As The Times reports:
Labour has pulled itself back from the brink of bankruptcy by restructuring its loans and persuading the bulk of its backers to give the party until 2015 to repay the money.
Party officials have been locked in frantic negotiations with more than a dozen businessmen who lent Labour £15 million in the run-up to its 2005 election campaign. The loans, which were due to be repaid next year, threatened to sink the party.
Officials are due to announce the new loan agreements next week…
A Labour spokesperson said: “We are grateful to all our lenders fotheir continuing support as we address the financial challenges the party faces. Of course we keep our finances under ongoing review and work to ensure the party’s finances remain on a stable long-term footing, but are unable to comment further at this stage.”
Some were sceptical that the restructuring would make any difference at all. Lord Oakeshott, the Liberal Democrat’s Treasury spokesman, said: “They are clearly not in the same league as the Tories now. The Tories have pots of money to fight an election campaign while Labour is still struggling with the legacy of the last one.”
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5 Comments
So Labour will still be paying off the 2005 General Election whilst fighting the election after next.
This hardly suggests a sound business model!
If – as may well happen – the Labour Party finds itself swept from office in a catastrophic defeat partly (but not wholly) attributable to the huge funding now available to the Tories I do hope they won’t complain – since they largely created the phenomenon.
They’re certainly still pulling in a disproportionate level of donations compared to their vote share (see http://politicalfundingwatch.blogspot.com for details).
One big problem is the royal mess they made when, in 2000, they accidentally re-introduced a loophole, which the Thatcher govt had eliminated. This is what’s been allowing Ashworth to plough money into seats where there are Tory candidates that support his kind of politics.
When someone is able to do that, it’s not surprising that even some Tory MP’s are calling it The Ashworth Party!
Will Labour be charged ‘competitive’ interest rates on these loans?
If so, how are they related to the market rate?
Does this affect their thinking about how to influence the Bank of England’s monetary policy (and please don’t argue the MPC are more than only part-independent)?
Labour will pay the price for not grasping the nettle of state funding for political parties. This is also a setback for the Liberal Democrats, despite all the lemmings in the party who oppose it.