I continue to be amazed that Labour’s own internal financial problems haven’t been a bigger issue.
The issue is one that goes to the heart of their integrity, competence and fitness to Govern.
A pet theory of mine, as yet untested, is that the way parties run themselves internally is probably one of the best indicators we have about what a Government run by that party will be like. I base this on the idea that parties can run their parties however they like so, in effect, it exposes how they view authority, organisation, hierarchy, democracy etc. In addition we can see how they manage their communications, how they manage their own internal processes in drawing up policies, making announcements and finally – and crucially – we can see how they run their finances.
Is it reasonable to believe that an undemocratic, highly centralised, tightly disciplined party with strict processes and chains of command and rules about what people can and can’t say to whom would somehow then produce a decentralised, open, democratic government that values civil liberties? The very idea seems absurd, and in practice – in reality – Labour’s approach to Government appears to mirror their approach to their own internal organisation.
More relevant and important – can you believe that a party with a well documented “spend now, worry later – nothing must get in the way of winning” reckless, scorched earth attitude to funding election campaigns, landing them in serious debt would run the public finances with prudence, care and diligence?
Time has told on this one – Labour have run the public finances with the same ‘whatever it takes to win’ attitude, and has left our public finances mirroring their own.
The Times today runs a story that alleges Ray Collins, Labour’s General Secretary, has attempted to seize assets held by local branches of Labour – not to repay the debts they have, but to be able to borrow more against them. A very ‘Labour’ solution to the problem of impending financial (and electoral) doom. The NEC have stopped this – they fear that if they begin securing more borrowing against all the assets Labour has, they stand to lose absolutely everything.
It is desperate, humiliating stuff.
Dan H. said...
9 Nov 09 at 3:58 pm
Actually, Labour’s party financial crisis is having more of an effect than you might imagine, for a few very interesting reasons. The main reason is this: the Labour Party is constituted much like a small society and includes the crucial detail that the principal officers (head of party, treasurer and a few others) are personally liable for all debts that the party has, if the party is unable to meet its debts through its own funding.
When Tony Blair was in charge, he recklessly (though calculatingly) ran up huge debts by using the party to finance most of his campaign budgets, then proceeded to keep just ahead of this financial Grim Reaper until he finally resigned. He left in place a pair of financial dunces (Brown and Harman) and such a debt as to scare off most sensible treasurers and would-be executives.
The situation now is thus: the Labour party owes millions to banks. These banks are only prepared to leave the debt outstanding if it is not increased and there is a chance to repay some of it; they won’t yet call it in since the Labour party executives who would be liable aren’t actually all that rich and bankrupting them out of spite wouldn’t clear all the debt.
The only people who can and are likely to give money to Labour are the few big unions who are still paying Labour dues; some of the money is rumoured to have been rediverted from Government grants, even. This leaves everything in a Faustian pact: Government has to put up with most of the posturing of the Unions or the debts won’t be paid and won’t be able to be paid (and at this point the banks will have the Labour party in a very, very nasty situation), but at the same time they cannot be seen to be pandering to the Unions too much. If ever the Labour party does go under, then the principal officers will also be bankrupted. Since a bankrupt cannot be a minister, Gordon Brown would immediately lose his seat and trigger a fairly rapid General Election.
All this, because their grasp of finance was abysmal…
Charlotte Gore said...
9 Nov 09 at 4:18 pm
Hmm… if the banks are effectively holding a guillotine over the Labour Party’s head and able, in effect, to bring down the Government at any moment… doesn’t that imply that there’s a conflict of interest between Labour and the banks?
Wonder if there’s a way to find out how much money Labour owes RBS, Lloyds and Northern Rock. Out of pure idle curiosity, of course.
Philip Walker said...
9 Nov 09 at 6:01 pm
The Government can’t go bust, but Labour can. So I can only conclude that since they cannot generate funds to pay off the debts, they will have to come up with some other scheme. I’m betting before the election is called, they’ll either (a) organise some kind of party-political raid on the Treasury to obtain state funding for parties, or (b) kick-start mega-inflation to try to keep their own party afloat.
(B) could be argued to have happened already. (A) is sporadically discussed.
Niklas Smith said...
9 Nov 09 at 6:25 pm
Another excellent post, Charlotte.
You made the point about government-controlled banks that I was just going to make as well!
Stephen Tall said...
9 Nov 09 at 6:34 pm
Richard F said...
10 Nov 09 at 9:48 am
Interesting analysis
How do you see it working if you apply it to the Conservatives and Liberal Democrats?
Dan Hill said...
10 Nov 09 at 9:49 pm
That’s a pet theory I can believe in. Sometimes the best place to hide something is in plain sight. Only took 12 years to find it.
Charlotte Gore said...
11 Nov 09 at 5:58 pm
Richard, I’ll probably do a separate post about both of those at some other point.. need to do my homework first though. We actually know rather a lot about the inner workings of Labour – can’t say the same about the Tories, and I’m completely baffled by the Lib Dems