by Atul Hatwal
Earlier this week the Electoral Commission released the latest quarterly donation figures for the political parties. Once again, income across the board fell. Down for the Tories but more importantly, falling faster for Labour.
As my esteemed colleague Peter Watt said in his post yesterday when he reviewed these figures, “the party simply cannot go on like this indefinitely.”
In these uncertain times the one action the party can definitely take is to cut costs. Yet the latest financial accounts for the party for the 2011 calendar year, released at the start of this month, reveal a disturbing situation.
Yes, expenditure was lower in 2011 than 2010, dropping by £3.5m from £33.8m to £30.3m. But in 2010 there was a general election that cost £8m while in 2011 the local election campaign only cost £900k.
If the party had managed to keep all non-campaigning costs at roughly the same level as in 2010, the reduction in expenditure in 2011 should have been just over £7m (the difference between the cost of campaigning in 2010 and 2011).
But it wasn’t.
The reason was an 18% hike in running costs for the party. Running costs are the biggest single line item in the party’s expenditure making up 80% of total spending. In 2011 they went up by £3.6m to £24m, from £20.4m in 2010.
An almost 20% spike in running costs, when there is no general election or major campaign, is quite extraordinary.
Delving into the detail of accounts, there is a breakdown of running costs which sheds some light on where the money is being spent.
source: Labour party 2011 accounts
In the first line of the table, it is clear that there was a £900k rise in expenditure on staff from 2010 to 2011. A note in the accounts reveals that this equated to an increase in headcount from 287 to 307 staff.
