By politics.co.uk staff
John Prescott has confirmed Labour's financial woes at the same moment as Tony Blair's investment bank is registered.
Concerns first emerged about the party's financial status in the wake of the cash-for-peerages scandal, when private donations dried up as a result of fears about media attention.
Lord Prescott, who is running to be Labour treasurer, confirmed that declining membership and bad accounting had put the party £20 million in debt.
Speaking at the Scottish parliament's annual Festival of Politics, he said: "The treasurer has got to say to the central body, in this case Number 10, you cannot keep on spending, we damn well haven't got it.
"We want a strong treasurer who's involved in the membership drive, putting a proper financial account into the party, and is an active political person in making that accountable to the constituencies. You can go on if you like and just have somebody doing what's always been the way. Well, we cannot continue to finance a political party in that way.
"We have to do what I said when I was elected as deputy leader. The politics of organisation are equally as important as the politics of ideas. We forgot about the organisation bit."
In a coincidence worthy of morality play, the comments came as the Financial Services Authority (FSA) registered Tony Blair's new Mayfair-based investment bank, Firerush.
The investment bank, which could act as dealmaker in investments for the super-rich, will contribute to Mr Blair's fortune, which is already reported to be in excess of £20 million.