Tories sack 10% of party HQ staff as credit crunch bites

Redundancies fall heavily on party's policy section, providing research and ideas for next election manifestoDavid Hencke, Westminster correspondent guardian.co.uk, Thursday December 4 2008 16.01 GMT Article historyThe Conservative party is making more than 10% of its staff at party headquarters redundant as a direct result of the economic downturn, guardian.co.uk can reveal.

The casualties include members of the party's policy section, which provides research and ideas for the next general election manifesto.

The decision follows a slackening off in donations as the global financial crisis bites. Some 24 staff at the party's Millbank headquarters were told on Monday that they could be made redundant.

A Conservative party spokesman said: "Like many organisations in the current economic climate, we need to look very carefully about how we are using our resources and, unfortunately, there is a need to make significant budget cuts."

In a separate move the party is also closing the arm's-length Constituency Campaigning Services – based in Coleshill Manor, in the West Midlands – which provides campaigning material and acts as a call centre for constituency parties. Some 40 people there have been declared redundant.

The two divisions bearing the brunt of the redundancies in London are the party's external affairs and policy units, which are in effect being run down. A third division, the party's business relations department, was also facing closure, but sources say the department has been saved by a big Tory donor, Alan Lewis, chair of the Hartley Investment Trust and a former treasurer of the party, who agreed to bankroll all the staff.

This department has links with two key Tory organisations, Conservative City Circle and Conservative City Future, and has strong links with the City of London.

It is chaired by the MP Richard Spring, the vice chair of the party with special responsibility for business and entrepreneurship, and advises George Osborne, the shadow chancellor, on small business issues.

The decision to slim down the policy section some 17 months before the last date of an election is a surprise. The section writes and researches draft policy for the party – and works closely with Oliver Letwin, the former shadow chancellor appointed by David Cameron to head the party's policy review.

The West Dorset MP is also, alongside Cameron, a former member of the party's policy unit, after working closely with Margaret Thatcher.

The external affairs department is run by George Eustace, David Cameron's former press secretary, and liaised with Christian and Muslim groups and local party associations. Sources said yesterday that Eustace was not one of the people to be sacked.

Most of the staff facing the sack are footsoldiers, brought in to strengthen the party's work to win the next general election.

None of the highly paid big hitters, including former News of the World editor Andy Coulson, the party's director of communications and planning, and marketing guru Steve Hilton, the director of strategy who is still helping the leader while working from California, are affected.

Nor is the party's communications directorate or any of the departments bankrolled by Lord Ashcroft, the deputy chairman of the party, including the campaigning section.

The changes have been initiated by Andrew Feldman, the new chief executive of the Tory party, with the backing of Giles Inglis-Jones, the party's head of human resources.

The closure of CCS, funded by millionaire Tory donors, comes after the political funding watchdog the Electoral Commission cleared the organisation of being controlled by the Conservative party. Registered as a body independent of the Tories, it has received nearly £2m in donations since 2004, mainly from the Midlands Industrial Council, a Tory funding body, whose members include Robert Edmiston, a car importer and property developer.

It had been under investigation for two years by the Electoral Commission after the Labour party complained that it was really part of the Conservative party and was subsidising campaigning in marginal seats by millions of pounds.

The Electoral Commission did a U-turn in the middle of the investigation. Its initial findings, sent to David Wall, chair of both the CCS board and of its main donor, the MIC, said the commission believed the centre was "heavily subsidised".

Lisa Klein, the director of party and election finance at the Electoral Commission, says in the letter (seen by the Guardian): "There may have been under-reporting of donations and election expenses by candidates, agents and the Conservative party accounting units who have benefited from the subsidised rates. These potential breaches are of concern to the commission, as the rules on donation reporting are fundamental to the transparency of party and election finance in the UK."

A Conservative party spokesman said: "The Conservative party was in discussion with the Electoral Commission in early 2008. These were clearly initial views prior to full information being provided and before a full investigation had been completed. The Electoral Commission has since concluded that CCS's charged rates were comparable to commercial rates. On this basis there is no evidence that donations should have been declared by the party and the commission decided to take no further action."

He said: "Ahead of elections next year the Conservative party will be setting up an in-house campaign centre, which will coordinate the party's campaigning work across the West Midlands."
http://www.guardian.co.uk/politics/2008/dec/04/conservatives-credit-crunch