Home > General Politics > 10 reasons the Left should support Labour Council Cuts (Reasons 6-10)

10 reasons the Left should support Labour Council Cuts (Reasons 6-10)

Before I had time to draw breath from part 1, Sunny had posted on Liberal Conspiracy a synopsis of the first part of this two parter on Labour Councils and cuts..

The part 1 synopsis  has drawn a hostile response, and that’s predictable enough.

Just briefly for the record, I don’t think I can be legitimately called a Labour careerist interested only in my ‘job’.  I’ve only been a councillor for four years, and I won’t be seeking election again in May, not least because I think I’m better positioned to help resist the current government from a position outside elected local government, while understanding what it is like to be on the inside.

But that’s a story for another time…..I don’t really mind the vitriol, as it merely reflects the current level of acrimony and lack of mutual understanding; people think I’m a careerist coward, while I’m just trying to set out the position as I see it, and to clear the decks for what I hope will be a better received part 2.

For all is not, as I hope to set out, doom and gloom.

The first five reasons I set out were really focused on what the Left needs to hear; I didn’t enjoy saying it much, but I’m only trying to establish properly where we find ourselves. In this part, I want to move on to five more reasons why we should support Labour councils making cuts, but in a way which I hope provides some strategic insight as to how we can resist more effectively in the future.

Working with the reality at it stands, I now contend, will bring us more medium and even short term benefits than fighting a losing battle over the next two weeks and falling out with ourselves in the process.

6  Reserves are finite, but not set in stone?

This links back to Reason 1, the simple fact that if Labour Councils decide to try and set an illegal budget, then section 114 of the Local Government Finance Act comes into play, and the budget ends up getting set by officers, overseen by Pickles.

But there’s another side to this councillor- Chief Finance Officer relationship.

If councillors don’t play ball with the Chief Finance Officer, then the Chief Finance Officer can’t play ball with the councillor. If councillors do play ball with the Chief Finance Officer, then there’s some room for manoeuvre around use of reserves.

If you’re not told any different, then it’s easy to imagine the reserves held by a Council as one big pot waiting in the bank to be used. This is not actually the case.  Reserves are broken up into lots of little pots, mostly earmarked for specific purposes.

This is a list of the current reserve allocations and balances held by own Council, for example: usable capital receipts; major repairs reserve; housing earmarked reserves; local tax balances; investment centre reserves; community safety reserves; developer reserves; environmental health officer reserves; insurance fund reserves (against potential liabilities); and general reserves and balances.

Some of these reserves are allocated voluntarily, some are ring-fenced to specific expenditures (e.g. as part of developer agreements, one reserve can only support social enterprise) and some are matters of statute (e.g. local tax reserves can not legally support general revenue expenditure).

Thus Cameron is wrong simply to state that Liverpool City Council is hoarding reserves;  such a statement displays either great ignorance or great political cynicism.

Equally, though, these reserves are not set in stone. Last year, for example, as a result of Labour’s pressure on my own (Tory) council, we were able to force as review of the insurance fund needs, and squeeze an extra million out into the general reserve, a pretty important step in a small borough council.

But you can only do this kind of thing if you’re acting in good faith with the Chief Finance Officer. With good faith, what were figures set conservatively and sensibly back in 2006 or so become matters for judgment, and the CIPfA guidelines he has to apply to his judgment become guidelines, not rules.

And the results of this good faith may be considerable in terms of hard cash. If for example, you can work with the Finance Department at a large County Council to squeeze reserves down from an overall 6 months to 5 months salary costs, somewhat below where the Finance Dept might want it but at a point they can still live with, you might be talking somewhere in the order of £50m in revenue to maintain services. Look at that in the context of the cuts proposed in County Councils, and it suddenly looks like an interesting proposition – interesting enough, I suggest, to get the Left engaged in its pursuit.

This is precisely what Jon Rogers, a leading Labour Representation Committee member and leftwing unionist, understands so well in this piece – hostile to my overall view – on how unions should engage with Councils:

Regular readers of this blog will be used to posts on these issues and will know that I can also bore for England on the related subject of local Council’s reserves .

Whilst I agree that Labour Councillors ought to be resisting, rather than implementing Tory cuts (even at the cost of handing control of their budget to their Chief Finance Officer) – there is, as far as I am aware, no ruling Labour Group in the country which is anywhere near this position……

Therefore, in the here and now, as well as advancing and defending the (correct) principled position that Labour Councillors ought not to make Tory cuts, we need also to make lesser demands which may help defend some jobs and services and/or encourage the movement of opposition to our main enemies – the Tory-led Coalition Government.

The debate about Council reserves is part of this work (however much it may be seized upon hypocritically by opposition Councillors in Labour authorities).’

In the end, the question arises of whether Labour councils stick with the political ‘principle’ of setting budgets illegally, or work to squeeze cash out in their residents ‘here and now’ interests.  I’ll come back to this in Reason 10, but I know what I’d rather do.

And in turn, the question arises over whether the Left is operating in the best interests of its working class constituency by attacking Labour councillors for their cowardice, when they might be challenging and scrutinizing, as Jon recommends, those same Labour councillors on the details of how to keep services going.

7  There’s legal budgets and there’s legal budgets

This argument for ‘playing ball’ with the Chief Finance Officer and working to set legal, but creative budgets, has the same principles as Reason 6; get the finance department on side, and what exactly a legal budget is becomes a slightly (and usefully) blurred issue itself.

For obvious tactical reasons, I can’t name any of the Councils involved, but look hard enough around the place and you’ll find situation in which Labour councils are preparing, or have just set, legal budgets, but where the logic behind that legality is, let us say, open to interpretation. One example of this might be where, through tacit agreement with the unions, projections for staffing costs remain dependent on negotiations around terms and conditions of service, but where the unions may remain fairly confident that the position not stated in the budget may win out in the course of the year.

A willing and engaged Chief Finance Officer, not troubled by the idea of having to ‘go all section 114’ on her/his elected members, is much more likely to concur with such budgeting assumptions than one who is being forced into a corner s/he would rather not be in.

S/he will know, in any event, that – in a local government so used to Gershon savings that underspending on budget allocation is almost automatic – there are other areas of the budget likely to compensate, and will be comfortable enough to sign off a budget which some might see as risking overspend. That’s the way finance in local government works.

And those engaged unions and activists are much more likely to find common ground, in a way which squeezes the last drops out of the budget, than are those unions and activists who are less keen on engagement than they are on professing that their councillors are all careerists whose abiding wish is to betray the workers.

8  Borrowing with a difference

At Reason 4, I set out why borrowing for revenue is simply not an option at the moment.

Borrowing for other purposes, however, is an option, and it is this that activists and party members should be working with Council groups to pursue.

What is allowed under the Local Government Act 2003, and is likely to be better facilitated by the forthcoming Powers of General Competence legislation, is borrowing for capital expenditure which then creates revenue streams.

Typically, this has tended to be around outlay on kit and building which allow for economies of scale and savings (and in many case staffing reductions) and there may be some mileage in that route, but we also need to think more creatively about how we can use borrowing powers.

Take, for example, the idea of borrowing in order to buy out local firms which are essentially profitable, but which are under threat of closure through short-term cashflow difficulties (as a result of restricted bank lending) or for other reasons – perhaps as simple as a private firm owner retiring and her/his children not wanting to continue the business (this is a much commoner reason for business closure than generally recognized).

In such circumstances, and given due diligence, why shouldn’t a local authority borrow money to a) keep jobs going; b) draw revenue for services into the local authority from the firm’s underlying profit, especially if they are acting on concert with unions keen to expand their membership?

Could Forgemasters in Sheffield, for example, have been saved through a Sheffield City Council re-activating its 1980s commitments to local employment initiatives, but in a manner adjusted the economic realities of the 21st century (poor access to cash, but growth potential in some sectors of the economy)?

I don’t know all the ins and outs of this; that needs dedicated officer time and links to wider expertise through, say, the new Local Enterprise Partnerships, but surely if leftwing Labour councils like Sheffield and Manchester engaged usefully (if not always entirely successfully) in this stuff in the 1980s, then surely it’s not beyond us now.

Of course, such initiatives remain dependent on staying legal, and that may be unpalatable for the Left in the short-term, but more of that in Reason 10.

9  Protest, but protest elsewhere too

But all this ignores the fact that people are angry, and they want to protest.  Most people to protest against are local Labour councillors, because they are the ones doing the cutting.

As I’ve said, I understand and respect that urge, but as I’ve also said – there are other points, equally or potentially as valid/effective, at which to protest.

What about, for example, the Primary Care Trusts, where unelected quangos are quietly pushing cuts of similar scale through, while the Left gets angry with itself?

More pertinent in terms of local government, though, are those local government suppliers who are continuing to take cash out of the system, and are even bullish about increasing their revenues.

Again, I’ll give an example from my own council. The Tory council gives Serco £1 million per year in subsidy to manage five leisure centres, under a 15 year contract. Serco then profits from the deal where it can. Would it not seem reasonable, in the current circumstances, for Serco to receive a reduced subsidy, brought down say to £850,000 in line with the formula grant cut imposed on the Council?

The idea of a voluntary reduction was taken to Serco at its meeting in October, at my insistence and in the context of both Francis Maude’s letter on this, and of Serco’s letter to its own suppliers seeking savings. At the October meeting, no decision was made. At the next board meeting of the Leisure Trust overseeing the contract, in January, a decision was deferred until a convenient point beyond the council’s own budget setting, in the hope that the request (contractually, that’s all it can be) might go away.

Will that request go away? I don’t think so. Is there a case for a big demo outside the next Serco meeting, demanding that Serco shareholders take some of the pain.  Oh yes, I think so.

And so with Labour councils who have outsourced services over the years. It is, I suggest, perfectly legitimate to protest not just against a Council forced to make cuts, but against firms who should be taking a hit in their profits, while maintaining the services they agreed under contract.

I’ve written more on this in a ‘sites of resistance’ post.

10.  What are councillors for again?

And that’s more or less it. 

Of course it’s not an exhaustive list of areas where councillors and activists might come together to forge a more effective resistance in aftermath of the next couple of weeks of budget setting mayhem.  There will be plenty of other options for creative resistance, and I’m perhaps a bit too focused here on narrow Council mechanisms. 

The main point, however, is that such creative resistance can only really take place in a spirit of cooperation, and that this will happen less easily if the Left throws the councillor babies out with the budget-setting bathwater.

Ultimately, the choice of whether or not to engage with councillors on this does seem to come down to what you think councillors are for.  I touched on this at Reason 3.

Richard Seymour has an interesting post setting out why he thinks councillors should resist cuts in a very different way to the way I suggest they do (and I hope I’ve shown that I back effective resistance).

Richard sets out his reasoning from a SWP standpoint, according to which elected councillors are functionaries of the state, according to which Labour councillors are little different from other parties’ councillors.

The SWP does not engage in elected party politics, so that’s a valid enough standpoint for Richard to take.

I was in the SWP for a while in the 1980s. I was also a union steward and secretary to my hospital branch. I left the SWP when I was criticized for engaging too much in casework at the expense of a wider struggle.

It seems to me that the choice I have made in this argument has similar roots.  I’m not a revolutionary socialist. I believe revolution may come about when the ruling class does not concede to our legitimate demands, but that it is more likely to be spontaneous rather than planned (though its will need leadership to see it through).

In the meantime, my job in my remaining two months as councillor is to do the best for the people who elected me. I think that’s what makes most Labour councillors tick. To ask them to set this sense of duty aside in the interests of what will most likely be a losing, if dramatic, cause, – rather than focus on making the best of it for now and creating further sites of realistic resistance – is a strategic mistake.

There are bigger battles for the Left to win than the ones they will lose in the next couple of weeks. 

And I’m sorry if I’ve offended you all.

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Categories: General Politics
  1. tim f
    February 22, 2011 at 10:01 pm

    Hmmmm

    I like parts of this, and I certainly agree that Labour councils that can’t vote against the cuts (for example, if public sector workers would rather they try to manage cuts than take the risky option of going all out against them) should follow this strategy.

    The trouble is though that a lot of this hinges on having a very good relationship with a CFO who is basically onside. That is not always going to be the case. And even then, as Andrew says in the comments to the last post, it isn’t going to cover the full impact of the cuts but just embolden the Tories to demand further savings over the next few years.

    I also don’t think you can tell people where not to protest. By all means say protest here, but protest elsewhere too. But I wouldn’t say don’t protest here, protest there.

    Floating an idea here – would be interested in your view as there may be reasons why this wouldn’t work – I think there may be scope for councils and protest movements to work together in other areas. For example, what about putting up business rates on certain kinds of businesses – banks would be an easy target, as would fast food outlets, as would – and protesters targeting them over a long period if they didn’t comply? As I understand it you can hike up business rates for a group of businesses for specific purposes, of 1% for a limited time, or higher if you get them to agree to it. This is seen as an option to raise cash to put on sporting events that will attract people into cities, for example. What about putting a bit of friendly pressure on through external agents to get them to agree to it?

    In principle though I remain in favour of councils joining together across the country to defy cuts, supported by public sector workers who will implement illegal budgets even if their CFO and eventually Pickles try to tell them not to. I just recognise that is a huge ask and doubt the Labour movement in this country is capable of making that happen right now, and don’t think a political culture of shouting betrayal is helpful anyway. Equally if protesters don’t put pressure on Labour councils it definitely won’t happen. But protesters – and of course LRC members are well aware of this – need to do it through unions not just shouting at councillors outside town halls, as if the unions don’t support the strategy it won’t work and shouldn’t be tried.

  2. February 23, 2011 at 12:04 am

    Tim @1:

    Protest: you are quite right, that’s very badly worded in my haste to get part 2 out before I went off this evening (thought it needed to be out there as it balance part 1, which I didn’t know Sunny was going to synopsise for LibCon). I absolutely respect people’s right to protest where they want, and recommending that they shouldn’t demo outside Labour councils would be unacceptably patronising. I suppose I was mixing up protest with chucking personal vitriol, which I think is counterproductive, but protest need not be that. I also fully support legal actions to challenge Labour council cut decision etc. as a perfectly valid form of protest.

    Business rates: To be honest, I don’t know. I’ve never thought about it before. I’ll do some checking (of course it’s not really an option in opposition so I’ve not looked into it). I sense it’s not a goer, but then I also suspect there’s some really obvious tricks being missed, so insistent are we all on tried and trusted methods.

    Other ways forward: I’m certainly not trying to suggest I have all the answers, and I think there are plenty of creative options out there, including working with unions around refusal to implement. My posts have had a narrower focus, seeking to estblish a common ground for councillors and activists to go forward after the next 9 days of mayhem. By the looks of libCon, I’ve failed, but then that’s because Labour councils have tended to patronise and disregard protestors rather than engage respectfully (I don;t think that emphasis transfers to Sunny’s LibCon synopsis).

  3. February 23, 2011 at 7:00 am

    Tom @1: Yesterday’s effort was bashed out at a great rate of knots, so i’ve changed Reason s 9 and 10 slightly now, not least in light of your comments.

  4. February 23, 2011 at 1:44 pm

    As Andrew said the other day, this blog suggests “You know what happens to people who stay in the middle of the road. They get run down.” So what happened…..
    Would Nye Bevan have argued the “socialist” case for cutting services and putting people out of work. No chance. The LRC was right to pass the resolution and right to argue Labour counciloors do not do the Tories work for them.
    Colluding in cuts is not the way forward for the left. Sorry. And sorry this blog should suggest otherwise

  5. Robert
    February 25, 2011 at 9:32 pm

    MY NHS hospital is at breaking point after labour closed two nursing homes, I have been told that the respite center I go to once a month has closed, because I’m severely disabled, but not bad enough to be told to work, I go into a respite unit for a week end to give my wife a rest, she also has spina bifida.

    Our street lights are now off all night, go a mile down the road to an area in which houses cost £350,000+ the light are still on because we are tol;d of insurance problems

    Not to sure about saying nothing, do not rock the boat type of analogy .

  1. February 24, 2011 at 3:02 pm
  2. February 28, 2011 at 12:30 pm

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