(Bloomberg) -- Prime Minister Rishi Sunak’s UK Conservatives face a grim funding outlook with a £25 million ($30 million) shortfall less than two years before the next election.

After Nadhim Zahawi became Tory chairman in October, he was alarmed to find the party’s operating budget was around £5 million in the red, according to people familiar with the matter. At one point things were so bad that the party’s bank account went into its overdraft to pay its staff wage bill, they said.

But now Zahawi himself has gone, fired by Sunak after being “careless” with his taxes. That’s left the Tories bereft of a chairman since last Sunday.  Whoever succeeds him will inherit an unenviable task in a role that’s responsible for election fund-raising and campaigning.

Zahawi’s replacement matters because with an election due in January 2025 at the latest, the Tories languish more than 20 points behind Labour in most recent polls. Moreover, their reputation for competence and stability was trashed last year when they ousted two prime ministers, sank the pound and roiled the bond market.

With cashflow into the party’s coffers drying up, whoever gets the call will face awkward conversations with Tory donors. The party needs to raise a further £25 million to hire staff to work on its wars on the ground and the air-waves, the people said, asking to remain anonymous discussing internal affairs. The party needs to recruit high quality organizers, research and social media staff, they said.

But fed up with the political turmoil of the past year, big money donors are shying away. Donations dropped by 45% in the third quarter of 2022, according to the latest data from the Electoral Commission. 

Instead, Britain’s super-rich are cozying up to Keir Starmer’s Labour Party, which is increasingly seen as a government in waiting. 

Compared to the amount of money in American politics the sums are small, but in British terms the spreadsheets showed a party in a grim financial position.

Mohammed Mansour, the billionaire chair of Mansour Group who Sunak appointed as senior party treasurer, agreed to underwrite several millions of pounds of donations to keep the lights on, the people said. 

A Conservative party spokesman acknowledged donations were down in 2022, but said there are signs of improvement so far in 2023. Mansour did not respond to a request for comment submitted through the Tories.

Donors who spoke to Bloomberg gave varying reasons for why they had stopped giving money. Several pointed to the polls: with a Labour win looking overwhelmingly likely, donations to the Tory campaign are seen as pointless. 

Another said fellow donors had factional reasons for withholding their checks. Pro-Remain donors are unhappy with Brexit. Pro-Brexit donors are unhappy with how it’s been delivered. Pro-Boris Johnson donors are upset at his removal from power. Johnson-skeptic ones closed their wallets after the “Partygate” saga that helped bring him down. Pro-Liz Truss donors are depressed about the implosion of her tax-cutting premiership. And other donors are furious at the Tories for the chaos over which they have presided.

One donor who has given millions of pounds to the party said he won’t give more until Chancellor of the Exchequer Jeremy Hunt agrees to cut taxes. 

And several more said they’re less inclined to give money because Labour leader Keir Starmer is less of a threat to their interests than his predecessor, the more left-wing Jeremy Corbyn. 

Ben Elliot, the Tory chairman at the time, raised more than £20 million to fight Corbyn in the 2019 election. Repeating that against Starmer would be a tall order, a donor said, making the new party chairman even more important.

But the Tories have had seven chairmen in three years and it seems to be a job no one wants. With local elections due in May and the Conservatives expected to do badly, it’s a poisoned chalice. It’s also rarely been more important. 

But Sunak is taking his time with the appointment. Some Tory MPs believe he is waiting to see the outcome of a separate investigation into bullying allegations against Deputy Prime Minister Dominic Raab, and will hold a wider Cabinet reshuffle if he is forced to fire him. Raab denies the claims.

Allies of the prime minister say that with a general election likely next year, the party chairman job is akin to a “great office of state”, one of the top four jobs in government, and so he wants to get it right. They are deciding whether to put a Sunak loyalist in the role, or whether it would be more politically astute to bring in a rebel backbencher to improve party unity.

Some in government want Sunak to give the job to Simon Clarke, an ally of former prime minister Liz Truss who has spear-headed a so-called “pro-growth” faction of right-wing Tory backbenchers who are calling for tax cuts. Their reasoning is that with choppy political waters ahead, Clarke would be better inside the tent than out.

The current strategy is to hope Sunak’s performance and an improving economic picture will cut the polling gap with Labour to below 10 points by the start of the formal general election campaign. The Tories would then need their most aggressive and expensive campaign ever to make up the rest of the ground, the people said.

When Zahawi took over the chairmanship, morale was so low among party apparatchiks that they were advised to take vitamin D supplements to boost their mood. His successor may need to take something stronger when they see the books.

--With assistance from Kitty Donaldson and Emily Ashton.

©2023 Bloomberg L.P.