Major blamed as big firms cut Tory cash

BIG BUSINESS and other financial supporters are deserting the Conservative Party because of John Major's unpopularity, raising doubts about the leadership's confident claims that the party's financial crisis has been resolved.

Former senior Conservative officials believe there could be a 'black hole' of millions of pounds in the accounts which the party has to fill before it has to raise even more money to fight the next general election.

The party is suffering from a crisis of financial uncertainty with traditional sources of finance ebbing away. Latest company accounts show that payments from 11 of the largest corporate donors have fallen from more than pounds 500,000 to just over pounds 100,000 in the past year.

Even allowing for an inevitable drop after the 1992 election and the effect of the recession, the fall raises serious questions about the recent claims of Sir Norman Fowler, the party's retiring chairman, that the Tories' financial fortunes have dramatically improved.

Sir Norman, announcing last week his plans to retire, said: 'In the last two years we have had a major reform of the party organisation and the party finances have been turned around.'

The fall in donations puts into sharp relief that claim and the confident assertion made to the Independent by Paul Judge, the Conservatives' director-general, who has responsibility for the party's finances, that he aims to eliminate the Tories' current pounds 16.5m overdraft by 1996. The party would probably need to raise at least the same amount again to fight the general election.

For that to happen, big companies should be giving generously - not scaling back their support - particularly as Mr Judge said company donations traditionally account for 60 per cent of the party's funding.

The party made a surplus last year of about pounds 2.5m, to help to reduce the overdraft from pounds 19m to pounds 16.5m. But to pay it off in the next two years is impossible, according to very senior party sources.

There are some who blame the parlous state of the finances for undermining electoral performance. Little was spent on the recent local and European elections, and there are fears that the Tories will not have enough to pay for the next general election.

Three former senior party workers accused Sir Norman of giving the impression that the party's financial problems were over, when in truth, his successor has a mountain to climb. They argued that management reforms carried out by Sir Norman at Tory Central office will prove ineffective.

One said: 'The deficit is Sir Norman's fault,' and accused him of taking no action to stem it for the first year of his appointment during which it grew by pounds 6m.

The former financial managers - who requested anonymity to talk more freely - said the financial troubles stemmed mainly from the continuing unpopularity of John Major and his government. 'There's not much point on spending money on a product that is unsaleable. If there is a washing powder that nobody wants, there is no point in spending money on it,' said a former party treasurer.

Another ex-treasurer was concerned about officials 'talking up' their finances: 'Sir Norman and Paul Judge are being politically naive. If I was still treasurer and our situation was so desperate I would say so. There's no shame in saying 'we're hard up'.'

They were mystified as to how the deficit might be eradicated and the party put in a position to mount an expensive, sustained campaign at the next general election. 'I don't know how you can get pounds 16m so quickly,' said one.

Donors desert party, page 3

Leading article, page 15