Five more ways for the Left to engage with Labour council cuts


11:29 am - February 28th 2011

by Paul Cotterill    


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

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.

I don’t really mind the vitriol, as it merely reflects the current level of acrimony and lack of mutual understanding.

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
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.

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. 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).

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.

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.

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
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.

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. 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)?

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.

But 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?

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.

10. What are councillors for again?
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. Richard Seymour has an interesting post setting out why he thinks councillors should resist cuts – according to which elected councillors are functionaries of the state, according to which Labour councillors are little different from other parties’ councillors.

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.

—-
A longer version is at Though Cowards Flinch. The first part of this article is here.

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About the author
Paul Cotterill is a regular contributor, and blogs more regularly at Though Cowards Flinch, an established leftwing blog and emergent think-tank. He currently has fingers in more pies than he has fingers, including disability caselaw, childcare social enterprise, and cricket.
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Story Filed Under: Blog ,Fight the cuts ,Labour party ,Local Government ,Westminster

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Reader comments


I think these days you have to look at council and councilors as being in business not really labour or Tory or anything , they do the job.

My labour council is open about where the money will come from, jobs loses from the workers, not the management, closing down of the places the disabled will use Respite centers community meeting places like day centers.

They turned off street light on council estate yet keep the lights on in the rich area, and then tell us it’s insurance.

So the idea that we have labour council and Tory councils have long gone your all just councils, my labour council has given people a period to come forward with idea about running meals on wheels within the private sector or by a charity, with no funding.

You can see it already those on welfare are the biggest losers, perhaps they think as labour does we are all fakes anyway…

Paul, are you suggesting councils actively seek to breach contracts such as the serco example?

“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.”

Quite so. People like you and Don are doing their best to figure out how Labour councillors can help maintain much-needed public services in the face of massive central government cuts to their funding, while certain fellow lefties seem so wrapped up in a fantasy ‘wider struggle’ narrative of bringing down the government that they’ve lost sight of the real-world consequences for ordinary people of leaving finance officers (under Eric Pickles’ guidance) to do the dirty work.

I keep saying this, but: a Labour councillor passing a legal budget is ‘accepting’ and ‘implementing’ Tory cuts in local government funding only in the sense that I am ‘accepting’ and ‘implementing’ Tory cuts to my tax credits by spending less on my kids’ shoes. Neither of us is a Tory collaborator; we just have less money to spend.

@UKCuts #2: No, I’m not suggesting breach of contract as an initial step – just too expensive legally and would defeat the object.

However there is an argument that exisiting council insurance would cover such costs, although it would be dangerous if it were argued in court that the breach was by negligence. I’m not sure of the law on this (and it would of course need to be tested in court), but if it was the case that councillors could pick up these fines by way of personal surcharge, and pretty well inevitable personal bankrutpcy, then it might be an avenue worth exploring (as in Lambeth 1980s), but if money simply came out of the council coffers it would , as I said for starters, simply hit services further.

In such circumstances, bringing the act of surcharge-as-protest in a way not circumvented by Tory law and the carefully worked out mechanics of the law’s implementation, might be beneficial, as long as it keeps as the key objective NOT cutting services by keeping what would have gone to e.g. Serco shareholders within the Council coffers.

In the shorter term, though, I’d suggest that it’s about pressuring bodies like Serco to voluntary reduce their own charges in the light of Francis Maude’s instructions to Councils that they should so so (October 2010) and, in Serco’s case especially, its letter to its own suppliers seeking reductions in costs. Such pressure by a combination of popular protest and Labour councillors using formal channels (e.g. detailed enquiries on performance indicators) seems to be like a handy dovetailing of resistance, and might lead on to clearer thinking about any potential for simply refusing to pay what is contracted, and using what the law then throws at us to advantage.

@4

Paul, the issue is a contract is in place and will have penalties for breaching. Serco’s line was aimed at contracts facing renewal rather than seeking to adjust existing contracts IIRC.

Usually breach clauses have quite hefty penalties, usually meaning the remaining contract amount is due and the parties will split with no return point.

Suppliers who are likely already squeezed at tendering arent going to reduce rates simply because you’re having financial issues. I wish they would.

@5: Yes, I know about contracts and penalties. That’s what I was saying.

Anyway, here’s BT offering a lower contract price to Liverpool City Council, so ity can happen.

http://www.liverpooldailypost.co.uk/liverpool-news/regional-news/2011/03/01/liverpool-direct-ltd-offers-city-council-it-contract-price-cut-92534-28252565/

@6

Not quite the same if you read the article closely though Paul.

They’ve found they’re being overcharged by £10m and that even paying the £20m penalty they will still save £23m over the contract term.

If you check your own contracts, I doubt any could be renegotiated in your favour at current prices unless you’ve been seriously ripped off at tender.

Which would lead to the question how such a blatant overcharge wasn’t picked up at the tender process and how it got signed off.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Five more ways how the Left should engage with Labour council cuts http://bit.ly/gi8l11

  2. sunny hundal

    Odd.. @BickerRecord writes how Left could engage constructively with Labour council cuts but usual mob can't be found http://bit.ly/gi8l11

  3. Spir.Sotiropoulou

    Five more ways for the Left to engage with Labour council cuts | Liberal Conspiracy http://t.co/IifEBZ9 via @libcon

  4. Rachel Hubbard

    Five more ways for the Left to engage with Labour council cuts | Liberal Conspiracy http://goo.gl/GTJ68





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