Labour on the verge of bankruptcy

John Prescott warns of possible financial meltdown as Labour faces debts of £20m.

John Prescott, who is campaigning to be elected Labour treasurer, issues a stark warning about the state of the party's finances in today's Guardian:

The Labour Party stands on the verge of bankruptcy. We are more than £20m in debt, facing a long-term decline in membership and a crisis in funding.

We are only kept alive by the Herculean work of party staff and volunteers, trade union contributions, high-value donations and the goodwill of the Co-op bank.

This isn't the first time Labour has faced a cash crisis in recent years. Before the election David Blunkett memorably admitted: "We are trying to be careful so we don't end up bankrupt after the election if this all goes pear-shaped."

Prescott also takes a sideswipe at Gordon Brown over the huge cost of the "election that never was": "[T]he so-called 'election that never was', in 2007, cost the party £1.5m in preparation costs which could have been spent on funding the disastrous 2009 European and local elections, for which Labour ran no real campaign."

It'll be worth watching to see whether the parlous state of the party's finances boosts David Miliband's argument that Labour needs a leader who can attract cash-rich donors. Since the beginning of the campaign he has raised well over £300,000 but has sensibly chosen to contribute one-third of that total to a "fighting fund" for the party.

George Eaton is political editor of the New Statesman.

Photo: Getty
Show Hide image

Jeremy Corbyn secures big victory on Labour's national executive committee

The NEC has approved rule changes which all-but-guarantee the presence of a Corbynite candidate on the ballot. 

Jeremy Corbyn has secured a major victory after Labour’s ruling executive voted approve a series of rule changes, including lowering the parliamentary threshold for nominating a leader of the Labour party from 15 per cent to 10 per cent. That means that in the event of a leadership election occurring before March 2019, the number of MPs and MEPs required to support a candidate’s bid would drop to 28. After March 2019, there will no longer be any Labour MEPs and the threshold would therefore drop to 26.

As far as the balance of power within the Labour Party goes, it is a further example of Corbyn’s transformed position after the electoral advance of June 2017. In practice, the 28 MP and MEP threshold is marginally easier to clear for the left than the lower threshold post-March 2019, as the party’s European contingent is slightly to the left of its Westminster counterpart. However, either number should be easily within the grasp of a Corbynite successor.

In addition, a review of the party’s democratic structures, likely to recommend a sweeping increase in the power of Labour activists, has been approved by the NEC, and both trade unions and ordinary members will be granted additional seats on the committee. Although the plans face ratification at conference, it is highly likely they will pass.

Participants described the meeting as a largely low-key affair, though Peter Willsman, a Corbynite, turned heads by saying that some of the party’s MPs “deserve to be attacked”. Willsman, a longtime representative of the membership, is usually a combative presence on the party’s executive, with one fellow Corbynite referring to him as an “embarrassment and a bore”. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.