What I wrote at Lib Dem Voice

February 09, 2007

Just how well-endowed are the Tories?

So the Conservative Party is less in debt, at last, thanks to the sale of its former HQ, 32 Smith Square. The £30m transaction is reputed to have netted the party a cool £15m profit, and should bring down the Tories’ total loans to a more manageable £5m or so.

I’m sure the party is breathing a sigh of relief at this result. But it’s interesting to compare the flogging of assets to pay down debt with the slightly loftier aspirations which Michael Howard articulated in December 2003, when, in one of his first acts as Tory leader, he announced the sale of Smith Square. Here’s what the Tory press release said:
The [Conservative Party] Foundation will be responsible both for raising money for the Party's general election campaign and for building a Conservative Endowment Fund. The Foundation will receive, as a founding endowment gift, the proceeds of the disposal of the Party's Smith Square headquarters. Michael Howard wishes to see the capital, realised by the disposal, invested in the Party's future - not spent on the day to day costs of Central Office.

Michael Howard said: "The asset of the freehold of 32 Smith Square is a great legacy from previous generations of Conservative leaders to our generation. I want the Foundation to ensure that my successors also receive a long lasting bequest".
Hmmm. Not so much of a long lasting bequest, then.

2 comments:

Tabman said...

Well, presumably they were servicing that debt by paying interest. So realising their asset to pay off the debt will reduce their current account expenditure. Also, presumably, the rental income from the site didn't offset the interest payments on their loans. But to borrow money to offset current expenditure (election expenses) isn't financially prudent.

Stephen Tall said...

Spoken like an accountant, Tabman!

I agree that paying down debt in this case is almost certainly the most sensible thing to do. But it's a bit of an about-turn compared to the original intention for the asset.

In effect, 32SS has been sold to pay for the 2005 general election - not perhjaps the great legacy previous generations of Conservative leaders intended for it.