Labour admits 'financial challenges' after leaked document shows £6 million debt

LABOUR'S general secretary conceded yesterday that the party faced "financial challenges" after a leaked document showed it had debts of at least £6 million.

But despite signs of a deepening rift between the Government and the unions and left-wing MPs, which further threatens Labour’s finances, David Triesman insisted a way would be found to overcome the challenges.

Speaking to delegates at Labour’s first rural conference in Newport, Shropshire, Mr Triesman said that despite some “fantastic results” in rural seats at the last general election, there were some battles ahead.

Next year’s Scottish and Welsh elections “will prove a real test of our party”, he said.

The extent of Labour’s cash crisis was revealed in a leaked document, published yesterday, which was circulated to Labour’s National Executive Committee earlier this year.

It said that the party “is in the worst financial position it has ever been”.

The disclosure followed a nightmare week for the Government’s relations with the unions.

With strikes on the London Underground and among council workers nationwide, Blairite Ken Jackson conceded defeat last night as leader of Amicus to left-wing former Communist Derek Simpson.

To add insult to injury, Tony Blair’s Government was denounced by a Labour MP, left-winger Diane Abbott, as a “faction” which went against the grain of the party, while GMB leader John Edmonds said it was time to “bury” New Labour.

Conservative leader Iain Duncan Smith said that after five years of the prime minister feeding the unions, “the crocodile’s coming out of the water and going after him”.