The state and local government

²⁵⁷

In this managerial transformation, the traditional public sector themes of collectivism, welfare and civic duty have become unfashionable. ‘Personnel’ is now ‘Human Resource Management’, chief officers are recast as ‘directors’ or ‘strategic executives’, and glamorous, career enhancing ‘flagship projects’ compete with more prosaic day-to-day responsibilities for scarce resources. The development of a professional, corporate image is seen as vital and is often symbolised by slick corporate logos depicting local landmarks and attractions.²⁵⁸ ‘In this new corporate world’, as Stoney notes:
the language of local politics is superseded by the anodyne and clinical discourse of management speak which is seen to legitimate management authority as a morally and politically neutral technical activity. The veil of rationality is spread over contentious decisions concerning, for example, the imposition of staff redundancies, pay freezes and cutbacks in services. The emphasis is placed upon achieving ‘leaner’, ‘fitter’ organisations through a process of ‘downsizing’ or ‘rightsizing’.²⁵⁹
However, as Farnham and Horton point out, this notion of rationality hides the fact that collectively senior public service managers are actually ‘agents’ of political and economic change and, in this sense, they argue that management has been politicised:
Such managers may claim that they are neutral professionals, carrying out policy made by the politicians and committed to organisational effectiveness and efficiency. In fact they have been responsible for driving through a series of extensive and sometimes contentious programmes of political reforms in the public services in the name of managerial competence. With few exceptions, they have provided little resistance to these changes and, some would add, many of them have been rewarded handsomely for their efforts in doing so.²⁶⁰
The primary objectives of public sector reforms have been greater economy and value for money. These aims, according to Stoney
have been pursued largely through a combination of cost control methods and an increase in the intensity and pressure of work for council employees. Compulsory Competitive Tendering (CCT) has been the major instrument used to enforce both measures, replacing hierarchical control with the market as a means of co-ordinating activity and resources, and combining reductions in the number of staff with increased workloads, lower rates of pay and worse terms and conditions.²⁶¹

Central to these strategies have been some classical examples of neo-Taylorism such as tight cash limits and cash planning; staff cuts; the introduction of performance indicators which stress economy and efficiency; staff appraisal and merit pay systems; more devolution to line managers; short-term contracts; and a rhetorical emphasis on responsiveness to the consumer.²⁶² Such strategies shift attention away from fundamental issues, such as public sector funding and the social distribution of wealth, and onto labour who are blamed for being inflexible and resistant to change. A similar logic underpins the requirement that councils publish performance indicators on a regular basis. The overwhelming constraints on local government to maintain tight control over spending have further necessitated more corporate forms of management which protect and insulate strategic decisions from local needs and demands. In this way, increased participation and representation is limited to technical and operational matters of finance as opposed to influencing the overall level of funding and the way in which it is allocated.

Stoney in 1998 concluded:

1. 
   That for Marxists ‘the restructuring of local government in Britain during the previous two decades cannot be understood as simply a contingent response to external pressures for innovation, efficiency and improved performance. Rather, it is a result of the contradictory forces within capitalism’ – and the attempt by consecutive Conservative and Labour governments, and now the Con-Lib Dems – ‘to manage them….strategies to control state expenditure have involved increasing centralisation and fragmentation of the state, with many local government functions being removed into enclosed, non-elected arenas making them more amenable to central control and direction. These strategies are designed to by-pass or circumvent local government which, because of its democratic accountability to local electorates and a traditionally organised workforce, has tended to defend against cuts in local expenditure’.²⁶³
   
2. 
   That ‘where responsibility for state spending has remained with local authorities increasingly corporate and centralised forms of management and decision-making have emerged with the capacity to insulate strategic decisions from competing local demands and the politics of welfare….This process has involved a reconfiguration of the balance of power in the community with some sectional interests such as business gaining greater influence over key decisions. Internally this has meant (re)establishing management's “right” to manage….weakening the power and influence of local government trade unions and “professionals”, through legislation and contracting, and the creation of well rewarded managerial elites with the executive power and 'objectivity' to enforce painful cuts in services and jobs’.²⁶⁴
   
3. 
   That ‘by insulating and de-politicising those aspects of decision-making which are of direct significance to business local authorities have been able to forge closer links with the private sector. Encouraged by an increasingly competitive funding system and a growing dependency on private investment, local authorities have established partnerships and joint ventures….The growing influence of the private sector is also reflected in, and reinforced by, the willingness of many senior executives and members to embrace private sector management techniques and to cultivate a more entrepreneurial and commercial spirit within the organisation’.²⁶⁵
   
4. 
   That ‘the internal reforms within local authorities have also been part of the overall strategy to make local government a “safer” and more predictable institution in terms of spending and financial control. Though it is still possible for local authorities to be controlled by left-wing members, their scope for delivering a “radical” agenda have been much reduced through a combination of the legislative and financial reforms of the last two decades and by the process of internal restructuring which has shifted the balance of power locally…. although many council members and senior officers object to many of the enabling reforms and express concern about the general direction and future of local government, in practice….the scope for real strategic choice has ironically been severely curtailed’.²⁶⁶
   

Stoney’s main contribution has been to meticulously analyse within a Marxist framework the introduction of strategic management into local government up to 1998 that occurred after the original Cockburn/Cawson and Saunders/Duncan and Goodwin debates. Moreover, the trends identified by Stoney, as shown by the work of Dexter Whitefield discussed in the following section, intensified under New Labour.

Dexter Whitfield’s ‘marketisation’ theory

Dexter Whitefield – founder of the European Services Strategy Unit (ESSU)²⁶⁷ – defines ‘marketisation’ as ‘a process by which market forces are imposed on public services, which have traditionally been planned, delivered and financed by central and local government.’ ‘Marketisation’ has five key elements:

• 
  Commodifying (commercialising) services – services are changed so that can be specified and packaged in a contract, thus extending outsourcing and offshoring.
  
• 
  Commodifying (commercialising) labour – the reorganisation of work and jobs to maximise productivity and assist transfer to another employer.
  
• 
  Restructuring the state for competition and market mechanisms – schools, hospitals and other facilities are compelled to compete against each other, funding is changed to follow pupils and patients, public bodies are reduced to commissioning factions creating opportunities for private finance and so-called partnerships.
  
• 
  Restructuring democratic accountability and user involvement – service users are treated as consumers; services and functions are transferred to quangos; arms length companies are established within public bodies.
  
• 
  Embedding business interests and promoting liberalisation internationally – business is more involved in the public policy making process and promotes national, European and global liberalisation of public services.²⁶⁸
  

‘Marketisation’ is also ‘a political process as much as a technical or organisational one’:

Many initiatives are presented as managerial and technical in order to avoid the political responsibility and ramifications and to de-politicise the process. Different fractions of the state facilitate marketisation, often made possible by the increased power of officers and managers compared with elected members.²⁶⁹

Neoliberalism – defined by Whitefield as ‘a conservative economic philosophy which revived in the late 1970s following the crisis in Keynesian economics, escalating inflation at the end of the post-war construction boom, the soaring cost of the war in Vietnam and the 1973 oil shock’²⁷⁰ – drives ‘marketisation’. Neoliberalism includes the following components: liberalisation and competition, markets, deregulation of financial markets, reconfiguring the role of the state, privatisation, consumerism, labour market flexibility and deregulation and increasing the power of business, coupled with the erosion of democratic accountability and transparency.²⁷¹ That is, privatisation is only one component of ‘marketisation’.

Using the above concepts Whitfield then summarises the different phases of ‘marketisation and privatisation’ in Britain since the early 1980s – set in the context of the European Union’s liberalisation of the cross border supply of services to create a single market (removing all barriers making it less profitable for a service provider to operate in one country compared to another), which complements the World Trade Organisation’s General Agreement on Trade in Services. He distinguishes three distinct phases:

• 
  The first phase of neoliberalism in the 1980s focused on ‘rolling back’ state intervention in the economy, promoting free market ideology, deregulating labour markets and the ‘fracturing’ of trade union power. For example, the large-scale sale of nationalised industries and the right to buy for council tenants.
  
• 
  The second phase of neoliberlism began in the early 1990s with increased emphasis on competition, commercialisation and quasi markets in public services. Competitive tendering was extended in central and local government to white collar services, with markets imposed on core services such as health and education, which ‘could not be privatised for political and economic reasons in the same way as the nationalised industries had been’.²⁷² The establishment of Agencies led to the growth of performance management, later extended by New Labour’s Best Value regime, which removed compulsory competition in local government but extended competition to all services via options appraisals. The commissioning concept, requiring the separation of client and contractor responsibilities with the state only responsible only for client functions, was mainstreamed in social care and later housing. Public service consumerism and consultation also emerged during this phase. By the end of the 1990s transport, energy, utilities, telecommunications and industrial state owned corporations had been privatised leaving education, health, council housing, defence, security, and criminal justice still in public ownership.
  
• 
  The third phase of neoliberalism began in the early 2000s with a new emphasis on commissioning and contestability. The ‘state was not “rolled back” or “hollowed out” but reconfigured and transformed into making, supporting and sustaining markets’.²⁷³ There was also a rapid growth in arms length public/private organisations such as foundation schools and hospitals, urban development corporations, urban regeneration companies, outsourcing to strategic partnerships and local public service boards.
  

Table 4.1: PPP/PFI in the typology of privatisation and marketisation

1. Marketisation and privatisation of global public goods

Carbon market in response to climate change

Deregulation of protection of natural resources and the global commons

Public health

Privatisation of global governance

Rise of privatised military industry

2. Marketisation and privatisation of assets and services

Commissioning of public services from private and voluntary sectors

Marketisation and expansion of private services, including franchising of services to the private and voluntary sectors

Private finance of infrastructure and services with PPP/PFI

Choice and personalisation of social need

Deregulation, liberalisation and re-regulation

Commercialisation of the public sector

Sale of assets to private sector through share flotations and trade sales

Sale and leaseback of government buildings

Asset based welfare state

Increase domestic & family responsibility

3. Privatisation of governance and democracy

Contract governance

Transfer of services to arms length companies and corporatisation of quasi-public bodies

Private companies established within public services

Privatisation of development and regeneration responsibilities

Privatisation of citizenship and political power

Privatisation of public interest information – reduced transparency and disclosure

4. Privatisation of the public domain

Public service values and principles being replaced by market ideology and commercial values

Privatisation of public intellectual capital

Privatisation of public space and domain

Source: D. Whitfield, 2006b, pp. 17-19

Whitfield also locates PPP/PFI within ‘a typology of privatisation and marketisation’ because:

There are many partial analyses of privatisation produced by academics and development agencies and there are attempts to redefine and narrow privatisation, for example claiming that it is applicable only to share flotations, to try to minimise opposition. Others focus almost exclusively on the liberalisation of public services and privatisation imposed by the European Union (Services Directive) and the World Trade Organisation (GATS). Whilst these policies will have a crucial impact, many other forms of privatisation such as PPPs are virtually unchallenged in many countries.²⁷⁴
‘A typology’, as he further argues
facilitates a better understanding of the ways in which different forms of privatisation and marketisation interact. In particular, it is essential to capture changes in gender, social and class relations as well as different economic forms of privatisation.²⁷⁵
Since, ‘a mere mechanistic approach, based on forms of private ownership and asset transfer processes between public and private sectors, would be limited in its usefulness’.²⁷⁶ The four types of marketisation and privatisation identified by Whitfield indicate their different forms, methods, objectives and impact on the state and public services (see Table 4.1). Whitfield’s typology therefore ‘provides a framework to explain and understand the different ways in which public services and the welfare state are being transformed.’²⁷⁷ Moreover, as he also emphasises, the different forms of maketisation do not take place in isolation: ‘They are part of a broader restructuring of the state in the interests of capital’.²⁷⁸ Hence as Whitfield concludes:
Further phases of neoliberalism could develop with the provision of core services (teaching, medical services) by the private sector, outsourcing of management, new Building Schools for the Future and Local Improvement Finance Trust-type models, and development of vouchers and similar direct payment systems.²⁷⁹
In addition, Whitefield unites theory and practice – that is, the above theoretical framework informs his work with community groups and trade unions. For example, the ESSU website in March 2009 reported that:
Over the last two years Bury UNISON, with the support of ESSU, has opposed the possible outsourcing of corporate services to a Strategic Service-delivery Partnership with a private contractor. This has included involvement in Council working groups to assess current performance, evidence to Overview and Scrutiny and producing briefings for staff and elected members. The Council has decided to continue current plans to develop and improve services and not commence procurement. ²⁸⁰


And he has also shown how the trade union twin-track strategy in Britain – opposing PPP/PFI projects by national and local campaigning to expose the high financial, employment and democratic costs combined with local negotiating to secure the best possible deal for members on individual projects – has not achieved any significant changes in PPP/PFI policy: because it failed to organise and mobilise sufficient opposition.²⁸¹

Chapter 9 includes an analysis of PPPs based on the ESSU’s PPP database and the significance of recent developments in Tory Essex County Council, Tory Barnet Council and Labour Lambeth Council. Whitfield’s alternative modernisation strategy is also discussed in Chapter 14.

Chapter Five
Ruling class local government strategies before New Labour
This Chapter examines ruling class local government strategies before New Labour; and shows in particular that the struggle for local democracy goes back to the very beginnings of the organised working class movement. Section one discusses the feudal and post-feudal central state and local government. Section two focuses on the central state and local government during early industrial capitalism. Section three examines twentieth century inter-war Poor Law struggles. Section four analyses the growth of ‘municipal labourism’. Section five considers structural reorganisation between 1963 and 1973. Section six looks at the growth of ‘corporate’ private sector management in local government. Section seven investigates the increase in financial control by central government. Section eight concentrates on structural reorganisation in the 1980s and 1990s; and section nine shows that the latter development was crucially related to the shift from direct provision to ‘local governance’ of services.
The feudal and post-feudal central state and local government

English feudalism lasted until the end of the fifteenth century and was based on land tenure or holding, with the monarch granting land to barons, nobles and bishops; and serfs the direct producers. The monarch controlled the central state. Judges appointed by the monarch visited the localities to supervise and ensure law and order; and the parish was the basic unit of local government.

The Peasants Revolt of 1381 was the culmination of a long period of class conflict during which time the compulsory labour given by serfs in return for their land was increasingly converted into rent payments. The feudal lords, as trade with the east had expanded, needed money for imported luxuries; and the exploitation of their serfs became more ruthless. The immediate background to the Peasants Revolt was the king’s imposition of a graduated poll tax in 1379 to pay for war in France – which did not raise enough money – and another tax in 1380. In May 1381 the killing of a tax collector in an Essex village was the catalyst for the revolt with peasants burning down manor houses containing all the manorial records, attacking or killing lords, and then marching towards London.²⁸²

By the fifteenth century three elements of nineteenth century local government – the parish, the shire (county) and the corporate town (borough or burgh) – had become firmly established²⁸³: and by the end of the fifteenth century the growth of commodity production, the bourgeoisie and wage-labour had laid the basis for the transition from feudalism to capitalism.²⁸⁴ Following the English Revolution – when the country was a republic for 11 years from 1649 until the restoration of the monarchy in 1660 – as Paul Feldman notes:
The merchants and landowners/farmers were the new, unchallenged power in the land. America, Ireland, Jamaica and Barbados were already colonial possessions….After the so-called Glorious Revolution of 1688, the mechanisms were put in place for the rapid expansion of economic activity. In 1694, the Bank of England was created as a lender to the government and the issuer of bank notes….With commodity circulation beginning to increase under the emerging capitalist form of production, paper money was vital as a means of exchange.²⁸⁵

Throughout the eighteenth century and until 1832, as John Saville shows, the landed aristocracy in the Lords plus their relatives and the gentry in the Commons monopolised power in the central state.