Esther Giles is standing for the position of Labour Party Treasurer in the ongoing NEC elections. She has an economics degree from Cambridge University and an Operational Research Masters from Sheffield Hallam. She is a qualified Public Finance Accountant (CPFA) with 35 years’ experience in the NHS, including at Finance Director level and has overseen the development and delivery of effective systems of governance and reporting in organisations ranging from £20m to £3bn turnover.
In this guest article, she writes about her candidacy and the changes she believes need to take place in the way the party handles and reports on its finances – with revelations that will startle some members.
Esther the Socialist Iceberg: Democratising Labour Party Finance
In the next week or so, the Labour Party Annual Report for 2019 will drop onto your virtual doorstep. I was advised by the current Treasurer last week that it would be sent out “in the next couple of weeks”. The Annual Report will contain the Financial Statements for 2019 (“The Accounts”).
I’m very interested in The Accounts, because, as a Chartered Public Finance Accountant, I read accounts like many people read the newspaper. Whilst I don’t expect that Party members would want to learn the language of accountancy, I think it’s really important- and entirely possible- that they understand the financial figures if they want to. It’s one of the roles of the Party Treasurer to make sure that they do.
So I am writing a bit here about how I think Labour Party Finances should be democratised.
As for the title of this section, a detractor has claimed that my campaign to democratise Party finances and introduce good governance and accountability would be the iceberg that sinks the Labour Party Titanic. I say that such a ship shouldn’t be in the sea and needs a major refit.
The management of Labour Party Finance should be based on the foundations of democracy, socialism and good governance
What this requires is that:
- there should be meaningful member participation, which requires, in turn, good communication of financial information.
- There must be clear structures and processes for financial decision making and accountability throughout the Party; and, ultimately.
- Members decide how the money is spent.
It’s my view that none of these things are true at present.
NEC Committee Structure – and Labour’s ‘subsidiary companies’
The Annual Report contains a list of NEC Committees, but we can’t see who’s on each Committee. Neither does the Annual Report say anything about what any of these Committees have been up to during the year. At the very least, I would expect a list of members, the identification of roles on the Committees (eg Chair), and an Annual Report from each one. The Committees and the NEC should be accountable.
Moreover, there are two subsidiary companies controlled by the NEC. I’d challenge any Labour Party member to tell me what they know about these two companies. In fact, they are property companies. Members don’t see the accounts for these companies (though anyone can get them from Companies House – where you can also find out who the directors of these companies are).
Party Treasurer- Real or Figurehead?
The Labour Party is in the process of electing a new Treasurer to NEC. The role of the NEC Treasurer is vague – there’s no job description – and the Registered Treasurer is actually the General Secretary. So, I’d say that the role of Party Treasurer needs a bit of tightening up so that there are actual expectations for and accountability from the role. It’s my view that the Party Treasurer should at least be responsible for:
- Putting in place a scheme of financial governance, including a schedule of delegation to make it clear who can agree what;
- Overseeing the budget setting and sign off process, including letting members have a say;
- A timetable of reporting to NEC and to members; as Chair of the NEC Business Committee, the Treasurer should prepare a regular (quarterly) finance update to members- this could be written and/or via a webinar for members; and
- Holding the Executive to account (as Chair of the Business Board) for their use of Party funds, and reporting exceptions.
Annual Accounts- Telling Members what they need to know
As for the Annual Accounts, they are simply presented in a statutory format at present. There’s no attempt to make them accessible to readers, and the notes provide the bare minimum of information. All of that’s fine for Statutory purposes, but it simply won’t do for members. The Treasurer should provide an annual Webinar to members for detailed review and discussion of the financial figures. They should provide a lot more information to support the figures in the accounts based on what members want to see. There should be accessible charts and narrative. The top salaries of the executive should be published.
Investing in the Grassroots
At present members have no say in setting the budget. There is a presumption that there should be a war chest of reserves for campaigns, whilst CLPs may be starved of funds and HQ costs grow year on year. We need to talk about this. We need to talk about how much money CLPs need to be effective grassroots organisations in their communities.
CLPs shouldn’t need to rely on raffles and jumble sales to stay afloat any more than we would expect the Governance and Legal Unit to have a car boot sale to keep going. At the end of 2018, the Party had £27m in its general reserve (on a turnover of £46m) and allocated £3m to CLPs. Spend on CLPs was less than 7% of Party spend.
To put this into perspective, the Party spent £11m on the 2017 GE campaign. CLPs should be properly resourced outfits, just as HQ is. Instead of saying “how much money is left over for CLPs?”, we should be saying “once we have properly resourced CLPs, what resources do we have to run national services?”. Of course, CLPs will be required to have the good governance that the NEC should have, and there will need to be a development programme to deliver this.
As I say in my Campaign:
#YourMoneyYourRules
Below is a copy of a set of questions Giles sent to Labour’s general secretary David Evans three months ago, regarding Labour’s huge out-of-court pay-out to former employees who had attacked the party in last year’s Panorama programme – in a case the party’s lawyers said it was on course to win.
She has received no response.
FAO: David Evans, General Secretary of the Labour Party and copied to Chair of NEC, Labour Party Treasurer and Bristol NW Chair
Dear David
I am writing in the light of the reported decision to pay out an estimated six-figure sum to the former staffers who claimed defamation following the BBC Panorama investigation into allegations of anti-semitism within the Labour Party. I understand the figure concerned to be in the region of £600,000.
I have reviewed the Labour Party Rule Book and find that it does not contain a schedule of delegation for financial decisions. For a figure of this size, I would expect the matter to be referred to the Board or equivalent (presumably the NEC) for scrutiny of the recommendation to pay, together with the the evidence supporting these recommendations.
Please can you:
– provide to me the schedule of delegation used by the Party so that I can see the relevant requirements for a decision of this type?
– tell me who the decision makers were?
– tell me who will review and agree the minutes of the relevant meeting, and who has access to these minutes?Many thanks
Esther Giles
Her candidate statement, along with those of the others standing for the role, can be read here.
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