“You never want a serious crisis to go to waste…Things that we had postponed for too long, that were long-term, are now immediate and must be dealt with. This crisis provides the opportunity for us to do things that you could not do before.” Rahm Emanuel, 2008, chief of staff to Barak Obama discussing the 2008 financial crash with Wall Street executives.
“We must do something about those inner cities.” Margaret Thatcher, May, 1987
In late 2014 councils across the country have been agreeing spending plans for 2015-16 that will close libraries, swimming pools, children’s’ centres, meals on wheels provision, domestic violence centres and a host of other services once thought to be essential to civic life on the basis that ‘there is no alternative’.
The Local Government Financial Settlement for 2015-16, announced on 18 December 2014, as a 1.2 per cent cut in local government spending by Local government minister Kris Hopkins, was an obvious deceit. A preliminary analysis by the Chartered Institute of Public Finance and Accountancy (Cipfa), using a more accurate measure of spending power that discounted ring-fenced grants and NHS spend, both outside of council control, found that London boroughs faced an average spending power cut of 8 per cent for 2015-16. The figure was 8.4 per cent for metropolitan councils (See: http://www.publicfinance.co.uk/news/2014/12/cipfa-finds-councils-face-6-cut-in-spending-power/)
Looking at the ten councils most and least impacted (see table) it is evident that the areas with the greatest social need will experience the largest reduction in local government financing in the year ahead. For example, Tewksbury in Gloucestershire has an unemployment rate of 4 per cent and a child poverty rate of 14 per cent, bad enough in itself, but compare that to Knowsley, the authority facing the deepest cuts, with 16 per cent and 32 per cent respectively. This is class warfare expressed through local government finance. By 2018 local authorities in urban areas will have reduced spending by more than 50 per cent in less than two Parliaments.
From 2 January onwards – in the months prior to the 2015 general election – because of its support for the austerity agenda, Labour-run councils will be handing out yet more redundancy notices to tens of thousands of local government workers and shutting services, mostly in the poorest areas across the country.
Labour strategists could be calculating that cutting deep and hard prior to the election might lay the blame firmly at the door of the Coalition and shore up a core vote as working-class voters reach for what might be seen as the only shield available. However, it is also more likely to demobilise class politics and deliver votes to other parties; to hollow out Labour’s core vote with UKIP in the north and the Greens in the south being the biggest benefactors in the absence of either TUSC or Left Unity having sufficient long-term national or local profile to properly benefit where they are standing.
Beyond immediate political calculations there is a wider strategy unfolding for local governance that goes beyond paring local services to the bone by keeping a lid on spending. The financial collapse of 2008 was not only a chance for capital to cut back on national state spending and dispose of any remaining national assets but also presented an opportunity to reconfigure the purpose, delivery and democracy of the local state.
The avalanche of local government spending cuts will continue long after 2015 whatever the nature of the new coalition government to come, and will operate as the handmaid of a planned and purposeful disintegration of the structure of post-war local government creating a balance between the state and capital not seen for a century.
Since the late 1930s libertarian free marketeers have been waging a long war against social collectivism. This struggle has been best summarised in Richard Crockett’s book Thinking the Unthinkable: think-Tanks and the Economic Counter-Revolution, 1931-83 (Fontata, 1995). Crockett describes how libertarian ideologues like Friedrich von Hayek collaborated with others on the right to shape an agenda for a different future world. Hayek authored the seminal anti-collectivist Road to Serfdom published in 1944 (incidentally, the book given by Lord Saatchi to Jeremy Paxman on his final Newsnight show). Road to Serfdom sold out quickly and encouraged by its success Hayek invited 39 people to meet in Mont Pelerin in Switzerland in the spring of 1947 on the basis that they were committed to challenging the ‘reigning intellectual fallacies’ of collectivist Keynesianism – then the dominant economic model.
Those invited included Karl Popper, Michael Polanyi, Ludwig von Mises and Milton Freidman, all soon to emerge as the leading thinkers of the economic counter-revolution. The Mont Perelin Society was established (the group being unable to agree another name) and spawned think thanks across the globe committed to rolling back the state. In Britain the main descendants of Mont Perelin were the Institute for Economic Affairs, formed in 1955, and the Centre for Policy Studies, established by Keith Joseph and Margaret Thatcher in 1974 following the Conservative defeat in the general election.
Arriving in Downing Street, Thatcher, with Keith Joseph in tow, was not a woman travelling without maps. For a compass she brought with her over three decades of political and economic thinking focused on defeating collectivism in all of its forms. First on the list was the one nation ‘wet’ Conservative paternalist collectivism she eliminated in her first term. While her second term focused on overcoming the most militant trade unions, her third administration turned to Labour’s collectivist heartland – the inner cities.
The mid-1980s witnessed a high tide of municipal progressive and socialist politics in Britain. The defeat of Lambeth, Liverpool and the capitulation of the Greater London Council signalled a sea change in the balance of class forces in municipal politics that opened the way to a decades-long transformation of local government. From the mid-1980s to 2010, the mass sell-off of council housing, the denuding of powers of local education authorities, the commissioning out of services under the rubric of ‘compulsory competitive tendering’ and then so-called ‘best value’ under ‘new public management’, the effective privatisation of public assets under the Private Finance Initiatives and the creation of cabinet government and mayors have all been part of a steady progression to a new form of local governance the final shape of which is now beginning to appear in view.
None of this was inevitable, being in part the product the systemic inability of the leadership of the British labour and trade union movement to adopt the only strategically coherent narrative capable of combating the late twentieth century counter-offensive of capitalism – namely, socialism. It was no accident that, with the Labour leadership at best stood on the sidelines, the only real and decisive setback experienced by Thatcher herself was the poll tax, a class battle predominantly led by socialists at all levels and defeated by a class-conscious community revolt (and therein may be a lesson for those wishing to build a new mass socialist party of the working class).
The poll tax, officially titled the Community Charge, was the first post war attempt to transform the connection between local residents and their council from a representative democracy to individual and customer based relationship. It is this ambition that is now the central objective of all local authority restructuring. In the forthcoming general election there may be ‘an argument’ about how to continue with austerity but there will be radio-silence on the dramatic transformation of local government that is about to take place because there is, in essence, a cross-party agreement on what needs to happen next.
Scenario planning publications by PriceWaterHouseCoopers (PWC) titled Thinking the Unthinkable: Local government after the next Spending Review: Gaming the Cuts (2012) and Redefining Local Government (2013) outline in full colour the nature of the local government transformation to come. The current policy chatter among senior civil servants and consultants employed in local government has been shaped by PWC and other free market advocates with three key themes at the centre of the narrative.
First is the insistence that ‘the relationship between the citizen and the state has to change’ and that councils ‘are likely to increasingly become the provider of last, or later, resort’. In fact: ‘[t]he pressure of further spending reductions could see a default retreat to the role of reactive, residual service provider.’ And this ‘cannot be avoided’.
The second theme is the idea that ‘citizens and communities…must be enabled and empowered to deliver outcomes for themselves’. Councils ‘need to work with the community to build resilience and personal responsibility’ and ‘resource should be focused on maintaining independence rather than directed primarily to those in critical situations’ with ‘strategies…developed through community workshops that establish what residents are willing to take responsibility’ including specific examples such as ‘communities taking on more responsibility for street cleaning or road gritting.’
London councils are leading the way in this regard. Lambeth Council is currently asking people to volunteer as a ‘snow warden’ to help clear paths (they will give you a shovel). In his new year message for 2105 Brent Council leader Muhammed Butt writes to Brent residents, ‘I would like to challenge you to make one of your New Year’s resolutions to be an ‘active citizen’ of Brent. I will be clear – we need your help. We want to enable you to become more active in your community by helping to deliver services with us’. Newham Council is ‘building resilience’ through ‘community neighbourhoods which bring together local assets such as libraries and community centres with local volunteers’. In effect, Labour councils are leading the charge towards a strategy they once derided – ‘the big society’.
Third is ‘a shift in the role of the council away from delivering services and towards facilitating outcomes in collaboration with private and public partners, and citizens themselves…’. Some policy documents dress this up as developing a ‘partnership’ between the local authority and individuals, now ‘customers’; others are discussing how to encourage individuals to become ‘independent’ of the local authority. In other words, wholesale privatisation with the local authority reduced to role of a commissioner of services from the private and voluntary sectors, whether in the shape of the warm glow of the ‘co-operative’ or ‘mutual’ councils offered by Labour authorities, or the more stark Conservative outriders of Barnet. PWC points with admiration to ‘the late 19th century’ which ‘saw Bourneville, Port Sunlight and Saltaire built as testaments to business engagement in place leadership. In the 21st century value-led companies are increasingly aware of the triple bottom line of economic, environmental and social value.’
The citizen will be morphed into a consumer and local democracy hollowed out, with at best, in the absence of a country-wide socialist alternative, the main parties debating at elections the merits of different private and third-sector providers. The direction of travel is best exemplified by Conservative Northamptonshire County Council, which aims by 2020 to privatise all delivery and be almost entirely free of central government funding with all services, including those for the elderly and child protection, being delivered by mutual companies, social enterprises or private firms: with a reduction of authority staff from 4,000 to 150. Over time the use of the term ‘outsourcing’ will fall into abeyance because there will be no ‘body’ to ‘outsource’ from – the anti-collectivist outcome that Hayek and his co-thinkers dreamed of.
The implications for the labour movement and the Labour Party are profound. In 2013 trade union membership stood at 6.5 million – half of that in 1979 – with 3.8 million in the public sector. Local government public sector unions have been at the heart of Labour Party support, but by 2020 the revolution in local government will mean that the majority of workers remaining in trade unions delivering local services will most likely be in the private sector. The link between trade unions and Labour will come under further pressure as the Labour Party local government union alliance will be broken apart by this process.
This will undoubtedly encourage those who want to complete the transformation of the Labour Party into a US-style Democratic Party with local primaries not dependent on a dwindling trade union base. However, this process will also create further space for socialists who want to build a new mass working class party of socialism. But rather than simply coming through a process of union re-affiliation to a new party (a refoundation of ‘Labour’ envisaged by some) it may have to be built in the main from the grassroots up in community resistance to the destruction of local government services in the decade ahead.
Table Spending power change 2014-15 to 2015-16 by Council
Kingston upon Hull -10.8%
Barking and Dagenham -10.0%
East Devon +2.7%
Aylesbury Vale +2.3%
South Cambridgeshire +2.1%
Reigate and Banstead +1.8%
East Hampshire +1.7%