The flaws at the heart of the Labour party’s reorganisation

by Peter Watt

I have decided to write something about Labour party governance.  Now wait; before you stop reading simply because you assume that any article about governance must be aimed at anoraks give me a moment as it really is an important issue.

The Labour party is governed by the National Executive Committee (NEC) who act in the same way as a board of directors or trustees do.  In other words, they are responsible for ensuring that the party manages its finances well; delivers on its primary objective of securing elected Labour representation and other subsidiary objectives like better representation of women.  And also for ensuring that the party complies with its legal responsibilities.  They also oversee, but do not direct, day-to-day operations of the party.  The day-to-day work is managed by the party’s chief executive the general secretary.

Traditionally the arrangement has not been a particularly good one in the Labour party with good governance being secondary to other political pressures.  The result was that the party became horrifically in debt and no one on the NEC seemed to notice.

The reasons for this are twofold.

Firstly the NEC itself was much more interested in politics than governance.  In other words they got elected or appointed by virtue of fighting for position or votes in internal elections on the back of taking positions politically.

They were experts in lots of things to do with politics, trade unions and so on.  But that didn’t make them experts in governance, asking the right questions, finances and the like.  Whilst other organisations could undertake a skills audit of their boards and appoint non-execs or other trustees to plug the skills gap – the NEC had elections to its various stakeholder sections.

And secondly the party management team saw it as their job to keep the NEC out of decision making.  What they didn’t know couldn’t hurt and anyway the NEC really weren’t that interested, or so the argument went.

It was just easier to set up NEC committees and structures that provided more confusion than transparency.  Plus there was always a third source of power that party managers had to worry about – the leader’s office.  The leader’s office always wanted to be in charge of everything but knew that the key to managing the weird and byzantine world of the NEC was the general secretary and their team.

The result was that for many years the party management and the party leader pretty much got on with it despite the NEC.  The members of the NEC were not unduly worried as they didn’t get on the NEC in order to deliver governance; it was a platform for them.  NEC officers were often very committed but didn’t understand many of the responsibilities required of them.  This all meant that there were not effective checks and balances in place and more money was spent over many years than was good for the party.

The needs of the leader’s office became the needs of the party and the party delivered with the NEC being both dysfunctional and side-lined.

And it could not go on.  In 2007 the party pretty nearly became bankrupt.  I will never forget the NEC where I explained to them just how close we were.  The figures were horrific and the outlook bleak.  There was a serious discussion about the rescue plan on the table.  At the end of the discussion the NEC took the decision to reverse the recommendation to increase the price of reduced rate conference passes!

But the crisis changed attitudes.  The NEC upped its game and rightly demanded greater openness from their management team.  And I, as then general secretary, demanded that the NEC took greater responsibility and began to exercise it governance role.

The leader’s office also recognised that it needed to work with the NEC not despite it.  There’s nothing like a good financial crisis to focus minds!

Over the coming years and through subsequent general secretaries the new approach prevailed.  The finances were gripped and the leader’s office accepted that they could not spend party funds with impunity.

The NEC made sure that the party delivered a balanced budget that included debt reduction.  And everyone, NEC and party Leader, knew that this was the general secretary’s job.  It was the right balance of competing forces at the top of the party.  This even prevailed throughout the last general election, a tremendous testament to Ray Collins and his then team.  And rightly so; party members and indeed voters expect the Labour party to be well governed.

Which brings me to the appointment of the new executive board at party HQ.

It is welcome that the party is updating and streamlining its management structures and a good thing that teams are refreshed.

But if I was on the NEC I would be worried.

I would worry because it looks like the leader’s office has taken over the running of the party.  It looks like the general secretary’s role is being watered down.  And the danger is that when all of this plays out, the role of the NEC in overseeing the good governance of the party is being watered down.

History tells us that when the NEC is side-lined and the balance of power at the top of the party is shifted like this, the risk of bad short term decisions rises.  Decisions to spend now in order to try and get out of a political hole are more likely to be taken – irrespective of the consequences for the party’s overall financial health.

In other words I worry that the new structures with a dominant leader’s office are making the Labour party once more prone to short termism in its decisions over spending and so on.  You could almost say that the Labour party is becoming a bit more “predator”!

I hope that I am wrong.  But one final observation which adds to my worry is that it is not clear who, if anyone, is worrying about finances on the executive board of the Labour party.  Because unless I am missing something, there appears to be no executive director for finance.

Peter Watt was general secretary of the Labour party

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20 Responses to “The flaws at the heart of the Labour party’s reorganisation”

  1. BenM says:

    A subject that seems to have got the Blairites all in a tizzy.

    Meanwhile, the world turns…

  2. Peter Kenyon says:

    Dear Peter

    Before your claims of introducing governance to the Labour Party’s NEC become enshrined in urban myth, I suggest you read a copy of the Development Trust Association (now Locality)’s Early Warning Guide.

    I declare an interest as a member of the working group that compiled the key performances indicators for executives and non-executives.

    I also declare an interest as a former member of the NEC who’s first requests having been elected were a) to attend the Warwick 2 National Policy Forum as an observer – refused by the then acting General Secretary Chris Lennie, and b) copies of the 2008 budget, management accounts and staff/organisation organigram(s) – refused by the then Director of Finance and Compliance, Roy (now Lord) Kennedy married to deputy General Secretary, Alicia Kennedy.

    Good governance comes from each member understanding their roles, and responsibilities. Is there any evidence that anyone either in the Leader’s Office or the National Executive Office has a grasp of the the most basic principles of governance – good or bad?

    I’d be happy to be enlightened.

    Yours with happy memories of being told by you some years ago that I was part of the problem

    Peter Kenyon

  3. Henrik says:

    Blairite, n – one who understands a balance sheet (local usage, Brit. Labour Party, colloq.)

  4. The Future says:

    I think there is something in this Peter.

    The reason why we are in this mess is partly becuase of the Blair era where Tony didn’t really care about the party past his own political career.

    The idea of entrusting any leader with the authority he had is very bad indeed.

  5. Mary H says:

    Wasn’t reorganisation a conclusion of the Refounding Labour consultation. Some management focus is long overdue. Many members asked for this. Ed Miliband and his team seem to be listening to grassroots as they said they would.

    Times change and how history repeats itself !
    I seem to remember something like this when Tony Blair began making changes. Isn’t this a case of the Blair loyalists feeling that their noses are being pushed out of joint ?
    Some seem to think its all about them and that they’re still in charge. It really isn’t and they’re not. Its time to put up, and shut up.

    Yes, the world turns…

  6. Indigo says:

    Obviously, it’s a bad thing if the Labour Party is returning to the bad management practices of the Blair era – but I’ll need to examine the actual content of the reorganisation before I assume that that’s the case.

    However, I don’t for a second buy the implication that the NEC is too political or not capable of providing due governance. The NEC has always been an elected body, composed of members who took positions in pursuit of votes. But it wasn’t until 100 years into this organisation’s history that the wheels came off the wagon. The only reason is what you identify as the second reason – that the party management installed by Blair ignored and lied to the NEC.

  7. Peter Watt says:

    Peter’s never been my biggest fan! I hope you are well though Peter.

  8. Anon E Mouse says:

    The responses here are completely bonkers and everyone here needs to keep repeating “Blair the election winner – good for Labour” and “Brown the most useless chancellor and unpopular Prime Minister in history – bad for Labour”.

    The only time that the Labour Party was successful was under Tony Blair, the most popular leader the party ever had. The least successful leader and the most unpopular Prime Minister since records began in 1923 was Gordon Brown. I suppose at least he wasn’t elected by the country or the Labour Party.

    As long as Labour continue to ignore the way the voters in this country feel the longer they can continue with this stupid naval gazing and stay in opposition.

    Every time Ed Balls tries to blame the debt on someone else we are not listening.
    Every time Ed Miliband drones on about Rupert Murdoch we are not listening.
    Every time Andy Burnham shrieks on about the NHS we are not listening.
    Every time Ken Livingston criticises the rich we are not listening.

    70% of Labour supporting voters agree with or want greater benefit cuts and unless the activists actually start listening to the people who could put the party into power Labour is doomed to ineffective opposition.

    Stop telling us black is white because we know it isn’t and we’re not listening and it’s giving the government a free hand…

  9. Mark Hoult says:

    Is the Leader’s office ignoring the NEC because it can’t explain clearly enough what it’s own position on many key issues is right now – let alone expect the NEC to nod through support?

  10. John says:

    When I took over treasure for my party 4 and half years ago, we had £80,000 in the parties own account plus a couple of £1,000 in our account , we were spending £1,000 on hiring halls for meeting that would get cnacelled and no refunds, when i sotpped being treasurer a year ago we had, about £10,000 in our current account and had onyl transfered over a coupe of ,1000 form o the party one, yet with in a year the 10,000 has gone, and our party asked the Labour party for more money form the other one, which they’ve refused, the party just doesnt understand’ finances.

  11. paul barker says:

    On a historical note, surely Ann Black & Peter Kenyon did try to raise the issue of labours debts on the NEC ?

    For the future, labour hasnt got one, your branch of the left has run out of road, watch the results in 7 weeks to see that.
    You could go out with some sort of honour though, you could at least pay off your legal debts even if you can never pay for the damage you have done to Britain.

  12. Adam Gray says:

    Where to begin? To pretend Labour’s organisational problems began with Blair is idiotic: the party was dysfunctional under Smith, Kinnock, Foot, Callaghan…how do you imagine the party ended up in as inappropriate a back-woods building as Walworth Road for example?

    Peter (Watt) is right that the fundamental problem in party organisation is the relationship with the Leader and his/her office: and that hasn’t been resolved; it’s just been ordered this way because Ed Miliband happens to believe that Head Office staff supported David. But the next leader will want a different relationship and the one after that, and the one after that…unless the structure is formally resolved by the party.

    This isn’t a genuine interest in the party leader actually leading the party: if it were the leader’s office (or the vast bulk of it, including for some of the week the leader himself) would base itself at party HQ. This is about control – and as usual Ed’s lot have botched it. And the fact it’s being leaked and briefed about and generally derided is not because staff are unhappy with the leader’s politics: it’s because the reorganisation is becoming a catastrophe.

    But there are other fundamental problems. For far too long in the party, people have advanced not on their ability but because they are part of whichever empire happens to exercise influence in the party. And those not in those cliques – whatever their abilities – got shafted.

    There was a golden opportunity with the restructure of the party to break this cliquey, incestuous, backbiting, bitchy organisation – and it has been squandered. People have yet again been appointed not on ability but because of their loyalty to the leader or other players. How many of the new exec directors are from outside the ranks of HQ or the leader’s office? None except the suddenly emerged “chair of the Exec Board” Sir Charles Allen.

    So instead of a fresh start, old cliques mutate and new cliques develop. Those with talent but independent purpose will be driven out. Where new ideas are desperately needed, the old tried-and-tested mediocrity will win through. Innovation and independence will for another generation of party organisation be stifled.

    The new party structure was set up to sustain the old regime. The new Exec director jobs have such vast remits that it is impossible to place a professional qualified in all aspects of their job – because no such person exists. Take two examples.

    Policy is linked to rebuttal. Now, you’re either a policy wonk or you’re a media professional adept at being able to rebut to cynical poltiical journalists. Of course there’s a link between being able to rebut based on your knowledge of what we’re actually saying, but essentially these are two completely different skills sets.

    Meanwhile, field operations covers even more utterly distinct person specifications bunged together not to attempt to find the best person for the job but instead to ensure only an existing in-favour member of staff got the job. Let’s hope Patrick Heneghan excels in the job but this is someone whose career in Labour had nothing to do with field operations in any sense until he was crowbarred in to head London region when Ken demanded the entire staff be booted out, again through paranoia about their political allegiance to him.

    This is not a fresh start. Nor will it work.

    PS Not an ex-head office staffer before anyone asks: someone who actively avoided working at HQ or region because of the culture there, preferring to stay in grassroots party organisation.

  13. Indigo says:

    Are we to expect a massive breakthrough for the Green Party and RESPECT, Paul Barker?

  14. Anon E Mouse says:


    The core vote has mainly gone and any goodwill Labour had left in the electorate was destroyed with their open hatred of the poor working classes by crippling them with more and more taxes whilst rewarding the bankers city slickers and spivs like no other government in history.

    There are no mines or large scale employers left and labouring jobs are now dome by immigrants who came here under Labour’s open borders policy.

    There won’t be a breakthrough for the Greens but all left wing parties are on the decline and frankly the sooner Labour get rid of the professional politicians like Ed Miliband and Ed Balls and get real working class people involved the better.

    Labour has been hijacked by childish socialists and toffs like Polly Toynbee, Ken Livingston and Harriet Harman and the sooner they realise the electorate support what this government is doing with austerity and apologise for their reckless handling of the economy the better.

    All this lot is just moving the deckchairs on the Titanic…

  15. Les Abbey says:

    I wonder who was part of the problem, Peter Kenyon or Peter Watt. Now let me see…

  16. john reid says:

    The denial of Labour ,that it has this roblem, Means to me (gritting teeth) that we’re seeing the return of the loony Left, arghh.

  17. Peter Kenyon says:

    Dear Les

    You wrote:
    March 16, 2012 at 9:05 am
    “I wonder who was part of the problem, Peter Kenyon or Peter Watt. Now let me see…”

    Hands up, it was definitely me, daring to pose questions about declining membership, and raising money to fund an evidence-based approach as to why…

  18. paul barker says:

    Indigo. I mustnt have been clear, respect are from the same historical stream of the left as you, identity-based, statist etc. Greens are much more complex.
    Certainly the decline of labour will open up political space for all sorts of throwbacks, marxists, faschists etc. Most of your voters will go to the libdems though.

  19. Stephen says:

    The fundamental point that is being missed here is that there will always be arguments between the executives charged with running the Party (i.e the Leader and the NEC) and I daresay the Party staff will also add their tuppenyworth. Yes it has to be managed – and there has to be proper mechanisms for resolving conflict. What however is clearly missing is a non executive/trustee element as you will see in most organisations – who are entrusted in ensuring that betweeen all the arguments there is good corporate governance and the rules are properly set and interpreted. You cannot expect General Secretaries or those with political axes to grind such as Peter Kenyon (who spent most of the last 3 Labour Governments complaining about the Party Leadershio and now has turned on Ed Miliband after the briefest of honeymoons) to undertake such a role.

    I would also add that for any corporate governance structure to work there also has to be a basic acceptance and consensus about what it is and how it should function. If we are to get there – perhaps a little more focus on those matters where there is agreement, rather than spending all the time on political arguments about the differences is now called for.

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