Prescott: Labour can pay back loans

John Prescott has insisted Labour will be able to pay back million pound loans made before the general election.

Reports this weekend suggested the party has to pay at least £1.5 million in loans by October, and could be forced to sell its Westminster offices to help pay the bill.

However, the deputy prime minister yesterday insisted Labour would cope, telling BBC One's Politics Show: "We will meet our commitments – that is not a problem for us."

He continued: "There's always difficulty in finance. If you look at the Labour party's finances for decades now, we're always overspent at the election and after the election we build up our resources for the next election."

Mr Prescott was responding to reports in the Sunday Times yesterday suggesting wealthy backer Gordon Crawford, a computing tycoon, had formally notified the party that it must now repay his £500,000 loan, with interest.

A second businessman, reported to be Capital One founder Nigel Morris, is thought to have demanding repayment of a £1 million loan. In addition, a further two backers are thought to be calling for their loans, totaling a further £2 million, to be repaid.

The demands for repayment come after intense media scrutiny about the people bankrolling Britain's political parties, following allegations that many of the biggest backers are being rewarded with peerages.

Both the Conservatives and Labour deny this, but the row has led to a review of how parties are funded – as well as a return to the issue of House of Lords reform.

Yesterday, Northern Ireland secretary Peter Hain said the point had been reached for an extension of public financing of politics, although he insisted the taxpayer should not pay for campaigning.

"So I want to see [the] extending [of] it, but extending it not for campaigning purposes – you couldn't finance a billboard, an election leaflet from taxpayers' money – but I think they will support properly funding parties for political research, education and training," he told GMTV's Sunday.

He also said a "great reforming bill on the House of Lords" would be introduced in the next parliamentary session, which would include a review of both the composition of the upper chamber and its powers.

"The Lords cannot be a vetoing chamber and if you give it an elected, democratic basis...you have also got to circumscribe its powers so it cannot trample over the House of Commons, otherwise you get a kind of paralysis developing," he said.