The senior Labour peer who investigated claims of anti-Semitism at Oxford University Labour Club has warned that a decision by a party panel not to discipline two individuals risks “confirming a widely held view that we don’t take anti-Semitism seriously”.

After months of investigation, party staff had recommended that a warning be issued against the pair over various allegations of anti-Semitism and bullying. But, in the latest major blow to relations between the party and Britain’s Jewish community, it’s understood the party’s disputes committee – made up of members of the national executive committee – decided against even a slap on the wrist.

It comes nine months after Baroness Jan Royall, a former Labour leader in the House of Lords, produced a report into the Club saying there had been “incidents of anti-Semitism” and passed allegations against “a small number” of individuals to the party’s general secretary.

Baroness Royall said: “I am deeply disappointed by the outcome and fear that it will further had relations between the Jewish community and our party by confirming a widely held view that we do not take anti-Semitism seriously. It also doesn’t bode well for the outcome of the ongoing inquiry into Ken Livingstone’s behaviour.”

The Union of Jewish Students branded the decision “disgraceful” and asked: “What more would need to happen for the Labour Party to take action against anti-Semitism?”

A statement added: “The Party had an opportunity to put its values into practice, to demonstrate how seriously they take the issue of anti-Semitism and to show that Labour Clubs are welcome spaces for Jewish students, but they have failed miserably. They have let Jewish students down and in doing so, they have created an atmosphere in which anti-Semitism may thrive without fear of being challenged.” They pledged not to rest until action is taken and to work with with Oxford students to explore further avenues to achieve this.

Chair of Jewish Labour Movement (JLM) Jeremy Newmark said: “This decision rides roughshod over the concerns and experiences of our student members. They do not feel comfortable attending meetings of their own Labour club. This has been looked at by three inquiries and one investigation. The complainants have not heard from the Party for nearly a year – even to inform them of this decision. It is many months since Chakrabarti recommended an overhaul of the complaints and investigations process but seemingly nothing has changed.

“JLM is working with Labour Students and UJS to deliver training and education to prevent future incidents. However this problem can not be fixed without the backing of a disciplinary process that is fit for purpose. This decision shows just how far we still have to go.”

Adding her voice to the condemnation at the decision to drop the case, Board of Deputies Vice President Marie van der Zyl said: “This inability or unwillingness to confront what is a serious problem is damning for the party and will concern Jewish students on campus who feel their own party offers them no protection against abuse.”

Jewish News understands that the panel overturned many recommendations made by party HQ on a range of disciplinary issues unconnected to anti-Semitism. One committee member said paperwork provided to members by the party showed one of those investigated admitted bullying, but not anti-Semitism. While the case presented lacked detail, they suggested, party officials recommended a warning and “warnings have been issued for less”.

The Labour Club case marked the start of the row over anti-Semitism in Labour. Alex Chalmers, the Club’s co-chair, resigned in February, accusing members of casually using the derogatory term “Zio” and of accusing Jews of “crying wolf,” on the day the Club voted to endorse Israel Apartheid Week. Labour vowed at the time to take “robust action” against anyone found responsible for anti-Semitism.

Chalmers told Jewish News: “This latest news is disappointing but unsurprising. It is entirely in line with the indifference, lack of transparency, and bad faith that has characterised the response of certain parts of the Labour leadership to claims of antisemitism.”

Labour at first drew criticism after failing to publish her report in full, leading the peer to do so herself. In her report, she wrote: “It is clear to me from the weight of witnessed allegations received that there have been some incidents of anti-Semitic behaviour and that it is appropriate for the disciplinary procedures of our party to be invoked. However it is not clear to me to what extent this behaviour constituted intentional or deliberate acts of anti-Semitism. This is particularly true of historic hearsay evidence.”

Royall reiterated that there is “no evidence that the Club is itself institutionally anti-Semitic” but acknowledged a “cultural problem in which behaviour and language that would once have been intolerable is now tolerated”.

She denounced a “lack of systematic reporting” and “the fears of victims in coming forward,” noting that “some Jewish members do not feel comfortable attending the [OULC] meetings, let alone participating”.

In an interview with the Jewish News last month, Dawn Butler, the shadow cabinet member for diverse communities, criticised the failure to update complainants about the investigation.