by Chris McLaughlin
Labour leaders have been told they will need to find £40 million over the next two years in order to keep the party from bankruptcy, continue to pay staff and fight the next election.
The figure has been produced during the auditing of the party’s accounts, which have to be signed off next month and also delivered to the Electoral Commission by June 30. It includes £21 million outstanding loans, the day-to-day running costs and the cost of mounting an election if no legislation on spending caps is in place by the time it is called.
As Tribune disclosed earlier this month, the funding crisis has raised fears that the auditors may be unable to sign off the accounts and effectively declare the party bankrupt. An immediate £4 million hole in the finances has to be plugged before the accounts can be deemed in order.
Talks on the rescheduling of the controversial loans are still not finalised in spite of earlier optimism that all the lenders had agreed to new repayments deals over several years.
Party chiefs have been warned that a further £4 million deficit can be expected next year and that matching the Tories spend at the election will cost at least £16 million.
The party is struggling to pay staff and is relying on the trade unions, who are reported to have quadrupled their financial support in the past six months, to avert bankruptcy.
Concern is mounting among MPs at the lack of cash at a time when Lord Ashcroft, the Tory deputy party chairman, is pushing at least £2 million into marginal seats the Tories hope to take from Labour at the next election.
Financial support from individuals has fallen from £2.86 million to just £581,000 in the last quarter. In the same period the unions gave £4.5 million compared to £1.6 million in the previous quarter.
The position has not been helped by the absence of a general secretary, who is ultimately responsible for the party’s finances, since last November. David Pitt-Watson, a City financier, refused to take up the post after seeing the books and there is no long-term financial plan in place.
Supporters of Mr Pitt-Watson say he was “badly treated” by the party because it had not been made clear that he had originally accepted the post on condition that the finances did not jeopardise him personally and that it was party chair Dianne Hayter who withheld his withdrawal back until the day after the local elections, and any delay was not due to Mr Pitt-Watson.
Ray Collins, of the T&G section of the Unite union, remains the front-runner and Mike Griffiths, of the Amicus section, has kept his name in the ring while considering his position. Tentative approaches made to Ken Livingstone, the former Mayor of London, to thrown his name into the race, were emphatically declined.
