Comments on: Labour’s Money Situation

By: Charlotte Gore

Charlotte Gore — Wed, 11 Nov 2009 16:58:28 +0000

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

By: Dan Hill

Dan Hill — Tue, 10 Nov 2009 20:49:21 +0000

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.

By: Richard F

Richard F — Tue, 10 Nov 2009 08:48:17 +0000

Interesting analysis

How do you see it working if you apply it to the Conservatives and Liberal Democrats?

By: Stephen Tall

Stephen Tall — Mon, 09 Nov 2009 17:34:38 +0000

Possibly – though in reality most MPs probably have little interest in or knowledge of how their party runs itself.

By: Niklas Smith

Niklas Smith — Mon, 09 Nov 2009 17:25:28 +0000

Another excellent post, Charlotte.

You made the point about government-controlled banks that I was just going to make as well!

By: Philip Walker

Philip Walker — Mon, 09 Nov 2009 17:01:27 +0000

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.

By: Charlotte Gore

Charlotte Gore — Mon, 09 Nov 2009 15:18:08 +0000

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.

By: Dan H.

Dan H. — Mon, 09 Nov 2009 14:58:24 +0000

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…