Tories seek bank's help over party deficit

A LEADING City merchant bank has been approached over a novel plan to raise money for the Conservative Party.

The bank, which did not wish to be named, received a written proposal asking whether it would be interested in advising on the setting up of an investment trust.

Some of the money in the trust would be put into investments in the conventional way, but some would be lent to the Conservative Party as an interest-free loan.

Participation in the trust could appeal to a number of Conservative supporters who might prefer to see their money part-invested in such a venture rather than give it straight to the party in the form of outright gifts.

The bank declined to be involved, believing that it would be difficult to interest enough institutional investors, its major clients, in such a scheme. It also believed that the fees involved would not be enough to make it worth taking part in what could be a controversial project.

It is not clear whether the scheme, which is possibly being touted round other merchant banks, is officially endorsed by Conservative Central Office. There was no comment from Central Office, and neither Charles Hambro nor Sir Philip Harris, both appointed by the party as fundraisers last summer, were contactable. Both were overseas.

The Conservative Party is in desperate financial straits as donations have slumped.

The party's deficit more than doubled to pounds 15.3m in the year to last March and donations fell by 61 per cent.