The endless age of austerity: Liverpool puts the ghost of the 1980s to bed – for now

Despite hints at returning to the days of illegal budgets and a confrontation with Westminster, pain is far from over in a city haunted by cuts.

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It’s 1984, the year after a devastating general election defeat for a Labour Party led by an ageing left-wing socialist. The party had run on a manifesto that was subsequently deemed “the longest suicide note in history” (the party’s 2019 manifesto was twice as long).

This was the heyday of Thatcherism. Austerity, deregulation and monetarist reforms had been met with industrial militancy – the miners’ strike began in March – as well as high-profile confrontations with radical Labour councils determined not to implement spending cuts passed down from Whitehall.

In Liverpool, sharply dressed, mouthy firebrands like Derek Hatton gained control of the port city’s town hall, along with a small but organised band of Trotskyists who had established themselves in the local Labour Party.

The “Militant Tendency” faction set an illegal deficit budget, its spending far exceeding the council’s diminishing income. Instead of reducing its workforce or shutting down services, the council went on a spending spree, hiring more workers and defiantly initiating a mass council house-building programme. The move was part of an established strategy to threaten to bankrupt a city that had long been in terminal decline, forcing Westminster to concede a bailout.

Spectres of this era have appeared with increasing frequency since Jeremy Corbyn became Labour leader. The left-wing activist group Momentum has repeatedly been compared to the now-defunct Militant Tendency by Tory ministers and Labour grandees alike.

Over three decades after Neil Kinnock condemned the Liverpool councillors from the podium of the party’s Bournemouth conference, precipitating a wave of expulsions of Militant members from party branches, Dawn Butler, the shadow women and equalities secretary, heaped praise on the council’s legacy: “Conference, we are in Liverpool where over 30 years ago the council stood up to Thatcher and said – better to break the law than break the poor,” she told cheering delegates.

The same year, Hatton re-applied to join Labour and enjoyed a brief return to the limelight.

Last month, Liverpool’s mayor Joe Anderson, in the midst of a selection battle triggered by local Momentum activists, told the city's local paper, the Liverpool Echo, that he would refuse to make any more cuts, briefly enthusing the local Socialist Party (Militant’s uncompromising successors), which has long advocated a return to the real “Liverpool road”.

“I realise this will put us on a collision course with government,” he told the paper. “But we will have no choice – we will not shut down the services that this city needs. If the government wants to impose this, they will have to come here and try and do it themselves – but they will have a hell of a fight on their hands.”

At last week’s New Statesman conference on the Northern Powerhouse, having won the trigger ballot and retained the right to run as the Labour candidate in May’s local elections, Anderson was less emphatic.

“Sometimes the Echo takes a little bit of licence with what you say,” he tells me. “We won’t set an illegal budget. It’s as simple as that... There’s absolutely no return to ‘84.”

Clarifying his earlier statements, he said he “won’t produce a budget that will close children’s centres and close libraries. And if our finances didn’t stack up and it meant that that had to be done, then I would invite government to come in and do it.”

On 3 March, Liverpool City Council set its budget for 2020-21, making £30m worth of cuts to services. These types of cutbacks have, in recent years, become routine, and this is the latest in a decade of annual budgets that have seen the city gradually stripped of two-thirds of its central government grant, equal to £436m a year in real terms.

The £30m savings this year were scraped together from reductions in the number of children in residential care, increased means testing for social care packages, and a “transformation” in supported living provision for disabled adults. No libraries or children’s centres will close, and so Anderson will not have to make good on his promise to reject any budget which does so.

Nevertheless, the city is in dire financial straits. “We are heading for a confrontation,” says Anderson. “The finances are worse now than they were in the 1980s. They’re the worst they’ve been since the Second World War.”

Michael Heseltine recently told the New Statesman that Liverpool was a “boom town”, saying it had never been so “prosperous” or “dynamic”. The city centre has undergone a transformation in recent years, with major developments and regeneration schemes linked to its European Capital of Culture win in 2008.

But the benefits of this kind of growth are yet to trickle down to huge swathes of the city. The Indices of Multiple Deprivation show a decline in living standards in some wards since 2010.

The council has attempted to ameliorate some of the worst effects of austerity with its “Invest to Earn” strategy, becoming, in effect, a local entrepreneurial state and commercial landlord – increasing its annual revenue by buying up and charging rents on properties including hotels, office buildings and Everton Football Club’s Finch Farm training ground.

The strategy has brought in £57m of extra revenue for the council, but not nearly enough to compensate for the government’s fiscal tightening.

“There are people dying on the streets,” says Anderson. “There are people in poverty. One in three kids in some of the wards in Liverpool is going hungry. I’m having to provide meals at half term and summer holidays to make sure that they eat. It’s a disgrace. We provide tens of thousands of meals during the summer and half term… It’s obscene.”

The government’s rhetoric on the Northern Powerhouse and its “levelling up” agenda has often been dominated by talk of major infrastructure projects – high speed rail, tunnels and bridges. Before Anderson’s appearance at the conference, the new HS2 minister Andrew Stephenson had told delegates that, “now austerity has been confined to history… now we’ve delivered Brexit, it’s time to repay the trust of northern voters to ensure nobody is left behind”.

But the end of austerity will sound like a cruel joke to local governments facing millions more in cuts this year. From 2021, if the government’s “fair funding review” recommendations are followed, deprivation will no longer be taken into account as a criterion for allocation of funds, shifting millions away from local authorities like Liverpool, as well as many in the former “red wall”.

“I get a little bit angry and frustrated,” says Anderson, “when I hear people, whether it’s Andy Burnham or Steve Rotheram or someone else, talk about the issue of HS2 and transport, saying ‘Oh it’s going to be great!’

“You go to Kensington, you go to Anfield, or to Warbreck, where they’re worrying about where their next meal’s coming from, or whether they can pay a private landlord the rent. They’re not interested in flashy high-speed rail, they’re interested in survival,” he says. “That’s where we are.”

Opening the conference with his inaugural speech, the new transport minister for Northern Powerhouse, HS2 and the Transpennine route upgrade Andrew Stephenson referred to the end of an age of austerity.

“That crap about austerity being over,” remarks Anderson. “I wish I’d have been here this morning [for Stephenson's speech] because I'd have probably got up and punched [him] in the nose.”

Clearly, the tradition of bellicosity in Liverpool’s local politics hasn’t completely faded. And if responsibility for making extreme cuts continues to be “devolved” to local government, it may yet make a full return.

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