Party to make contingencies in case hung parliament - and aversion to another coalition - prompts second election

The Conservatives are making contingency plans for a second general election next year as Whitehall’s election spending watchdog officially begins the countdown for the 7 May poll.

Sources close to the Tories say that party officials, wary that opinion polls show it is likely that neither major party will have overall control, have been told to begin raising funds for a second poll within months of the first.

“Extra fundraising is under way as a precaution in case there is a second election next year,” a Tory source said. “It is sensible contingency planning given the possibility of a hung parliament.”

The Electoral Commission this Friday marks the imminence of the general election by declaring all party donations and spending from this point on will be counted as contributions to the campaign. All major parties are making preparations for a New Year political offensive as an effective five-month long campaign begins.

Parties which field candidates in every seat can spend £32.7m in the long campaign according to spending rules. Different spending rules apply in the “short campaign”, which starts 25 days before polling day.

In the long campaign constituency spending caps are based on a maximum sum of £30,700 + 6p/9p per elector in a borough or county constituency. In the short campaign the constituency spending cap is £8,700 + 6p/9p per elector.

The possibility of a quick second election seems more likely as Ukip, the Scottish National party and the Greens gain support.

Polling has shown voters are increasingly disenchanted with the idea of coalition and believe a second hung parliament would be bad for Britain.

It is known many senior Tories would prefer, in the event of a hung parliament, to try to govern as a minority government rather than form another coalition, and then go for another election.

Lord Cooper, an election strategist at No 10, said last week that polls indicate the Conservatives are unlikely to win an outright majority at the next election and that a “tidal wave” of support for parties such as Ukip would lead to a “messy” hung parliament.

Last year Cameron told Conservative colleagues that he would change party procedure to ensure that in the event of a second coalition being negotiated the final deal would have to be approved by Conservative MPs before being signed.

Given the Tories’ large-scale backing from City and hedge fund donors, and that many of Labour’s donors have drifted away, the Tories are in a much stronger financial position.

Over the last four years they have raised £78m, a quarter of which came from hedge fund donors.

The Observer disclosed on Sunday that the Conservatives have ignored Electoral Commission recommendations and secured a 23% increase in spending. The change to the law on candidates’ election spending was passed without parliamentary debate, despite a direct warning by the commission against such “excessive spending to prevent the perception of undue influence over the outcome of the election”.

Labour officials have acknowledged they will not be able to match the Tories’ funding now they are more reliant on union funds and individual donors. Insiders say they will unveil at least two new “big donors” in the New Year.

They are also beginning to see the fruits of an online campaign for smaller donations, party officials said, following a similar 2011 strategy by Barack Obama to rely on the “small dollar”.

Iain McNichol, the party’s general secretary, on Thursday sent out emails to all party members asking for small donations, and pointed to the recent change in election law as a way of drumming up support.

“[The Tories] just quietly changed the law to raise the ceiling on how much money they can spend on trying to cling on to power. Their changes mean they are free to funnel huge amounts of cash from their wealthy donors – up to £32.7m – into the fight to decide who wins the next election,” he wrote.

Ukip sources say they have received some recent large donations from former Tory donors, saying their identities will be released in February in accordance with funding rules. In the meantime, Ukip has held a number of recent fundraising evenings including an event at Chilham Castle in Kent, owned by its long-term supporter Stewart Wheeler.