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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Single parent families are already struggling - universal credit is making things worse

Austerity and financial hardship are not inevitable – politicians have a choice.

“I don’t live, I merely keep existing”. So says one single parent in Gingerbread’s final report from a project tracking single parent finances since 2013. Their experience is typical of single parents across the country. The majority we surveyed are struggling financially and three-quarters have had to borrow from friends, family or lenders to make ends meet.

This is not the story that the government wants to hear. With a focus on a jobs boom and a promise to "make work pay", a relentlessly positive outlook shines from the DWP. The reality is somewhat different. Benefit cuts have taken their toll, and single parents have been among the hardest hit. Estimates suggest over six per cent of their annual income was lost through reforms under the 2010-15 government. The 2015 Summer Budget cuts will add another 7.6 per cent loss on top by 2020, even after wage and tax gains.

What’s more, for all the talk of tackling worklessness, working families have not escaped unscathed. Single parent employment is at a record high – thanks in no small part to their own tenacity in a tough environment. But the squeeze on incomes has hit those in work too. The original one per cent cap on uprating benefits meant a single parent working part-time lost around £900 over three years. Benefits are now frozen, rapidly losing value as inflation rises. On top of stagnant and often low pay and high living costs, it’s perhaps unsurprising that we found working single parents surveyed just as likely to run out of money as those out of work – shockingly, around half didn’t have enough to reach the end of the month.

Single parent families – along with many others on low incomes – are being pushed into precarious financial positions. One in eight single parents had turned to emergency provision, including payday lenders and food banks. Debt in particular casts a long shadow over families. A third of single parents surveyed were behind on payments, and they described how debt often lingers for a long time as they struggle to pay it off from already stretched budgets.

All of this may be depressingly familiar to some – but it comes at something of a crossroads for politicians. With the accelerated roll-out of universal credit around the corner, the government risks putting many more people under significant strain – and potentially into debt. Encouragingly, the increasing noise around the delays to a first payment is raising red flags across political parties. Perhaps most alarming is that delays are not purely administrative, but deliberate – they reflect in-built, intentional, cost-saving measures. These choices serve no constructive purpose: they risk debt and anxiety for families the government intended to help, and costs for the services left to pick up the pieces.

But will the recent warning signs be enough? Despite new data showing around half of new claimants needed "advance payments" (loans to deal with financial hardship while waiting for a first payment), the Department for Work and Pensions stuck doggedly to its lines, lauding the universal credit project that “lies at the heart of welfare reform to help “people to improve their lives”.

And, as valuable as additional scrutiny is, must we wait for committees to gather and report on yet more evidence, and for the National Audit Office to forensically examine and report on progress once again? The reality is glaringly evident. Families have already been pushed to the brink without universal credit. Those entering the new system – and those supporting them, including councils – have made it abundantly clear that moving onto universal credit makes things worse for too many.

This is not to dismiss universal credit in its entirety. It’s hard to argue with the original intention to simplify the benefit system and make sure work pays. It was always going to be an ambitious (possibly over-ambitious) project. But salami slicing the promised support – from the added seven day "waiting period" for a first payment, to the slashed work allowances intended to herald improved work incentives – leaves us with a system that won’t merely overpromise and under-deliver, but endanger many families’ already fragile financial security. The impact should not be underestimated – this is not just about finances, but families’ lives and the emotional stress and turmoil that can follow.

With increasing political and economic uncertainty, with Brexit looming, this is not the time for petty leadership squabbles, but a time to reassure voters and revitalise the government’s promises to the nation. The DWP committed to a "test and learn" approach to rolling out universal credit – to pause and fix these urgent problems is no U-turn. And of course, the Prime Minister promised a transformed social justice agenda, tackling the "burning injustices" of the day. Nearly all of the UK’s 2 million single parent families will be eligible for universal credit once it is fully rolled out; making this flagship support fit for purpose would surely be a good place to start.

Sumi Rabindrakumar is a research officer at single parents charity Gingerbread.