Bust fears as ScotsLib Dems in the red to tune of £75,000

Published on Tuesday 19 August 2008 22:15

An independent auditor raised concerns over the party's financial state in a report published on the Electoral Commission website. The Lib Dems posted debts of almost £75,000 for 2007, about £22,000 more than their assets.

"These conditions indicate the existence of a material uncertainty which may cast significant doubt about the party's ability to continue as a going concern," the auditor from the accountancy firm PKF (UK) LLP noted.

Party bosses have insisted its finances are sound and its bankers are willing to support its debt. But as three of its MSPs – Tavish Scott, Mike Rumbles and Ross Finney – fight over the leadership, the revelation of the party's financial vulnerability has come at an embarrassing time.

The Scottish Liberal Democrats are officially separate from the party in England, which is also heavily in debt, but they are affiliated in a federal system.

This means that the Scottish party is responsible for its own finances and would not necessarily be baled out from south of the Border.

Party sources have said that the debt was a result of 2007 being a double election year, when it had to fight campaigns for the Scottish Parliament and local councils.

Most of the party's expenditure of just over 750,000 went on fighting the elections. A spokesman said: "The party's auditors have confirmed that the party is indeed a going concern. The deficit of 22,000 occurred in a double election year, when the demands of the party's campaign operation were significantly high.

"This is an entirely manageable deficit, which the party's bankers have confirmed they will support."

He went on to point out that the SNP's deficit stands at 600,000 and, on a UK scale, Labour and the Tories have debts worth millions.

He added: "The Scottish Liberal Democrats are already taking steps to improve our long-term income position."

However, all three leadership contenders have made it clear in their campaigns that the party needs to do more about raising membership and support.

Mr Rumbles said: "The only way we can do this is by offering distinctive policies, choice and image that people can buy into, both in terms of membership and party donations."

He added: "We need to put this in perspective. It's not a major problem, but it would be better if our books balanced on the right side, rather than the wrong one."

Political opponents said the financial problems are indicative of a party that is dwindling in its support in Scotland.

The Scottish Liberal Democrats came only third in the Scottish Parliament elections last year, even though the party overstretched its funds.

Added to that, the party has only about 4,000 members.

Christina McKelvie, a Nationalist MSP, said: "Not only are polls showing that the Scottish Liberal Democrat leadership contenders are invisible to the public, but it looks like the eventual successor to Nicol Stephen may even inherit an invisible party."

The MSP added: "It further underlines the blunder they made in taking to the back-benches in a huff after last year's Holyrood election."

An SNP spokesman said the Liberal Democrats' criticisms of its debt were not valid. He said: "The point is we have a lot more money coming in and assets to cover our debt."