Upsurge in donations failed to prevent substantial deficit, which led to year-on-year net liabilities increasing from �2.8m to �9.3m
The Conservative party spent �6m more than it earned in 2010, as an upsurge in donations failed to offset the party's election spending and increased pension contributions.
The substantial deficit, coupled with a new settlement with the party's pension fund, led to the party's net liabilities ? the gap between the value of the party's assets minus its debt and future payments ? increasing more than threefold year-on-year, from �2.8m to �9.3m.
Detailed financial information for each of the UK's political parties must be disclosed each year to the Electoral Commission, who this week published all the 2010 statements of accounts for the major parties.
The poor financial results will add pressure to the Conservatives' fundraising division, as the party battles to compensate for the loss of "short" money, public funds used to cover the costs of opposition parties, no longer received now the Conservatives are in government.
The party received almost �4.7m in "short" money in 2009, but just �1.2m in 2010, covering the months before the general election.
Michael Ashcroft, one of the party's largest donors, stood down as deputy chairman in October 2010, the same month as another major donor, Michael Spencer, stood down as party treasurer.
The Conservatives raised more in direct donations than any other party, with donation income increasing from �25.2m in 2009 to �30.7m in 2010.
However, this failed to match a �12m increase in campaign spending used to fight the general election.
In their general election return, the Conservatives declared �16m spending ? more than twice the Labour party's campaign spend, and four times that of the Liberal Democrats.
Parties dramatically increase their spending during election years, often building up a war chest of surplus funds to cover the shortfall. However, as the Tories had only built a �4.6m war chest throughout 2009, the spending beyond this level made a substantial contribution towards the party's mounting liabilities.
The Conservatives' financial results are in stark contrast to a surprisingly robust set of figures from the Labour party, whose finances have been under pressure in recent years due to high debt levels and falling donations.
Labour had a far larger upturn in donations year-on-year than the Conservatives, though from a far lower base: donations increased from �5.4m in 2009 to �13.0m in 2010. Membership fees also increased slightly, though cash from union affiliation fees fell.
This, coupled with Labour's eligibility for "short" money after its general election defeat, led to a �10m increase in income for the party year-on-year, leading to a �3.1m surplus. Labour's net liabilities fell from �10.0m to �7.5m over the year.
While the unions remained by far the dominant source of Labour's funding, the party was less reliant on union funding in 2010 than the year before. The proportion of Labour's donations coming from union donations and affiliation fees fell from 60% of all declared donations on the Electoral Commission register in 2009 to 54% of the total a year later.
The Liberal Democrats had a small shortfall of �335,000 across the year, as donations rose from �2.7m to �4.7m in the runup to the election, with an accompanying campaign spending increase from �2.4m to �5.1m.
The Liberal Democrats attracted controversy in May 2010 when they announced plans to seek to continue receiving "short" money despite entering government, due to their status as the junior partner in coalition.
The move prompted Labour deputy leader Harriet Harman to accuse the Liberal Democrats of being "surely the first party to attempt to cling onto the trappings of opposition". The attempt was ultimately unsuccessful.
Source: http://www.guardian.co.uk/politics/2011/jul/29/conservative-party-spending-exceeded-earnings
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