Adam Goulcher, Gloucestershire Socialist Party
It is clear that we are at the start of a new period of austerity, where the ruling class will try and make ordinary people pay for the costs of the pandemic and for the crisis in the neoliberal capitalist system which has been fully exposed by the pandemic. For all socialists and trade unionists, the key question is how can this growing crisis be arrested and reversed?
Local councils are in the frontline, having suffered a 40% cut in real central government funding over the last ten years, a period of rising poverty and growing population when need has increased. What can be done?
In recent years some on the left have pointed to the possibility of implementing what is sometimes called ‘municipal socialism’, based on the strategy initiated by Preston Council in Lancashire, which in turn draws on a similar programme in Cleveland, Ohio.
Some advocates of the Preston model suggest that new local economic policies can arrest the decline of towns and cities struggling with years of austerity, job losses, poverty and precarious work. The danger of this approach is that it could take the emphasis away from a fighting strategy based on a total rejection of austerity and forcing the government to pay.
Is there an alternative?
Maybe there is an alternative to the building of a mass campaign for the funding necessary? Could the Preston model defeat austerity?
So what is the Preston model? At the start of the decade Preston was a town with economic and social problems.
The decline of industry in the 1970s and 1980s had contributed to rising rates of joblessness and poverty. By the early 2010s these issues were compounded by public sector austerity which followed the crash of 2008 and by the post-crash recession itself.
Consultants and think tanks were beginning to come up with strategies for this new period and were looking for councils willing to test out their ideas. Preston Council leaders were attracted by the idea of ‘community wealth building’ which was showcased at conferences.
This ‘community wealth building’ strategy basically involves four areas of reform:
1. Increasing investment within local economies by using existing local wealth and resources locally. This involves, for example, local authority pension funds being encouraged to redirect their investment into local schemes rather than remote global stocks and shares.
2. Fair employment and just labour markets – job recruitment would come from lower-income areas with a commitment to paying the living wage.
3. ‘Progressive’ procurement of goods and services by local institutions through the development and prioritisation of local supply chains over global suppliers. These local institutions include big spenders such as local authorities, NHS trusts, universities and colleges, housing associations, large local businesses, trade unions and the combined activities of the community and voluntary sector.
These local supply chains would be built around local small and medium-sized businesses, employee-owned businesses, social enterprises and cooperatives which would be encouraged and supported, including through mutually owned banks.
4. The use of land and property assets owned by local institutions to ensure that any financial gain is harnessed by citizens and that they are used for the benefit of the community.
During the 2010s this approach was implemented by Preston. The main impact reported by the council and its consultants was in procurement.
By 2017 the procurement spend by major institutions located in the Preston area which were retained within Preston (as opposed to being spent elsewhere) rose by £74 million compared with 2012. Within Lancashire, including Preston, the rise was £200 million. This change in supply chains generated additional economic activity in Preston and Lancashire.
A second area of benefit reported by the council is that 4,000 more employees were receiving the real living wage than had been the case before the initiative. The council also reports that unemployment improved relative to other comparable areas, and that deprivation was reduced as a result.
So does the ‘Preston model’ offer a way out of the crises caused by a decade of austerity and several decades of industrial decline?
All socialists would support more progressive procurement, for example requiring contractors to pay the living wage. Social enterprises can also sometimes, though not always, be beneficial to workers with better wages and conditions, service and environmental standards etc – at least for a time – and again, this is of course welcome.
‘Islands of socialism’
This type of approach – sometimes called ‘islands of socialism’ – is very old indeed. Proponents of this approach were often known as utopian or ethical socialists.
One of the earliest was Robert Owen who built his New Lanark community in Scotland in the early 19th century, where housing, education, health, leisure and cultural services were provided by a benevolent employer, and wages, hours and conditions were better than the norm.
Worker-friendly model communities like Bourneville in Birmingham, created by the Cadbury’s, and Port Sunlight near Liverpool, built by Lever Brothers now Unilever, are other examples. These experiments, as with the Preston model, delivered some improvements, for some people.
The key questions for socialists however are whether such an approach is sustainable, so that it can provide lasting benefits to workers, and whether it can be implemented across the whole of society without breaking the grip of the multinational banks and corporations that dominate society through a programme of democratic public ownership of the ‘commanding heights’ of the economy.
The evidence sadly suggests not. These ‘islands of socialism’ were not sustained in the longer term.
They operated within a competitive, global profit-driven economy, resting on private ownership of production. The drive for profit and the pressure of competition have meant that these experiments have eventually been subjected to market pressures.
They have been forced to compete to survive, leading to reduced profits and an inability to sustain higher levels of pay and better conditions for workers than their competitors in the longer term. These experiments have either failed or have inevitably moved towards profit-based models in order to compete and survive.
We have also seen this evolution in social enterprises in recent decades, where reductions in funding have forced many to operate on an increasingly commercial basis. Housing associations are a good example of this, and are now largely commercial operations paying fat salaries to senior managers whilst often attacking workers’ pay and conditions. So this generally has been the pattern for attempts to introduce ‘progressive’ policies within the capitalist market system.
Looking at the Preston model specifically, as a route to local prosperity, a key question is whether the approach has forced back austerity and meant that the cuts in public services have been militated.
The answer unfortunately is no, cuts have been severe. Local government services in Preston are mainly provided by Lancashire County Council, with Preston Council itself accounting for only 16% of spending.
After adjusting for inflation, in the ten years since 2010-11, Preston has cut 60%, more than half, from its spending, and Lancashire County Council has cut 30%. These figures represent a huge reduction in living standards, particularly for the poorest and most vulnerable who are most dependent on public services. They also exclude the fact that many charges made for services have increased too, such as council rents, council tax, car parking, leisure facilities, transport subsidy etc.
So this quite clearly shows that while economic activity has risen and unemployment fallen in Preston and parts of Lancashire, relative to the average of comparable areas over the last decade, this is not a strategy to defeat austerity. Cuts have still been severe, with or without the Preston model.
While marketing it as a way forward, some supporters of the Preston model do not in fact claim that it is a strategy to fight the cuts. Rather, the strategy is, in its essence, the same as that adopted by all the main capitalist parties, namely the belief that maintaining capitalist economic growth is the route to better living standards.
This is often called ‘trickle-down’ – more local economic activity will work its way through into reduced poverty. In an era of unending global capitalist crisis, rising inequality and poverty, precarious work and attacks on hard-won pay and conditions, this seems far-fetched to say the least.
This strategy of localism is really just transferring jobs and expenditure from one area to another. The main benefits of the Preston model identified by the council and its consultants are in the area of procurement where economic activity that was previously undertaken in other areas of the UK has been shifted to Preston. Good for Preston, not so good maybe for Blackpool, or Yorkshire or the South West.
As well as being a zero-sum game, the approach also has the danger of playing into the ‘divide-and-rule’ strategy of capitalism if it does not become the launchpad for a struggle for more resources for local councils and communities across the country and the goal of a socialist reorganisation of society.
Setting communities or groups of workers against each other forces them to compete for scarce resources and ultimately leads to a race to the bottom. Ireland’s low corporate tax regime and the proliferation of ‘freeports’ and ‘special economic zones’ are examples of this tendency.
Instead of this age-old and failed strategy, socialists argue for planning and organising production democratically so that resources are available for all to meet needs, rather than fighting for scraps within a failing system. And to achieve this, socialists know that unity of working-class communities is required if the fight against austerity and capitalism is to be won. We need a collective strategy and to reject divide and rule.
Don’t pass on cuts
So while supporting all improvements such as the living wage, ethical standards etc, the only effective strategy to defeat austerity and the cuts in local services implemented by central government is to refuse to pass them on. Councils have the ability using their reserves and borrowing powers to set needs budgets and prevent cuts in the short-term.
But what is required is the restoration of funding, and that can only be achieved by putting massive pressure on government. It requires a mass mobilisation of working-class communities, linking up across towns, cities and regions in a democratic campaign of demonstrations, strikes and other actions.
Is this possible? The fightback of Liverpool City Council in the 1980s shows what can be achieved.
In that struggle, £60 million of additional funding was won through a socialist leadership that had confidence in local workers’ willingness to struggle, and organised to win, despite Liverpool standing virtually alone in fighting Tory cuts.
Imagine what could be achieved with a campaign across multiple councils if they were committed to fight back and organised to win. The benefits of Liverpool’s struggle can still be felt today, with 5,000 council homes, nurseries and leisure centres built as a result.
Longer term, of course, gains like those achieved in Liverpool, or indeed by the post-war welfare state, will eventually be taken back by the ruling capitalist class as the crisis of their system deepens and their profits are threatened. Ultimately, only the end of capitalism, democratic public ownership and control of the major parts of the economy, and a democratic socialist plan to meet needs, can transform the lives of the mass of ordinary working people.