"GLASNOST" ("Militant and Liverpool")
Local Government News April 1987 (1987A)
I have often written in defense of local government but this is a plea for openness and not congratulations! Nor is it just another piece about Liverpool. No - it is a quite desperate plea for more accountability. And as a practical matter that means councillors ready to speak out honestly and, if necessary, to stand up to their leaders - and officers with the courage (and it takes courage here!) to do the same. Because without transparent and accountable public finance cities like Liverpool are finished.
And Liverpool is not unique. But the damaging thing is that any local authority should occasion such a plea when the Government's own attitude to power now frightens local government and the whole of public service. For it already a lesson of history that democratic local government is one condition of freedom. The "Municipal Stalinism" experienced in Liverpool is, in so many respects, the mirror-image of this country's "Elected Dictatorship". It is a grotesque response in a State which itself has few answers to centralization and unchecked power.
Let me start with the people. Only four years ago Liverpool saw itself heading a united Urban Left. Rallies assembled around Liverpool Pierhead's monumental speaker's platform. It hammers out a dedication in letter of rusty steel (1) "Workers Unity Has No Boundaries" "Workers of Europe Unite". But a temporary platform was needed large enough for MPs and local leaders from across England. Messages of solidarity went winging to the nation's oppressed; a deeply unpopular Government in their sights. There was Tony Benn, there was David Blunkett - and of course there was Liverpool's Tony Byrne and Derek Hatton too.
Eric Sorenson, then Michael Heseltine's policy director, also stood there quietly listening within the entrance door to the "River View Rest Centre for Elderly People". But thousands of people heard speakers challenging central government. Outdated dogma didn't seem to matter. Before us were people seemingly of the poorest city in Europe cheering for a chance to do something for themselves. Liberty! And how they cheered: it was good! It seemed very good!
But the platform claptrap was riddled with contradictions from the start! "We must defend our Local Mandate" (cheers); "We must have centralized Socialist planning" (cheers); "Three cheers for Tony Benn - and let's hope he gets a safe seat this time" (cheers). Derek Hatton - the "Mersey Mouth" was in full cry; "No cuts in jobs or services; no increases in rents or rates - total political confrontation across the board. They were being sold down the river once again!
Recently I asked Councillor John Hamilton (Hatton's "von Hindenburg") if he had ever believed it would work. In 1983 (while still "Leader") I suggested to him that it would further erode local government's case. In my earlier interview with the Scottish Minister Malcolm Rifkind and the rebel Lothian leader Eric Milligan (LGN. January 1982A) we saw how skillfully the Scottish Minister had used the "Hard Left" opposition to get contentious new powers through Parliament - and (in LGN. February 1982B) how Michael Heseltine's people had studied the "Rifkind Template". They thought it would be just a matter of tidying things up. John Hamilton still believes the errors were just poor Liverpool Council tactics and a tactless Derek Hatton. But essentially they depended on trade union support and the return of a Labour Government that was willing to pick up the tab.
That they will never do. Did Militant not know that the best way to create redundancies was through improvident borrowing and council workers facing unemployment while the foreign bankers make a killing? (Byrne and Hatton were the first on the Left to "privatize a revolution"). And this is the point, what did most councillors know? Nobody knew much at all. In my own search for key budgetary details I found that the "Leader" of the council and the councillors in general knew very little of what was at stake. In my search for key budgetary details I found they generally knew none of the essential facts - nor were they able to find out.
I write again from Toxteth, which suffers even worse discrimination under Militant. Again Michael Heseltine's voice is heard. "There is a democratic process in this country, there are councillors, there is a city authority and it is elected"..."that is the instrument of democratic power serving this country. Why didn't they play a part in that"?! I can only respond as I did in "The Fire - Now !" (1981E); "Unless people can see how much, and for what we are spending, we no longer have democracy worth a damn at any level". For if Heseltine's rhetoric was not ironic enough, the further real irony is that the City Council accounts for only a minor part of public spending in Liverpool; the bit to be met from local government rates, rents and borrowing is now just around 14%!
Again, to spend is to choose - and the rest relatively rhetoric. We still lack a perspective of the actual government of cities since the whole polarized and dichotomized, political conflict is falsely polarized on just a tiny fraction of the action. And so that, too, is enveloped in confusion, contradictions, secrecy and, recently in Liverpool, downright dishonesty. When I first went to work with Shelter in Toxteth the 1969 graffiti read "Why Vote - Anarchy"! Exactly so! Therefore we have an open city or we have a finished city; an open country or a finished country. The people must know what's going on!
Law Lords and Tory Plots!
And will they know before the next May elections? Probably not. Meantime glib rhetoric about an "establishment Plot" and martyrdom may carry Militant back.
Predictably on 13 March "Militant" demonstrated outside the House of Lords and carried the banner headlines, "Guilty of Defending Jobs and Services". The run up to next May's Election had begun. Hatton; "Five Law Lords sitting down in London have decided the democratic wish of the People of Liverpool is worthless. The only way we can be removed from power is by an unelected group in the House of Lords".
That was not exactly the matter before the Lords. On 12th March they surcharged the 47 Liverpool councilors and discharged them from office. But more precisely they rejected the councillors' case that the auditor should have given them an oral hearing (S.20 Local Government Act 1982) - and they upheld earlier decisions by the Divisional and Appeal Courts over a surcharge. The surcharge was a £106,103 lost to the Council through its delay in setting their 1985 rate. Councillors also faced two years of legal costs exceeding £400,000; a tragedy for those who just "went along" with the leaders: they never had of a case in law.
Even a few experienced councilors felt an awesome distance between the rigours of the judicial appeal and the issues which, they imagined, had brought had them there. They should have known better. Martin Loughin warned a Liverpool conference I arranged for English and Scottish Council Leaders in October (1983) that judicial appeals could be no panacea. In such matters the courts, just like the local authorities themselves, were constitutionally subordinate institutions and largely limited to procedural considerations (2) . Derek Hatton and Finance Chairman Tony Byrne were not at that Conference in Liverpool's Adelphi Hotel - nor would they allow Council officers to attend. But at one point they invaded the venue to hold their own informal session and make their statement: "No Surrender"! A civil servant who was present purred, "This will be easy"!
It was absurd to represent the Law Lord's decision as a plot - but was there a wider plot? The scrupulous answer must be "Yes" and "No"! At the same conference Patrick McAusland (subsequently LSE Law Professor) offered one wider perspective: "A government which does not put a high priority on "constitutionalism", which is so concerned to carry through its policies that it places the toughest priority on having power to do what it wants, will sooner or later feel the need to attack and emasculate alternative governments and alternative centers of power at their electoral and financial roots (2) . And so, more generally, the Rates Act 1984 finally gave the Treasury the control they always wanted over local government finance - and politically the stance and high profile adopted by the Militants had to make Liverpool a primary target.
But one must distinguish between overt "policy" and "plots". The above was overt policy and it must be said that the Labour Party has yet to resolve its own general policy on the localist versus centralist dilemma. For radical Conservatives there also seems nothing irreconcilable about the extension of such Treasury control and a necessary dispersal of power because their final idea of freedom is the "privatized and voluntary state". This argument runs that local government is just one of the "barnacles" on a simplistic model; one however that is packed with inherent contradictions.
But within the grand dichotomy the ordinary cut and thrust of party politics "dug in". Why, for example, did the Government not impose budgetary discipline on Liverpool a long time ago? There is no doubt they could have done so. Liverpool City Council has not published its Abstract of Accounts since 1982/83 and its chaotic practices and improvident borrowing were becoming legendary. There was even a very good argument for taking the ("independent") Audit Commission to court - so why did they funk it? Why the long protracted agony .....with the auditor finally left to take action on a detail?
Firstly, Ministers themselves dread the deadly odium of stepping in to create redundancies. Liverpool has an unemployment rate of over 27% and in some wards - like Granby - youth unemployment is over 60%. Thus while the Treasury can control, local government must often appear to bear the political responsibility (as a major employer) for hard decisions. For example it was civil servants who in 1984 first suggested a large stepping up of "capitalisation" in Liverpool - thus putting off the evil day at greater expense, and often much to local Liverpool officials' concern. They then felt it part of a "necessary" package at a time when many recognised Liverpool had been harshly treated.
But any such sympathy was to evaporate in the face of Derek Hatton's Militant antics and Tony Byrne's blinkered determination to push through a massive housing programme to the exclusion of all else. Secondly given a politically similar revolt by Lambeth Militants in London - and after the 1984 breakdown of talks ("Dancing on -Tory Minister - Jenkins' grave", etc) Conservative Party Chairman Norman Tebbit saw the obvious party political dividends in letting Militant "hang itself". A General Election loomed .... and "Tebbit took the trick"!
So on 25 February this year Liverpool set its rate - including a rise of only 5%. The latter seems a political adjustment by Tony Byrne - the Treasurer's reports for the relevant meetings didn't give full, or clear, information and it may therefore be that Liverpool has an illegal rate once again. By 15 March this year it began to emerge that this year's gap in £50 million and (while average 1985/86 loan charges per capita in London were £60.90 and England and Wales £50.78) the figure for Liverpool this year is now a staggering £197,000! This figure needs adjustment for some subsidies but, again, the horrific loan charge must increase as actual expenditure on committed contracts and deferred purchase agreements is incurred in future years.
Academic commentators who praised the "ingenuity" of Liverpool's "creative accounting" are wide of the mark. We put it to our Liverpool students like this. If you want to spend £1 million each year (borrowing at a modest 10%) the repayment and interests will cost £260,00 in the first year - but spending that £1 million will cost £1,300,000 in the fifth year. So my question is, what were the terms for all the multi-million foreign loans negotiated by Byrne and his Militant supporters - and what result will this have on staffing and services?
I began asking councilors in early February. But it was impossible, they said, to penetrate the juggling of accounts in committee papers. So one simple question was devised; one that any councilor has a right and duty to ask and any Treasurer can (normally) give an immediately answer: "What are the total loan charges for each of the last two years and (on present commitments and assumptions) for each of the next five years"? Councillor John Hamilton, while still "Leader" of the Council was unable to find out:
LGN: Let me be crystal clear, as Leader of the Council you do not know the authority and terms for the deferred purchase deals"?
Hamilton: The authority was delegated to (Tony) Byrne, they have never been before Council...I went the other day to the Treasurer and he didn't know.
John Hamilton - was discredited in his Toxteth Granby Ward while acting as the Militant's "von Hindenburg" - especially when Sampson Bone (a Militant sympathizer from Brent) was crudely imposed as Race Advisor. John Hamilton's Granby councillor colleague David Leach, who stood up for the local black population in that controversy, put it all in context. "Asking specific questions is deemed a criticism and lack of support for Leadership. So people don't ask, or if they do they know they are going to be accused of being disloyal".
And Leach nicely illustrates the abiding Liverpool problem, perhaps even a national problem too - and one that even transcends budgetary details. The Nazis called it the "Leadership Principle" ("Führerprinzip") but at least the Nazis were open about it! Certainly it was always a feature of Liverpool administration's macho style, Tammany Hall, "machine type", "local boss" politics. With their "caucus within caucus" Tony Byrne and Derek Hatton just hyped it up several points - and so a couple of people could control the lot.
The new Liberal Leader, Sir Trevor Jones, had a rough idea of the total debt this year at the Liberal press conference on 13 March - and a few minutes before the 18 March debate in the House of Commons, the 1987/88 debt and budget gap were phoned through to Liberal MP David Alton. But will the Tories help the Alliance this year - and since the Liberal Liverpool Council could be again overthrown by Militant on 7 May? David Alton suggests asking the Audit Commission to carry out a special study under S.29 of the Local Government Act 1982. Like Councillor Margaret Hodge of Islington, this hoists the Audit Commission on its own petard (cf. "Blandishments of Banham") and puts it in the actual "hot seat". And Ministers would then find it more difficult to distance themselves from the problems.
Sauce for the Gander
So what are the contents of the bottom drawer? Hardly had the five Law Lords sat down to hear the councillors' appeal when Lord Scarman (previously Lord of Appeal) rose in another part of the Lords to introduce a debate about urban problems: "I doubt whether even today we have got away from what I suggest is the error of regarding the problem of inner city decline as a local government problem or as a problem that can be handled within the confines of local government finance".
Then there was all the familiar stuff. But to pick up my earlier point again, overall public spending within the boundaries of Liverpool is now running well ober £850 million a year. Overall council spending accounts for about 34% and, if one then subtracts central government grants, the amount of Council spend is about 14% of the total. So if "money speaks to the purpose of men and nations" - as it does - then we need to know more about the other hidden politics of public spending since that's providing most of the action.
The top priority programmes alone, which are targeted by central departments to environmental agencies with the City are worth a close look. These quangos do not have to finance their money, like the local authority, since they are mostly deficit finance régimes. Thus there are two housing régimes operating side by side. The Militant council's creditable achievement was building "5,000" houses (actually 3,096) and this then was to be the key role in the above Great Local Government Drama.
But the government sponsored housing associations and co-operatives have been spending £25 million a year within Liverpool (almost as much as the City's entire Housing Investment Programme) - but this "voluntary" housing enjoys the highest level of central government housing subsidy in the whole of Europe. So regardless of "taxes" or "rates", which costs more? The Audit Commission's "Management of London's Authorities" (January 1987) examines housing performance measures which are quite spurious when we start looking at the "knock on effect" of the two regimes (see AIS Table).
Or, for example, the Merseyside Development Corporation's £29.2 million direct annual grant from the taxpayer is more than the total of the DOE imposed Housing Investment Plan targets (borrowing limits) for Coventry, Kirklees., Knowsley and Wolverhampton combined. We are now proud of our Liverpool Albert Dock conversion - but no wonder it is so pretty; all such centrally funded agencies have little experience of the revenue burdens involved in trying to maintain the overall urban environment.
Michael Heseltine's "Where There's a Will" was published this month (Hutchinson, 1987) and I read he created a large park "in the centre of Liverpool". I went today down to the river to have a look at the fortifications that keep it closed: "Warning Guard Dogs Patrolling Premises"! When I stopped to photograph a security official drove rapidly up in his van: "What are you doing - we want to keep people away from here"! (NB. A park was finally opened in 2012 - 25 years later - but most of the site is still undeveloped; Des McConaghy 2013).
But given the nature of urban problems in the post industrial state, if local government is to survive the first duty of councilors must be knowing what goes on - not trying to do everything themselves! That takes a resource called information and also the courage to get it and use it in an accountable way. The poison of the "Militant Municipality" was its sheer ignorance - and its contempt for politicians of conscience and constituency.
As when I reported from the Toxteth (six years ago) it seems clear that "at the bottom" the mass of people stand apart from both socialist and capitalist societies; societies that may have exhausted their remedies. And sometimes these folk speak with an authority all of their own. The other day I saw Eric Caddick pushing his bike up the hill to Toxteth. He is a retired back seaman who has stood as a Toxteth Communist candidate (without success) for the past ten years. "What we need is an exposé" - said Eric - "not jargon. The large sums must be broken down so that people understand - or Militant will just get up to their 'shinanikins' again". I laughed: "Since when has your CP stood for 'open government'"? A cheerful wave answered me, "Look at that Gorbachev taking the lid off his tin of worms. Cheerio - 'Glasnost'"!
Liverpool 19 March 1987
(1) The monumental Liverpool pierhead speakers platform was subsequently demolished.
(2) Operating Under Central Targets: Exchange of Scottish and English Experience; Adelphi Hotel Liverpool 13, 14 October 1983.
Cllr. John Sewel (COSLA), Arthur Midwinter (University of Strathclyde);, Cllr. Ronald Young (Strathclyde Regional Council); Cllr. Eric Milligan (Lothian Regional Council); Treasurer Robert Gray (Glasgow District Council); David Webster (Glasgow Housing Department); Professor Patrick McAuslan (University of Warwick Law Department); Cllr. Keva Coombes (Leader Merseyside Council); Tony Travers (NE London Polytechnic); Martin Pilgrim (Under Secretary AMA); Cllr. Martin Coleman (London Borough of Brent); Ron Turton (Chief Executive Halton Borough Council), Robin Wendt (Chief Executive Cheshire County Council) and Martin Loughlin (University of Warwick Law Department).
Contact to Des McConaghy:
5 Glenluce Road, Liverpool L19 9BX, Tel. 0151 427 6668