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OXFORD (Reuters) - As Britain hurtles into the deepest slowdown in more than 15 years, a party funding scandal has reminded the country of its most enduring schism: class. This does not bode well for the opposition Conservatives.
In a more buoyant climate the scandal -- involving Conservative finance spokesman George Osborne, posh drinking clubs, a yacht and a Russian billionaire -- may have made little more than tasty fodder for the country's voracious media.
But as many Britons lay blame for mounting redundancies on rich City bankers -- who in their white-collared stripy shirts are often closely allied to the party of the wealthy and elite -- it could not have come at a worse time for the Conservatives.
Traditionally seen as a bedrock of the upper classes, the party had been striving to broaden its appeal: a quick glance at its past leaders and chairmen shows a list littered with Barons, Viscounts and Lords.
Since David Cameron became leader in 2005, the Conservatives, or Tories, have worked to secure working-class votes if they are to end 11 years of Labor rule at the next election, due by mid-2010.
But the scandal in late October, involving Osborne, Russian billionaire Oleg Deripaska and their mutual friend the banking heir Nathaniel Rothschild, brought the Conservatives' elite connections firmly back into view.
Rothschild alleged that Osborne, his friend since they were members of an exclusive drinking and dining club at Oxford University, had tried to solicit a large donation to the party from Deripaska, whose yacht he visited in the Mediterranean last August. Osborne denied seeking any such donation.
The focus of the scandal -- sources of party funding -- is a topic which has dogged both the main parties. But it was the Conservatives' association with friends in high places and the exposure of an old boys' network that did the damage.
"It does look incredibly bad when these leading politicians are flouncing around having cocktails... It does revive old kinds of images about the Conservatives that they've been adept at hiding for some time," said Steven Fielding, director of the Center for British Politics at Nottingham University.
For some commentators and voters, the incident, which also involved Labor minister Peter Mandelson and appeared only to come to light as some act of revenge, simply highlighted that politics as a whole is an elitist business.
Trevor Phillips, the head of the country's equality watchdog, argued after the election of Barack Obama as U.S. president that the way political parties are organized means a candidate of his background would never be elected in Britain.
"There are an awful lot of rich Labor politicians too," noted Carol Richmond, 65, who is retired and lives in Cameron's constituency.
"All it can do is further reinforce many people's attitudes that politics is distanced from many people's reality... It reinforces this attitude that politics is not for ordinary people, it's an elitist game," Fielding said.
A survey by education charity the Sutton Trust in 2005 found 32 percent of British members of parliament went to fee-paying schools, which educate just 7 percent of the population, and 27 percent are graduates of Oxford or Cambridge, the UK's two most prestigious universities.
Unfortunately for the Conservatives, the echoes of their elite connections sounded by the "yacht-gate" incident may undermine their ability to tap popular resentments as unemployment heads for its highest in more than a decade.
Opposition leader Cameron -- educated at Eton College, which has fees of 28,000 pounds ($44,270) a year -- has endeavored to portray himself as an ordinary man, cycling to work and posting video diaries on his blog site, "webcameron."
Opinion polls suggest the effort was paying off. A survey by ComRes from before the scandal broke in October showed 33 percent of the two lowest social class categories -- unskilled manual workers and the long-term unemployed -- would vote Conservative if there were an election tomorrow, compared with just 18 percent in March 2005.
"The ability that David Cameron has had to detoxify the Conservative brand has certainly resonated among middle to lower class voters," said Greig Baker, Research Director at ComRes.
This emerged at a local election in May, when the Tories snatched a seat held by Labor for 34 years, despite Labor campaigners mocking the Conservative candidate's privileged background by dressing up in top hat and tails.
The result was embarrassing for Labor, whose class-centered campaign appeared to have backfired. Some said at the time it indicated class may no longer play so highly with voters.
The Labor government says social mobility, the ability of a person to move to a higher social class than their parents, is improving in Britain for the first time in 30 years.
But an Organization for Economic Cooperation and Development report last month said the gap between rich and poor in Britain is greater than in three-quarters of OECD countries, suggesting the class divide remains rife in British society.
Labor Prime Minister Gordon Brown -- who since he has run the country's finances for most of the government's term could be blamed for the mess -- has made political capital from rescuing troubled banks and now emphasizes his ordinariness.
"It's only a progressive government -- in Britain a Labor government -- that will take decisive action to safeguard people on middle and modest incomes," he wrote in The Observer newspaper earlier this month.
"While the very privileged can look after themselves in times like these, the rest of us need to know we're not on our own," he added.
Robert Worcester, a leading commentator on British politics and founder of polling group Mori, believes class will always be a factor in the way the British vote.
"Class has and class will affect the outcome of general elections because it's still a class-ridden society... Class is alive and well and living in Britain."
(Editing by Jodie Ginsberg and Sara Ledwith)