Fund manager named Labour general secretary

A City fund manager has been appointed Labour's new general secretary with hopes that he can turn around the party's funding crisis before the next general election.

But the arrival of David Pitt-Watson, founder and chairman of Hermes Equity Ownership Services, split the unions and led to calls for the votes on Labour's national executive committee which appointed him to be published.

Mr Pitt-Watson, 51, beat Mike Griffiths, a leading official in the Unite union, to succeed Peter Watt, who resigned amid controversy over proxy donations from the property developer David Abrahams.

The police are still investigating the use of proxy donors, which were in breach of funding rules, and are looking into whether party officials broke electoral laws. But some union leaders are concerned that the NEC picked Gordon Brown's preferred candidate to focus on the finances instead of giving priority to lifting morale in the party.

One union source said: "Pitt-Watson has been brought in by Gordon to sort out the finances, but that isn't necessarily the priority. Mike Griffiths is a party animal down to his finger tips. He has a track record. You wonder whether there is going to be much political leadership from Victoria Street [Labour's party headquarters]."

There are suspicions among some leading Labour figures that Mr Brown wants to avoid creating a new power base for the unions in the party headquarters in the run-up to the general election. The NEC avoided publishing the voting figures after yesterday's selection meeting. Another NEC source said: "That must be because it would be embarrassing to find out how some union members of the NEC voted. The unions wanted Mike Griffiths but there was clearly a split."

Mr Pitt-Watson, author of The New Capitalists, was the deputy general secretary involved in Labour Party finance from 1997 to 1999 during the row over the £1m donation by Bernie Ecclestone, the Formula One chief, which was later returned by the party. Another senior Labour figure said: "That was mainly a loan organised by Tony Blair. Nobody blamed Pitt-Watson for that. He gave a very impressive interview."

The NEC is reported to be making "frantic" efforts to reschedule £14m in loans. The party owes a total £20m, and Mr Pitt-Watson inherits a tough task in reversing the decline in donations for the election.

Mr Pitt-Watson said: "My first priority is to build on the progress already made to get the Labour Party ready to win a future general election.

"It is also to establish robust party structures and procedures in terms of finance and compliance to create stability for the organisation going forward."

Dianne Hayter, chair of the NEC, said: "This is a great appointment. David Pitt-Watson brings a breadth of experience and will be a great asset to the party in terms of political judgement and organisational management.

Mr Pitt-Watson has advised leading Labour politicians on issues of industrial policy and organisation for more than 20 years. He is married with three children and enjoys singing in his local choir, history, jogging and travel.