Labour Party

Follow the Money

Dave Levy, Lewisham Deptford CLP, has been looking at the Labour Party’s published accounts for 2021. They make alarming reading.

In August, the Labour Party published its annual accounts for 2021. There has been much discussion of the headlines, that in 2021 the party made a £5m operating loss having spent a record for a non-election year of £50m.

Income is down because of the loss of membership fee income, donations are down from recent history and are still dominated by Trade Union donations; the rich donors are not giving as much as they did in the late noughties, in fact individual donations were under £1m in 2021 and even between 2005 and 2008 the Party failed to raise enough from donations to fund the elections and had to obtain bank loans.

Labour’s real membership is hard to track and even harder once the membership system became unserviceable. Labour does not consider a member has left until 12 months after membership expiry, unless they explicitly resign (or change bank accounts it seems). Labour lost 91,000 members (net) in 2021 and according to informal reports, another 50,000 in the first half of 2022.

In the published documents you can see the surge of membership as a result of the general election and the subsequent leadership campaigns both won by Jeremy Corbyn in 2015 and in 2016 and the decline from 2019.

Expenditure was £50m with 80% of this being running costs. It’s hard to draw conclusions without understanding how much was spent on redundancy payoffs but two things are obvious on running costs. The first is that the staff head count has fallen from 453½ to 399, the staff budget should have fallen and the senior management team costs rose by £347K, they both require explaining. Much of the increase in running costs is likely to be the contractor/consultant costs in legal and governance although the IRB/ICB were not instituted until the following year. It should also include the redundancy payments made to those staff ‘let go’ during the year.

The financial report does not contain the staff diversity report; we’ll have to wait for the full annual report to see if there has been a change in average salaries by gender.

There is a £6m item called political activities and publication, which was trivial in 2019 and jumped to £3m in 2020 and £6m in 2021 i.e. since Starmer became Leader and Evans became General Secretary. It would be useful to know what this is.

A significant item of expenditure is payments to CLPs, £3.6m down from £4.2m. This is a function of membership numbers and so its decline is likely to continue.

Donations, while higher than 2020, are low. We can see that the rich donors are not yet coming through and the total individual donor level is pretty low. The Trade Unions are once again the single largest category of donations contributing over 70% of the donation income. Of the individual donations, over half of the cash donated came from two people. And we are all wondering if Unite (£1.7m), CWU (£500k) and GMB (£1.3m) will continue to pay at this rate. The public grant to the PLP, “Short Money”, remains extremely valuable.

The final chart illustrates the decline in the value of ‘net assets’, which show the value of the organisation if it were to stop operating.

The chart shows the Party’s recovery from a position of debt, to surplus and its decline since 2019 posting a £2.4m decline in 2021. The operating deficit was turned into an income and expenditure surplus in the accounts due to a pension fund re-evaluation.

The loss of membership income is a serious financial blow to the party and the glee with which it is welcomed by some senior members of the PLP and NEC is irresponsible. Furthermore, this financial report is not really adequate to understand what happened. I hope that the NEC and its business and risk and audit committees get better and more frequent numbers.

This article is a précis of an article written by me on my blog: . The other commentator of interest is Esther Giles, who posted on twitter ttps:// and predicts that unless measures are taken to control the overspend, the Party will run out of money in under two years.

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