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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Why is Labour surging in Wales?

A new poll suggests Labour will not be going gently into that good night. 

Well where did that come from? The first two Welsh opinion polls of the general election campaign had given the Conservatives all-time high levels of support, and suggested that they were on course for an historic breakthrough in Wales. For Labour, in its strongest of all heartlands where it has won every general election from 1922 onwards, this year had looked like a desperate rear-guard action to defend as much of what they held as possible.

But today’s new Welsh Political Barometer poll has shaken things up a bit. It shows Labour support up nine percentage points in a fortnight, to 44 percent. The Conservatives are down seven points, to 34 per cent. Having been apparently on course for major losses, the new poll suggests that Labour may even be able to make ground in Wales: on a uniform swing these figures would project Labour to regain the Gower seat they narrowly lost two years ago.

There has been a clear trend towards Labour in the Britain-wide polls in recent days, while the upwards spike in Conservative support at the start of the campaign has also eroded. Nonetheless, the turnaround in fortunes in Wales appears particularly dramatic. After we had begun to consider the prospect of a genuinely historic election, this latest reading of the public mood suggests something much more in line with the last century of Welsh electoral politics.

What has happened to change things so dramatically? One possibility is always that this is simply an outlier – the "rogue poll" that basic sampling theory suggests will happen every now and then. As us psephologists are often required to say, "it’s just one poll". It may also be, as has been suggested by former party pollster James Morris, that Labour gains across Britain are more apparent than real: a function of a rise in the propensity of Labour supporters to respond to polls.

But if we assume that the direction of change shown by this poll is correct, even if the exact magnitude may not be, what might lie behind this resurgence in Labour’s fortunes in Wales?

One factor may simply be Rhodri Morgan. Sampling for the poll started on Thursday last week – less than a day after the announcement of the death of the much-loved former First Minister. Much of Welsh media coverage of politics in the days since has, understandably, focused on sympathetic accounts of Mr Morgan’s record and legacy. It would hardly be surprising if that had had some positive impact on the poll ratings of Rhodri Morgan’s party – which, we should note, are up significantly in this new poll not only for the general election but also in voting intentions for the Welsh Assembly. If this has played a role, such a sympathy factor is likely to be short-lived: by polling day, people’s minds will probably have refocussed on the electoral choice ahead of them.

But it could also be that Labour’s campaign in Wales is working. While Labour have been making modest ground across Britain, in Wales there has been a determined effort by the party to run a separate campaign from that of the UK-wide party, under the "Welsh Labour" brand that carried them to victory in last year’s devolved election and this year’s local council contests. Today saw the launch of the Welsh Labour manifesto. Unlike two years ago, when the party’s Welsh manifesto was only a modestly Welshed-up version of the UK-wide document, the 2017 Welsh Labour manifesto is a completely separate document. At the launch, First Minister Carwyn Jones – who, despite not being a candidate in this election is fronting the Welsh Labour campaign – did not even mention Jeremy Corbyn.

Carwyn Jones also represented Labour at last week’s ITV-Wales debate – in contrast to 2015, when Labour’s spokesperson was then Shadow Welsh Secretary Owen Smith. Jones gave an effective performance, being probably the best performer alongside Plaid Cymru’s Leanne Wood. In fact, Wood was also a participant in the peculiar, May-less and Corbyn-less, ITV debate in Manchester last Thursday, where she again performed capably. But her party have as yet been wholly unable to turn this public platform into support. The new Welsh poll shows Plaid Cymru down to merely nine percent. Nor are there any signs yet that the election campaign is helping the Liberal Democrats - their six percent support in the new Welsh poll puts them, almost unbelievably, at an even lower level than they secured in the disastrous election of two year ago.

This is only one poll. And the more general narrowing of the polls across Britain will likely lead to further intensification, by the Conservatives and their supporters in the press, of the idea of the election as a choice between Theresa May and Jeremy Corbyn as potential Prime Ministers. Even in Wales, this contrast does not play well for Labour. But parties do not dominate the politics of a nation for nearly a century, as Labour has done in Wales, just by accident. Under a strong Conservative challenge they certainly are, but Welsh Labour is not about to go gently into that good night.

Roger Scully is Professor of Political Science in the Wales Governance Centre at Cardiff University.

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