EFFORTS to restore faith in politics took another battering yesterday as the elections watchdog accused the Tories of breaching a deal to declare all loans from wealthy supporters.

The Conservatives abided by part of the code by listing loans taken out since the general election period, but refused to give details of similar arrangements made before that time.

From next month it will be unlawful not to submit such information to the Electoral Commission, although the Conservatives said that they previously released details of their current lenders and would abide by the new law once it applied.

In the three months to June, the Tories declared that they had taken out two bank loans totalling £2.8 million. But they made no mention of almost £16 million in outstanding loans to donors, plus a similar amount owed to banks. Nor did they mention the £4.5 million borrowed from Conservative associations and £200,000 from the Association of Conservative Clubs.

A party spokesman said that details of all “outstanding loans” had been published, but five months ago it announced that it had repaid £5 million to lenders who refused to be identified, some of whom were not registered to vote in Britain and therefore were unable to make conventional donations.

Labour took out no new loans in the period, but rescheduled debts owed to several of the party’s millionaire backers who have kept the party afloat over recent months, allowing them to be repaid over longer periods.

These included a £1.5 million loan from Chai Patel, two loans together worth £2.75 million from Sir David Garrard and £1 million lent by Sir Barry Townsley. The three were at the centre of the “cash for peerages” row when the House of Lords Appointments Commission blocked their nominations for peerages.

Another loan, for £2 million, from Lord Sainsbury of Turville, the Science Minister, was also rescheduled.

But figures for donations illustrate the difficulty that Labour has had in raising money since police began an investigation into links between political honours and donations.

Donations from private individuals slumped in the second quarter, forcing the party to rely even more on funding from trade unions.

The Conservatives said that almost three quarters of Labour’s funding now came from unions, compared with 60 per cent in the same period last year.

The party is consulting staff on budget cuts of 20 per cent to address its funding shortage. Labour has, however, been able to repay bank loans of £6 million, thanks to the sale of its former headquarters in Old Queen Street, Westminster. David Cameron’s leadership continued to encourage high volumes of donations from individual Tory donors, who gave a total of £4.7 million.

The figures also showed how much the Liberal Democrats rely on state funding, which accounted for £456,300 of the money received by Sir Menzies Campbell over the past three months, compared with £326,500 from private donations.

The Electoral Commission criticised the Conservatives for not providing full details of all its outstanding loans, despite a voluntary agreement with all the main parties under which they would declare both existing and new loans before this becomes a legal requirement on September 11.

It suggested further that the Tories and Labour should have declared loans made to their local or regional parties. Of the main parties, only the Liberal Democrats did so, listing just over £100,000 loans to constituency organisations.

Peter Wardle, the commission’s chief executive, said: “The fact that the main parties seem to be struggling with the level of disclosure we have called for on a voluntary basis suggests that they are ill-prepared to comply with the new laws that Parliament has put in place. We will do all we can to ensure the parties understand the new requirements, but they need to take them seriously to restore public confidence.”

The Electoral Commission was drawn into a further row with several small parties that it accused of failing to declare loans. But the Scottish Nationalist Party, Plaid Cymru, and the Scottish Socialist Party said that they had declared all loans. The UK Independence Party said that it had failed to declare one loan of £10,000 because of an oversight arising from staff changes.

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