The UK’s local authorities are at breaking point. But municipal socialism could save them

Preston shows that the damage done by cuts and outsourcing can be undone.

NS

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Our political class has a habit of discussing local politics only as a bellwether for the national trends. The coverage of this week's local elections has been dominated by Brexit, with the Conservatives expected to perform particularly poorly on the back of their catastrophic mishandling of the process.

This is no big surprise given the historical marginalisation of Britain’s local authorities. The Attlee government based the post-war welfare state on the logic of top-down, national interventionism aimed at raising and reducing disparities in living standards across the country. 

In the early 1980s, many councils staunchly resisted the creeping neoliberal agenda imposed by the radical new Conservative government. Those councils that resisted most fiercely – notably in London and Liverpool – were ruthlessly crushed by Thatcher’s centralising agenda, which many in her party saw as breaking with the Conservative tradition of localism.

Blairism picked up where Thatcherism left off, focusing on the broad and ill-defined agenda of public service "reform", associated with the imposition of centrally determined targets that reduced local power. But it was the coalition government that truly decimated Britain’s local councils. Local government budgets have been cut by nearly 50 per cent since 2010 – and on current plans the pain is set to continue until at least 2020.

Local authority-funded children’s services are now "at breaking point", putting some of the most vulnerable children in the country in danger. Social care services for older adults are also stretched, placing further pressure on the NHS. Homelessness services, public health budgets, and locally controlled education budgets have all faced massive cuts. Across the country, many people have seen their communities crumble before their eyes.

We know that reducing spending on these vital services is bad for economic growth – and the public finances – over the long term. So why did the Coalition insist on cuts to local government under the auspices of fiscal responsibility?

The answer can be found in the policies that have been adopted by councils in response to the tougher financial environment. Many councils have opted to privatise the provision of public services, often using outsourcing giants like Carillion or Capita. These corporations extract capital from local areas and workers to enrich the wealthy shareholders who have so much influence over government policy.  

This model has been a disaster for many local areas. Private companies have been brought in to provide public services like social care, often profiting from providing a low quality service. Private developers have been tasked with "regenerating" local areas, but many opt for quick profits over meeting local needs. When these companies can no longer make money, they simply leave.

Such a situation befell Preston in 2011, when John Lewis pulled out of a planned shopping centre development, leaving the council severely short of cash and without a plan. Matthew Brown, now the council’s leader, stepped in and, with the help of the think tank CLES, developed an innovative new model to challenge the dominance of free market thinking in local government.

Brown, borrowing from a similar experiment undertaken in Cleveland, Ohio, opted to turn Preston into a model for municipal socialism. His plan was to use community wealth building – a term coined by the US think tank the Democracy Collaboartive, which supported Cleveland’s transformation – to revive his ailing city.

Preston council worked with the city’s "anchor institutions" – universities, hospitals and other institutions that are anchored to a particular place – to retain wealth in the local area. Rather than paying outsourcing companies to deliver services, they have used their collective procurement budgets to provide contracts to local companies that pay the living wage. Preston has also sought to encourage the development of local co-operatives, and Brown even wants to build a local bank.

The achievements of the model have been substantial. Between 2013 and 2017, the council managed to increase the amount being spent in the local area by £73m, even as their spending power fell. Last year, Preston was named the UK’s "most improved council". 

After decades of marginalisation, local government is once again a key ideological battleground. We face a choice between governing our spaces in the interests of private investors, or ordinary people. The fate of our local authorities may just pre-figure what comes next for the nation as a whole.

Grace Blakeley is the New Statesman’s economics commentator and a research fellow at IPPR.