A number of Sir Keir Starmer’s advisors have admitted that the Labour Party is now on the verge of bankruptcy.
Since Starmer replaced Jeremy Corbyn as leader in April 2020, Labour’s revenue streams have dried up and the party’s finances have been plunged into chaos.
Owing primarily to Starmer’s lurch to the right and his decision to backtrack on a large proportion of his leadership pledges, more than 100,000 members have left the party, and a number of trade unions have cut or withdrawn funding to the party.
In October 2020, Labour’s main union backer, Unite, voted to cut its funding to the party by 10%. And, in December 2021 – under new General Secretary Sharon Graham – the union further announced it would cut all political donations to Labour, with Graham deriding Starmer’s rightward shift.
In addition, the Communication Workers Union (CWU) voted in November to suspend all donations to Labour – with the union’s General Secretary, Dave Ward, stating that under Starmer’s leadership, the party was “failing to connect with working-class communities”.
And, in September, the Bakers’ union (BFAWU) – one of the Labour Party’s founding union members – voted to disaffiliate from the party entirely.
However, analysis conducted by former the Labour Treasurer candidate Esther Giles shows that it is actually the mass exodus of party members and a large decrease in small donations which appears to be taking the biggest toll on Labour’s finances.
Reduced membership dues look set to hit the party’s finances by around £6m a year, whilst income for the party as a whole was down to just £40m during Starmer’s first year of leadership – a full £20m less than its the previous year under Jeremy Corbyn.
Many of Starmer’s supporters have attempted to blame increased legal fees for Labour’s dire financial straits. However, topline estimates provided by allies of Keir Starmer show that increased legal expenditure would only constitute for £1.8m extra a year – leaving over £18m in losses unaccounted for.
In recent months, the party has attempted to mitigate its losses in a number of ways – including mass redundancies of party staff, and trying to lure wealthy donors to hand over cash to the party.
In addition, it has been claimed that Starmer’s November reshuffle was conducted, in part, so the party could reduce money spent on Shadow Cabinet aides – and the party has even reportedly taken the step of scrapping its media monitoring unit, which was set up during the Blair years to respond quickly to negative media stories about the party.
However, it looks like Starmer’s cost-cutting austerity measures could be all in vain.
According to The Times, numerous Labour sources – including members of Starmer’s inner circle – have admitted “the party is on the verge of bankruptcy“.
And one of Starmer advisors even admitted that the prospect of declaring bankruptcy was now being actively considered – stating:
“There would be some advantages to declaring bankruptcy. You could start a new organisation with a new membership.”
“But“, the advisor continued, “if you did that, the Tories would just run ads saying: ‘You ran your own party into the ground — you can’t be trusted with public money.’”
The source also bemoaned the effect – both on the party’s finances and its ability to campaign effectively – of the mass exodus of party members during Keir Starmer’s tenure, stating:
“The figures I’ve seen suggest we’ve lost well over 100,000 members, and most of those were the people who knocked on doors. That’s also millions of pounds no longer coming in.”
Despite the gloomy financial outlook, The Times reports that some within Starmer’s inner circle are still optimistic about wooing wealthy donors – stating:
“Starmer’s aides insist they will have a good story to tell about new donors switching from the Tories and Liberal Democrats but have not released names.”
However other aides, The Times reports, “admit the leader is “not a good fundraiser” because he finds it difficult to ask for donations.”
In 2018, thanks to a membership of more than 550,000, a huge influx of small donations from ordinary people, and unequivocal trade union support for Jeremy Corbyn’s leadership, Labour was declared as Britain’s richest political party – with the party outspending the Tories by a full £10m during the 2017 General Election.
However, after just two years of Keir Starmer’s leadership, the party’s financial prospects looks dire – with the very existence of the party now being called into question.