Labour membership falls by more than 90,000 as party reports £5m deficit

The Labour Party has revealed that its membership fell by more than 90,000 in 2021 with a loss of income from membership fees contributing towards the party’s end-of-year financial deficit of £5m.

Labour’s financial statements for 2021, published on Tuesday by the Electoral Commission, show that the party’s total income in 2021 was £45,564,000, up from £41,580,000 the previous year.

The revenue that the party raised from donations increased by more than £4m last year, from £5,679,000 in 2020 to £9,933,000 in 2021. The party’s commercial income also rose considerably in 2021, from £423,000 to £2,977,000.

But income from membership took a significant hit, falling from £19,316,000 to £16,187,000. The party’s statements revealed that the number of Labour members fell from 523,332 in 2020 to 432,213 at the end of 2021.

LabourList understands that the fall in membership is in line with the usual trend experienced between elections, and the revenue raised from membership in 2021 is comparable to that which the party received in 2017 and 2018.

Labour’s overall deficit for the year was £5,205,000, up from £1,009,000 in 2020. The treasurers’ report said the party’s finances “remain challenging, with pressure on income coinciding with increasing costs”.

It continued: “This has led to difficult discussions and decisions, and we would like to thank everyone for their commitment and dedication during this process. The action taken by the party to manage costs included reverting to the more traditional mid-election cycle model, after years remaining on an election-footing.

“The one-off cost of the voluntary severance scheme contributed to the deficit result which required the allocation of cash reserves to fund.”

The report concluded: “Moving into 2022, we continue to face financial pressures and the need to act with prudence, managing finances in accordance with the [national executive committee’s] finance strategy.”

General secretary David Evans told staff in a meeting in July last year that the poor financial situation of the party meant its reserves were down to just one month’s payroll. Evans said Labour’s finances had suffered due to lost members and using funds to deal with antisemitism cases.

Voluntary severance was offered to staff with the aim of making at least 90 redundant. LabourList was told at the time that staff were offered three weeks of pay for every year served.

Labour’s financial statements reveal that the total number of staff employed by the party decreased by 93 in 2021 – from 424 to 331. Staff numbers fell by three the previous year.

The party has reportedly been working to secure new funds from high-value donors. It received nearly £5.3m in donations in the first three months of 2022, more than double the amount raised at the same time last year.

A Labour Party spokesperson told LabourList this afternoon: “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.”

But Momentum co-chair Hilary Schan declared: “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.

“If Starmer wants to get Labour back on the right track, he should start by properly supporting the affiliated trade unions and striking workers fighting to defend their livelihoods.”