Is there a future for town hall socialism?
The argument was never the budget. It was always who fights.
TLDR
In the spring of 1987 Davy Jones, writing in the Fourth Internationalist journal International, set out what a socialist council should do under Tory cuts: a budget built to community need, funded by more grant and the cancellation of councils’ debts to the City, drawn up with the workforce and community through open books and mass consultation. We are republishing it because 2026 anti-austerity pledge says almost exactly this.
The line has not moved in forty years. Only the legal furniture has: the surcharge that disqualified Liverpool’s councillors is abolished, and the modern weapon is the section 114 notice and government commissioners.
The same tradition defended Liverpool’s defiance, which won real concessions and protected jobs better than the dented shield, and damned Militant’s method: the cadre and the courts standing in for the self-activity of the class.
What it has never resolved is race, and is power. Liverpool’s housing was racially unequal before Militant arrived, and Militant refused the Black community’s own remedies; and the method has never held a council long enough to be proved, because the working-class strength it assumes has not been rebuilt.
The article that could have run this week
Reading Davy Jones’s ‘Is there a future for town hall socialism?’ now, the disorientation is in how little of it needs translating. It ran in International, a journal of Marxism in the Labour Party, in the spring of 1987, with Nicholas Ridley glowering off the cover as the minister for rate-capping. Jones counts the damage in the figures of his day: central grant down from 61 per cent of planned council spending in 1980-81 to 46.4 by 1987-88, a cumulative £17 billion stripped out, the share carried by ratepayers climbing past 56 per cent. Change the minister and the numbers and you could file it on Monday.
What has not dated at all is the trap. Jones names the comfortable Labour position of his day through Margaret Hodge, who had by then abandoned even the language of the dented shield for the candour of saying that staying in office meant ‘services must take precedence over trade union interests or even jobs’. That is the Brighton script before Brighton, the Sheffield group’s ‘we can’t commit to always oppose any cuts’ a generation early. The dented shield is not a recent discovery. It is the permanent temptation of a Labour councillor with a balanced-budget duty and no stomach for the fight, and it has been answered, in the same terms, for forty years.
The same demand, forty years apart
Set the 1987 programme beside the 2026 pledge and the continuity is almost embarrassing. Jones argued that the demand for central government to foot the bill, and for the councils’ accumulated debts to the City to be cancelled, should be expressed locally through a budget drawn to the real social needs of the borough. That budget was to be built with the workforce and the community and not handed down: a real process of mass consultation, with all the financial information open to public scrutiny. Read the proposed Socialist Federation pledge and the same skeleton is there, the needs budget, the refinancing of debt, the open books, the assemblies, only with the accountancy updated and the unions named.
The one thing that has genuinely changed is the furniture of repression, and it changed in the council’s favour. The councillors who held Liverpool and Lambeth were surcharged and disqualified by the district auditor, ruined personally for a budget decision. That weapon is gone: the surcharge was abolished by the Local Government Act 2000 and the disqualification route went in 2011. The modern instrument is the section 114 notice and the commissioners it can summon, a political siege rather than a personal bankruptcy. A councillor who refuses to pass on cuts in 2027 risks losing control of the council. They do not risk losing their house. The tradition’s demand has outlived the law that was built to punish it.
Where the tradition broke with Militant
Here is the part that has to be said plainly, because the temptation is to flinch from it. Jones’s tradition, the IMG and its successors through Socialist Outlook to the current that writes this, was not Militant’s. It was Militant’s rival, and it judged Liverpool with its eyes open. Its judgement was double, which is the only honest kind.
The defiance was right. Jones is unambiguous that Liverpool and Lambeth, the only two councils that then actually argued for a deficit budget built on mobilising the community, were the only two prepared in the end to confront the government, and that they were isolated and attacked by the very allies who had promised to stand with them. The co-ordinated rate-capping refusal of 1985, led by Hodge, Blunkett and Livingstone, collapsed the moment the miners were beaten, because it had rested on agreements between council leaders and almost no mobilisation where it counted, in the workforce and on the estates. Livingstone’s capitulation at the GLC, the council with the most prestige, brought the rest down. Liverpool, left holding the line alone, still extracted more from the Tories over the 1984-85 budget than any other council managed in seven years, and even after the surcharge its jobs and services came through as well as or better than the creative accountants managed theirs. Defiance worked, where it was tried and backed.
What failed was the method. Jones’s standing principle is that local action must build ‘the strength, confidence and self-activity of the working class’, not lean on ‘the heroic role of individual socialists and councillors’, and it is exactly here that Militant fell down. The Liverpool leadership increasingly put its own cadre, and then the courts, in the place of the movement it should have been building. The ninety-day redundancy notices issued to all thirty thousand council workers in 1985, the device meant to buy time, were the perfect emblem: a manoeuvre done to the workforce over its head, which split the unions and handed Kinnock his conference weapon. Pete Firmin drew the conclusion in Socialist Outlook in 1990, watching Militant fight the witch-hunt the same way it had run the council. It refused to build a common campaign with the rest of the left and ran the defence ‘solely as a Militant promotion exercise’, then retreated into the courts to stop its own expulsions, a tactic Firmin called ‘futile in its results, and politically wrong’. A tendency that opposed the courts’ interference in the unions was inviting it into the Labour Party. The sectarianism and the legalism were the method showing through, not lapses in it.
The self-activity of the working class
The positive content of Jones’s argument is the part worth carrying into 2027 whole. A needs budget is an organising occasion, not a clever sum. Its purpose is to pull the workforce, the tenants and the community into drawing up what the borough actually needs and then into defending it, so that the confrontation with the centre, when it comes, is fought by a mobilised city and not by a brave caucus in the chamber. The financial devices, then and now, are worth something only if they buy the time for that. Strip the mobilisation out and the deficit budget is just a different accountancy.
The proof of the method arrived where Jones could not yet see it. The poll tax was beaten a few years later, not by councillors and not in any chamber, but by mass non-payment organised street by street, the connected front from below that Liverpool’s go-it-alone defiance had never built. That is the lesson the tradition has held onto: the no-cuts stand is won by the movement the budget mobilises and lost by the cadre that substitutes itself for it. It is the argument the Federation’s pledge is making again, with the union conference season as its proving ground.
The part the tradition has to own
None of this is usable as inspiration unless it carries its worst alongside its best, and Liverpool’s worst was race. The racism in the city’s council housing was not Militant’s invention. A Liverpool doctorate completed in 1985, before Militant took the council, had already shown with allocation data that white households were close to twice as likely as Black households to be given the best stock, and that the system was driving the Black community ever deeper into the worst of it. Militant inherited that machine and made it in some ways worse, imposing Sam Bond as its race adviser over the open objection of the Liverpool Black Caucus and treating Black, women’s and Irish self-organisation as a diversion from the class. The workerism that dismissed those struggles was the politics itself and not a blemish on it, the same narrowing that left the council isolated.
And yet Firmin’s other insistence in 1990 has to stand beside that one. Those real failings, on Black sections, women’s sections and Ireland, were used by much of the left as a spurious reason to let the bureaucracy pick Militant off, and that was a betrayal too. Defend the fight against the witch-hunt; indict the method without mercy; refuse to let either the liberal or the rival sect off the hook. That is the only register in which the left can tell the truth about its own past.
1987’s question, still open
Jones titled his piece with a question, and answered it, in the follow-up that autumn, with ‘not for much longer’. He was right about the era of town hall socialism: it was ending, and what came after was the housebroken party and the managed decline of the cities. But the strategy he set down was never refuted, only never given the conditions to work. The tradition has been right about the method for forty years and has not once held a council long enough, with a movement large enough behind it, to prove it at the scale that would matter. The thing the whole argument assumes, a working class organised enough to make a no-cuts budget stick, is the thing four decades of defeat have worn away.
So the pledge is not a programme with a guaranteed result. It is a bet that the rebuilding starts somewhere, and that a line drawn in every ward in 2027, backed by the union branches and the tenants and the open books, is as good a place to start as any. Whether it does is not settled by the wording, or by this article, or by anything that can be known before the budgets are set. Davy Jones’s question is still the question. We have just run out of decades in which to keep getting the answer right only on paper.
Is there a future for town hall socialism?
Davy Jones, in International: a journal of Marxism in the Labour Party*, no. 9, March/April 1987.*
Repeated Tory attacks are reducing the room for manoeuvre of Labour councils. Is there a role for socialists in local government, and can a belated fightback be organised? Davy Jones looks at the issues.
When the Tories came into office in 1979 their central goal was to restore the profitability of the British economy. This necessitated taking on and defeating the labour movement industrially, thereby weakening the trade unions; running down the welfare state through progressive reductions in social spending; and simultaneously shifting the terms of ideological debate markedly to the right. For their project to succeed the arena of local government was crucial since local councils account for about a quarter of all public spending. As a result the last seven years have seen a battery of new laws and changes to the rules of local government spending.
The net effect of these changes has been enormous. The percentage of central government grant as a proportion of planned council spending in England has fallen progressively from 61 per cent in 1980-81 to 46.4 per cent in 1987-88. Rate support grant has fallen, at 1986-87 prices, from £12,848m in 1978-79 to £8,988m in 1986-87. The cumulative loss to local government between 1978-79 and 1986-87 is a staggering £17,455m. As central government grant has been cut, so the proportion of expenditure born by the ratepayers has risen dramatically from 39 per cent in 1978-79 to over 56 per cent in 1986-87.
But there is a second major reason for the Tories to tackle the issue of local government: namely, the important role of local councils as potential centres of resistance to the Tories’ goals. The Tories’ aim was both to abolish the most powerful of their enemies — the Greater London Council (GLC) and metropolitan authorities — which in radical Labour hands had proved both electorally popular and capable of serious and damaging resistance to Tory rule; and to undermine the potential popularity and influence of local councils controlled by Labour by squeezing their economic autonomy and forcing them to take responsibility for unpopular reductions in services. The crunch is now rapidly approaching both at a local level, as all the tricks of financial resistance to the Tories run out, and nationally, as the likelihood of a majority Labour government committed to bailing out local councils seems daily less likely.
Labour’s response
While the Labour leadership and the party as a whole have attacked the government’s moves against local government, commitments to restoring adequate levels of local spending have been less forthcoming. And at key points in the campaign against the Tories, the party leadership has been part of the problem rather than part of the solution. They refused to co-ordinate national backing to Lambeth and Liverpool councils just as they refused to commit themselves to reverse the surcharges subsequently imposed. They have been only too keen to join in the media chorus attacking local councils rather than seeing the potential mileage in championing the cause of Labour councils facing up to the Tories’ attacks.
Locally some right wing Labour councils have limply capitulated to the Tories’ measures and made cuts in services and jobs, or raised rents to keep within the new financial limits. But for much of the Labour left such options have been unacceptable. Debate has centred instead on the role of rate rises and the myriad of creative accountancy schemes used to deflect the impact of government cash limits.
Raising the rates
For a number of local Labour councils, and metropolitan authorities such as the GLC, the tactic of raising the rates to finance the expansion of services was a deliberate and coherent strategy. The case was made that existing services were completely inadequate and that radical equal opportunity policies needed substantial funds to have any serious impact. In the absence of adequate government grant, and given opposition to rent rises or cuts in jobs and services, rates were seen as the only method of financing such expansion. It was also argued that rate rises had little impact on the working class — as those on supplementary benefit had rates paid by government — but rather hit local businessmen. Supporters of rate rises said that this lesser evil was justified in order to give the council(s) time to win popularity through the expansion of their services, as with the GLC for example.
There were a number of things wrong with this approach. It is simply untenable to claim that huge rate rises do not attack working class living standards. Undoubtedly they severely hit low income wage earners. (In some areas in inner London rates had reached almost the same level as rents by the mid-1980s.) If cuts in jobs and services are unacceptable, why not attacks on living standards? To sanction rate rises as a lesser evil is a slippery slope towards those cuts in jobs and services.
Second, making such huge rate rises at the same time as taking bold equality measures undoubtedly fuelled popular opposition to these initiatives. While the responsibility for this equation lay with the media, it is a fact that the belief that vast sums of money were being ‘squandered’ on these schemes while rates were going through the roof was firmly implanted into tens of thousands of Labour voters’ minds. Funding equal opportunity policies from huge rate rises was to irresponsibly jeopardise their public acceptance.
The most important thing to note about this strategy, however, is that it relied on resolving the problems of local government financing through the actions of councillors, rather than through mobilisation of the community and the workforce. Like all bureaucratic approaches it demobilised the potential for struggling against the Tories’ attacks. In retrospect, though of course it was not so clear at the time, the relationship of forces between the classes at the outset of the Tory government in 1979-80 was far more advantageous than the mid-1980s. The early years of the Tories, before the defeat of the miners, was a far more favourable time to struggle against their attacks on local government. The moment was lost as the left councils who might have led such a struggle opted for huge rate rises instead.
The rate rise argument is not an academic one. While the media’s ‘favourite’ Labour councils such as Islington, Lambeth, Liverpool, Brent, Haringey, Sheffield and others have been ratecapped, there are many more which have not. Some have recently fallen into Labour control, some have radical leaderships or members looking to follow the example of the GLC, Islington, Lambeth and others in financing expansion of services prior to the inevitable ratecap the following year. Such is the case with Ealing and Hammersmith and Fulham, planning rate rises of 65 per cent and 40 per cent respectively.
Proponents of rate rises distinguish rates from rents or cuts in services by making the analogy with income tax. Just as socialists have traditionally favoured income or direct taxation over purchase/VAT (indirect) taxes, so it is argued that rates are relatively progressive taxes based on property values, hitting business more than private tenants. Raising rates, like raising taxes, is therefore a tactical question. This analogy has some truth to it, but concretely with a Tory government attacking living standards across the board, how can socialists justify joining in? There is no ‘acceptable’ rates rise in this economic context. On the contrary, within the framework of a socialist strategy for local government finances and establishing local social needs, a strong case can and should be made for reducing the rates from their current unacceptably high level in some boroughs.
Socialists would oppose an incoming Labour government raising the standard rate of income tax, after Tory reductions, in order to expand social provision. They would argue for the funds to be made available from other sources, such as cutting the misnamed ‘defence’ budget. Equally socialists should not support local Labour councils raising the rates dramatically, after local Tory rule, in order to expand the services. They too should insist that the funds come from elsewhere, not from the pockets of the working class.
Creative accountancy
With the advent of ratecapping attention shifted to other methods of preventing the Tories from decimating local government. A new industry was born — creative accountancy. Essentially, four main devices have been used under this broad heading, each with varying results and with varying degrees of acceptability from a socialist viewpoint. Overall this was termed both by Kinnock and the ‘soft left’ as the ‘dented shield’ approach. First, running down reserves traditionally held to finance major schemes and/or for contingencies. The Inner London Education Authority (ILEA) has maintained itself this way for the past two years and its crisis this year stems from having no more reserves to play with. Second, leasing schemes where council property or equipment is sold to commercial or banking interests who lease it back to the council. This gives the council cash up front. The Tories are committed to closing this loophole. The local government finance act currently going through parliament is likely to outlaw forms of leaseback schemes.
Third, and most significantly, is ‘capitalising expenditure’. This entails the council transferring day to day or ‘revenue expenses’ into its longer term or ‘capital budget’ thereby avoiding various government overspending penalties on its revenue account. This has been particularly used for repairs and maintenance costs. Its serious side effect however is to begin to run down the council’s capital projects programme, which in many cases is central to the manifesto commitments for major growth in areas like housing.
The fourth device, which has arisen partly to compensate for the side effects of ‘capitalisation’, is deferred purchase. Here a private sector intermediary undertakes to finance various capital works, but repayment from the capital budget is deferred, usually for three years. This also has the disastrous consequence of choking off any future capital growth as the repayments come due in later years. The Tories announced last July their intention to introduce legislation, backdated from July 1986, to prevent any more such deferred purchase schemes, though existing schemes will continue.
There are major objections to ‘creative accountancy’ as a solution to the government’s attacks. First, it puts the onus on experts to elaborate ever more complex and secret deals, rather than relying on the capacity of the labour movement collectively to mobilise and confront the government. Second, as a result, it is divisive among those who could and should be united in fighting the Tories, as each borough seeks its own individual and specific solution based on its own capacity to be more ‘creative’. Third, it demobilises the potential for struggle not only by referring it to experts, but also by each year deferring the struggle ‘to next year’ when ‘there will be no option left’ but to struggle. Fourth, and most devastating, it has led to disbelief among the local communities and workforces as the council seems miraculously to bridge the ‘unbridgeable gap’ each year through these mechanisms. The result is that claims of huge deficits, imminent cuts and jobs losses, are no longer believed. The councils have cried wolf too often.
The first real opportunity for a counterattack came in the early 1980s when left councils opted instead for large rate rises. The second was the preparation for the 1985-86 budget and the debate over not setting a rate or setting a deficit budget. The co-ordinated campaign not to set a rate led by Hodge, Blunkett, Livingstone and others relied almost exclusively on agreement among council leaders with lukewarm backing from certain local government leaders. Little mobilisation was achieved where it really mattered — among the workforce and in the local community. With the defeat of the miners in March 1985 the resolve of the local government leaders to face breaking the law and possible surcharge and political disqualification rapidly collapsed. The capitulation of Livingstone at the GLC, which had the most prestige and popularity among the authorities, was instrumental in the collapse of all the other authorities ‘committed’ to not setting a rate.
The only two authorities which had argued for a deficit budget based on mobilising the community and workforce around a budget based on local social needs, in fact became the only two prepared to confront the government — Liverpool and Lambeth. Isolated, and even attacked by their erstwhile allies, they went down to inevitable defeat. Though there are many criticisms of the leadership of both councils, at least they emerged with some credibility from the debacle. Indeed, Liverpool remains the one council to have achieved serious concessions from the Tories in seven years during their mass campaign over the 1984-85 budget.
A socialist response
Any socialist response to the Tory attacks on local government has to start from a recognition of the limitations of fundamental change which socialists can bring about through using the local state machinery. There can be no socialism in one borough. The national (and international) political context of local government places real limits on the capacity of the most socialist-inclined council to effect radical change. At all times local decisions must be weighed closely against national considerations. In particular actions need always to promote the strength, confidence and self-activity of the working class and the oppressed locally and nationally, rather than relying on the heroic role of individual socialists and councillors.
There is still a useful role for socialists to play as councillors — to use that arena to ensure that the working class and the oppressed do not pay for the crisis of local government finances, and to organise others to fight for the same objectives. It is unacceptable for left councillors, under the guise of ‘realism’, to offer lesser evils as options — ‘better to have large rate rises than cuts in jobs’, ‘better a vacancy freeze than handing over to the Tories’. They should not vote for such budgets or measures in Labour group or council, but act as a minority caucus refusing to budge on defending working class interests, if necessary resigning positions of responsibility within the group to do so. At least such a stance prepares the ground for any future confrontation with the government. Whether there would remain even that role for socialists should the Tories be re-elected is open to question.
The demands for central government to foot the bill and for the enormous debts which local authorities have accumulated to the City to be cancelled should be expressed locally through the drawing up of a budget based on local social needs. This entails councils collaborating with the local labour movement, their own workforce, and community groups to establish the real levels of social need in the borough and to draw up a timetabled programme of implementation. Such a consultation process cannot and should not be restricted to council and union leaders. It must be a real process of mass consultation, stimulating the maximum local involvement and mobilisation which will prove vital in any subsequent showdown with central government. Such a process cannot be achieved by relying on financial experts. All the financial information should be made available and subject to rigorous public scrutiny and debate.
Within such debate on priorities and needs all questions must be up for discussion — from the hours and conditions of different sections of the workforce, the rent and rate levels, through to all aspects of service need and provision. Nothing should be exempt from debate and all information should be available. Any such process could only be successful insofar as the council worked hand-in-hand with its own workforce, the local labour movement and community sector.
The struggle over the next year
1987 is almost certainly election year. The pressure on Labour councils to avoid a confrontation and attempt to ‘muddle through’ this year’s budget has been immense. For the centre and soft left this has been a straightforward electoralist decision, avoiding the confrontation with the Tories so as not to embarrass Kinnock in election year. For others, on the hard left, it has been a realpolitik decision that mobilisation, just prior to an election, especially following the defeat of Lambeth and Liverpool, is too difficult to achieve.
However ‘realistic’ the latter assessment may be, it has led councils into all sorts of shady budget decisions ranging from the totally unacceptable to the less obnoxious. But endorsing such budgets rather than fighting for a deficit budget based on social need fails to prepare the labour movement for the inevitable struggle next year. All too often it leads to councils resorting to traditional high-handed managerial styles, an impatience with established procedures, and good socialist councillors of yesterday locking out their workforce today.
Over the next year there will be an increasing number of struggles between Labour authorities and their workforce as the ‘muddle budgets’ break down and the money runs out. Vacancy freezes, hidden cuts or deterioration in services and conditions, or even open reneging on commitments will be par for the course. However ‘difficult’ the position of left councils, socialists should stand fully behind the workforce and local tenants/community groups in such disputes. Every attack on the workforce this year in the name of realism and waiting for a new government is a nail in the coffin of any serious united struggle by councils and workforce next year.
After the election
Clearly the outcome of the general election will affect the possibilities of struggle around local government enormously. The re-election of the Tories would not only be a huge defeat for the labour movement, it would cause widespread demoralisation within local government. Paradoxically though, a convincing argument can be made for attempting to co-ordinate a national campaign of resistance and confrontation to defend jobs, services and living standards in local government against such a government in its first year. There will be little point in Labour staying in office locally to administer Tory cuts as the screw is tightened to stop any creative accountancy miracles.
With the Tories being the largest minority, or in a genuinely hung parliament with Labour and Tories roughly equal and the balance held by the Alliance, there would be pressure on Labour towards lobbying the Alliance for a common approach to defend local government. Nationally, however, the Alliance have made few commitments on local government, and locally its representatives are frequently indistinguishable from the Tories.
Again a strong case can be made for a co-ordinated campaign of confrontation by Labour councils to such a weak government, which would undoubtedly be susceptible to mass pressure.
An outright large Labour victory with a large majority seems excluded in any election this year. A slender majority or being the largest minority is possible and would present complex problems for those wishing to defend and extend local government services. The pressure not to rock the boat and give Labour a chance would be strong. Labour would attempt to alleviate the crisis of funding local government and repeal key aspects of Tory legislation, but it is doubtful whether it would release enough funds to do any more than prevent the most widespread cuts and redundancies. The accumulated debt and problems of the last few years requires a gigantic redirection of funds from other areas, way beyond Labour’s commitments.
Systematic preparation for a co-ordinated fight next year is the most sensible option, whatever the election outcome. The work has to start now. Serious local consultation on establishing a needs budget takes at least six months, and the stronger such local links and campaigns are early on the more difficult it will be for those councillors and union leaders at the top to derail the struggle.
Although needing national co-ordination, this campaign must be prepared in each locality. It is here that any such strategy will stand or fall. The key to local campaigns will be their ability to unite the council, the labour movement and local party, the council workforce, and the voluntary/community organisations.
Such a unity is fraught with difficulties. The workforce unions have to simultaneously defend their own members’ interests, in a period where even left councils are often attacking them, and campaign with those Labour councils against their common enemies in defence of jobs, services and living standards. This will not be easy. The unions will have to avoid the contradictory pressures of being ‘incorporated’ or of ultraleft refusal to build unity against the Tories. An effective local campaign will have to involve forms of mass democracy and involvement in decision-making of the workforce and local community.
Such a scenario may seem far-fetched as we approach a general election with a real chance of facing five more Tory years. But it is one which the left must fight for over the coming year. With the defeat of the miners, printworkers and other key industrial sections of labour, the public sector is next for the chop — local government, and the health and civil services. The left is relatively strong in local government, in councils, the Labour Party, and the unions. It must use that strength to prepare the best possible circumstances for the looming confrontation.