Labour councils and Tory cuts, last time round

Submitted by martin on 16 November, 2010 - 8:21 Author: Martin Thomas

Poplar Labour council's fight against another Tory/Liberal coalition government, in 1921, and the battle by the Labour council in the village of Clay Cross, Derbyshire, against Tory laws imposing council rent rises in the early 1970s, shows that councils can take on the government and win.

Click here to read more, in the 1985 AWL pamphlet, "Illusions of Power: the local government left 1979-85. And click here for the 1986 pamphlet, "Liverpool: what went wrong".
In the early 1980s there was a bigger flurry of defiance by Labour councils. Sadly, every single one of them backed down in the end - unlike Poplar and Clay Cross - so the flurry ended in defeat. But there are lessons to be learned from the defeat.

Between the 1920s and the late 1970s, with a very few exceptions like Clay Cross, Labour administration of local government was a routine affair. In his autobiography, veteran Trotskyist Bill Hunter recalls being a Labour councillor in Islington, north London, in the early 1950s. Council meetings routinely lasted only 15 minutes. The biggest left/right battle in the council Labour group was over whether the council would spend money on celebrations to mark the Coronation in 1953.

By the late 1970s, local government was different.

  • As services expanded, it had become bigger. By the end of the 1970s, local government employed twice as many workers as in 1945, and was the biggest employer in many working-class areas.
  • Local government had also become a base of union strength in many areas. Today the main union in local government is Unison. Its main forerunner in local government was called Nalgo.

    Nalgo was founded in 1905, but for most of its history was more like a staff association than a union. It affiliated to the TUC only in 1964, and called its first strike only in 1970. The joke was that the initials Nalgo meant "not a lot going on".

    By the end of the 1970s, white-collar unionism was burgeoning, including in local government. Many people who had been won to socialist ideas as university students in the late 1960s and early 1970s went on to become union activists in white-collar jobs in local government.

  • Local authorities had become bigger and more bureaucratised. A big reorganisation in 1974 merged many authorities and introduced payment for councillors (all previously unpaid). By 2008-9, Kensington and Chelsea council, in London, for example, was paying its council leader an "allowance" of £54,000 a year, the deputy leader £41,000, all cabinet members £40,000, and every council member a fallback allowance of £10,500.

Two other changes shaped a sharp clash.

Margaret Thatcher's new Tory government, elected in May 1979, was out to do what Thatcher called "defeating socialism" - in fact, crushing the elements of countervailing power won in the truce which an anxious British capitalism negotiated with its working class in 1945. The Tories saw services and union organisation in local government as part of the "socialism" to be defeated. They cut the tax money transferred from central government to local authorities, and changed the law to reduce local government autonomy.

Meanwhile, a slow revival of constituency Labour Party activism, from the very low point it had reached in 1970, had by the end of the 1970s worked its way through to left-wingers gaining leading positions on councils.

A series of Labour councils declared themselves to represent a new left, which would break from the long tradition of timeserving in Labour local government, work to empower communities, and do battle with the Tories. The first was Lambeth (in south London), led from May 1978 by Ted Knight, a former long-time Trotskyist. Several others would follow.

Knight and many others said that the unions should and would call a general strike to defeat the Tories. The councils would support that general strike when it came. Meanwhile, they should "buy time" by raising rates (local property taxes, levied on tenants) to offset the cuts made by central government.

Today business rates are set by, and channelled through, central government. Then, councils set and collected the rates charged on local businesses. They had more scope to offset central government cuts through their local tax-raising powers than they have now, and more scope to claim that this local tax-raising was in some way progressive and redistributive.

But in fact the first response of Knight's Lambeth council to the new Tory government was - within weeks of the general election - to announce 4.5% cuts! An angry meeting of the local Labour Parties - then active and lively - forced Knight to rescind the cuts. Instead, in the April 1980 council budget, he raised rates 49%.

Big rate rises were not uncommon. Lothian council, another left Labour council, raised rates by 46% in 1980.

The rate rises generated two debates. One was within the Labour left. The forerunners of AWL were then organised in a group called the Socialist Campaign for a Labour Victory, set up to provide a left-wing voice within the Labour election campaign in 1979 and continuing after that with the newspaper Socialist Organiser.

SCLV and Socialist Organiser drew in a wide range of the left, including Ted Knight himself, and Ken Livingstone, then not famous but soon to become so.

Very quickly after the May 1979 general election a sharp debate broke out in SCLV/ Socialist Organiser about the rate rise strategy.

The unions had responded to the Tory victory in May 1979 much more confidently than they have responded to Cameron's victory this year. The TUC organised big demonstrations. But - so the forerunners of the AWL argued - a policy of raising rates to buy time until the unions organised a general strike meant that the local government left was betraying its promise to be in the front line against the Tories. It was stepping back into a role of more-or-less benevolent administration, doing "the best it could" within Tory-imposed limits.

When an SCLV/ SO conference in November 1979 voted by a majority for "no cuts, no rate rises", the minority split away, launching a new publication called Labour Briefing.

That was not the only argument sparked by the rate rises. There was a big revolt against the rate rises by working people in Lambeth, of all political shades. 49% was a big rise - and it was just to keep services as they were, without cuts, not to bring improvements.

By budget day in April 1981, the Lambeth councillors knew they couldn't go on with huge rate rises. They made 10% cuts. The local Labour Parties, demoralised by the rate-rise episode, did not reverse these new cuts.

On the whole, opinion within the Labour left shifted against rate rises over the first half of the 1980s. But it never shifted strongly enough to budge a council leadership. The left councils still relied mainly on rate rises. Islington's left-wing Labour council, for example, elected in May 1982, made a 30% rate rise in its April 1983 budget.

In 1984-5 came a new chapter, dominated by two interlinked stories - Liverpool council, and ratecapping.

In May 1983 a left-wing Labour group won control of Liverpool City Council. This left-wing Labour group was different from the others.

Most Labour left councillors across the country had been good trade-union or community activists, but they had no schooling in Marxist theory and were scattered as individuals in a flabby movement. The Liverpool councillors were led by the Militant group (forerunner of today's Socialist Party) - organised activists, who proclaimed themselves Marxists.

Although Militant had been fairly passive in the debates after 1979, it was explicitly committed to no cuts and no rate rises.

Elsewhere left Labour councillors sometimes had only weak links with local government unions. When Hackney council, in east London, briefly came out for "no cuts, no rate rises" in 1985, it was pushed into backing down not by the Tories, not by the Labour Party leadership, not even by the union leaders, but by the council workers' shop stewards, who preferred rate rises or mild cuts to a confrontation.

In Liverpool, Militant dominated many of the local unions as well as the District Labour Party. The council Nalgo branch was not Militant-led, but it was left-wing. In June 1984 a survey would find that 55% of Labour voters in Liverpool said they would back a local general strike against the Tories.

So the prospects for another Poplar looked good. From February 1984 they looked even better. The miners were on strike. The strike would last over a year, and shake the Tories.

Workers in Liverpool, led into confrontation with the Tories over council cuts, would know that they were striking alongside the miners. The joint action would increase the chances of both struggles winning. If there were ever a time to be seized, this was it.

On budget day, 29 March, the Militant-led Labour councillors proposed an "unbalanced" budget (one with more spending than income). A few Labour right-wingers voted against it, and it fell. The Liberals' alternative budget also fell, so the city had no budget.

Five weeks later, in May, a new round of council elections changed the council so as to give a clear majority for the "unbalanced" budget.

But then what? Speeches, rallies, declarations - but no new budget-making, nothing decisive. Local working-class activists waited, puzzled.

In early July the council leaders announced... that they had done a deal with the government. The Tories would give Liverpool a little more money. They would permit fancy accounting to shuffle deficits into the following financial year. The council would make a 17% rate rise and balance its budget.

Militant hailed this as "a 95% victory". Actually, Derek Hatton of Militant (formally deputy leader of the council, but in fact the chief figure) would recount later, in an autobiography, that they had been told by a Tory MP what was really going on. "We had to tell Patrick [Jenkin, the Tory government minister] to give you the money. At this stage we want Scargill [the miners' union leader]. He’s our priority. But we’ll come for you later".

Militant left the miners in the lurch, in return for a sop.

Against all expectations, the miners were still on strike when councils approached their spring 1985 budget-making. In the meantime, the Tories had changed the law.

Rate-rises were not good working-class strategy. But they annoyed business people, especially small businesses, which are much harder hit by rates than big ones. The government responded, passing a law which allowed it to "ratecap" councils - i.e. to outlaw rate rises above a certain amount.

The rate-raising left Labour councils were up against it. But they looked at Liverpool, and thought they saw an answer.

Liverpool had not set a budget at the usual time (start of April), but instead delayed until July. And, lo and behold, it had got some concessions from the Tory government! Pixillated by a vision of council-chamber posturing as the stuff of politics, the left Labour councils thought they had an answer. They would delay setting a rate! That would show the Tories!

So, for the first time ever, a sizeable number of Labour councils would simultaneously do something in defiance (albeit weak defiance) of the Tory government.

The rate-delay tactic quickly ran into trouble. The miners were forced back to work. The Greater London Council, by now the "flagship" left council, reneged on its promise to delay a rate, and set a budget within Tory constraints.

The left Labour administration on the GLC, led since May 1981 by Ken Livingstone, had been a different case from other left Labour councils.

It ran almost no basic services, and got almost no income from central government, and so was not under pressure to cut. For the main public service that it did run - buses and Tube - it had promised a cheap-fares scheme, but then backed down after the Law Lords ruled it illegal.

Its rates were levied on properties right across London, and so its rate rises, unlike those of borough councils in London, were only a small burden on working people, and drawn in significant part from big businesses.

It had settled into a mode of levying rate rises and using them to fund women's groups, anti-racist campaigns, aid to workers' cooperatives, and the like. But it was seen as left-wing. It was left-wing.

And now it complied. That was the point at which Ken Livingstone broke decisively from his left-wing past. He called for the Labour left to reconcile itself with Labour leader Neil Kinnock, who was shifting the party to the right as fast as he could, and declared blatantly: "I’m for manipulative politics… the cynical soft-sell".

Livingstone's GLC deputy leader, John McDonnell, broke with him over the rate-capping betrayal, and is still a flag-bearer for the Labour left today.

Liverpool council had not been ratecapped, and on paper Militant was committed to a more combative strategy than delaying the budget. But what did it do?

At first, nothing. It waited. By early June all the rate-delay councils had backed down and set budgets within the Tory limits, except Liverpool and Lambeth. Lambeth would set a legal budget on 3 July, too late to avoid having its Labour councillors surcharged (surcharged, not for confronting the government, but only for delaying too long in setting their budget). What would Liverpool do?

In June, the Liverpool councillors proposed a 20% rate rise which, with some financial juggling, would have allowed the council to scrape through the financial year. The council unions objected. The council now voted through an "unbalanced" budget, and Militant declared: "After two years of shadow-boxing, the gloves are off".

Then... nothing happened.

Working-class activists in Liverpool - like the non-Militant but left-wing leaders of the Nalgo branch, for example - waited to see what lead the councillors would give. And waited. And waited. The councillors denounced the Tories, appealed for "support", said that "soon" the council would run out of money and the battle would be on - and left it there.

Then, in mid-September, the council suddenly announced that it would issue 90 days' notice of redundancy to all its employees! Oh, "purely a legal device", it claimed. By showing that the council was doing something to balance its books, the redundancy notices would buy time. Workers should trust the council. They wouldn't be sacked.

Many workers - especially in the Nalgo branch, which the Militant councillors had antagonised by other foolishness outside the scope of this article - didn't trust the council. They protested. The councillors withdrew the notices.

In the midst of ensuing acrimony, and having postured and delayed for 17 months, Militant made a snap call for a general strike of all council workers.

The strike call could have been won at a number of points over the previous 17 months. Now, predictably, it was lost, though only 47%-53%.

Five days later, the council actually issued the redundancy notices! The Nalgo branch held a one-day strike against the council, and the NUT branch took the council to court, forcing it to withdraw the notices.

As the council's political credit collapsed, Militant blandly trumpeted "the success of our campaign". It floated a scheme to balance the budget - by laying off the whole workforce from 1 to 28 January!

Finally, on 28 November, the council announced a plan to wriggle through. Some money would be "borrowed" from the next year's housing repairs account (a tactic already under discussion for months, and previously denounced by Militant). More would be borrowed from Swiss banks (actually, the loan had been negotiated as far back as August, when the council was still trumpeting defiance).

And cuts? Conveniently, those had already been made in the previous couple of months, through emergency measures (turning down the heating, not buying new stamps and stationery, etc.) made with the explanation that the cash was running out.

In 1986 Liverpool, still under Militant leadership, would set a routine cuts budget. The councillors still got surcharged for delay in setting a rate in 1985.

And so the wave of "local government leftism" ended, with a whimper. With better political leadership, it could have helped defeat the Tories, with a bang.

The lesson for today is not "don't fight", but "fight with better politics".

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