THE Tory party will be plunged £1.5 million into the red for the first time in five years after the failure to sell Conservative Central Office.

It will have to use its overdraft facility at the Royal Bank of Scotland to ease its sharply worsening financial position.

Lord Saatchi, the joint party chairman, expects it will cost £1.5 million to transfer to purpose-built offices near New Scotland Yard on June 18, after the local and European elections, but there is no money to pay for the move.

The decision to utilise the overdraft facility is a serious setback to the party’s general election preparations. The sale of Conservative Central Office was supposed to raise £6 million to £8 million for Michael Howard’s war chest.

However, the sale has been cancelled as no serious bidder emerged for the Smith Square building. The Tories are now seeking a tenant to rent the property, which will result in serious cashflow difficulties.

The party has been warned that it could take months to find a viable tenant for the sprawling, four-story building, which has been the backdrop for some of the most memorable moments in the party’s history, including Margaret Thatcher’s three election victories. Tory grandees are concerned about the decision to go ahead with the move without first securing a buyer for the building that has been the headquarters since 1958.

A senior Tory source told The Times: “We have broken one of the first rules of property purchases. We’ve signed a contract on one property without making sure we have a buyer for our property.”

The Prime Minister’s decision to call a referendum on the European constitution could put further pressure on the Tories’ finances. Stuart Wheeler, the spread-betting magnate who gave £5 million to William Hague, has pledged his financial support to the No campaign, as has Sir Stanley Kalms, founder of Dixons and a former Tory treasurer. Ominously for Mr Howard, neither is giving any significant donation to the Tory party.

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