A FRESH rift has opened up between Kezia Dugdale and Jeremy Corbyn after Scottish Labour sources blamed the UK leader for a catastrophic collapse in donations.
Ahead of this weekend’s Scottish Labour conference in Perth, Ms Dugdale’s circle said the deterioration in the party’s finances north of the border was indisputably Mr Corbyn’s fault.
The briefing was prompted by publication of Scottish Labour’s 2016 accounts, which showed donations at their lowest level since 2009, and reserves at their lowest since 2003.
Read more: Scottish Labour donations collapse in Dugdale's first year as leader
In 2015, Scottish Labour had a total income of just over £1m, of which £592,000 was in donations, and the party ended the year with a surplus of £98,000.
But last year, when Mr Corbyn was re-elected leader after an MPs’ revolt, Scottish Labour’s income fell to £400,000, its donations to £105,000 and it ended with a £104,000 deficit.
The collapse in its donations hampered its ability to fight the Holyrood election, when the party fell to third place behind the Tories with just 24 MSPs.
At the 2011 Holyrood election, Scottish Labour’s income was £735,774, of which £287,827 was in donations.
A Scottish Labour source said: "Donations to the party across the entire UK have dried up since Jeremy became leader. Scottish Labour is no different. People are not donating while Jeremy is leader."
A recent ICM poll suggested Labour is now 18 points behind the Tories under Mr Corbyn.
The cash squeeze threatens to hamstring Scottish Labour’s local election campaign, when the party faces coming third behind the Tories and losing most of its councils to the SNP.
The source added: “Donors not donating because of Jeremy’s leadership need to realise only Labour can stop the SNP in May and send a message to Nicola Sturgeon that she should abandon a second referendum.”
Read more: Scottish Labour donations collapse in Dugdale's first year as leader
Despite securing Mr Corbyn’s support for her plan for a federal UK, Ms Dugdale is sceptical of his ability to win votes, and backed leadership rival Owen Smith last year.
Although she has made her party more autonomous in terms of policy and personnel, Scottish Labour still relies on financial support from the UK party, making any fight over money a dangerous one.
The feud comes as the Dugdale and Corbyn camps gather in Perth, where Mr Corbyn and shadow Scottish Secretary Dave Anderson are due to speak on Sunday.
The conference is already at risk of being overshadowed by fall-out from today’s byelections in Stoke-on-Trent Central and Copeland, where Labour MPs stood down to take new jobs.
Ukip leader Paul Nuttall is the challenger in Stoke, although his campaign has been knocked off course by disputed claims he made political capital out of the Hillsborough disaster.
The Conservatives are the threat in Copeland, and if they win, Mr Corbyn will be the first leader of the official opposition to concede a byelection to the governing party for 35 years.
The new accounts show it was not just donations which dried up in 2016, which was also Ms Dugdale's first full year as Scottish leader.
In 2015, Scottish Labour made around £36,000 from its conference and £41,000 from fundraising, but last year barely broke even.
The problems followed a near-wipeout in the 2015 general election, when then leader Jim Murphy outspent the SNP by £1.6m to £1.47m, yet lost his own seat and 39 others, while the SNP went from six MPs to 56.
Read more: Scottish Labour donations collapse in Dugdale's first year as leader
Professor John Curtice of Strathclyde University’s politics department said: “Money follows a winner, it doesn’t follow a loser, and the Labour party is a loser and therefore it’s going to struggle to raise money.
“The crucial thing for the local elections will be how many people they have to knock on doors, to which I suspect the answer is also not very many.”
Ms Dugdale, 35, a Lothians MSP, became leader in August 2015 after Jim Murphy quit.
An SNP spokesman said: “Labour are showing themselves to be a completely pointless party – incapable of providing any opposition at Westminster and in terminal decline in Scotland.
"No wonder members and donors are turning away from Labour in their droves."
A Scottish Labour spokesperson said: "While the SNP is funded by bus tycoons and lottery winners, Labour is mainly funded by the membership and donations of working people.
“At conference, Kezia Dugdale will set out our message to voters that together we’re stronger.
"We don’t need another divisive referendum from Nicola Sturgeon and the SNP – we need Government to be getting on with the day job.”
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