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18 December 2015

Jeremy Corbyn warns Labour councils not to set “no cuts“ budgets

Leader says that local authorities must comply with legal requirement for balanced finances. 

By George Eaton

In 1985, after the Thatcher government capped councils’ spending, 15 Labour-led authorities responded by refusing to set budgets. Their hope was that ministers would concede, rather than take direct responsibility for providing local services. The strategy failed but the memory of the tactic endured. Among its supporters was John McDonnell, then the finance chair of the GLC under Ken Livingstone. 

Following Jeremy Corbyn’s election on an anti-austerity platform, some of his supporters have been calling for councils to emulate this stance. Last month, the Lewisham Momentum group urged activists to petition the local authority to set a “no cuts budget”.

But in a letter to Labour council leaders, Corbyn, McDonnell and Jon Trickett, the shadow communities and local government secretary, have warned against defying the law. They write: “A number of colleagues have requested clarity about Labour Party policy concerning the setting of legal budgets.

“The shadow chancellor, John McDonnell MP, said in September, ‘…the situation councils are now in is if they don’t set a budget, a council officer will do it for them. There is no choice for them anymore.’ As you know, councils must set a balanced budget under the Local Government Act 1992. If this does not happen, i.e. if a council fails to set a legal budget, then the council’s Section 151 Officer is required to issue the council with a notice under Section 114 of the 1988 Local Government Act. Councillors are then required to take all the necessary action in order to bring the budget back into balance.

“Failing to do so can lead to complaints against councillors under the Code of Conduct, judicial review of the council and, most significantly, government intervention by the Secretary of State. It would mean either council officers or, worse still, Tory ministers deciding council spending priorities. Their priorities would certainly not meet the needs of the communities which elected us.”

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Though many, including Corbyn supporters, will agree that the stance is only the sensible one, the Labour leader’s position will antagonise some on the left. It is often said that “lawmakers cannot be law breakers” but when I recently interviewed McDonnell, he told me that trade unions would be justified in breaking the law to resist the government’s new legislation. “It’s inevitable, I think it’s inevitable. If the bill is introduced in its existing form and is used against any particular trade unionist or trade union, I think it’s inevitable that people will resist. We established our rights by campaigning against unjust laws and taking the risk if necessary. I think that’s inevitable and I’ll support them.”

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But when I spoke to Tom Watson after his speech this morning on liberty, he told me that he didn’t agree with McDonnell and Len McCluskey that unions should go beyond the law if necessary. “I think you should always adhere to the law,” he said. 

In the case of council cuts, Corbyn’s contention is that it would be unwise and impractical, rather than merely illegal, not to set a balanced budget. But that is not an argument his most radical supporters will accept.