Birmingham city’s declaration of bankruptcy comes after a decade and more of austerity and the systematic erosion of local government. Kevin Bean calls for a return to democracy but on a much higher level

The news that Birmingham city council, the largest local authority in the country, has effectively declared itself bankrupt – after issuing a section 114 notice, indicating that it does not have the finances to balance its budget – produced the predictable political reactions.

Announcing the notice, which restricts spending to statutory obligations on essential local services, the Labour leader of the council, John Cotton, blamed three things for the current deficit of £87 million: a £760 million bill to settle historical equal pay claims; overrunning budgets and problems with installing a new IT system; and £1 billion cuts in central government grants since 2010. The government swept aside the substance of these criticisms, arguing that it had stepped in to provide support for local authorities in the 2023-24 budget, which amounted to an increase of 9% for Birmingham.

Instead of acknowledging the long-term impact of austerity cuts since 2010, the Tories shifted the focus onto ‘governance arrangements’ in the council and the responsibility of local authority leaders to secure the “best use of taxpayers’ money”, by reminding Birmingham (and other authorities in the same boat) that “clearly it’s for locally elected councils to manage their own budgets”.

The inevitable media reaction also followed a wearingly predictable path, with the Tory press highlighting alleged examples of municipal extravagance, mismanagement and incompetence. As ever, the Daily Mail was in the vanguard, with tales of waste and political dysfunction, while the Daily Telegraph’s coverage highlighted the council leader’s holiday and trips abroad. Other commentators broadened the attack to criticise Birmingham’s ‘over-ambitious plans’ and the impact of the city’s hosting of the Commonwealth Games in 2022 on the council’s finances. Along with comments by local Tory MPs and councillors, these media attacks feed into the developing pre-general election campaign designed to show that Labour, and Sir Keir in particular, are incapable of responsible government and cannot be trusted to balance the books.[1]

The response of the Labour leadership, both nationally and locally, was similarly predictable. Its main defence was the accurate assessment of the impact of Tory austerity policies and cuts in local government funding since 2010, especially given the growing demands placed on local services. Arguing that Birmingham’s position was by no means unique – Hackney, Slough, Croydon, Northamptonshire, Thurrock, and Woking had all filed similar notices in recent years – Labour turned their fire on the Tories. This line of attack was given added weight in the days that followed by reports that over 20 councils were facing a similar financial crisis, including Tory and Liberal Democrat local authorities.[2]

Attacking Tory austerity is easy, but, as Angela Rayner reminded us in her speech to the TUC, Labour was a financially responsible party and local authorities could not expect an incoming Starmer government to loosen the purse strings and to make up for the lost years of austerity and cuts. So, as has been the case with Sir Keir’s leadership in general, Labour offers plenty of tea and sympathy to local authorities, but ‘responsibly’ dampens down any expectations of real change. It explicitly rules out restoring local services to even the inadequate levels of 2010.

Municipal socialism

The ramifications of the crisis in local government go far beyond the rather stale and uninspiring politicking that passes for bourgeois politics in contemporary Britain. Of course, the provision of good local services is vital for people, especially amongst the poorest sections of the working class. The disproportionate impact of austerity on the poorest local authorities and the grossly unequal nature of local government finance, business rates, council tax bands, assessments and central government grants has been well-documented from the 1980s onwards and provides much of the framework of the common sense of the labour movement’s politics of local government.

The defence of those services, along with the autonomy of local institutions, became key battlegrounds from the 1970s and greatly intensified in the 1980s, when the Tories imposed central government control over local government finance and forms of block grant, business rates and the nature of local taxation, such as the poll tax. In the wider context Margaret Thatcher’s approach to local government policies were part of a successful campaign to increase the share of wealth in the hands of the ruling class.

These attacks also struck at an important historical element in Labourist politics, ‘municipal socialism’, which in its turn had been built on the reforming and radical traditions of 19th century local government – as developed in Birmingham by Joseph Chamberlain and the Progressives in the London County Council. This ‘gas and water socialism’, in its own way, also drew on the civic traditions of bourgeois Britain and the evident local pride and often ostentatious displays of wealth, progress and prosperity embodied in magnificent public buildings and civic amenities. Visit any of the great industrial and commercial cities and towns that came into their own during the 19th century, such as Birmingham, Manchester or Liverpool, and you can still see the self-confidence of that period in the architecture and cityscapes they created. The contrast between that era of British capitalism’s triumph and its present-day position could not be more starkly posed than in the crisis now facing local government and the highly symbolic example of Birmingham. Sic transit gloria civitatis.

Despite some recent attempts to revive the rhetoric of municipal socialism in the form of the ‘Preston model’ or the grandstanding appeals of metro-mayors, such as Andy Burnham in Greater Manchester, given the degree of control central government exerts over local authorities, these options are extremely limited. In practice the power of local councils are circumscribed by diktat from Whitehall; the room for manoeuvre and local initiative is non-existent.

Defend services

Although Labour councillors still talk of acting to defend services and mitigating the worst effects of the Tory austerity programme, in practice this dented-shield approach is mere rhetoric. Labour councils sell off assets to buy some time and space to maintain budgets, or they try to hold down wages to ‘protect’ overall budgets at the expense of the living standards of council workers. Plenty of dents here, but no effective shield to protect vital services.

Moreover, should any Labour councillor oppose these strategies and vote against such budgets, they face losing the whip. Labour has completely bought into the presidential-style politics of local mayors and the centralisation of power in a few hands at cabinet and senior-officer level. In accepting the bidding culture and partnership politics initiated by George Osborne, metro-mayors like Andy Burnham and Steve Rotheram are essentially running the larger conurbations as agents on behalf of central government, and thus further eroding local democracy and any real accountability.

Of course, that is only to be expected of capitalism’s second eleven, the Labour leadership, but those claiming to be on left have also failed to present any real political alternative or analysis of the significance the local government crisis. The ‘official communist’ Morning Star presents a similar critique of Tory austerity to the Labour leadership, albeit with calls for the next Labour government to make up the losses suffered by local authorities since 2010.[3] Such plaintive cries for expansion and extra spending are likely to fall on deaf ears, so what then? Socialist Worker has the answer: more protests and building resistance to protect local services. All valid and necessary in themselves, but where is the politics and the alternative to the attacks on local government which have intensified over the last 40 years?[4]

That is why the communist minimum programme links the defence of local government services to the wider battle for republican democracy – from the top to the bottom of British society. Abolish the metro and city mayors, and the powerful cliques of senior officers and unelected officials, who currently shape policy in the town halls. Replace them with a real local democracy that radically devolves service provision, planning, tax raising, law enforcement and funding allocation as far down as possible, and appropriate to ward, borough, city and county levels.

By bringing together the political battle for local democracy and the demands for the economic resources to make them a reality, we expose both the political bankruptcy of those Labourites trying to make the current system work and show how mass mobilisation around the communist programme is the only real alternative to the crises in local government l

[1]. www.telegraph.co.uk/opinion/2023/09/05/birmingham-is-paying-the-price-for-labour-rule.

[2]. www.lgcplus.com/finance/moodys-warns-of-more-council-failures-in-the-near-term-13-09-2023.

[3]. morningstaronline.co.uk/article/e/labour-right-demand-new-settlement-council-funding.

[4]. socialistworker.co.uk/features/who-is-to-blame-for-birmingham-council-crisis.