Labour £4.8m in deficit after redundancy payouts and membership losses

Labour lost more than 91,000 members last year and recorded a £4.8m deficit, caused by staff redundancies, a drop in membership subscriptions and ongoing legal battles with former staff members.

But the party also raised significantly more than the Conservatives over the course of last year, bringing in more £45m compared with about £31m by the Tories.

The party treasurer’s report, logged with the Electoral Commission, declared Labour had 432,213 members as of 31 December 2021, compared with 523,332 the previous year.

The report described the year as “difficult and demanding” but said a return to campaigning activities and the party’s annual conference post-Covid would begin to return the party to normal operations.

Labour’s membership increased significantly during Jeremy Corbyn’s leadership to more than half a million, and it remains one of the largest in Europe – although large numbers of members left after Corbyn’s resignation, some disillusioned with Keir Starmer’s leadership.

Hilary Schan, co-chair of the grassroots group Momentum, said: “These figures are alarming. Keir Starmer’s pledge-breaking and factional approach has prompted an exodus of Labour members and a financial crisis for the party. Yet the leadership has welcomed these departures while actively alienating Labour’s affiliated trade unions, which give millions to the party.”

The accounts stated membership income was “comparable with 2017 and 2018”, at the height of the Corbyn-inspired membership boom, but said the party was facing increasing costs, including redundancy payoffs for large numbers of staff.

The report said the severance scheme was the main reason for the deficit this year, which had required using cash reserves, noting that the party remained debt free.

But there was also a drop in income from membership fees, the accounts showed. In 2021, Labour said it had received about £16.1m in membership fees, compared with £19.3m in 2020. It raised almost £10m in donations.

Last year, a member of Labour’s national executive committee (NEC) said the party was spending millions on legal fees to fight cases concerning a leaked report into antisemitism that contained private WhatsApps from members of staff.

Staff and others named in the report are suing the party for damages, and Labour says it will countersue those it believes leaked the report, senior members of Corbyn’s staff – who deny involvement. The case is not expected to be heard until next year.

A Labour party spokesperson said: “Thanks to Keir Starmer’s firm leadership and clear commitment to taking Labour back into power, the party is on track to returning to a firm financial footing – with commercial income and donations rising significantly.”

The party said it had increased donations in Starmer’s time as leader by £4.3m, including from supporters and major donors, as well as unions. Commercial income increased by £2.5m.

The Conservative party does not declare its membership figures, despite the fact that members are currently voting for the next prime minister.