Gray faces inquiry over Marqueegate
Mr Gray accepted 800 from Prestonpans Labour Party, which had used council resources worth about 6,700 – in particular, a marquee – for its annual fundraisers.
The marquee was gifted to the council on condition that groups from Prestonpans could use it for free and the local Labour Party branch has used it for the past 20 years.
But SNP opponents and the Scottish Conservatives, in calling for the independent audit, said council resources should not be used to support political parties.
Labour yesterday denied that the issue had any chance of escalating into the sort of donations row that eventually brought down Mr Gray's predecessor, Wendy Alexander.
The party accused the SNP of smear tactics and trying to distract attention from its own problems by leaking details of the donation.
Tory South of Scotland MSP Derek Brownlee called for an external audit into the affair.
He said: "The value of these donations to Labour must be repaid immediately.
"This is an abuse of taxpayers' money that should be used to fund local services."
Nationalist South of Scotland MSP Christine Grahame added: "This is an astonishing use of public money. Did they not think how this would look?
"The Labour Party must reimburse the taxpayer for the subsidy they received from this event and Iain Gray must be honest as to whether he knew council resources were going toward Labour Party events."
But Labour yesterday said the council had approved the use of the tent for the past two years, and the mistake was the council's.
A Labour Party spokesman said: "The matter needs to be sorted out between the Prestonpans Labour Party branch and the local council. When that matter is dealt with, if any action needs to be taken then it will be taken.
"At the end of a week when Scottish education is in crisis, the education secretary has been sacked and the First Minister is being investigated for misleading parliament, it is a sad spectacle to watch the SNP try to attack Labour about a marquee."
East Lothian Council is investigating the local party over the use of its tent, and expects to announce its conclusions early next year.
"It appears this application was just put through every year by habit. We understand from our legal team that only disputed funds from the past five years can be claimed back."
The Prestonpans Labour Party social club, which is a separate business and legal entity, gave Mr Gray's leadership campaign 1,500.