30/08/2011 20:05 BST | Updated 30/10/2011 05:12 GMT

Labour Must Never be Allowed to Get This Broke Again

Yesterday the Guardian reported that proposed new rules for party funding could result in the Labour Party being "ruined". But this is only a metaphorical straw landing on a camel with an already decidedly poorly back.

Yesterday the Guardian reported that proposed new rules for party funding could result in the Labour Party being "ruined". But this is only a metaphorical straw landing on a camel with an already decidedly poorly back.

Peter Mandelson's memoirs are interesting for many reasons, but one of the most important is as the first insider account of the Brown government and the 2010 general election campaign. What I hadn't realised, as a former party staffer, and what blew me away, was just how tight money was in relation to the two previous elections, for both of which I'd been on the payroll.

The leanness of the campaign cannot be overestimated. We usually had about 250 staff at election time, swollen from the normal 150. In 2010 it was, however, just 150 at the peak of the campaign. There was, astonishingly, no paid advertising: normally a large portion of the party's income was set aside for billboards. How did we ever end up there, at the time a party of government, scrabbling around for coppers to fight an election campaign?

Part of the reason is for external factors beyond the party's control: membership of all political parties is down, and Labour's larger corporate and individual donations all but dried up following tougher declaration rules that it itself introduced, and the subsequent 2007 funding controversy, which resulted in the resignation - and subsequent clearing - of General Secretary Peter Watt. This has left only one real source - union donations - to fill the gap.

But part of it is within the party's control, and it has long been a problem of political leadership. This is not down to my fine and long-suffering former colleagues on the party staff, but senior politicians on Labour's National Executive and some, but certainly not all, General Secretaries.

Firstly the party needs firm, independent financial structures and accountability, like would exist in any private company. Politicians are used to wielding power; used to demanding things and getting their own way. Some General Secretaries will stand up to them and tell them their pet project is a bad idea and that it is a poor use of party funds. And some will say, "no problem". This is not good for the long-term health of the party. There need to be mechanisms which stop this happening, and insist that the books balance over the electoral cycle; rather like those you might find at the Treasury over the economic cycle. This problem is exacerbated by both senior staff and politicians changing jobs after each election, often leaving someone else to clear up the financial mess.

Secondly, it needs proper, long-term political ownership of the party organisation. Tony Blair admits in A Journey that one of his regrets is that he did not give the party machine the attention it needed once Labour were in power. He's right. Although his innovation of a Party Chair should have helped, in practice it became an ill-defined, part-time role which suffered from the usual game of ministerial musical chairs. So, after 1997, the reworking of party funding, along with fixing all the other failings in party structures and the rulebook, and the long-desired creation of a truly mass-membership party, never happened.

It is not to overstate the case to say it simply must be a major and urgent focus of these few years we have in opposition, because in government it will not get done. Again. But why does all this matter? It matters because our lack of focus on this issue means we are now fighting the Tories at half-strength and because we could even suffer the ignominy of insolvency; because we are ceding extraordinary power to trade unions, which is in their interests more than it is in ours; because staff reductions mean we are losing vital long-term skills and knowledge we have built up; because it is, objectively, bad for democracy to have a poorly-funded opposition; and, perhaps most importantly of all but least noticed, because it makes us not look like a serious party of government.

After all, if a party can't be seen to manage its own finances properly, why would you trust them with the country's?