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The problem that is Labour local government: It is time to move away from Labour pragmatism in local government.

Note that word 'is' in the title of this piece. We are not dealing with problems 'for' Labour when it controls local authorities in the UK. Rather the focus is on the problem that such control poses for a party which has twice elected Corbyn as leader and is attempting to break with the direction taken by Labour under Blair and Brown. This article asks whether it is possible for a Corbyn-led Labour Party to make a difference to twenty-first century local government politics.

Before Labour's recent turn to the left, the party shared the stance of pretty well all socialist parties in the post-industrial countries of Europe whenever they have been in office at any time in the last thirty years: 'content to appear on the stage of contemporary history as humanisers of the inevitable'. (1) One explanation put forward for this shift in social-democratic and Labour parties has been their capture by professional politicians obsessed with office, who have abandoned class politics (a politics organised in the interests of working-class people broadly defined), in favour of a politics of the general interest--which in practice means the interests of capital, capitalists and the elites who work in the service of capital. And that is of course part of the story. In offering some suggestions for coping with post-democracy Colin Crouch defined that condition thus:
   ... while elections exist and can change governments, public
   electoral debate is a tightly controlled spectacle, managed by
   rival teams of professionals expert in techniques of persuasion,
   and considering a small range of issues selected by those teams.
   The mass of citizens plays a passive, quiescent, even apathetic
   part, responding only to the signals given to them. Behind this
   spectacle of the electoral game politics is really shaped in
   private by interaction between elected governments and elites which
   overwhelmingly represent business interests. (2)

This is something that happens at all levels, including that of local government. But to understand how this shift has come to pass we need to move beyond the personal characteristics of the kind of individuals who occupy political roles--in the case of this article, Labour councillors in the UK. (3)

To understand what is going on at all levels of government including the local we need to take into account the operation of deeper and more structural factors, what used to be known as political economy; i.e. we need to refer back to the Marxist precept that the 'base determines superstructure'--though at the same time taking due note of Raymond Williams's instruction to examine every term in that proposition with care. (4) Here, 'determining' the superstructure should be understood as setting limits for possibilities and not as exact specification; while 'base' should be understood as the current form of the capitalist economic context in the locales which we are examining; the term superstructure includes of course all aspects of state form and practices. And, pace orthodox Marxism, we have to see this process as also recursive; that is, the direction of causation is not one way: the actions of the state at any and all levels, local states included, have causal powers in relation to the economic base and the relations and conditions of production.

Post-industrial cities and local democracy

Broadly speaking, the current political-economic context for local authorities is determined by the post-industrial nature of the UK economy and the imposition of austerity in response to the financial crisis.

In 1970 more than 45 per cent of the UK's workforce were employed in industry broadly defined, that is in manufacturing, mining and industrial forms of transport on the docks and railways. Every UK city region including London had significant industrial employment. (5) By 2015 that proportion had declined to less than 18 per cent. Another way to measure the character of a nation's economic base is to look at the proportion of Value Added (the measure of the value of economic activity) by broad sector. In 2016 manufacturing provided 10 per cent of the UK Value Added. The other large sectors were wholesale, retail and car repair at 11 per cent; construction at 6 per cent; finance at 7 per cent; and real estate at 14 per cent; while the category of public administration & defence, education and health/social services accounted for 17 per cent. Real estate was thus the largest single category. In London in 2016 manufacturing provided 2 per cent of gross Value Added, construction 5 per cent, finance 15 per cent and real estate 16 per cent.

These shifts are not just a matter of productive sector. They are also indicative of a radical shift in the dominant modes of capitalist accumulation in the UK as a whole, and in London in particular. There has been a marked shift away from capital accumulation through the production and sale of commodities themselves, and towards accumulation through distribution, property and finance. (6) Speculation in real estate in all its forms--including the massive booms in the value of residential dwellings, and the shift across post-industrial capitalism towards 'property led regeneration' as the solution to the problems caused by de-industrialisation in formerly industrial cities--has been both a consequence and a driver of this shift, and this in turn has had a massive impact on politics at the level of localities and regions, and on the way in which governance functions in the everyday worlds of lived experience.

As long ago as 1987, Joe Feagin's essay on the secondary circuit of capital noted how accumulation in the real estate sphere was fuelling accumulation through financial transactions--a prescient observation given the later role of financial derivatives based on the securitisation of mortgages in triggering the 2008 crash. (7) The speculation in financial assets, including the derivatives that were described by Warren Buffet as 'financial instruments of mass destruction', was intimately linked to property speculation. And both played a key role in the financial crisis of 2008.

The dominant political response to the financial crisis by neoliberal governments across Europe was to inaugurate an era of austerity. This means that not only are we now living in post-industrial times; we are also experiencing the consequences of fiscal and expenditure policies directed towards resolving the UK's (supposed) national budgetary deficit problem through the cutting of governmental expenditure, and in particular expenditure by local authorities.

In post-industrial cities rent has become a key source of accumulation (i.e. income derived from acquiring and/or exploiting assets which in themselves produce no value). This has gone alongside the lobbying of national and local government in an effort to secure the necessary conditions for such forms of accumulation. This process has been going on for some time. Robert Fitch wrote The Assassination of New York in 1993--a book which attributed the assassination of the city to the elites of FIRE (Finance, Insurance and Real Estate). The argument was that, through their domination of urban governance, the FIRE elites had turned the formerly great industrial city and heartland of the US organised working class into 'a mutation masquerading as modernization'. (8) Peter Ambrose and Bob Colenutt's book on The Property Machine, published in 1975, already recognised the emerging powerlessness of elected local governments in managing land development, given the power of capitalist developers in shaping urban space. (9)

In 1986 Peter Ambrose wrote a book that addressed the crisis then being experienced in the UK planning system (which had been devised by the post-war Labour government as an essential part of socialist governance), as a result of actions taken by the Thatcher governments. (10) A main focus of Ambrose's critique was the setting up of Urban Development Corporations in major conurbations throughout the 1980s, bodies that took over the planning powers of elected local authorities, and whose members were appointed by the government but predominantly drawn from within the private sector. The powers awarded to Urban Development Corporations included the ability to seize public sector land and transfer it to the private sector in order to 'regenerate' post-industrial cities. Thus it came about that a planning system designed to manage land use--and which in its original form had included the ability to confiscate through taxation development gains from increased land values consequent on the grant of a change of use--became the servant of speculative development capital. Thenceforth all financial gains made from change of use accrued to the landowner. (11) There have since then been efforts to achieve planning gain by negotiation--usually through the provision of some publicly useful element in a development--but these are generally trivial in content in comparison to what would be available from a proper development levy.

The Blair and then Brown governments did little to reverse this shift to grant greater power to real estate companies at the expense of local democracy. Indeed, they massively accelerated the move away from democratic local control over development as a process--through their very active promotion of private/public partnerships, their insistence on Private Finance Initiatives as the only possible source for public infrastructural investment, and their wider development of increasing levels of private sector engagement with governance. One important element in this undermining of local democracy was the replacement of the local government committee structure by a choice between either a cabinet system or executive elected mayors. The Local Government Act (2000) made the leader/ cabinet model mandatory unless a local referendum endorsed the appointment of an elected executive mayor. The Coalition government's Localism Act (2011) was a further step in this process: it was primarily targeted at establishing city-region scale devolved authorities, which would have elected mayors that had some of the powers of the London Mayor (although in Greater Manchester the devolved authority was subsequently also handed the poison chalice of overseeing its underfunded health and social care services). The accumulative effect of these developments is to very much diminish the power of the mass of elected councillors, who are reduced to the role of scrutinising, rather than formulating, policy and directly overseeing services.

As a result of New Labour's hostility to letting ordinary members have a say in policy formation and service management, the ability of local parties to do anything very much about the activities of local councils has also in large part been removed. Such oversight used to be the role of District Labour Parties, to which constituencies elected delegates. But these were replaced first with Local Government Committees and then with Local Campaign Forums. The membership of Campaign Forums comprises the Leader and Deputy Leader of the Labour Group of Councillors and representatives from CLPs and trade unions. Their remit is to select potential candidates for council elections; co-ordinate campaign activities and develop election strategy locally; and to liaise with the Labour Group about local government issues and input into the manifesto for local elections. In other words these forums are about getting councillors elected. They have minimal influence over what councillors do once they are elected.

And then came austerity

For a full discussion of what austerity means and why it is both dreadful in its impact and nonsensical in its foundations as political programme see Mark Blyth's 2013 book Austerity: the history of a dangerous idea. (12) Here our focus is on what this programme--as enforced first by the Coalition government and then by the Conservatives on their own--has meant for local government's capacity to deliver services and address the issues which arise from de-industrialisation.

The Association for Public Service Excellent (APSE), a far from radical local government supported network, puts the position clearly:

1. Current spending by UK local government is now below the previous post-1979 low point. By 2020, current and capital spending combined will be lower than at any time since before 1948. Already in uncharted water, many of the things which English local authorities have taken for granted for decades will have gone by the end of this one.

2. Council tax, until recently a minority source of local government finance, will account for at least half the money coming in to every kind of English local authority by 2020. For shire counties, it will account for three quarters.

3. By 2020, revenue support grant, at barely a third of its current, already much reduced level will be mainly confined to metropolitan and unitary districts and London boroughs. Shire counties (94 per cent on average) and districts (85 per cent) will be almost entirely reliant on council tax and business rates.

4. The more deprived a local area, the harsher have the past five years' funding cuts been. The extra funding for more deprived authorities won't come down much further by 2020. But a new dimension of inequality is opening up according to how strongly an authority can grow its business rate income. There is no link between the two: business rates are not a general answer to local deprivation.

5. A shrunken revenue support grant signifies the end of the only general mechanism for providing resources to English local authorities in response to local need.

6. Although the headline fall in core spending power between now and 2020 is just 0.5 per cent, the additional pressure on English local authorities over that period is estimated to be about 10 per cent. If all of that pressure is borne by services other than social care, the pressure on those services approaches 20 per cent. (13)

Austerity has hit hardest in the poorest areas. As APSE also notes, among English 'all-purpose' authorities, those in the most deprived fifth saw average expenditure per head fall from over 900 [pounds sterling] in 2010-11 to 700 [pounds sterling] in 2014-15, while during this same period spending per head in the least deprived fifth fell by less than 50 [pounds sterling] (from under 650 [pounds sterling] to 600 [pounds sterling]). (14) And since 2015 the continuing tendency has been downwards. Things are much the same in Scotland and Wales, but in the devolved nations there has been a move in the banding of council tax which makes that form of household taxation less regressive. (Funding for local authorities from central resources is a devolved power, and, though there have been substantial cuts in SNP-run Scotland and Labour-run Wales, England, as ever, is worse.) However, even Tory county councils are facing massive problems. Thus in February 2018 the Tory-controlled Northampton County Council effectively declared itself bankrupt.

In England, a shift towards the devolution of powers to strategic authorities has run alongside the cutting of revenues. But the effect of this has been to further shift the burden of responsibility for cuts away from central government; and it has also promoted what APSE correctly identifies as 'a market-orientated funding framework that offers councils an incentive to generate resources through higher levels of local economic activity'. (15) Labour's promotion of city regions morphed, under the Coalition government, into the setting up of combined authorities institutions that group together a number of local authorities which then receive extra delegated functions from central government, particularly in relation to transport and the local economy. The assumption is that these combined authorities--which now cover all the metropolitan areas of England--will somehow be able to 'achieve financial self-sufficiency, help rebalance the economy away from London and redesign public services'. (16)

But the move to devolve additional powers to consortia of local authorities coupled with the requirement to put power in the hands of an elected executive mayor--does virtually nothing to address the underlying issues. Devolution delivers little more than a lending facility for infra-structural developments. Moreover, central government has considerable 'approval' control over what those developments will be. The emphasis is on the 'enhancement of economic activity': services are not included.

A major recent fiscal change in the revenue streams of local government has been the shift from collecting business rates nationally and then redistributing the revenue according to a needs-weighted population formula, towards a system in which local authorities now keep more of the business rates collected in their area (from 2013 local authorities started to retain 50 per cent of business rate income, and the government is currently planning to proceed towards 100 per cent retention). This move is likely to be beneficial for combined authorities, but there are many deprived areas where the change is likely to mean cuts, particularly in areas with high levels of need (which were formerly taken into account in business rate funding allocation).

Moreover, this shift has taken place at a time of massive reduction in central government funding on a needs basis, which means that the financial resources of local authorities are very heavily dependent on increasing their local tax base in the form of business rates and council taxes. Increasing revenue from these sources is usually understood to refer to raising the rates of those taxes, but over the years it has become just as important to expand the tax base, for example through promoting more residential construction. These changes thus drive local authorities into putting themselves into the service of development capital, and those seeking capital accumulation through real estate. The measures introduced by first the Coalition and then the Conservative governments have accelerated these processes, to the extent that the quantitative changes they encouraged have now become qualitative.

The trend towards privatisation and operating local government in the interests of development and finance capital was begun by Thatcher and reinforced under Blair and Brown, particularly through the imposition of PFI. Under the conditions of austerity it has become truly transformational in its impact.

Labour local government as collaborators in austerity

The most well-known example of collaboration with development capital by Labour local government is Haringey's engagement with Lendlease, in the 2 [pounds sterling] billion development contract that was bitterly opposed by local residents and rejected by the local Labour Party, many local councillors and the majority of those selected as candidates for the May 2018 local government elections (though there are examples in almost all Labour controlled authorities). The scheme had been not so much backed as imposed by Claire Kober, the Blairite Haringey council leader who stood down after the May elections. But Kober was praised for her 'necessary pragmatism' in a letter to the Guardian signed by twenty-seven Haringey existing councillors; and, after Labour's NEC decision to pass a motion calling for a halt to the scheme, Nick Forbes, the leader of Newcastle City Council and a local government representative on the NEC, got 71 Labour Council leaders to sign up to a condemnation of the motion. According to Forbes: 'This statement is a strong and powerful assertion of our ability to determine policy at a local level without fear of recrimination' (quoted in the Sunday Times). 'If the NEC [was to] intervene directly in the running of a Labour group, without any clear justification ... it would have been seen by Labour local government as a declaration of war.'

In effect, this letter was an assertion by a substantial number of Labour leaders that they are not accountable to their own Labour groups, their local Labour Parties or the Labour Party nationally This attitude can be seen as the logical outcome of the New Labour years of centralisation and undermining of local democracy. And the battle between the NEC and Haringey may be a sign of things to come. (17)

Forbes has form as someone who thrives on the New Labour approach to local government. He was the architect for the recent local development plan for Newcastle and Gateshead, which can be summarised as 'whatever the developers want they get', and he is the key supporter of a devolution deal to Greater Tyneside that was rejected by four of the seven local authorities concerned. (The result is that it has ended up as a deal only for 'North of Tyne', covering Newcastle, North Tyneside and Northumberland County--notwithstanding that a large chunk of Northumberland, including Hexham, is actually south of the Tyne!)

It is hard to establish the nature of the claim to democratic authority by Forbes's Labour leader backers. They are functioning exactly in the fashion described for post-democracy by Crouch--although with the qualification that for many of them their support derives less from professional public relations than from the established tradition of 'my granny would turn in her grave if I voted anything but Labour' (though my own Tyne Dock grandmother, a noted Labour Party activist, would have considered the state of her bladder absolutely irrelevant to the outcome if people like Forbes were spontaneously to ignite).

There comes a point at which some sort of action is required. Local government across the UK, but particularly in England, is now in a state of crisis--a condition which cannot be allowed to continue. A radical change has to happen. How can politics make a difference now? What political action can we expect from political parties--or have local authorities become powerless entities, subject to administrative decision rather political discussion? Peter Mair's analysis of the current character of most party politics in the post-industrial, post-democratic world is spot on here:
   If we conceive of the role and location of parties within a
   democratic polity as standing somewhere on a spectrum between
   society and the state, then we can suggest that they have shifted
   along this continuum from a position in which they were primarily
   defined as social actors --as in the classic mass-party model--to
   one where they might now be reasonably defined as state actors.

To use the vernacular, political parties are now 'They'--those over whom you have no control and who do things to you which you do not like.

The two elections of Corbyn as Labour leader mark the possibility of a radical shift in another direction. But that shift cannot accommodate continued 'pragmatic' engagement with the imposition of austerity. The old argument that the other parties would be so much worse is pathetic, not least because the current constraints on what local authorities can do, given their current resource base, makes it highly likely that the 'others' would be no worse at all. In an Observer article at the end of 2017, last century's major Labour blatherskite Roy Hattersley used the example of Haringey to talk about a far-left take-over of Labour and the need to revert to moderation. (19) But what do you do when moderation means collaboration with property and finance capitalists--the few--to exploit austerity at the expense of people who vote or should vote Labour--the many?

Perhaps it is time to ask a serious question: if Labour control over local authorities has no meaning whatsoever, would it not be better for Labour to refuse to take control and thereby responsibility for imposing austerity?

Labour councillors and in particular Labour leaders would not like that idea at all. Their likely response is indicated by the Labour councillors in Aberdeen who recently defied a Scottish Labour ruling that they should not enter into a ruling coalition with the Tories. But it is a tactic that Labour has tried before. In the interwar years Labour councillors and poor law guardians on a number of occasions refused to implement cuts which would have had a disastrous impact on the working class, which meant that the central government had to put in commissioners. It is high time to consider this kind of defiance again--because we are faced not just with cuts but with the capitalist seizure of urban space for profits to capital alone. That is not acceptable.

David Byrne is Emeritus Professor in the School of Applied Social Sciences, University of Durham. He was a Labour councillor for twelve years in Gateshead in the 1980s and early 1990s, when excellent local politicians were supported by a public service oriented set of officers.


(1.) R. Unger, speech at the Royal Society of Arts 2015: social-democratic-left/.

(2.) Colin Crouch, Coping with Post-Democracy, Fabian Society 2000, p2.

(3.) Labour councillors and other elected representatives vary. The set includes many fully paid up members of the human race, to use a Geordie expression of approbation. But it also includes the kind of apparatchik who began as a Labour student politician in the Blair years.

(4.) Raymond Williams, 'Base and superstructure in Marxist cultural theory', in Problems in Materialism and Culture: Selected Essays, Verso/NLB 1980. The question of the relationship between the economic base and the superstructures of ideology, culture and state is one that has been debated by Marxists and Marxist-influenced thinkers throughout the history of social democracy and communism. This essay is a useful starting point for those wishing to explore this area.

(5.) My anecdotal evidence for this is that when I took my Geordie accent into the Crooked Billet in Upper Clapton Hackney in 1969 the landlady asked if I was a fitter or an electrician. When I said I was a graduate student--had to explain that--she said the girls would be disappointed because they thought the Geordie tradesmen who came down to work in NE London's big engineering factories were a good catch!

(6.) Much recent writing that deals with the appropriation of surplus value in the sphere of circulation rather than production has been focused on space and real estate. See, for example, H. Lefebvre [1974], The Production of Space, Blackwell 1991.

(7.) J. Feagin, 'The secondary circuit of capital', International Journal of Urban and Regional Research, 11.2.87.

(8.) Robert Fitch, The Assassination of New York, Verso 1993, p235.

(9.) B. Colenutt and P Ambrose, The Property Machine, Penguin 1975. Here they draw explicitly on Lefebvre's framing of the notion of the secondary circuit of capital in The Production of Space, first published the previous year.

(10.) P Ambrose, Whatever happened to Planning?, Methuen 1986.

(11.) Current Labour proposals to acquire land for social housing at existing use value are a step in the right direction. Wilson's government also attempted to do something about this through the Community Land Act 1975.

(12.) Mark Blyth, Austerity: the history of a dangerous idea, Oxford University Press 2013.

(13.) Association for Public Service Excellence, Sustainable Local Government Finance and Liveable local areas: can we survive to 2020?, APSE 2015.

(14.) Sustainable Local Government Finance, p12 (summarising findings of studies by the Joseph Rowntree Foundation and a report by the House of Commons Public Accounts' committee).

(15.) Ibid, p13.

(16.) Ibid.

(17.) For more on this see Dave Featherstone, 'Editorial: politics, place and left strategies', Soundings 68.

(18.) P Mair, 'Ruling the Void--The Hollowing of Western Democracy', New Left Review 42, 2006, p45.

(19.) Roy Hattersley, 'This is Labour's greatest crisis. Time to fight back', Observer 2.12.17.

DOI: 10.3898/SOUN:69.03.2018
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Author:Byrne, David
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Date:Jun 22, 2018
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