Lib Dems to receive £2m donation

The Liberal Democrats are to receive a £2m donation from the Joseph Rowntree Reform Trust.

The gift will be a major boost to the party, which according to its last accounts filed with the Electoral Commission had just under £300,000 at the end of 2005.

The trust, a charity which funds research into tackling 'social difficulties', has previously given money to Labour and the Greens, and has consistently supported the Lib Dems.

In 2003 it gave the party more than £500,000 to fight the local, Scottish and Welsh elections, and in 2004 and 2005 it donated £250,000.

At the party's conference in September, leader Sir Menzies Campbell announced the launch of a cash incentive scheme to encourage more women and people from ethnic minorities to stand for election.

The first tranche of funding - £200,000 - is being provided by the trust.

The Lib Dems have been warned the money cannot be used to repay the £2.4m it received from businessman Michael Brown, who was jailed for perjury and making a false passport application.

Under election law corporate donations can only be accepted from companies which carry out their business in Britain, and the Electoral Commission is investigating if Brown's gift was legal.

Senior party sources are said to view the donation as an endorsement of Sir Menzies' leadership.