Guido has previously speculated about whether or not the Labour Party was actually legally solvent. It is noticeable that loan after loan has fallen due and not been repaid. The money has been rolled over, reportedly with some reluctance by some lenders. The party is up to its neck in debt to the Co-Op Bank and and the unions via money laundered through Unity Trust Bank. The latter bank has lent so much money to the Labour Party against a small capital base that the FSA put it on the high risk loan register and demanded monthly report monitoring of the risk.

David Pitt-Watson, as a calculating City risk taker, would have been well aware of the risk. The Labour Party is now classed by credit agencies as a dangerously high credit risk. As an unincorporated association the bulk of assets and debts are in law owned by trustees for the Labour Party, which is £20 million in debt and the members of the NEC are personally liable. If an aggrieved creditor were to call in the debts, it would be them who would be on the hook. David Pitt-Watson is worth millions, which a canny creditor might think worth pursuing. Ben Brogan has been briefed by Downing Street that, as speculated first on LabourHome and followed up by the Guardian, this is the reason Pitt-Watson has had second thoughts about the job. Brogan says that it will take until the autumn for “DPW” to “sort his affairs”.

Well it is certainly more plausible than the original spin from Downing Street that the delay was due to “contractual reasons” related to his previous appointment. To be honest, Guido never believed that line and this seems a bit too convenient as well.

Taking the explanation at face value is hard to do. Setting up a discretionary trust to protect your assets from creditors takes weeks not months, it also has the benefit of putting your assets out of the Chancellor’s reach. Wonder how the Labour Party rank-and-file will feel about a multi-millionaire general secretary of the party who has such little faith in his own skills and the party’s ability to raise funds that he hides his own money from creditors whilst putting his assets beyond the reach of the tax man? Not exactly “for the many, not the few” is it?