Why the Lib Dems' funding crisis could end the coalition early

Faced with mounting debts, the party may be forced to leave government in order to reclaim the "short money" provided to opposition parties.

Whether or not Joan Edwards's £520,000 bequest was intended for the government of the day or whichever party formed the government, there's no doubt that the Lib Dems could have done with the money (they received £99,423 based on their share of MPs and ministers). The party ran a deficit of £410,951 last year (the only one of the three main parties to do so) largely due to a 13% fall in its membership to 42,501, a decline of 35% since 2010 (when it stood at 65,038) and the lowest annual figure in the party's 23-year history.

While the party insists that its Finance & Administration Committee "has taken steps to ensure that satisfactory surpluses will be achieved in 2013 and 2014" (having previously projected a surplus of £200,000 for 2012), this will likely mean cutting back on campaign spending, something the party can ill afford to do given the political obstacles it faces and the decimation of its councillor base (many of whom pay a tithe of 10% to their local parties). 

Lib Dem finances have also been hit by the loss of "short money", the state funding made available to assist opposition parties with their costs. The party received £1.7m from this source in 2009-10 and its removal forced it to make more than 20 staff redundant. Over the five year parliament, the loss amounts to nearly £9m. 

With an eye to this, one scenario put to me by several in Westminster is that the Lib Dems will ultimately be forced to return to opposition in advance of the 2015 general election in order to reclaim the short money they'll need to mount anything like an adequate campaign. 

It's worth noting that before the defeat of the boundary changes in January, there was talk of the Tories doing a "cash-for-seats" deal with the Lib Dems under which the party would receive millions in state funding in return for supporting the review. It didn't come to pass (would anything have looked more grubby?) but it shows that the issue hasn't escaped the attention of Conservative ministers. Rather than an epic tussle over policy, the coalition could yet fall based on the inescapable fact that the Lib Dems are running out money. 

Nick Clegg makes a speech at the G8 Open for Growth - Trade, Tax andTransparency conference at Lancaster House in central London on June 15, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Will Jeremy Corbyn stand down if Labour loses the general election?

Defeat at the polls might not be the end of Corbyn’s leadership.

The latest polls suggest that Labour is headed for heavy defeat in the June general election. Usually a general election loss would be the trigger for a leader to quit: Michael Foot, Gordon Brown and Ed Miliband all stood down after their first defeat, although Neil Kinnock saw out two losses before resigning in 1992.

It’s possible, if unlikely, that Corbyn could become prime minister. If that prospect doesn’t materialise, however, the question is: will Corbyn follow the majority of his predecessors and resign, or will he hang on in office?

Will Corbyn stand down? The rules

There is no formal process for the parliamentary Labour party to oust its leader, as it discovered in the 2016 leadership challenge. Even after a majority of his MPs had voted no confidence in him, Corbyn stayed on, ultimately winning his second leadership contest after it was decided that the current leader should be automatically included on the ballot.

This year’s conference will vote on to reform the leadership selection process that would make it easier for a left-wing candidate to get on the ballot (nicknamed the “McDonnell amendment” by centrists): Corbyn could be waiting for this motion to pass before he resigns.

Will Corbyn stand down? The membership

Corbyn’s support in the membership is still strong. Without an equally compelling candidate to put before the party, Corbyn’s opponents in the PLP are unlikely to initiate another leadership battle they’re likely to lose.

That said, a general election loss could change that. Polling from March suggests that half of Labour members wanted Corbyn to stand down either immediately or before the general election.

Will Corbyn stand down? The rumours

Sources close to Corbyn have said that he might not stand down, even if he leads Labour to a crushing defeat this June. They mention Kinnock’s survival after the 1987 general election as a precedent (although at the 1987 election, Labour did gain seats).

Will Corbyn stand down? The verdict

Given his struggles to manage his own MPs and the example of other leaders, it would be remarkable if Corbyn did not stand down should Labour lose the general election. However, staying on after a vote of no-confidence in 2016 was also remarkable, and the mooted changes to the leadership election process give him a reason to hold on until September in order to secure a left-wing succession.

0800 7318496