Labour admits to party funds scam

The Labour Party admitted yesterday that new MPs had been asked to make a "contribution" of pounds 5,000 towards the cost of party agents, and that "over-eager" officials had suggested it might paid - illegally - from Commons expenses.

The initial suggestion that Labour MPs should donate pounds 5,000 a year towards political agents' salaries was made at an official briefing meeting for all 178 new Labour MPs, held at Westminster's Queen Elizabeth Two centre on 13 May.

That was followed up by calls to MPs from their regional party offices, in which it was spelled out that the money should be paid from the tax- free pounds 47,568 office costs allowance - financed by the taxpayer.

None of the potential victims was willing to be identified by The Independent - there is a general fear of the party machine - but an MP who was targeted said yesterday: "It was mad; I couldn't believe it."

Another said: "There was no question of a misunderstanding. They were demanding money with menaces." Yet another said: "I was told it wouldn't cost me anything; it could come out of the allowance."

The allowance is paid on the strict understanding that it is used for parliamentary purposes, and use of the allowance for political or personal purposes is forbidden. On that basis, the Inland Revenue does not tax it as income; improper use would be a criminal offence.

But Clive Soley, chairman of the Parliamentary Labour Party, told The Independent that an MP had complained to him about the demand and the matter would be investigated.

"Basically, the MP was asked to give money for party services and I said, `Is it out of your salary?' and he said it was out of allowances. I then asked around and it was then that I heard the Chief Whip had heard of it. I cannot believe that this has happened."

Earlier, Mr Soley had told BBC Radio 4 that he was certain there had been a "misunderstanding".

However, a party spokesman said: "If under any circumstances anything was said over-eagerly, we can guarantee this will be put right. Nothing has happened as yet and now we have been alerted to it by The Independent, we can guarantee nothing will happen."

That meant that no money had been paid so far, and the project had been killed by its exposure in yesterday's Independent.

The existing practice for Labour MPs is that they are asked to volunteer a "precept" of 1 per cent of salary, pounds 438 a year, towards the costs of the national Labour Party, with another 1 per cent levy for their regional parties.

But the idea that the new MPs might contribute more than five times that total levy, financed by the taxpayer, left many Labour MPs flabbergasted and disgusted.

One new MP said: "I was certainly approached by my regional party. This is inappropriate. If people choose to make personal donations to the party, that's up to them. But putting pressure on people, especially those who cannot afford it, who are perhaps maintaining families and kids at university, god knows what else, pounds 5,000 would be an embarrassment."

A senior MP said last night: "The trouble with these people is that they cannot recognise sleaze when it's on their own doorstep."