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How might Keir Starmer run the country? Look to Labour councils

Labour-led authorities have governed under austerity for more than a decade, with mixed success.

By Jonny Ball

Under the first-past-the-post electoral system, both main parties look like odd coalitions. The winner-takes-all model, which rewards a delicate balance of geographical spread and concentration, does not benefit schismatic parties, newcomers or insurgents – just ask the SDP, the Greens, or Ukip at its Faragist peak. The relatively high showings of these parties across national polls have never translated into an equivalent share of seats in the Commons.

But the system leads to a kind of political diversity within parties – Remainer Cameroons share government benches with hard-right populists, while the “broad church” of the Labour movement regularly tears itself apart from the inside. The political breadth of practice and experience on Labour councils mirrors its national “broad church”, too.

Following May’s local elections, the party now has more councillors than any other, but there’s little uniformity in the way its more than 6,000 elected members govern. In terms of how they’ve dealt with over a decade of budgetary constraints, their experiences have thrown up a mixed bag of outcomes. Labour-run Croydon (now held by the Conservatives), racked up more than a billion pounds in bad debt and declared bankruptcy after a series of commercial investments turned sour. The Labour stronghold Liverpool is effectively being run with the assistance and oversight of government-appointed commissioners, after the arrest of the city’s mayor on suspicion of conspiracy to commit bribery and witness intimidation (accusations he denies). This week, too, Labour-run Birmingham has filed what’s known as a section 114 notice, meaning it is effectively bankrupt.

Meanwhile, Labour’s Preston City Council – once described as “an unlikely laboratory of Corbynomics” by the Economist – has won plaudits in some quarters and was named the UK’s “most improved city” in a PwC report in 2018, after encouraging cooperative ownership models and so-called community wealth-building strategies. Then there’s the eight Labour metro mayors. Steve Rotheram, who heads Liverpool City Region, has said he and his cohort exemplify “what Labour can do in power”. For the former shadow transport minister Sam Tarry, it was Andy Burnham’s bus franchising in Manchester that showed “what Labour can do in power”. South Yorkshire and West Yorkshire mayors Oliver Coppard and Tracy Brabin, respectively, are, for Keir Starmer, the “shining examples of what Labour can do in power”.

Starmer and Rachel Reeves are keen to avoid being associated with big spending splurges. Should they enter Downing Street after the next election, the party will inherit tight public finances. Labour councils, meanwhile, have had to administer 13 years of austerity imposed by Westminster, and are used to making do with less. As Labour rides ahead in the national polls, what can this breadth of experience of cash-strapped local Labour governance tell us about how the party would act if it wins the next general election?

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In Wigan, Labour’s council leader David Molyneux took charge in 2008, two years before David Cameron’s government started its programme of spending cuts. “Local government was always the first port of call for cuts,” he tells Spotlight from the Victorian municipal buildings of the Greater Manchester mining town. The council could have “closed things down and blamed everything on the government”, he adds, “but we had to deliver services and support communities as best we could.”

The solution became known as the Wigan Deal. The council would move away from a top-down, one-size-fits-all model of service delivery. Instead, it would try to “work collaboratively with community” and voluntary sector groups, not simply as contracted providers but as “joint partners” for delivering services, says Molyneux. Council management, particularly in adult social care and support services, would give front-line staff the freedom to experiment with what they do based on conversations with service users. Since adult social care makes up such a large proportion of council budgets, usually over a third, this would transform the way the authority operated.

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The council consulted communities to find out what services they wanted most, and which they needed. “I’m not talking about bin collections or pothole filling, because that comes as standard,” the council leader explains. “But on things like swimming pools and libraries – we didn’t shut them. There was a big interest from conversations that we had, talking to people in school halls and church halls, asking people what they could do as much as what we could do.”

[See also: The town that was gambled away]

Rather than closing these services down, the council sought ways to allow communities and third-sector groups to run them with the local authority’s support. Social care was totally reorganised by allowing service users to help design and run their own packages of care rather than have an off-the-rack service. In the words of a King’s Fund report on the scheme, the Wigan model was based on “working with” rather than “doing to” service users.

But wasn’t this simply a mechanism allowing government to retreat and absolve itself of its traditional responsibilities while asking unpaid members of the public to step in? “No,” insists Molyneux. “We don’t just hand things over and say ‘all yours’. It’s about asking people what they want and working with them to deliver it.”

Lisa Nandy, who was until today (4 September) the shadow levelling-up secretary, told the Convention of the North last year that the Wigan Deal would inspire her party’s plans to “reimagine the state and smash up a century of centralisation”. It was, she told delegates, “what we need at the national level as well.” Her book from last year, All In, praises the paradigm of “community empowerment”, which has been put to use under difficult circumstances in her north-west constituency. Starmer, too, has promised the largest devolution of powers in decades as part of a “take back control” bill. The shadow levelling-up minister, Alex Norris, earlier this year told Spotlight that the government’s current devolution agenda “should go much further”. If these opposition murmurs are to be taken at face value, such fixes could represent the cheaper alternative to the big public investment and high tax-and-spend agenda of the previous Labour leadership. Norris, for his part, would not commit to reversing the local authority cuts made since 2010.

And yet, the kind of radical shake-up mooted by Labour would run counter to decades of centralising tendencies in the party. The post-1945, top-down model was, explains Jessica Studdert, deputy chief executive of the New Local think tank, about saying “we can perfect society, we can measure things, we can allocate resources with maximum efficiency via bureaucrats in Whitehall”.

Attlee’s postwar governance structures gave way to new trends in the 1980s and 1990s. The focus moved to scaling up, “reducing the unit price” and “injecting market spirit into the public sector”, says Studdert.

New Local advocates for the more grassroots-driven approach typified by the Wigan Deal. “The community paradigm,” she tells Spotlight, isn’t about mimicking David Cameron’s ill-fated Big Society project. Neither is it a way of handing responsibility away from a thinned-out local state. “It does require a well-resourced public sector,” says Studdert. But it also requires the public sector to deliver “with, not for” communities.

Already there are signs that Keir Starmer may not be trusted to give away the power he could win next year: the leader of Sheffield City Council stood down before May’s local elections after the South Yorkshire city’s ruling Labour group was put under supervision by the national party following a local scandal around tree-felling. “Campaign improvement boards” have taken over errant local party organisations in Birmingham, Blackpool, the Wirral, Croydon and Dudley. In June, North of Tyne mayor Jamie Driscoll was blocked by the National Executive Committee from standing to be Labour’s candidate for mayor of the North East, a new devolved jurisdiction that he had helped negotiate into existence. Labour members in Gateshead, part of the new combined authority, were even reportedly barred from discussing Driscoll’s ban in constituency meetings.

[See also: Keir Starmer’s reshuffle was politically ruthless]

Such manoeuvring is more congruent with the actions of Labour leaders past than being indicative of a new approach. The leader of the opposition has been christened “centralising Starmer”. Writing in the Times, the former New Statesman political correspondent Patrick Maguire, noted that the party’s “happy-clappy evangelism for devolution” was being called into question by its tendency to “distrust… those to whom it would devolve”.

Whether or not Labour can veer sufficiently from past habits to radically devolve powers, one now-fashionable model of local governance could find itself scaled up and written into the party’s national economic programme. Community wealth-building originated in the American rust-belt city of Cleveland. Conceived as a way of stimulating local economies through cooperative and mutual ownership models, it is centred on an economic philosophy that tries to harness the fiscal power of “anchor institutions” in local areas. Hospitals, schools and universities spend hundreds of millions of pounds annually on procurement, whether it’s for catering or cleaning services, logistics, security or physical goods. A community wealth-building approach encourages such institutions to direct procurement budgets towards local businesses, especially small and medium-sized ones. In its most advanced form, worker-owned cooperatives are established and supported with their bids for contracts. Union-friendly, living-wage employers that pay full tax and can prove positive environmental impacts and employment practices are prioritised over the usual outsourcing suspects.

“The spend of anchor institutions within our city was over a billion pounds,” says Matthew Brown, leader of Preston City Council, which spearheaded the community wealth movement in the UK. “Previously it tended to be large outsourcing firms and corporations that won contracts. But we found that by going to local companies… there would actually be a lot more local jobs created than there would be by having a large company that might have been headquartered in Greater London winning the bid.”

As well as reforming its procurement practices, Preston council has worked with the local public-sector pension fund to promote investment into local business and development projects. There’s a north-west “community bank” planned (although it’s struggling for initial capital from other cash-strapped councils), and the authority has helped establish ten worker-owned cooperatives over a three-year period, including a home retrofitting co-op and a market trading business for former female prisoners. Other Labour councils, including Wigan, Manchester and Liverpool City Region have talked up their community wealth-building credentials, but few have made as much progress.

What is now known as the Preston model was originally conceived in response to a failed development project in Preston town centre and the onset of George Osborne’s budget cuts in 2010. But the new “municipal socialism” became associated with Corbynite politics, and the city was labelled a “poster child” of the Labour left: the then shadow chancellor John McDonnell established a “community wealth-building unit” in the Labour Party; the ideas were discussed widely at Momentum’s World Transformed festivals; and the policy approach on public procurement found its way into both Corbyn-era manifestos.

Despite efforts by the current leadership to distance itself from the Corbyn period, there are echoes of a community wealth approach in Starmer and Rachel Reeves’s broader economic vision. During her recent Washington visit, the shadow chancellor told the New Statesman “the old model – of the fastest, the cheapest, not mattering about who owns things – has passed”. Far from the inevitability of rapidly opening markets, liberalised trade, and globalised supply chains and capital flows welcomed by New Labour, “globalisation as we knew it”, Reeves told a Washington audience, “is dead”. 

The new economic trends – from the US’s “Bidenomics” and Inflation Reduction Act, to the EU’s Green Deal Industrial Plan – aim at boosting security and resilience over price efficiency and just-in-time production: the domestic and the local is better; manufacturing jobs are to be reshored; green energy production and renewable technologies are to be prioritised; and governments are dropping their former aversions to industrial strategy, subsidies and large-scale public investment. “We do need more transformative programmes,” Brown says, “people have had it in this country, but also in other countries, seeing how the effects of extreme free-market ideology is leading to serious social problems. And politicians want to find a way to address that.”

For Reeves, this agenda is about “securonomics”. A Labour government would “buy, make and sell more in Britain”, she says, establish a National Wealth Fund, “in-source” services, start a publicly owned Great British energy company, implement an industrial strategy, and invest in the green economy (subject, of course, to fiscal rules). The party also plans to force pension funds to allocate more capital to state-backed projects, partnering with the publicly owned British Business Bank, and they would supposedly repeal some anti-trade union legislation (although this was an unfulfilled promise of the Blair government before 1997, and the party’s “New Deal for Working People” paper has recently been the subject of controversy after the party’s National Policy Forum was accused of watering down some of its key provisions).

If wealth taxes, big spending and public ownership are out, smaller tinkering is in. These kinds of technical policies come with a lower price tag: social value and conditionality will be applied to public contracts; industrial strategy will be aimed at pursuing a “social partnership” between the state, business and trade unions; policy levers for skills, transport and housing will be devolved; and the government’s procurement budget will be used more strategically to boost domestic supply chains.

If a future Labour government can use its time in office to create more efficient, dynamic and user-centred services then it will have succeeded where many before have failed. Starmer and Reeves may have ditched policies on the more radical edges of the 2017 and 2019 manifestos, but in the post-Covid, geopolitically uncertain era, some of the modest successes embedded in the past decade of local Labour governance may start to come of age on the national stage.

[See also: What to expect from Angela Rayner as shadow levelling up secretary]