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From The Socialist newspaper, 2 December 2009

Liverpool council's budget 'black hole': Establishment parties only offer swingeing cuts

ON 3 August 2009, the Liverpool Echo reported that Liverpool city council faces a budget 'black hole' of over 90 million in the next five years. The city treasurer's statistics reveal that by 2017 the council could have a deficit of 122 million. An additional barb was aimed at the workforce on 12 November with the headline: Liverpool council is to axe 1,000 jobs over the next three years.

Tony Aitman, Tony Mulhearn and Dave Walsh

The council now faces a 120 million budget gap over the next five years, 30 million higher than the forecast revealed only three months ago. Liverpool's Liberal Democratic rulers blame what they claim are government grant cuts of up to 25% and the removal of the funding the city gets to compensate for its declining population.

The treasurer's report warns: "the city's spending aspirations will need to be significantly constrained and reduced" in future years, heralding the need for "imaginative solutions, bold decision-making and strategic leadership".

'Imaginative solutions' have been deployed in spades by the Liberal Democrats and, in its brief period in office, by New Labour before them.

In 1987 when the '47' cuts-fighting Labour councillors were framed by the district auditor and removed from office, the number of workers directly employed by the socialist city council was 31,000. That figure is now 16,500.

Also in 1987 the council directly owned and controlled 26 care homes for the elderly. Now there are three, the rest having been flogged off by the council to 'save' money.


Many of these sites were developed into luxury houses and flats. Care homes Leighton Dene and Boaler Street, the most recently closed despite widespread public anger, had recently been refurbished at a cost of over 2 million. Revealed here is the Liberal Democrats' genius at husbanding the city's resources in the most effective way.

The council's forecasts predict the population of 436,000 will fall by 600 a year and not return to 2009 levels until 2031 - but other major cities will on average see their population grow by almost 20%. So, in years to come, other cities will get more funding than Liverpool because cash is distributed relative to population levels.

Is there a strategy by the city's rulers to organise a campaign to oppose any further cuts or to demand more government funding to overcome the shortages? Is there a programme of house building and publicly funded works to provide desperately needed affordable housing and to create jobs?

The answer is no. The strategy will be to cut, cut and cut again to impoverish sections of the population in the city they claim to love.

So, 22 years after Margaret Thatcher's district auditor surcharged the Militant-led 47 councillors, removing them from office with the unanimous agreement of five Law Lords (with the complicity of Neil Kinnock and right wing trade union leaders), Liverpool now faces the greatest cash crisis in its history. This follows two decades of cuts, privatisation and massive reductions in the workforce.

The city's working families are entitled to ask what benefits were derived from Liverpool's much heralded City of Culture status, or from the billions of euro funding poured into the city in the last ten years.

Between 1983 and 1987, the socialist city council built 5,000 houses and converted hundred of flats into habitable accommodation. Since then the number of houses built directly by the council is zero, resulting in the housing crisis that we witness today.

Some years ago, a so-called 'ground breaking deal' between the council and British Telecom established Liverpool Direct, which received accolades from the Audit Commission.

What is not trumpeted is that BT bills the council for every call made to the council, and the council are obliged to pay BT 150 for replacing a phone which would cost 20 in any store that sells phones.

If the global cost to the long-suffering council tax payer of this questionable practice could be extrapolated from the murky world of the council's financial transactions it would make interesting reading.

Since the 1980s, successive administrations have sought to cut the council workforce, primarily through privatisation or by constant restructures, which invariably lead to work intensification.

Coupled with this, the city council has carried out very little recruitment over the past two decades as most new jobs are filled by redeployed staff from other departments.

The result is an ageing workforce, with many of them fearful that they are next for restructure or privatisation, so they prefer to seek severance pay rather than to stay and fight for their jobs. In such conditions the trade unions have become fractured and increasingly marginalised.

Those workers that have been privatised have had no choice but to transfer or give up their job. And, once in the private sector, the profiteers don't wait long to maximise profits at the expense of front-line staff.

Usually the lowest paid workers are most vulnerable; support staff in schools such as cleaners and catering assistants will often see no pay rise until the national minimum wage catches up with their pay. That might not be for three or four years after transfer, by which time they will have fallen behind local authority pay rates to the tune of 1 an hour.

For those women who remain in a union, it is possible to protect their sick pay and holiday pay by virtue of the TUPE regulations, but some scurrilous employers will resort to bullying ex-council staff out of their jobs so new starters can be brought in on minimum everything, and these staff see very little benefit in union membership.

Union membership in street cleansing and refuse collection remains high and they have largely been able to defend their terms and conditions. But this has only been possible through their willingness in recent years to take militant action.

Also, whatever industrial power they have cannot be used to protect other public sector workers with less industrial muscle, as it had been in the past. Nor have they been able to secure local government pensions for new starters.

Attacks on workers

Throughout this period of steady degradation for workers, trade union leaders have done little but acquiesce to the neo-liberal agenda, putting all their efforts into campaigns to improve the TUPE regulations rather than fighting cuts and privatisation in the first place. And they have done still less to highlight the fact that the extra money the government so often talks about, spent in the public sector, is not benefiting the workers, but as in Liverpool, ends up as huge profits for companies such as Hochteif, Compass, Enterprise plc and British Telecom.

At a recent meeting between unions and council managers, trade union reps were given proposals which will alter the redeployment process so workers can be made redundant more quickly and efficiently.

The reason given was that there simply wouldn't be enough redeployment jobs available to cope with the scale of job losses that are coming. And scandalously, one union official at the meeting was quick to indicate his willingness to, as he put it: "Help as constructively as possible to manage the process in the least painful way".

Slowly now, ordinary trade unionists are beginning to realise that it's not enough to only fight on the industrial front when we are constantly being attacked from the political one.

We musn't keep being constrained by union leaders who refuse to fight back. If the unions can help build a political force of the kind that achieved so much in Liverpool in the 1980s then we can tip the balance of power in our favour and build a system that benefits workers and not fat cats.

The Liverpool Echo recently reported that a leading Liverpool councillor (Richard Kemp) has written a letter urging the city's two main party leaders (council leader Warren Bradley and Labour leader Joe Anderson) to set aside their differences to tackle the council's looming financial crisis.

As the main parties share the same neo-liberal agenda, it is difficult to imagine what 'differences' Kemp is referring to.

Perhaps it is the parties having different names. If they merged and called themselves the Capitalist party that would make it simpler, both in Liverpool and nationally, and help the electorate conclude that what is required is an alternative party that, like the socialist council of the 1980s, prioritises working class interests.

  • See Socialist Books or read Liverpool - A City that Dared to Fight by Peter Taaffe and Tony Mulhearne online
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    In The Socialist 2 December 2009:

    Climate change 'gigantic market failure'

    Copenhagen climate change talks

    Socialist Party NHS campaign

    National Health Service: Patient safety not private profit

    Youth fight for jobs

    Youth march for jobs: "A fantastic experience"

    Credit crunch

    Dubai's house of sand crumbles

    War and occupation

    Chilcot inquiry: Put the warmongers on trial!

    Socialist Party news and analysis

    Fast news

    Yorkshire strikes - the lessons

    BA management get tough

    Fighting university cuts

    Fighting council cuts in Greenwich

    Stoke Axiom action continues

    Defend the Four!

    NUS plans mean students pay


    Rally to oppose racist EDL

    How mass campaigning closed BNP HQ

    International socialist news and analysis

    Irish Republic: Huge public sector workers' strike against cutbacks

    Indonesia: Eyewitness report from Tamil refugee boat

    Socialist Party election campaign

    Politics 'illegal' in Lewisham council

    Help give a socialist answer to cuts and privatisation

    Marxist analysis: history

    Liverpool council's budget 'black hole': Establishment parties only offer swingeing cuts


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