Sam Coates, Chief Political Correspondent
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Britain’s biggest union saved Labour from bankruptcy by guaranteeing its finances in a secret deal that the party is refusing to make public.
Unite, which has given £13.4 million to Labour since Gordon Brown became Prime Minister, gave formal assurances in June that it would support the debt-ridden party. Labour and Unite have confirmed its existence to The Times but refused to provide details.
The Electoral Commission suggested over the summer that guarantees should appear on its public register. Nothing appeared yesterday as the commission published its quarterly report of political donations.
Labour and the commission said that the details did not need to be disclosed because the guarantee related to future rather than past earnings. However, Unite sources suggested to The Times in June that the guarantee was more wideranging, promising that the union would never let Labour go bust.
The party admits that it was in a perilous financial predicament over the summer, with outstanding loans topping £15 million and pressure from donors to return money totalling £1.5 million.
A Labour source said that the party detailed accounts to the auditors Horwath Clark Whitehill, who approached lenders, including Unite, for “reassurance” that they would continue funding. The party said that this was “legally absolutely different” from guarantees of specific loans that must be declared to the commission.
Francis Maude, the Shadow Cabinet Office Minister, said: “The public have a right to know that, if a deal was struck between Unite and the Labour Party, what were the terms and conditions of any agreement?”
Lord Oakeshott of Seagrove Bay, the Liberal Democrat Treasury spokesman, said: “If a political party can only keep going with guarantees from outside backers those guarantees should be fully and publicly disclosed as loans or donations. Even if they are operating a millimetre within the law, Labour are clearly breaching the spirit of the law.”
The commission revealed that Labour’s finances improved between July and September, with the party receiving donations totalling £7.5 million. About £2.1 million of this came from the unions, a smaller proportion than in recent months, with £500,000 coming from Unite. In the first three months of this year, 92.6 per cent of the national Labour Party’s total funding came from the unions The Conservatives received just over £4 million, excluding public funds. Their donations came from a broader base – 260 individuals and companies compared with Labour’s 77.
The jump in Labour donations comes in stark contrast to those from the previour quarter, April to June, when they totalled £3.8 million compared with £5.6 million for the Tories.
Labour’s debts now stand at £15,762,280, compared with £12,113,165 owed by the Tories.
The Lib Dems took £599,177 over the quarter, with Sir Elton John and David Furnish, among the contributors, handing over £10,495 each.
The Electoral Commission said: “Parties must report details of any donations received or regulated transactions they enter into to the commission. Regulated transactions include any loans or credit facilities entered into, and that includes transactions connected to those loans.
“Political parties do not have to tell the commission about any future funding arrangements they have agreed unless they are entered into a regulated transaction or receiving a donation.”
The commission would not say whether it was aware of the guarantee.

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Brace yourself for an election May 7th, 09.
Paul Mack, Paisley, Scotland
I wonder, did part of the deal involve increases in higher rate taxation and no change to the current £1000,000,000,000 public sector pension liability? If Labour is setting policy on the basis of donations from the Unions, we should certainly know about it.
Edward Smith, London, UK
Why is it news that they are doing something shady to help labour & Gordon to survive? Surely that is business as usual for the labour lads&ladies.
If they did something above board, that was good for us, not them, now THAT would be news!!!
Alan, Verwood, UK
And we trust this lot to run the country - I think NOT. With UK Plc they have created a blank cheque. If you have nothing to hide, you don't hide it. How can you trust anybody who flouts the spirit of transparency. Who needs a Labour Party anyway?
Iain Pearson, Reading,
Labour on the edge of bankruptcy due to over-borrowing and financial mismanagement. Sounds rather like their handling of the economy.
Charlie, London, UK
UNISON is trying to expel four leading left socialists simply for advocating an end to this obscene policy:
www.stopthewitchhunt.org.uk
RIchard, zurich, swizterland
It's not just financial, Labour is morally bankrupt!
Steve, Coleshill, U.K.
Since the Labour government employs 100% of the members of this union therfe would appear to be a declarable interest somewhere down the line. Of course in Socialist terms this sort of behavious is acceptable as long as you are a party member.
JOHN KEATING, romsety, england
One can only assume that the focus has been on the UK economy, not the finances of the political party running it......
Luke Moorhead, Birkenhead,
So we can expect to see plenty of union leaders in the New Year Honours list (for services to the country, of course; nothing whatsoever to do with Labour donations, silly me, perish the thought etc.).
Chris K, Cheltenham, UK
Whatever happened to fairness (G B's newest word) and open government. You cannot trust this PM or any of his MP's
Joe Co Antrim
Joseph Blair, Ballyclare, Antrim
Never ever vote for this corrupt inept rabble.
They have Destroyed our Country.
rick, newcastle, uk
Labour - bankrupt, the country - bankrupt, businesses going bankrupt daily, personal debt, the highest in the world.
What happened to Brown`s much vaunted reputation as the best, most "prudent" chancellor ever ?
Quite simply, like everything Labour, it was an illusion.
Dan Roman, UK (what`s left of it),
So Brown and Darling can't even manage the accounts of their own POLITICAL PARTY. How on earth have they been put in charge of a COUNTRY?
Bob Travels, Stevenage,
Union funding of the Government is undermining our democracy.
It is obvious that Unions have undue legislative influence now.
I look forward to the day when we find a real leader - like Baroness Thatcher, to remove Union power from the 21st century once & for all.
Zena Albion, Corby, Great Britain
Near bankrupt Nu Labour - Near bankrupt country. Says it all really doesn't it?
Jon, Bournemouth,
Would it have been any different if it had been a Russian trades union?
By doing this the Labour Party has compromised itself, being beholding to a small band of union brothers who will expect to influence policy for the minority of the population that they purport to represent
Harvey , Nottingham,
No such thing as a free lunch...and we know who picks up the tab don't we comrades?
Rob, Warfield, England
I can't beleive people still vote for these jokers.
Oh, yes, they get free councils houses, jobs, benefits and gold plated pensions that the rest of us have to pay for.
Stephen , Leicester,
The reason that Labour Party finances got in such a bad way is that having two wars at the same time is an anathama to socialists, who left the Party in the thousands. The money had been at an historical high but was squandered on expensive HQs instead of winning votes. Try ending the wars Gordon.
Andy Kadir-Buxton, Hatfield, UK
Would the HM revenue and customs accept any of the returns for any of the political parties? If the answer is no then we need to change the system entirely. Receiving funds inappropriately needs to become a punishable (jailable) offence.
G Morgan, Worcester,