Our Greatest Challenge – November 1981

By Ted Knight, Leader Lambeth Council

London Labour Briefing No. 15, November 1981

Ted Knight
Ted Knight, Leader of the council from 1978-1986

Environment Secretary Heseltine’s ‘Consultative Document’ on local government financing presents the greatest challenge ever faced by Labour councils.

His legislation which will be introduced in the next session of Parliament, fundamentally alters the rules of local government in England and Wales.

It will bring to an end a constitutional and historical relationship between central and local government which has existed for centuries. It calls for a concerted response led by Labour Councils and the trade unions to thwart the legislation and to rescue the jobs and essential social programmes provided by local authorities.


Carve-up threat

In advance we have been told that Parliamentary opposition cannot stop Heseltine’s Bill becoming law before local authorities make their budgets for the next financial year, starting on 1st April 1982.

This means that every Labour controlled local authority is now living in a twilight world of impending Tory legislation which makes its electoral commitments impossible to carry out. If we drift into this situation without a plan of action, then Labour Councils will be mercilessly carved up at the next local government elections in May, next year. The Tories have devised an unscrupulous timetable to achieve this result. We must outline a strategy to counter this.


Heseltine’s Plans

First of all we should review the proposed legislation and its implications. These are the main Points:

  1. Each local authority will have an expenditure cash limit on it, which will be an assessment by Whitehall of what it needs to spend – Grant Related Expenditure – plus a percentage ‘tolerance’.
  2. The initial rate that a local authority can raise will be the balance of this expenditure limit following the deduction of Rate Support Grant entitlement.

This rate will be raised from both commercial and industrial ratepayers, i.e. as the rate is raised at the present time.

  1. If the local authority has a financial budget above the Tories’ cash limit, then it will have to raise a First Supplementary Rate as soon as practical after July 1st in the financial year. The income permitted to be raised under this First Supplementary Rate will be limited by legislation to a percentage of the initial cash limit. In levying the First Supplementary rate, Heseltine has devised his first trap. Industrial and commercial ratepayers will bear a smaller proportion of the rate to be levied than they would under the present system, and the balance falls on the longsuffering domestic ratepayer.
  2. Should the local authority’s budget outstrip the income levied in the initial and first supplementary rate, then Heseltine’s legislation allows for a second supplementary rate which could be levied after October 1st in the financial year, but this is where the Tory trap is sprung.

The second supplementary rate is legally subject to a referendum in which the form of the question will be determined by the legislation and the result will be binding on the council. But Heseltine’s unscrupulous shenanigans do not end here.

  1. Should the electorate agree to the second supplementary rate, the amount levied would in the main have to be borne by the domestic ratepayers. Once again, the industrial and commercial ratepayers would receive Tory protection. In other words, domestic ratepayers would be callously used to subsidise big business profits.
  2. Should the referendum go against the local authority – and how could it be otherwise? – then its budget must be submitted to the Secretary of State who will decide what cuts in expenditure will be made, and will then give the authority to borrow the balance. Furthermore, the local authority will not be permitted to proceed with its following year’s budget without the approval of its expenditure pattern by the Secretary of State
  3. One new factor included in Heseltine’s proposals is that the local authority will have to circulate to every elector a statement from those councillors opposing the supplementary rate. This introduces a barrage of Tory propaganda against Labour councils, to add to the media campaign.



 It is certain that the majority of Labour-controlled London boroughs, plus the GLC and ILEA, will be caught in Heseltine’s trap. Other big cities and metropolitan counties such as Sheffield,

Manchester, Merseyside and South Yorkshire are also high on Heseltine’s .hit list’. The purpose of Heseltine’s whole exercise is to try and force Labour councils to impose massive cuts in essential services and redundancies. It obliges them to adopt budgets in March which would be electorally suicidal. They would either have to make the cuts or propose supplementary rate increases to be levied in July, which Labour voters would deem intolerable.

By March next year we can either refuse to make a budget under Heseltine’s terms, cut jobs and services, propose massive rate increases; or simply resign and hand over to the Tories.


Labour’s referendum

We believe there is an alternative strategy. We must seize Heseltine’s own criteria – the referendum. Before we propose a budget, Labour councils should go to the people with a clear choice. Do they want Heseltine’s cuts, sacking, and rate increases, which protects Heseltine’s big business friends and penalises working people?

Should the Thatcher government be allowed to deny central government funds to deprived inner-city areas? Labour councils would stand in a referendum of our own, on a clear policy of no cuts, a freeze on rates and more government cash. This would reduce the referendum to a straight ‘yes’ or ‘no’ vote. The GLC, ILEA and the London Labour boroughs should unite together and seek a mandate from the electorate in February or early March to oppose Heseltine’s legislation and its threatened massacre of jobs and services.  The GLC would post to the electorate: Do you want to see the cheap fares policy scrapped and the imposition of Tory increases of over 100%? Do you want to see unemployment increased in London by another 5,000?

ILEA would ask: Do you want to see the closure of schools, a drastic increase in class sizes and the educational future of your children irreparably destroyed?  Such a campaign would call upon support from hundreds of community organisations who depend on local government to provide their resources, and on tenants’ associations, who would face loss of services and repairs, as well as massive rent increases:

The impetus for the referendum campaign must also come from the trade unions, whose members face thousands of redundancies under Heseltine’s proposals. They would unite with local councils in explaining the Tory threat to the whole community and organising the Labour vote.

Private tenants and owner occupiers would inevitably be drawn into the campaign against the Tories. Such a campaign will expose the Tories and the SDP-Liberal Alliance who would have to take sides in the referendum.


The Choices

If we win the referendum, then we pose the government with the verdict of the people of London. The onus will then be on the Tories to restore the Rate Support Grant or act in complete defiance of the will of the referendum, a test of opinion Heseltine himself is advocating.

If the Tories ignore the electorate’s verdict, then we make the initial rate, without increasing the amount paid by ordinary households, and seek a second mandate at the May elections, announcing that we will make no cuts and will refuse to raise a supplementary rate.

Newly elected councillors, the trade unions and Labour voters will know a confrontation will come in early summer, and the anti-Tory campaign will continue.

If we lose the referendum, we will refuse to propose a cuts budget and let the Tories do it. They will go into the May elections as the Party of cuts and redundancies. We will work with the forces mobilised in the referendum campaign to combat the cuts and to continue the fight into the elections on the platform of the referendum.

The referendum is essential to the strategy of taking the issues in a positive way outside the council chambers and internal Labour Party meetings into the community itself actively involved in defence of its services and its local democracy.

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