A CONSERVATIVE donor whose elevation to the House of Lords has been blocked is behind a “front” association that has donated more than £800,000 to the Tories.

Robert Edmiston, a multi-millionaire car importer, is responsible for the Midlands Industrial Council which has been making regular gifts for the past three years. One in January last year was worth £250,000. Edmiston’s name cannot be found on any of the council’s public declarations.

Earlier this month The Sunday Times revealed that Edmiston’s nomination for a peerage had been blocked by the Appointments Commission, which vets candidates.

This weekend there was growing criticism of a range of methods used by the Conservatives to raise money. One source said the party might have borrowed £20m-£25m from wealthy backers and was the first to come up with the idea of raising loans to circumvent rules. Many of its loans are understood to be over long periods and are never likely to be paid off.

The party is believed to have been raising money from loans since 1997; Labour says it adopted the device just before the 2005 general election. The latest Conservative accounts, for the year ended December 2004, show loans of £13.8m.

The Conservative party uses a range of other controversial strategies that obscure the sources of funding. It accepts money from “unincorporated associations” — effectively voluntary organisations that do not have to file public records.

The Midlands Industrial Council is one of these and is registered to a terrace house in a Lincolnshire village. The home is owned by David and Josephine Wall. David Wall is a director of IM Trade Assist, on whose board Edmiston served for eight years. Edmiston is said to be chairman of the council, although it is not known who else is a member.

A Tory spokesman said: “Donations by the Midlands Industrial Council have been registered in accordance with the Electoral Commission’s rules.”

Last year it was revealed that the party had received money from the Leamington Fund, another unincorporated association, run by a freemason in Warwickshire.

This weekend the Labour party is trying to deflect criticism of its secret loans by highlighting the Tories’ long history of accepting money. Lord Ashcroft, the party’s former treasurer, has admitted having £3.5m in outstanding loans to the party and believes that the Tories should be open about the sources of their funding.

A spokesman for Lord Harris of Peckham, a fundraiser and a close associate of David Cameron, the party leader, said he had not accepted any loans while he was treasurer between 1993 and 1997. However, he admitted that Harris, who runs a chain of carpet shops, had made “a small loan” before the last election, believed to be “in the low six figures”.

In future, all political parties will be forced to reveal details of loans. Yesterday Cameron said: “I am unhappy with the whole way politics is funded in Britain and I think we need to have a serious look at it.”

However, the Conservatives are unlikely to agree to reveal details of their existing or past loans. The party’s treasurer Jonathan Marland, himself nominated for a peerage, said all Conservative loans made in the past were “private matters”.

The Liberal Democrats have received loans, too. The party received £125,000 from Paul Marshall, a founder of the Marshall Wace hedge fund; £250,000 from Lord Alliance, who built the former Coats Viyella thread business; and £100,000 from Lord Razzall, the party’s general election co-ordinator. Razzall said: “The party was looking for people to give loans to avoid bank debt and I was one of the people who was happy to provide the loan.”

If asked, he said, he would consider converting the loan into a donation. Because it was interest free, he declares it to the Electoral Commission.

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