Jim McMahon, Labour's leader in local governmnet, has a message for the Labour leadership candidates.
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Labour's leadership hopefuls have lessons to learn from the party's councillors

Devolution of powers, reform of the state, and above all, a clear idea of what Labour is for are required, says Jim McMahon.

The four contenders for Labour’s top job will be speaking at a local government hustings in Harrogate today. I would urge them to listen there to the councillors who run our grassroots campaigns and knock millions of doors every year for the party. I recently surveyed all six thousand Labour councillors across England and Wales. One in ten replied, whether in power locally or in opposition, from every sort of council and from every region. Their nationwide efforts shouldn’t be taken for granted and their insights from outside the Westminster bubble should be heard. So, what do Labour’s local champions want from the party’s next leader?

The issue that vexes us most is the prospect of yet more cuts to council services. On top of the 40 per cent of our funding we have already lost since 2010, we look set to lose another £3 billion next year alone and are heading towards a funding gap of £10bn by the end of the decade. The government insists on caricaturing councils as brimful of faceless bureaucrats, but people need to understand that this will mean swingeing cuts to public services that they do care about. Youth clubs, libraries and children’s centres will shut as a result. There may have to be reductions in social care for isolated adults and savings in children’s services for vulnerable kids. Four out of five Labour councillors believe that in the next two years some councils will go bust altogether. We need Labour nationally to argue for fair finance for local authorities, distributed according to need, and for councils to be able to keep revenue that’s locally raised. Then we can offer a meaningful alternative to the Tories’ miserable tale of managed decline.

A coherent, compelling narrative on the economy is essential. Labour’s local representatives believe that we lost the debate on the economy in 2010 and never recovered. Failure to command people’s trust and confidence there poses a credibility problem we cannot dodge. If we can’t defend our economic record, then no-one else will. And if we are not sure about the economic path we want to take, then nobody will follow. Our political economy needs a shakeup too. The state often props up the market with very little quid pro quo. To cut the housing benefit and tax credit bills, for example, we need to drive wages up and rents down in the private sector.

The country is suffering a chronic housing crisis. Supply is badly outstripped by demand. Too many of the homes we have are sitting empty or falling apart. Regeneration since 2010 has ground to a halt. But new government policy will make matters worse. The forced sale of ‘high-value’ council homes that the government is proposing, for example, is an exercise in asset-stripping that will, over time, segregate mixed urban communities into separate city centres for the rich and banlieues for the poor.

On welfare, the government seems determined to try to balance the nation’s books on the backs of the poor. The contributory principle that people must put in as well as get out is important, but so is having a system that provides the right incentives, safeguards people’s dignity and supports them at times of need. After the Chancellor’s £12bn of cuts to social security in his budget next week, the nation’s safety net will be left dangerously threadbare. As the welfare system is hacked back, it is councils that are left to pick up the pieces at the taxpayer’s expense.

The machinery of government also needs rewiring. When Labour was last in power we kept a lot of decision-making at the centre, in England at least. We now need a principle of subsidiarity that insists that power, resources and responsibility should rest at the most appropriate level to address a given issue: devolution by default, not outdated deference to Westminster and Whitehall. Britain’s regions have different characters and differing needs. They ought to be able to organise public services in their area in the most effective way for their local population, especially when one-size-fits-all national approaches have failed, as they have in vital areas like employment and skills. Devolved transport has worked well in London. I have high hopes for the devolved and integrated approach to health and social care we are now taking in Greater Manchester. But devolution should be on offer to all parts of the country, be they collections of coastal towns or former industrial areas, not just a handful of major city regions with their metro-mayors. Unequal devolution runs the risk of entrenching inequality. But, done right, devolution offers a route to renewing a sense of belonging and restoring local pride.

Labour in parliament must now prove an effective Opposition. While the party picks its top team, our MPs must take the government to task, all the time looking outwards to serve and speak up for the people who put them there. We cannot cede the political frame for this parliament the way we did in 2010.  We need to learn the lessons of the past five years. During that time, neither the party’s policy offer nor its on-the-ground organisation was bad. Its communication was weak though and its core message was unclear. We have to choose a strong, decisive leader who can tell a convincing story about the sort of country we want to be. We must be seen to stand for something. Whether our candidates are up against Conservatives or UKIP in 2020, clarity of definition, confidence and purpose are what our movement now needs.

Cllr Jim McMahon OBE is the Leader of Oldham Council  and the Leader of Labour in Local Government

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Scotland's huge deficit is an obstacle to independence

The country's borrowing level (9.5 per cent) is now double that of the UK. 

Ever since Brexit, and indeed before it, the possibility of a second Scottish independence referendum has loomed. But today's public spending figures are one reason why the SNP will proceed with caution. They show that Scotland's deficit has risen to £14.8bn (9.5 per cent of GDP) even when a geographic share of North Sea revenue is included. That is more than double the UK's borrowing level, which last year fell from 5 per cent of GDP to 4 per cent. 

The "oil bonus" that nationalists once boasted of has become almost non-existent. North Sea revenue last year fell from £1.8bn to a mere £60m. Total public sector revenue was £400 per person lower than for the UK, while expenditure was £1,200 higher.  

Nicola Sturgeon pre-empted the figures by warning of the cost to the Scottish economy of Brexit (which her government estimated at between £1.7bn and £11.2.bn a year by 2030). But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose considerable austerity. 

Nor would EU membership provide a panacea. Scotland would likely be forced to wait years to join owing to the scepticism of Spain and others facing their own secessionist movements. At present, two-thirds of the country's exports go to the UK, compared to just 15 per cent to other EU states.

The SNP will only demand a second referendum when it is convinced it can win. At present, that is far from certain. Though support for independence rose following the Brexit vote, a recent YouGov survey last month gave the No side a four-point lead (45-40). Until the nationalists enjoy sustained poll leads (as they have never done before), the SNP will avoid rejoining battle. Today's figures are a considerable obstacle to doing so. 

George Eaton is political editor of the New Statesman.