Wealthy are donors put off by Brown'

Debt-ridden Labour is facing bankruptcy because wealthy donors do not want to give more money while Gordon Brown is leader, according to new claims.

The party has debts of around £24million, with millions in loans due to be paid back this summer.

Political parties must give their accounts to the Electoral Commission by July 7, but auditors may refuse to sign Labour's off because of the amount it owes.

Mr Brown and the rest of Labour's national executive committee will be personally liable if the party goes bankrupt.

The refusal of private donors to stump up cash means the Prime Minister may be forced to go cap in hand to union barons and make concessions at a dangerous time for the economy. The unions already give it £9 out of every £10.

Labour's finances are so bad that the party has been forced to make a 'tawdry' bid to raise funds by auctioning prizes such as a tennis match with Tony Blair, the chance to appear as a character in Alastair Campbell's next novel and tea at Claridges with Nancy Dell'Olio, the former partner of ex-England manager Sven-Goran Eriksson.

Party bosses are also inviting members to attend a sports dinner at Wembley Stadium on July 10, where they will be able to bid for a meal with Manchester United manager Sir Alex Ferguson or a day in the studio with pop producer Pete Waterman.

Last night Tony Blair's former fund-raiser Lord Levy admitted Labour is having 'great difficulty' persuading people to donate because they believe it will lose the next election.

He said: 'I certainly do think that's happening with Labour.

'I think the time has come for the whole of fund-raising to be renewed.'

One anonymous donor said yesterday: 'I'm not going to give them any more money while Gordon Brown is leader. It's time for the next generation to take over.'

Another said of Mr Brown: 'He is not up to the job. Being Chancellor played to his strengths, but Prime Minister seems to bring out every weakness.'

Mr Brown's premiership has seen Labour enter its worst period for raising private cash for years. Between January and March this year, only 17 people gave the party more than £1,000.

A spokesman for the Electoral Commission said if any party's accounts are not received by July 7, it will be fined £500.

Tory Cabinet Office spokesman Francis Maude said: 'Labour have run their party finance in the same way that Gordon Brown has run the economy - utterly incompetently.

'Now, with the Labour Party up to its eyeballs in debt, Gordon Brown is engaged in a tawdry effort to stave off bankruptcy and keep the party afloat.'

Labour has denied it faced bankruptcy. Lord Sainsbury and private equity entrepreneur Sir Ronnie Cohen are believed to have topped up party funds in recent weeks.

A spokesman said: 'We are planning to file accounts by June 30.'