Delegates walk past a banner outside the Labour conference on September 23, 2013 in Brighton. Photograph: Getty Images.
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Labour's finances are healthier than most think - but dangers remain

The party has reduced its debts from £25m in 2005 to £4.5m but risks to funding have increased. 

Labour's decision to end its commercial relationship with the Co-operative Bank has come as no surprise to anyone in the party. The bank, which is now 70 per cent owned by US investors, was already reviewing the link as part of its new "apolitical" approach and, for Labour, there is an understandable interest in no longer being directly associated with the scandal-ridden instiution. The £1.2m loan that the party currently has with the Co-op will be transferred to the Unity Trust Bank, jointly owned by a coalition of trade unions and the Co-op itself (although it is currently attempting to sell its 27 per cent stake). 

The move has inevitably led to comment on the wider state of Labour's finances. ConservativeHome's Mark Wallace writes: "All of this is bad news for Ed Miliband’s election machine. True to their national record, the Labour party itself is laden with debt, and its fund-raising attempts have brought in less money than they hoped." Yet while Labour is far from flush with cash, its financial situation is healthier than generally thought. After reaching the dangerously high level of £25m in 2005 (putting it close to bankruptcy), its debts have been reduced to £4.5m and the party is on track to eliminate the blackhole entirely by 2016. In 2012, it ran a surplus (for the sixth successive year) of £2.8m and raised £12.03m to the Tories' £13.8m. 

But there are several black clouds on the horizon. The first is the probability that the separate Co-operative Group will end most or all of its funding to Labour having recently consulted the public on whether it was appropriate for it to continue to donate to a political party. In 2012, it donated £810,000 to Labour (the typical annual amount), including £563,000 to the affiliated Co-operative party (of which 32 Labour MPs are members) and £50,000 to Ed Balls's office. 

The second is the impact of Ed Miliband's party reforms. To date, his decision to require all trade union members to opt into donating to Labour, has prompted Unite and the GMB to reduce their funding by £2.55m. Both unions have already made it clear that some of this shortfall will be reduced through one-off donations but the party is still likely to suffer a net financial loss. 

The third is the likelihood of the party winning the next general election. As one source recently pointed out to me, this would mean the loss of all of the £6.4m Labour currently receives in "short money", the state funding made available to assist opposition parties with their costs (such as travel expenses and running the leader's office). "A lot of people know their jobs are on the line if we win," he said. 

With Labour's general election spending already constrained by its debt reduction target, expect the party to step up its fundraising efforts over the next year in a bid to ensure a fair fight with the Tories. 

George Eaton is political editor of the New Statesman.

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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage