Ukip 'on verge of financial ruin' amid drop in membership and decline in donations

Ukip's biggest donor is reportedly now channelling his funds into his own campaign for the UK to leave the European Union.

One party insider blamed Nigel Farage's U-Turn for alienating members. (Getty)

A slump in membership following the general election and the departure of key donors has left Ukip facing financial ruin, according to reports.

Reports in the Mail on Sunday, claim that since the general election – where the party suffered a blow – membership of the party has dropped by around 12,500 members, wiping £300,000 from its annual revenues.

Insiders told the newspaper they understand Nigel Farage has been forced to call backers begging for a financial lifeline.

One party source blamed ‘Nigel’s U-turn’ – when Mr Farage resigned as leader in the wake of his failure to win the Thanet South constituency only for him to change his mind shortly afterwards – for alienating supporters.

The financial headache was reportedly made worse after the party’s biggest donor, Aaron Banks, was noted as channelling his funds into his own campaign for the UK to leave the European Union.

A spokesman for Ukip said to the newspaper: “It was predicted that we could not pay our bills for the General Election in July, and that was not correct. The suggestion that we had a problem meeting payroll last month is also incorrect.

“It is certainly true that having a competitor like Leave.EU presents a challenge. As we are no longer the only game in town, we have to try harder to attract supporters, but our members know that without Ukip there would have been no referendum for Leave.EU to campaign in.’

In June, the Independent on Sunday reported Ukip had “lost control” of its finances during the general election campaign. A funding gap of more than £500,000 threw into question whether the party would have to abadon its headquarters in central London, in a desperate bid to avoid missing a legal deadline and settle its expenses.

According to a senior Ukip source at the time, the party’s leaders heard that there is a “gaping hole” in its election accounts of “many hundreds of thousands of pounds” and that the party was delaying the payment of non-election bills and staff expenses to tackle the shortfall. The source said: “There was a massive overspend during the election and there is now a massive hole we have got to fill. Unfortunately we didn’t discover this until after the event.

“Huge amounts of election spending were commissioned; we are talking about hundreds and hundreds of thousands of pounds, with no money in the kitty to pay for it.”

The Independent was unable to reach Ukip for comment.

A party spokesman told the Mail: ‘It was predicted that we could not pay our bills for the General Election in July, and that was not correct. The suggestion that we had a problem meeting payroll last month is also incorrect. It is certainly true that having a competitor like Leave.EU presents a challenge. As we are no longer the only game in town, we have to try harder to attract supporters, but our members know that without Ukip there would have been no referendum for Leave.EU to campaign in."