The state and local government

²⁸⁶ In the same period the landed gentry ruled rural and many urban areas, while many towns were governed by corrupt municipal corporations in the hands of a small section of local property owners. During the last quarter of the eighteenth century:
The Industrial Revolution, linked closely with inventions in cotton spinning, steam power and iron smelting, accelerated the growth of the capitalist system of production. With it came new classes – the manufacturers and the working class. Each in its own way would contest the power of the state itself.²⁸⁷
The central state and local government during early industrial capitalism

In Oldham, throughout the second quarter of the nineteenth century, as John Foster points out:

the town was more or less permanently under the control of the organised working class; much of its local government was subordinated to the trade unions, the new poor law was unenforced for well over a decade, and radicals like Cobden and Fielden were elected as MPs.²⁸⁸
Troops established a barracks in this Lancashire textile town because the unenfranchised working class was illegally conducting union activities and preventing the implementation of the 1834 Poor Law Amendment Act, which they did until 1847.²⁸⁹ Similar situations – also involving action by trade unions – occurred in the 1920s, 1930s, 1970s and 1980s: when the use of troops was replaced by the threat of commissioners, rulings of the Court of Appeal, disqualification and individual surcharge for elected councillors refusing to implement Whitehall’s instructions.

The Municipal Corporations Act of 1835 – which applied to 178 corporate boroughs in England Wales and attempted to eliminate corruption – required councils to be elected by ratepayers, hold council meetings open to the public and have regularly audited accounts.²⁹⁰ This legislation, as Harvey and Hood point out, was ‘the first step towards’ local government ‘as we know it today’ due ‘to pressure from the rising industrial capitalists, who wanted control of their towns taken out of the hands' of the 'corrupt municipal corporations' controlled by 'a small section of the local property owners' who were a 'very inefficient and hidebound closed circle’.²⁹¹

During the nineteenth century, as local government was increasingly unable to deliver, ad hoc commissions and boards to enforce necessary minimum standards required by the dominant capitalist class were setup up by the central state for cleaning, paving, lighting, slum clearance, health, sewers, burials, water supply, public assistance, highways and schools. Hence by the 1870s local government was ‘a chaos of areas, a chaos of authorities, and a chaos of rates’.²⁹² Under the Local Government Act 1888, therefore, elected county councils and all-purpose borough councils were established. The Local Government Act 1894 established elected urban and rural district councils; and in 1899 the 28 London metropolitan borough councils were established on a similar basis with the undemocratic City of London left as an unreformed separate authority.²⁹³ The other reason for increasing central state control, as Miliband subsequently and Harvey and Hood had already emphasised, is that ‘as the franchise widened and the opportunities grew for the working class to elect their own representatives’, the central state ‘was used to hold back any activities which offered a challenge to the wishes of the capitalists themselves’.²⁹⁴
Twentieth century inter-war Poor Law struggles

Following ‘the First World War…certain local authorities ceased temporarily to act as obedient agents of the central government, and tried instead to carry out the wishes of their working-class electors…[the] pioneers in this struggle were the famous Poplar councillors, headed by George Lansbury’.²⁹⁵ The background to the Poplar struggle was the industrial depression after the war when there was a rapid increase in unemployment. Unemployment insurance was totally inadequate in scale and scope, and the unemployed were forced in growing numbers to apply for poor relief, which was administered by Boards of Guardians, who were elected locally but closely controlled by the Minister of Health. The Guardians’ main source of income was from the local rates which were levied by the local borough councils. Rates, as the cost of poor relief rose, soared in the areas of high unemployment such as Poplar where the Guardians (also Labour controlled) paid a more generous rate of relief than that approved by the Minister of Health.

Poplar argued that the cost of poor relief should be pooled so that rich areas such as Westminster with virtually no unemployment should contribute to the impoverished East End boroughs. On March 21, 1921, Poplar decided to refuse to levy rates for outside authorities such as the London County Council, the Metropolitan Police and the Metropolitan Asylums Board, and to levy rates for its own expenses only. On July 29 the council was summoned to the High Court, which ordered it to levy the precepts. The council refused to collect the rates and on September 1 the mayor and 29 other councillors were sent to prison for contempt of court (the men to Brixton and the five women to Holloway). During their six weeks in prison, huge demonstrations with trade union banners much in evidence were held outside both prisons most evenings demanding their release. Such was the pressure that the prison authorities were forced to allow the councillors to meet – for which purpose the women had to be brought from Holloway to Brixton. Altogether, a total of 32 meetings were held. As well as council business, prison conditions were discussed, which eventually led to their release.²⁹⁶ After the councillors were released legislation was hurriedly introduced to set up a common Metropolitan Poor Fund.

Poplar’s rates then fell sharply and in the subsequent local elections Labour won every seat except one with increased majorities. The Minister of Health next laid down a new scale of relief above which Guardians were not supposed to go: and – when the Poplar Guardians asked for a loan – he set up a special enquiry into their administration of the Poor Law and they were ordered to operate the new scale, which they defied. The District Auditor then surcharged them individually for the excess, which they also ignored; but they were never brought to court because in 1924 John Wheatley, Minister of Health in the first Labour government, rescinded the order.

Neville Chamberlain – Minister of Health in the next Conservative government under the Guardians (Default) Act 1926 – nominated paid administrators to take over the functions of the West Ham, Chester-le-Street and Bedwelty Guardians: because they operated higher scales of relief than he had approved. The Local Government Act 1929 then abolished the Poor Law Guardians and transferred responsibility for Poor Relief to the Public Assistance Committees (PACs) of the county borough and county councils. However, when the National government in 1931 imposed a vicious household means test on the unemployed, at first many local PACs refused to operate it. The Rotherham and County Durham PACs were then both removed from office in 1932 and replaced by government-appointed commissioners. Finally, in 1934 responsibility for the unemployed was transferred from local government to the central state’s unelected Unemployment Assistance Board. For, as Harvey and Hood concluded:
…the attitude to and treatment of the unemployed still had its roots in the notorious 1834 Poor Law Act, a measure which sprang partly from the determination of the capitalist class to create a free labour market…[the] theory was…that relief must necessarily be made so unpleasant and degrading that the ‘idle’ would be forced to work, and…that in no circumstances should relief be high enough to compete with the lowest wages paid by employers…Those authorities who refused to operate the Ministry’s relief scales, therefore…were not only refusing to participate in the economy drive; they were deliberately challenging low wages, a matter on which the ruling class is more sensitive than on almost anything else.²⁹⁷
Moreover, as Colin Leys notes, ‘the Labour leadership was also less than enthusiastic about local democracy because of its potential for generating more radical, extra-parliamentary forms of action’. The Labour Party leadership opposed ‘Poplarism’ because they were ‘unhappy at the way the Poplar radicals had conducted their campaign’; and the ‘Labour government of 1924 had been attacked in the House of Commons for supporting “unconstitutional” action’, which ‘the leadership saw…as partly to blame for Labour’s defeat in the 1924 election’.²⁹⁸ Yet, as Janine Booth – in her recent discussion of Poplarism, reform and revolution – argues, although ‘Herbert Morrison was convinced that Communists were behind Poplarism, manipulating naive ‘soft left’ councillors such as George Lansbury’, the reality was that:
There was a united front in Poplar – reformists and revolutionaries united in working-class interests. Against some who said that it should not work with Labour, the Communist Party asserted that, ‘Against the Capitalist parties of all shades, a united front is indispensable…we work hand in hand with the Labour Party. We refuse to oppose them to the advantage of the Capitalists’….Poplar’s struggle was for reforms: revolutionaries supported it….²⁹⁹
Bernard Donoughue and George Jones argue that Morrison waged a successful campaign to stop the Labour Party ‘falling for the superficially seductive, but constitutionally dangerous, attractions of Poplarism’.³⁰⁰ But, as Booth states:
Poplar’s victory was not ‘superficial’. And its councillors would undoubtedly have retorted that it was better to endanger the constitution than to endanger the poor.³⁰¹
The growth of ‘municipal labourism’

In 1900, West Ham was the only council with a socialist majority; and there was no contest at all at elections in 140 boroughs.³⁰² By 1919, however, half the London metropolitan borough councils were Labour-controlled: and by 1934 - even though the Labour Party in parliament had been reduced to a small minority - so was the London County Council.³⁰³ By 1939 Labour also controlled Durham, Glamorgan and Monmouthshire county councils, 18 out of 79 county boroughs, 25 non-county boroughs in England and Wales, 14 burghs in Scotland, 76 urban districts and 17 out of the 29 metropolitan boroughs.³⁰⁴ Labour control of city government was also strengthened by the exodus of the middle class into the suburbs from the end of the nineteenth century and capitalists to the countryside. Thus there developed a powerful tradition of ‘municipal labourism’ and a significant degree of Labour hegemony in many cities. However, the limitations of labourism itself, and the limited powers given by the central state to local government, circumscribed the political impact of this state of affairs. Nevertheless, Labour-controlled councils began to exploit the limited powers they had to build homes for workers and undertake various kinds of ‘municipal trading’: for example, public transport, gas and electricity services, telephone systems, docks, entertainments and crematoria. But, as long as central state control remained under the effective control of the Conservative Party, further extensions of municipal trading were resisted.³⁰⁵

By 1938-39, local government accounted for 43.4 per cent of total government expenditure.³⁰⁶ However, after 1945 – though the expansion of the welfare state extended services already provided by local government – local councils lost responsibility for hospitals, electricity, gas and the valuation of rates: so that by 1949-50, local government expenditure fell to 16.7 per cent per cent of total government expenditure, rising to 23.3 per cent in 1959-60.³⁰⁷ Labour control of a large part of local government, and the greater expenditure on housing, education and personal social services by Labour councils than non-Labour councils in areas with similar needs, did not fit well with the growing anti-state sentiment from the 1960s in the Conservative Party, which controlled central government from 1951. This led to the Conservatives bringing in a significant reorganisation of local government in 1963.
Structural reorganisation 1963-1973

By the 1960s the organisation of local government had remained virtually unchanged for 60 years. The most obvious anomaly was that some large and growing cities were still subordinate to County Councils while others which had declined, and were much smaller, retained their autonomous County Borough status and were responsible for all local government functions. In London, where the anomalies were among the most severe, the London County Council and metropolitan boroughs were both Labour-controlled. Hence – with a Conservative government – a change could be imposed which would benefit the Conservatives in London without hurting them politically elsewhere. In 1963, therefore, the London County Council was merged into a new Greater London Council (GLC) responsible for planning, transport, main roads, fire and ambulance services; and 32 enlarged boroughs became responsible for all the other services (except for education in the 12 Inner London boroughs and the City of London, which was the responsibility of the Inner London Education Authority). The GLC included the Outer London suburbs: which, as the Conservatives had intended, dramatically altered the electoral balance. In 1967 the Conservatives won control of the GLC and 27 out of the 32 boroughs giving them overall control of London again for the first since 1934.³⁰⁸

The London reorganisation model was then applied to the rest of England and Wales in 1972; and Scotland in 1973. The ruling class and establishment social science argument was that larger units were more efficient and would result in fewer ‘politically and socially unbalanced councils’: that is, as John Dearlove states, the reorganisation was designed to ‘reduce the unfettered control, which working-class voters and Labour dominated councils have over the affairs of the central city’.³⁰⁹ The Conservatives reduced the number of counties by mergers (especially in Wales) to 47, with 333 enlarged district councils within them. The conurbations outside London followed the London model with six metropolitan councils – Greater Manchester, West Midlands, Merseyside, West Yorkshire, South Yorkshire and Tyne and Wear – and 36 lower-tier district councils within them. In Scotland nine regions – with 53 districts within them – were created, and three single-tier island councils. Though, in almost all cases the attempt to swamp smaller Labour local authorities failed and the new bigger units became major problems for the Tories in Scotland:
The redrawing of boundaries for the new single tier local authorities cut across established communities to carve out groupings of wealthy residential areas which it was hoped would be able to sustain a majority Conservative vote. Ayrshire was cut into three to create a Tory voting area along the rich coast area north and south of Ayr. Renfrewshire was cut into two to create a Tory voting Eastwood. Dunbartonshire and Lanarkshire were both cut into two – and combined with rich residential suburbs of Glasgow to create new Conservative havens. In the event, the intensity of feeling against the Conservatives was so great that even within the new boundaries they failed to secure majorities.³¹⁰

These reorganisations coincided with the Macmillan government’s drive to restructure industry and create major British companies that could compete with those from the US. This involved promoting mergers, eliminating weaker companies and reorganising production across Britain in a way that could take maximum advantage of higher regional unemployment levels to reduce ‘wage pressures’.³¹¹ The adoption of indicative planning and active regional policy, already used in Gaullist France, also made it essential to streamline local government and make it responsive to ‘regional’ development: that is, government and corporate agendas. These agendas were essentially those of monopoly capital and asserted their interests over those of local small business. As in France, this restructuring created the basis for regional alliances between the working class and small business to protect existing industrial employment – seen most clearly in the movement to save the shipyards on the Upper Clyde in 1971. These movements also had the capacity to unleash powerful democratic challenges to central government control and – in the case of the Upper Clyde – led to demands for a Scottish Parliament to assert direct control over economic development.³¹²

‘Corporate’ private sector management

Local democracy was also reduced by the introduction of the ‘corporate’ model of management in the private sector following the Maud (1964-7) and Bains (1972) enquiries.³¹³ This change was associated with the emergence of a new kind of councillor (Labour as well as Conservative) and local government official who were both committed to the ideology of planning, economies of scale and efficiency promoted by the academics and consultants involved in the reorganisation of local government.³¹⁴ Hitherto department heads – Directors of Education, Housing, etc. – had been separately responsible to committees of councillors: but this was now regarded as incompatible with integrated planning and efficient management of the council’s work as a whole, and the needs of local capital and businesses. Instead, councils, like private companies, now appointed Chief Executives, who (unlike the former Town Clerks) had formal authority over the Department Heads or Directors. Committees of Officials were set up who prepared agendas for new Policy Committees, chaired by the Council Leader, composed of the chairs of the various council committees. Hence effective power shifted from committees of elected councillors to the Policy and Officials committees.³¹⁵ In effect, local government was brought into line with the structure of the central state, the executive had been strengthened and concentrated, and the equivalent of a cabinet under the control of the leader had been created. Information was now increasingly controlled by officials and the leadership of the majority party; and the larger areas reduced the independent knowledge which any councillor was likely to have of the detail of any question before the council.

Ted Knight was elected as a councillor in 1974 along with 13 other Left-wing candidates from Norwood who began to formulate a critique of the relationship between elected members and the senior full-time officers. Moreover, the local government elections of 1978 produced a strong Left wing slate of councillors across the borough as a whole; and Ted Knight was elected Labour Leader of Lambeth Council in south London. One of their first objectives, therefore, was to impose ‘member-will’ on the administration. And by 1981, according to Ted Knight, although they had not been able to defeat ‘the inertia of the bureaucracy’ – because it was ‘very big’; had ‘great difficulty in changing direction even though a policy decision’ had ‘been taken’; and they had ‘no ability to change personnel’ – there was ‘very little doubt in any officer's mind that the members have a greater say within the Council than they have ever had before; officers are now very reluctant to engage in battle with us’.³¹⁶

Increasing financial control by central government

The height of local government financial autonomy, as Simon Duncan and Mark Goodwin show, coincided with the economic post-war boom and the development of the welfare state; and 1965-75 marked the zenith of local spending.³¹⁷ That is, local government expenditure rose to 30.6 per cent of total government expenditure in 1964-65, peaked at 31.5 per cent in 1969-70 and had fallen to 22.9 per cent by 1984-85.³¹⁸ Increased financial control by central government further reduced local democracy, culminating in 1988 in the virtual elimination of the financial independence of local government.

The first round of this was in 1972-74 when several Labour councils refused to raise rents and defied the Conservatives Housing Finance Act 1972. Around 400 councillors faced surcharge or disqualification. While other councils backed down, the Labour-controlled Clay Cross Urban District Council in Derbyshire refused to collect an additional £1 per week in rent from tenants of its council houses. For two years they successfully resisted national government’s efforts to collect the increased rent and they also raised the pay of their manual workers above the limits of the 1973 wage controls. In January 1973, the district auditor surcharged 11 Clay Cross £635 each, finding them guilty of ‘gross negligence and misconduct’. The Council’s appeal to the High Court failed, £2,000 legal costs were added to the surcharges and the councillors were barred from public office for five years. The basis of their success, as with the Poplar Council in the 1920s, was the solid support of the majority in this working-class mining town. The 1972 Labour Party Conference resolved to support any council which refused to apply the new rents, and to indemnify any councillors against disqualification from office and surcharges, as Labour Minister of Health John Wheatley had done in 1924. Conversely, in the Clay Cross case the Labour Party leadership refused to give any such promise; and at the end of the decade 20 former Clay Cross councillors were still disqualified and 10 were undischarged bankrupts.³¹⁹

Councils had always had to have Treasury permission to borrow for capital expenditure, and in the 1960s and 1970s severe building cuts were imposed. When monetarist policies were enforced from 1976 by Labour, local recurrent spending was also cut. The squeeze was even more severe under the Conservatives after 1979; and in 1982 councils were forced to save, not borrow. From 1979 to 1987 local government spending in real terms was held constant. From 1977-78, Rate Support Grant was sharply cut back and ‘cash limits’, which cut back the grant in the following year if there was overspending, were introduced. This shifted the burden of maintaining local services onto the rates, which now rose sharply due to the reduced grants and high interest rates. Hence Whitehall was now able to control local government spending and policy in minute detail. In 1981, councils who resisted the cuts in services by borrowing and rate increases also had their grant for the current year cut: and they made up the loss by levying supplementary rate demands, which fell heavily on businesses, to maintain council services and jobs. The 1982 Local Government Act therefore closed this loophole by banning supplementary rates. However, some councils – the Greater London Council, the Inner London Education Authority, Camden, Hackney, Greenwich, Islington, Lambeth, Southwark, Basildon, Sheffield, Merseyside and South Yorkshire – still levied rates in excess of what Whitehall required.