Scottish Labour getting 'financial assistance' from London to pay its bills

Scottish Labour’s newly published annual accounts reveal it has been receiving “financial assistance” from UK Labour to help pay its bills for the past seven months.

With reserves slumping by 70 per cent under Mr Leonard, and fears over the current budget, London is ensuring Scottish Labour can “meet its liabilities as they fall due”.

Without the lifeline, which has been put in place for at least a year, Scottish Labour may not have “adequate resources to continue its activities for the foreseeable future”.

The Tories said Scottish Labour had become a “fading relic”.

The latest Scottish Labour accounts, which cover the calendar year 2019, reveal the new arrangement with London in an obscure note on accounting policies.

It states: “In consideration of the available reserves as at 31 December 2019 and the budgeted results for the subsequent accounting period, the Labour Party has confirmed that it will provide financial assistance to the Scottish Labour Party as required to allow the Scottish Labour Party to meet its liabilities as they fall due, for a period of at least twelve months from the signing of the financial statements.”

The statements were signed by Scottish Labour General Secretary and Treasurer Michael Sharpe on 18 March 2020, although they were only made public last week.

The arrangement will therefore last until next March, but quite possibly longer given the financial strain of the Holyrood election campaign.

The accounts go on: “Based upon that the undertaking of financial support outlined above the Treasurer has a reasonable expectation that the party has adequate resources to continue its activities for the foreseeable future. Accordingly, the Treasurer has adopted the going concern basis in preparing the financial statements.”

No such “financial assistance” appears in other published Scottish Labour accounts.

With both a European and a General election, as well as a Holyrood byelection in Shetland, many parties were squeezed financially last year.

The SNP ended 2019 with a deficit of £320,000.

However Scottish Labour’s accounts indicate some particular problems.

The party’s reserves fell to a record low of £77,606 last year, the first time they have been below £100,000 since the advent of devolution.

Many single constituency branches in England had higher reserves last year.

At their peak in 2010, Scottish Labour’s reserves were £455,980.

Since Mr Leonard took over at the end of 2017, a year in which the party achieved a surplus of almost £24,000, the party has gone into the red two years running. In 2018, it had a deficit of £32,452 and in 2019 it had a deficit of £73,662, meaning its reserves have fallen by more than £106,000 since he became leader.

There has also been a drop in income from membership fees, which raised £103,194 in 2017 but brought in £97,652 last year.

And there has been a dramatic decline in “fundraising and business events”, which generated £53,765 in 2015, but have collapsed every year since, and in 2019 raised just £250.

The lack of money has had a direct impact on the party’s campaigning abilities, an acute headache going into the 2021 election.

In the General election years of 2015 and 2017, Scottish Labour’s “campaign expenditure” was £539,074 and £411,747 respectively.

In 2019, with two elections and a byelection to fight, it was £159,952.

In the Holyrood election year of 2016 it was £198,229.

A Scottish Conservative spokesman said: “Our finances are in a stronger position than the fading relic of the once-great Scottish Labour party.

“The Scottish Conservatives, led by Douglas Ross, are the only party with the strength to stand up to the SNP at May’s election.”

A Scottish Labour spokeswoman said: “Every political party in Scotland was faced with two unexpected UK-wide elections in 2019, and all the financial reports reflect that. Since devolution, there has not been a comparable year for election campaigns and costs.”