Labour to cut ties with Co-op Bank as it continues to slash debts

The BBC reports this morning that the Labour Party is to cut its near century long relationship with the Co-op Bank:

“The Labour Party is looking to sever its links with the troubled Co-op Bank, bringing to an end one of the oldest political partnerships in the UK.

The BBC has learned that Ian McNicoll [sic], Labour’s general secretary, is looking to move loans worth more than £1m to the trade union-owned Unity Trust Bank.”

Speaking to LabourList this morning, Labour sources indicated that this move had been planned for some time.

The move comes as the party seeks to pay down all debts by the summer of 2016. Debt has been a significant issue for the party organisationally over the past decade – ballooning to in excess of £25 million after the 2005 election. That’s now down to less than £4 million, and is being paid off at a rate of £2 million a year. Currently the party has two secured loans, both of around £1 million – one with the Co-op Bank and the other with Unity Trust. Those loans will now be combined and held by Unity Trust, who will also be responsible for the party’s current account.

However, claims that the party has a substantial overdraft facility have been refuted by party sources. In fact, the party will only be able to spend what it is able to raise in the run up to the election, as it seeks to become debt-free. That’s likely to tie the party’s hands somewhat, especially with hires such as David Axelrod placing extra pressure on the party’s purse strings. In turn, that will mean a redoubled focus on fundraising – from large donors and small donors alike.

For the Co-op movement, it looks like another bad news story, although it seems that the Co-op bank are starting to orient themselves away from mid-level corporate accounts and towards a focus on their retail sector. However that’s unlikely to stop more negative headlines from hitting an already battered Co-op movement.