John McGrory

Radical economic policy-making at a local level is key to fighting austerity

John McGrory

THE ECONOMIC SITUATION for many Labour-run councils is currently very difficult. In 2010 the Coalition implemented sweeping cuts to council budgets nationwide and this has continued under the Tories. Huge cuts to the Revenue Support Grant (RSG), which is specifically used to fund the shortfall in revenue costs, such as the gap between adult social care income and expenditure, have disproportionately affected Labour councils. In Leeds, the RSG was £353m in 2006 and by 2020 will be £27m, leaving a huge funding gap. Labour councils thus need to reconsider local economic policy making if they are to mitigate the worst impacts.

Leeds Central CLP activists are examining the economic policies of Leeds City Council (LCC). LCC’s strategies are based on neo-liberal ‘trickle down’ economics and the ‘sticky cities’ concept promoted by the Big Four accountancy firms (Deloitte, EY, KPMG and PWC). This is also true of the Local Enterprise Partnership.

The ‘competitive cities’ growth strategy, which is hugely reliant on inward investment from large multinationals, particularly in the retail sector, concentrates on the city centre at the expense of inner city areas where poverty is widespread and increasing. This is also true of other Labour-run councils in large northern cities.

Many major decisions on economic policy are taken at executive officer level and much of the economic advice provided is from private sector providers, such as the Big Four, with little engagement with local universities, party members or others. There are countless examples of the Big Four having conflicts of interest in providing work for councils while providing advisory services to the same multinationals who stand to benefit from council economic policy.

In Leeds there is an absence of effective consideration surrounding how to boost council revenue. Like many councils, LCC has large capital reserves which cannot be used for revenue expenditure - but has had to make major revenue expenditure cuts due to the decrease in the RSG, imposing damaging austerity on local communities. For example, various assets from the council property portfolio have been sold off without exploring how they could be used to raise revenue.

The work of Preston City Council, spearheaded by councillor Matthew Brown, is interesting here. This policy work, with the assistance of the Centre for Local Economic Strategies (CLES), focuses on community wealth-building through anchor institutions - organisations across the public, commercial and social sectors which have a significant stake in places due to the scale of their workforces, levels of spending and the fact that they are unlikely to leave.

Such policies have involved the council and anchor institutions critically considering their procurement policies. Where possible, the council and anchor institutions are using local providers, including small and medium-sized enterprises, co-operatives and other firms organised under alternative models of ownerships to provide goods and services. Wealth is thus trapped in local areas, instead of being lost, for example through dividend payments to external shareholders. Other polices have included setting up a credit union, a council-owned energy supplier and influencing the local government pension fund to invest in local infrastructure projects.

In order to challenge LCC, Leeds Central CLP have:

  • Organised an event in October 2017 to discuss alternative economic strategies which included speakers from the Public Policy Research Unit, CLES and Preston City Council. (See Leeds Central CLP Facebook page for video.)
  • Pressurised LCC to change policy, using the Big Four less and local universities, trade unions and members more. Pressure has been applied through the Local Campaign Forum (LCF), union branches and the trades council.
  • Planned a local government economic policy event bringing together CLPs, local union branches and other groups from across Leeds. » Linked up with groups outside the party, for example local residents groups, to challenge LCC’s policies.

The local elections in May 2018 provide opportunities for the left to select socialist candidates. However, there are also practical things to do, including pressurising executive officers, engaging with local poverty action groups, homelessness charities and others, to build a wider anti-austerity movement. We must change policy direction before the elections, otherwise it could cost the party votes and worsen the lives of most people living in Leeds.

We saw the power of grassroots party and union members in calling councillors to account in the recent bin strike in Birmingham as well as Bristol LCF passing a no cuts budget motion. We saw more successes in deselecting councillors who were openly supporting neo-liberal policies in Haringey and Manchester, as well as ex-Labour councillors in Kingston-upon-Hull, who previously took a stance against austerity at odds with the Labour Group, seeking to re-stand as Labour candidates.

It has been incredibly disappointing to see most Labour councils implementing cuts. As things worsen, the case for using ‘unallocated useable reserves’ grows. However, action on this is unlikely without co-ordination across a number of Labour councils - and meanwhile there are many other things councils can do.


Leeds Central CLP, writing in a personal capacity.