Chapter 12 – Nine Percent and No More

Up until the day that the council was to set an “illegal” rate, the government had been confident that Liverpool would come to heel in the wake of the capitulation of other councils. On May 13, Patrick Jenkin repeated his earlier refusal to talk to the council. John Hamilton angrily declared: “If he came to Liverpool to try to explain his policies, then his ideas would be slaughtered.”

But Jenkin was by now receiving open support from elements within the labor movement. George Wright, right-wing contender in the re-run ballot for the position of General Secretary of the Transport and General Workers Union, used a foray to the outskirts of the city to launch an attack on “Liverpool’s Militant Labour left”. “Militant must go,” he said, and attacked in particular “Militant official Richard Venton, city councilor Pauline Dunlop, European MP Les Huckfield, and MPs Eddie Loyden, Bob Parry, and Alan Roberts”. Liverpool Militant supporters replied:

We are surprised that George Wright should attack Liverpool council during the critical period in our struggle against the Tory government. If this struggle is lost, 6000 jobs will go. Liverpool council has a proud record of building houses and creating jobs. The Transport and General Workers Union (TGWU) locally have consistently supported us in implementing these policies. In fact, at a time when the TGWU membership in local authorities are on the decline because other councils are carrying out Tory government cuts, Liverpool membership has increased because of the new job opportunities brought about by Liverpool council…

Wright declared that he would be interrupting his campaign to “go on to Llandudno where today he would be urging the Welsh Labour Party to continue the battle to oust Militant”.

Wright’s venom towards Militant was not at all accidental. Militant supporters had consistently provided Ron Todd (the candidate of the left) with a platform in Merseyside. Tony Mulhearn and Derek Hatton had many times spoken with him at mass meetings. In the re-run ballot Militant TGWU members had been most energetic in support of Todd but they were rewarded later with the TGWU supporting their expulsions, with Ron Todd playing a decisive and shameful role in this. “There is no gratitude in politics”: this was applied with zeal by even most of the “left” national trade-union leaders when it was to come to the expulsion of Marxists from the Labour Party. Any feelings of “gratitude” were more than cancelled out by the “danger” to them and their privileged position.

The National Union of Public Employees (NUPE), at its national conference in May, joined the witch-hunters. Jane Kennedy, secretary of the Liverpool City General branch, moved a resolution calling for the expulsion of Militant supporters. This was taken as the first item on the agenda and bulldozed through by the Chair. NUPE, from being a left-wing bulwark within the Labour Party had moved over to become one of the chief opponents of the Militant and others on the left.

Approaching the Crunch

By the end of May four councils were holding out on the “no-rate” policy – Southward, Camden, Liverpool and Lambeth. On May 22 the District Auditor threatened the Liverpool councilors with heavy fines and banishment from office unless they set a rate within nine days. Finance Chairman Tony Byrne declared, “There is absolutely no possibility that this authority will have set a rate by the end of the month.” Nevertheless, the government confidently expected that the Labour group would capitulate given its isolation. What they totally underestimated was the extent to which the relentless decline of the area and the frightening deterioration in the social conditions reinforced the resistance of the council. Even the Echo felt it necessary to detail the absolutely dismal prospects for Merseyside’s youth. It reported on June 7: “Almost 32,000 Merseyside youngsters will be chasing just 112 careers’ office jobs this summer.” The statistics showed that in the region as a whole there were an average of 280 candidates chasing every full-time job on offer. In Knowsley, the picture was far worse, with just three jobs available and 3900 young people about to leave school in August. The Echo published a map of despair, indicating the total number of jobs available throughout the area – 45 in Wirral, 24 in Liverpool, nine in St Helens, three in Knowsley and 31 in Sefton.

Nevertheless, the capitalist press urged Patrick Jenkin not to give in. The Daily Telegraph declared, “Liverpool’s ultra-left leadership must be pressurized”. After Southwark and Camden capitulated in early June, the District Auditor weighed in with final demand letters to Liverpool and Lambeth. He warned that there was now enough evidence to pursue action over the councilors’ failure to set a rate. The Sunday Times reported that “300 may face council ban”. In other words, even those councilors who had delayed setting a rate beyond the March deadline, but who eventually capitulated, were now being threatened with surcharge and banning from office.

As the crunch time approached, both the government and the Echo still expected Liverpool to capitulate. Obviously encouraged by headlines in the press which predicted that Liverpool would set a budget and a 20 percent increase in rates, the tiny ultra-left sect, the Workers’ Revolutionary Party in its paper Newsline, in the rather delicate language for which this paper was renowned, declared (12 June):

Lambeth stands form: Liverpool capitulated. The Militant Tendency’s bluff was called by the capitalist state in Liverpool this week – and it produced abject capitulation from the right-wing [i.e. the left leaders of the council] reformist group. But there is Lambeth standing firm, ready for a joint struggle.

The very next day Newsline‘s prediction was to be turned upside down when some Labour members in Lambeth voted with the Tories to pass a cuts budget. The WRP’s pessimism for Liverpool found a strange bedfellow in the Daily Telegraph which declared; “Liverpool U-turn on rate likely” and the Daily Mirror: “Liverpool, the only other council still holding out against rate-capping is about to climb down.” But contrary to all the speculation in the capitalist press, as well as those on the ultra-left fringe, there was no prospect of Liverpool abandoning the struggle and carrying through massive rate increases or cuts.

Commenting on this development Michael Parkinson in Liverpool on the Brink wrote: “the national and local Militant leadership could not have controlled their rank and file, even if they wanted to do anything else.” Parkinson’s hunt for these “differences” is entirely false. Militant’s “national and local leadership” were as determined as the “rank and file” not to squander the political capital which the Liverpool struggle had built up over the previous two years. Of course, had there been a principled compromise available that kept the gains of the city council intact, then that line would have been taken. No Marxist worthy of the name would deliberately and consciously inflict suffering on working people.

In the battle in the previous year, despite the shrill denunciations of the ultra-left, Militant supporters had easily justified the agreement with the Tory government. Sometimes after a battle such as a prolonged strike, it is necessary to beat a retreat. But Liverpool still had not yet experienced a serious confrontation with the Tory government. Worse than defeat after struggle, is to give way without giving battle. In the previous two years the Liverpool struggle had been more in the way of preparatory maneuvers before an inevitable collision. A 20 percent rate increase, which in any case would not bring in sufficient income to cover expenditure for the year, would represent a real cut for thousands of working-class households in the city. Moreover, it would have had to have been combined with quite savage cuts in social services, in order to make the budget “legal”.

A Deficit Budget

There were lengthy debates among Militant supporters at local and national level and within the local labor movement as to what course of action should be pursued. At the end of these debates, with the collapse of the “no-rate” front, it was concluded that the only course of action open was to confront the government.

At the eleventh hour, on June 11, the city council once more appealed for discussions with Jenkin. He refused, hoping to see Labour eat dirt and relishing the prospect this time round of “dancing on Derek Hatton’s grave”. But the temper of Labour was indicated by Tony Byrne who said: “I can give this categorical assurance to the people of the city. This Labour Party will not cut a single job, will not reduce its housing program. There will be no threat of privatization and no rent or rate increases to compensate for cuts in grant.” In an editorial Militant urged Liverpool to stand firm. Its advice was matched by the mood of the majority of the working population of Liverpool. One back bench councilor explained: “I am not a Marxist, I don’t even believe in all this political stuff. I just don’t think it’s fair and I wouldn’t vote for anything (beyond) a 9 percent increase.”

At an historic meeting on June 13, the District Labour Party unanimously agreed to set a 9 percent rate – no higher than the real rate of inflation and with no cuts. Nearly all the Labour councilors were there, and there was not one dissenting voice at the meeting when this policy was put forward. Moreover, any last minute hesitations were dispelled the next day when Thomas McMahon, the District Auditor, sent a letter saying that a “crime” had already been committed and he was going to act against them for losses they had incurred between April 1 and June. Thus any potential defectors were dissuaded from such a course by the fact that even if they betrayed Labour, they could still be surcharged.

Rarely had the Liverpool labor movement been so united (apart from the “scabby five” – two of the seven were no longer on the council – who had opposed the council’s strategy all along). The District Labour Party and the Labour group were virtually unanimous in validating the council’s stand. At two day’s notice, 1000 council workers lobbied the council meeting which adopted the deficit budget. The mood was enthusiastic, but unlike the previous year, somber. There were very few interruptions to the Liberal and Tory speeches which were now considered to be an irrelevance. Labour speakers were rapturously applauded, of course, but there was an unmistakable eagerness to proceed to the vote in order that the workforce could be prepared for the coming battle with the government.

With a 9 per sent rate, and with government refusal to give further grants, it was quite clear that the city would run out of money at a certain stage. Labour were not setting out deliberately to bankrupt the city, but intended to use the time available to mobilize the population of Liverpool and to appeal nationally to local authority workers to exert pressure on the government.

After only two hours’ debate at the council, this budget was adopted. In Liverpool on the Brink, Michael Parkinson gives us an insight into the atmosphere in Whitehall. The government was absolutely stunned: “The council’s senior officers were shattered by the decision… the civil servants who were sending memos down to London could scarcely believe their contents.” The government met the following week to decide what to do. A senior civil servant said: “We can either sit on our hands or dust off the Commissioner file from last year. The Commissioner option looks as unattractive this year as it did last. It’s just too uncertain.”

Another option considered by the government was to use the Attorney-General to quash the rate and to set a “new legal rate”. It is a striking fact that in this whole period not one of the main opposition forces was prepared to go to the court to quash Labour’s rate and budget:

The Liverpool Chamber of Commerce thought about it, but decided against it. The leaders of the opposition parties considered it but, quite apart from the expense involved in legal action, there were political imperatives not to do so. They might be accused of bringing the house down. More important, they would have to suggest a higher rate to be set and, given the mood in the city, that could only damage them with the electorate. Everybody was waiting and wondering about the next move… Ministers sat round the table gradually realizing the position that their policies on local government finance had finally led them to. They were drifting towards the confrontation they never really wanted with no apparent way of avoiding it. (Liverpool on the Brink)

But the actions of the city council immediately found a response in the council workforce and in the labor movement, with tremendous sympathy amongst the wider population of Liverpool. The National Local Authorities Coordinating Committee, still representing the workforces of 26 councils, had indicated that they would come to the assistance of Liverpool in the event of an all-out clash with the government. A campaign was set in motion in Liverpool to mobilize all sections of the council workforce for industrial action if necessary in the event of a collision with the government. The only union to oppose the event in early June was, once again, the teachers.

The press again began to take up the theme of the Commissioners in Liverpool. The Daily Express declared on June 20: “Maggie set to send in own man to run rate rebel city.” But even NALGO shop steward and convener Peter Cresswell declared: “We pledge ourselves to call for massive industrial action if a Commissioner is sent in.” The government became so worried of the scenario opening up in Liverpool that suggestions began to be floated that in the event of a serious confrontation the Commons would have to be recalled during the summer recess.

At the same time reports began to appear which recognized the great progress in the field of housing. CHAR (the campaign for single homeless people), after examining the facilities of 302 local authorities declared: “The city [Liverpool]… is the only authority to rehouse all homeless, single women.”

Acknowledging this and other measures (outlined in Chapter 9) support from the labor movement was forthcoming with the National Labour Women’s Conference coming out four-square with the council. Militant declared: “After two years of shadow-boxing, the Tories are squandering up to take on Liverpool council for its defense of jobs and services. The gloves are now off… the Tories will be made to understand that they are not taking on a council, but hundreds of thousands of working people in the city”.

The national Labour leadership were as stunned as the government by the stand of the council. In June Kinnock had written to Lambeth saying: “I do not accept that chaos in local government brings benefits, wither to the people of a borough or the Labour Party.” This could have been culled from any of the speeches of Tory ministers in their attack on “left-wing councils which create chaos”. Moreover, it was in complete violation of the decision of the Labour Party Conference which in 1984 voted to support the council that defied the government and refused to implement cuts. It was also in complete contrast to the enormous support that existed for this position. At the very moment when Liverpool had adopted its “stand” NALGO, the 766,000 strong local government workers’ union, “threatened widespread industrial action and non-cooperation in an attempt to thwart the government” over cuts in local authority jobs.

The National Executive Committee of the Labour Party decided to “support councils defending and promoting services and jobs and calls upon sections of the Party to offer maximum support to those councilors in Liverpool, Lambeth, Edinburgh and other authorities in seeking to prevent the threatened disqualification and surcharge”. But Kinnock immediately went on television in an attempt to water down the effect of the resolution and true to form, the Echo preferred to feature his statement rather than the decision of the NEC. The campaign among the private sector workers, always considered as a vital part of the council’s strategy, was having a big effect. In early July, a solidarity rally of 500 private sector workers throughout the Merseyside area was organized in support of the campaign of the city council. Ian Lowes declared, “This is a fight for every working class man, woman and child in the city.” Forming themselves into the “A-Team”, a group of council workers volunteered their time to visit depots and build support for the campaign. Despite the opposition of management they received enthusiastic support in their visits to factories, both in Liverpool and on a national level. The work of the A-Team crushed the myth disseminated by some “lefts” that the campaign was the preserve of the “employers” – the council – without an independent voice for trade unionists.

Willful Misconduct

Undoubtedly, the action of the District Auditor on June 14 in surcharging 49 Labour councilors £106,000 for “willful misconduct”, galvanized support behind the Labour council. It also laid bare the dictatorial powers exercised by the District Auditor.

The Liverpool and Lambeth cases demonstrated this in a very graphic fashion. Under the auspices of the National Audit Commission a network of District Auditors has the function of rolling back the boundaries of the welfare state. In 1982, a new Local Government Finance Act gave the Auditors extensive new powers. The District Auditors can investigate local councils and then act as judge, jury and executioner in serving certificates of surcharge and disqualification.

Contrary to all the other principles of the British legal system, or any other for that matter, the prosecutor, in this case the District Auditor, does not have to prove a case against the accused in a properly constituted court of law. Their dictatorial powers allow them to surcharge and disqualify without any of the other legal safeguards that are normal in a court of law. Councilors are not allowed to appeal to the courts, but the onus is on them to prove their innocence.

In the Liverpool case the councilors were threatened with surcharge and willful misconduct because of an alleged “loss” to the council arising from the delay in receiving government housing benefit and payments “in lieu of rates” on Crown property between April and June when the council had not set a rate. He argued that if Liverpool had received this money, it would have been banked and would have been receiving interest. But the interest on these payments was being made, the only difference being that it was accumulating to the benefit of the national exchequer which had this cash lodged in the bank. Therefore no real “loss” resulted from the delay in receiving housing benefit.

Yet on this flimsy basis, 49 working men and women were to be dragged before the courts, threatened with bankruptcy, seizure of their houses, and banning from office. This could mean terrible suffering for ordinary councilors such as Harry Smith. He told Militant:

At the moment my wife is in full-time employment. I’ve for three children, aged 9, 11 and 16. What little we’ve got has been brought in by my wife. They are just small luxuries which have been saved up for and scrimped for. I’ve been out of work on and off now for five years. The sacrifice is going to be great for us, but we are determined that we are going to win.

Notwithstanding these threats, the 49 socialist councilors declared that they were prepared to fight to the finish. Derek Hatton, speaking at a magnificent 10,000 strong Youth Trade Union Rights Campaign demonstration in the city in late June, warned that the Liberals would not be allowed to take office because of the council workers’ resistance if Labour was barred from office. He also said: “Every time the leadership of the Labour Party nationally say, ‘Isn’t there a better way of doing it? Why are you breaking the law?’, we say to them, ‘show us the 6000 people we should make redundant.'”

The national press predictable foamed at the mouth at the scenario that was beginning to take shape in Liverpool. They were driven to fits of rage when the council decided to evict the District Auditor from council premises. Two senior council officials were suspended for allegedly cooperating with him. The Post declared, “Anyone who believed that Militant’s left council had gone as far as it would in defiance of the government by setting a rate which was patently inadequate, has now been proved wrong.” The Daily Express thundered: “The mantle of Arthur Scargill has fallen on Derek Hatton, Militant deputy leader of Liverpool council… to the left of left there is always the left – and anarchy” (21 June). The mood of approaching battle was reflected in the decision of the council’s security guards to physically repel any attempt by commissioners to take over council property.

The support of ordinary workers throughout the city was evident in the days that followed the threat of surcharging the councilors. In Norris Green people flocked to sign a petition in support of the council. When renegade Labour councilor Bill Snell appeared amid cries of “scab” from people gathered around, he accused activists of being “communists”. He then said that the councilors should try and convince the Tories that Liverpool needed more money. He received the reply, “We’ve been doing that for two years. What’s your alternative?” Labour punched home the fact that the Tory-Liberal alternative budget would have involved a cut of between £25 million and £37 million which in turn would have meant an immediate cut of 3000 jobs in order to balance the books.

The increasing militancy of the council workforce, particularly of the manual workers, raised expectations of a serious clash with the government once the cash ran out. Even as early as June, the Echo began to rehearse the theme that it was to take up with gusto in the September events: “council security men have pledged to put a stranglehold on Town Hall services in support of Labour’s rebel budget stand. The 136 staff who control all council buildings have voted unanimously to take indefinite strike action if legal steps are taken against city leaders.” Derek Hatton declared that any Commissioner would not be let off the M62 motorway, never mind take control of the city. These were no idle boasts, given the heightened mood of expectation that began to grip the council workforce and the population in general. At the same time, an occasional letter would appear in the Echo indicating just what progress had been made by the city council:

As a visitor from Portsmouth to your city, I have been most impressed by the housebuilding program of your city council. In Portsmouth, with a Conservative council, no houses are to be built in the next five years, yet Hampshire faces an extra 250,000 people needing accommodation in the same period. Does it really matter if the Militant is behind the city council if they are the only people in the country standing up against the mad policy of turning Britain’s major cities into slums? I would support the “Man from Mars” if he built another 2000 houses in our city”.

Yet once again Patrick Jenkin refused to talk, but instead announced that the city was to be rate-capped in the next year. In the House of Commons, Terry Fields MP, in a prophetic warning to Jenkin, declared that the council would be, “dancing on his political grave” if he continued with his policy. There was fury at the further attacks on Liverpool workers which the rate-capping proposals represented. It fueled the mood of opposition which led to Eric Heffer warning that “Liverpool could face serious problems of unrest this summer without a settlement of the city’s budget crisis.” More than 50 Labour MPs signed a Commons motion supporting the councilors and calling for lost Rate Support Grant to be restored to Liverpool.

Piling on the agony, the Public Works Loan Board threatened on July 31 that loans would be withdrawn unless a “legal budget” was set by the council. Anticipating that a huge electoral bonus could be seized by them, the SDP-Liberal Alliance poured in “Party funds in an attempt to seize control of the city council” (Echo 15 July 1985). In a vicious 66-page report called How Labour Sacked the City, the Liberals detailed an alleged “reign of terror against senior staff at the council”.

Time and time again, however, the enemies of Labour were to ignore and underestimate the colossal reservoir of support which the council had built up in the period during which it had been in power. The perception of the population of the city that their council was being persecuted for standing up for ordinary working people was underlined by the splendid campaign organized by the Labour Party involving the families of the threatened councilors. In late July, over 50 members of the Liverpool Labour Council Families Support Group, along with their children traveled to London to lobby for the council. They challenged Thatcher to come to Liverpool to meet the elected councilors and their families. Their challenge was repeated on the floor of the House of Commons by Labour MP, Dave Nellist.

Wherever council spokespersons went ordinary working people were astonished to learn about the rights and conditions enjoyed by the council workforce in Liverpool. Thus When Tony Mulhearn addressed a packed public meeting of Chesterfield Labour Party, one local authority worker declared: “If only all Labour councils were like that.” A NUPE member, discovering that Liverpool took on all workers full time, commented bitterly that one third of Chesterfield’s refuse department were on six-month, three-month or six-week contracts. He asked, “In Liverpool, do you ever get Labour councilors on such committees telling the workforce they are lucky to have a job?” Tony Mulhearn replied, “All hell would break loose.” He also commented that the local officers of the building workers’ union UCATT had no unemployed joiners on the books, thanks largely to the council’s stimulus to the local building industry. Indeed, he quipped that so successful had Labour’s campaign on housing been that “most people in Liverpool believe that Trotsky was a bricklayer”.

It became clear to the ruling class that the support which was consolidated behind the council had to be broken quickly. The horrifying case of 14-year-old Jason Fitzsimmons, a heroin addict who came from the Croxteth Estate, who had overdosed and was on a life support unit, was eagerly seized on by the national press. The Daily Mirror in particular viciously attacked the council for allegedly not doing enough. Yet it was Labour activists like Phil Knibb and the LPYS who were to the fore in a serious campaign in the Croxteth area to mobilize local people against the drug pushers. Moreover the Liverpool Council Drugs Unit, established in January 1985, is one of the most effective in the country, carrying out training for teachers and developing health education programs to be incorporated within secondary school curricula.

The increasing polarization in the city also compelled the Church dignitaries to choose sides. Inevitably, the tops of the Church gravitated towards the opponents of Labour. This was not an unusual occurrence in the history of Liverpool. Largely hidden from public view, the Churches had been conducting a systematic campaign of denigration of the city council. Obscure fossils of the past history of the labor movement were dragged up as representing “moderate” opinion.

The Church Finally Takes Sides

Former right-wing secretary of the TGWU Transport Group, Bob Robinson, was interviewed in the Catholic Pictorial, denouncing the Liverpool labor movement. This worthy was fulsome in his praise of the electricians union, the EETPU, but with horror he pointed to the growth of the left in the Liverpool labor movement: “Yes, the Marxists and Trots – particularly the Militant Tendency, and speaking parochially about Liverpool… they have an influence that I have never seen in all my years as a trade union officer, and for the many years I have spent in the Labour Party.”

This was followed with a statement in the Catholic Pictorial on July 28th: “Liverpool Rates Crisis”. After detailing the terrible decline of the city, there is an implied criticism of the stand of the council. The paper merely called for people to pray for “deliverance” from the catastrophe that loomed! However, they appealed to trade unions not to respond to calls for widespread strikes, to the council not to use “the language of revolution” and for the government to recognize the need locally for jobs and services.

The Church was attempting to straddle an increasing chasm between the deprived population of Liverpool and a determined and vicious class-based government. It even admitted: “It would have seemed part of out customary role of reconciliation to call for further talks between the government and the city council. But the government has made it plain it will not discuss the city’s finances with the councilors.” Despite this, the Church leaders unmistakably came out against the city council when they appealed: “We understand that it is possible for an interested person or body to go to court to secure the setting aside of an inadequate rate and requiring the council to set an adequate rate for a legal budget.”

Those good shepherds, the Bishops, were impervious to the fact that it would be their flock, ordinary working-class house-holders, who would pay the price of massive rate increases. But nobody was prepared to seize the nettle, to attach to themselves the odium of being the instigators of higher rates. The paralysis of Labour’s enemies was itself an indication of the head of steam which had been built up behind the council’s campaign.

Labour’s campaign of counter-propaganda over the years had gone deep among the working people. These points were now repeated in the letters of the Echo. One, on July 9th, quoted former Tory leader, Reg Flude: “We’re not interested in winning seats if the Liberals are carrying out Tory policy better than the Tories themselves.” But the local press began to whip up a feeling of impending doom: “Compromise is nowhere near on the horizon” (Echo 8 July).  On the same day, this same paper reported, “Jenkin lines up Governor of Liverpool”. It went on:

An urgent head hunt has been ordered by the government to find the man who would be sent in to run Liverpool if the city council’s cash crisis deepens… it would be an unprecedented act to send in what Whitehall describes as a “Roman Governor” with sweeping powers… it is clear that the government is finding it difficult to get the right man…

Nevertheless, Labour spokespersons made it quite clear that unless the government could be compelled to give extra resources, the cash would dry up at a certain stage: “We are only in a position to guarantee wages until the end of July” commented Dominic Brady, Education Spokesman. Appearing whiter than white, and completely out of touch with reality, Trevor Jones hypocritically declared in July: “If Labour rate rebels are surcharged and banished from office, we [the Liberals] pledge no compulsory redundancies.”

Labour spokespersons and MPs in the House of Commons continued to harry the government to come to the assistance of Liverpool. Eric Heffer furiously denounced Thatcher for characterizing Liverpool as a city “where there had been violence for a very long time”. This theme of violence and of the old and sick suffering allegedly through Labour’s “uncaring attitude” would reach fever pitch in the period from September to December.

Although August is a “holiday” month, in Liverpool hardly a day went by without the city’s cash crisis featuring heavily in the local press and nationally. There were to be no holidays that August for leading activists in the labor movement. Decisions that were taken by the city council at that time were to have a dramatic effect and represented the turning point in the development of the struggle in Liverpool.