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It would appear that the Labour Party has taken the same attitude to its own finances as those of the country at large when it comes to racking up debt in the short term, ignoring the longer term consequences. 

The FT reports this morning on the Labour Party's dire financial situation:

"The party will then have to repay up to £8.9m of outstanding loans to the businessmen in September 2015 – an obligation that could raise fears about its long-term financial prospects. Labour found itself at the centre of a storm four years ago after it emerged the party had borrowed £14m from 12 people without making the arrangements public. When news of the loans emerged it prompted a police inquiry into cross-party allegations of cash-for-honours, although the Crown Prosecution Service decided that no one would face charges.

"Under an agreement struck 18 months ago, two of the millionaires converted their loans into donations, two were paid off and seven agreed to reschedule their debts… According to records at the Electoral Commission, the remaining millionaires agreed to waive interest payments until after the forthcoming general election, providing some relief for Labour. That period comes to an end in July, at which point the loans return to commercial terms at an interest rate of 6.5 per cent – or £578,500 a year. Over a five-year parliament that is equivalent to £2.9m."

Jonathan Isaby

10 comments for: As the Labour Government has run up debts for the country, the Labour Party has been storing up debts as well

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