Rothschild family’s Tory links: cont’d

George Osborne's very public spat with Nat Rothschild (pictured) may have died down, but it has revealed the extent to which the Tory Party relies on his family's money. Yesterday's Observer revealed that Lady Victoria de Rothschild, former wife of the financier Sir Evelyn de Rothschild, has lent the Tory Party £1m, a sum that makes the £50,000 donation the shadow chancellor was said to have discussed with Russian oligarch Oleg Deripaska a mere bagatelle.

The loan was made through a company set up with the sole purpose of protecting de Rothschild’s anonymity, something which is now illegal. However, as this was done in 2005, a year before the new electoral legislation came into force, the Tories can legitimately claim that they were acting within the law. Some of the loan is understood to have been repaid this year. But the party's decision to continue the loan arrangement after the 2006 law change is an embarrassment.

Last week party officials said they accepted money only from “legitimate UK trading companies”. But the company set up Lady de Rothschild was made via a 'non-trading' company, called Ironmade, that conducts no business and has had no other function in its four-year history than to lend the Tories money.

Because of this Denis MacShane, Labour's former Europe minister, has called for the loan to be repaid. He said: "If they had an ounce of integrity left, they would only work within the law as it stands."

Lady de Rothschild, a former Tory party treasurer, has not commented on the matter. However Lord Bell, de Rothschild's spokesman, said his client had done nothing wrong. He said: "At the time she made the loan, it was absolutely proper and legal for her to do so. She was subsequently questioned by police about the loan as part of the ‘cash for honours’ investigation and was cleared of any wrongdoing."