by Peter Watt

I feel the need to return to a favourite topic of mine – the funding of the Labour party. Why? Well because this week has seen two developments. First, the publication of the party accounts for the year ending December 2010. And second, the announcement that Charles Allen, former ITV chief executive, has been asked by Ed Miliband to lead a commercial and management review of the party.

Taking the accounts first. At face value the accounts are a mixed bag. On the one hand, they show just how fragile the party’s finances are with a balance sheet showing a deficit of almost £7.5 million.  For the financially illiterate, that means we owe a lot more than we have. The reason that we are still solvent is that we are able to meet these obligations as they become due by making sure that we have enough cash year-on-year.

On the other hand there is clearly real improvement in the overall year-on-year position. Sound financial management, some purchasing of property and a sensible strategy of rescheduling debt has ensured healthy surpluses in the last few years. Ray Collins, Roy Kennedy and the Victoria street team should take huge credit for ensuring that the balance sheet improved from a deficit of over £27 million in 2005, in the aftermath of that year’s general election, to the 2010 position.

One contractual consequence of the debt rescheduling, is that the party has to pay off at least £2 million of debt every year. This enforced discipline lead to a policy of “if we don’t have it we can’t spend it” at the 2010 election. The result was, incredibly, that in an election year we reduced party debt. At this rate, the party will have a balanced balance sheet in the next couple of years. (more…)