LABOUR is facing an election crisis after being banned from spending extra money on campaigning. The party has been forced to make drastic cutbacks after expected donations failed to materialise.

It is under strict orders from its banks not to increase spending, despite the looming general election.

Labour MPs defending marginal seats complain they have been “fobbed off” with “DIY tool kits” to make their own campaigning materials and have received no other support from party headquarters because of the cash crisis.

Labour’s banks have imposed a recruitment freeze on head office, and the party is operating just 20 of the 80 telephone lines it usually runs at its call centre in the months leading up to an election.

In a desperate move, Ray Collins, the party’s general secretary, tried to “seize” the party’s multi-million-pound property portfolio, made up of buildings owned by local branches around the country, in order to borrow against it.

However, his attempt was thrown out by members of the party’s ruling body, the NEC, who feared the assets might be at risk.

Labour’s dire financial situation contrasts with the huge sums rolling into Conservative party coffers and has led to speculation that Gordon Brown could call the election earlier than May.

“We just can’t afford a long campaign,” an insider said.