Chapter 21 – Surcharged

They do not object to a Labour Government if it is a nice Pleasant Sunday Afternoon Government that is content to leave untouched the sacred ark of the covenant of Capitalism… Our governing class, with the ingenuity and cunning they know so well how to exercise, allow the workers to retain all the outward signs and symbols of democracy. We elect municipal councils and other authorities, but after election if they dare to put Socialist principles in operation, then the “artful dodgers” who rule us scheme and plot to overthrow Labour majorities. George Lansbury (Lansbury’s Labour Weekly 6 March 1926).

Repression against the Liverpool Militants through the Labour Party National Executive Committee’s inquiry went hand in hand with an open assault by the forces of the capitalist state. The medium for this offensive was the District Auditor, McMahon. He had been deliberately chosen by the Audit Commission in consonance with the government. In 1984 the previous District Auditor Leslie Stanford had made threatening noises when the council delayed in setting a rate. However, his hand was stayed by pressure from the government which was not at all eager to open a “second front” during the miners’ strike.By the autumn of 1985, with the miners’ strike out of the way and the Liverpool council isolated, the new hard-line District Auditor Thomas McMahon prepared the ground for the “legal” dictatorial removal of the Labour councilors from office. This battle was to be a long and tortuous one, extending over a period of 18 months. The full panoply of the law, together with the invaluable assistance of the right-wing leadership of the Labour Party, were to be brought to bear in order to reinforce the very flimsy “legal” case of McMahon for the removal of the councilors.

For Marxists the law is not at all neutral as the reformists would have us believe. The judges, selected from social classes “A” and “B”, in their overwhelming majority trained at Oxford or Cambridge, are steeped in the outlook of the possessing classes. In the final analysis, defense of “private property” supersedes in their outlook any moral precepts about “fairness” or “justice”.

Bourgeois judges played a viciously repressive role against the first attempts of the working class at the end of the Eighteenth and the beginning of the Nineteenth centuries to form their own independent class organizations. From the Tolpuddle Martyrs, the 1906 Taff Vale judgment, the one-sided interpretation of the Public Order Act of 1935, to the imprisonment of dockers in 1948 and 1972, the judges have overwhelmingly been in favor of the rich against the poor.

The judges, not to say the professors of jurisprudence, have attempted to embellish capitalist law with eternal moral precepts, particularly of “natural justice”. However, if the law were implemented in a crude class fashion, it would eventually become utterly discredited. Hence the law, and particularly the judges, have to balance the interests of capitalism, and particularly the “sacred tights of property”, against the need of being seen to act “fairly”.

With the intensification of the class struggle, and particularly when the balance of forces appears to be in favor of the capitalists, the mask of judges drops. The Thatcher government has used the law to attempt to weaken the unions and infringe democratic rights. Bolstered by this law, the judges sequestrated the assets of the miners and then the printworkers.

The green light for the legal repression of the Liverpool and Lambeth councilors was given by the leadership of the labor and trade-union movement. The signal they sent at each critical juncture was that if the councilors were “legally hung,” no help would be forthcoming from the summits of the labor movement. It was not accidental that McMahon began to probe and test out the ground in July of 1985, when it appeared that Liverpool was isolated. McMahon addressed a four-page letter to all Liverpool’s Labour councilors on July 19, 1985, in which he wrote:

Whilst not wishing to pre-judge the issue at this stage, I must say that in view of the advice provided by the council’s officers, by my predecessor and by me, the failure to make a sufficient rate appears to be so deliberate as to call into question the issue of willful misconduct. I must make it clear, therefore, that if losses arise as a consequence of the council’s actions, it may be necessary for me to consider whether further action may be required of me under the provisions of Section 20 of the Local Government Finance Act 1982.

Despite this clear threat, McMahon was not at all confident nor, we may assume, were his Tory masters, that they could proceed against Liverpool. After all, such threats had been made in the previous year but in the light of the agreement between the council and the government, the District Auditor was no doubt instructed to ignore the councilors’ delay in setting a rate. He summed up his hesitation, “Such possible action against individual members is not now my most immediate concern.” His letter amounted to warning the councilors that the expenditure that they had set would run out unless the rate were to be increased. Having gone through the various options facing the councilors, he then wrote:

There would seem to be a third course of action available. Having regard to the City Solicitor’s advice that the council’s rate resolution was unlawful and open to challenge, the council’s problem could be solved if the present inadequate rate were challenged and quashed and the council were then to make a rate at a level to meet whatever level of expenditure it considered appropriate.A challenge to the present rate could be made by any person with an appropriate interest and this would appear to include any member of the council. A failure to make a further rate if the present rate were quashed would be likely to be followed by consequences similar to those following the council’s earlier delay in making the present inadequate rate.

But as we have seen earlier, none of Labour’s opponents was prepared to be saddled with the responsibility for “raising the rates”.

£106,000 Fine

On September 8, McMahon imposed a fine of £106,000 against the Liverpool councilors dismissed from office and banned them from holding any office for five years. “Coincidentally”, on the same day, the Lambeth councilors received a fine of £126,947 from the Metropolitan District Auditor, Skinner. The fingerprints of the government’s concerted campaign against both councils were all over the measures taken by the two District Auditors. All the hesitations of the District Auditor disappeared after the failure of all-out strike action at the end of September 1985.

The reaction of the tabloid press was predictably jubilant. But it was The Times (10 September), baring its fangs, which displayed malicious pleasure at the predicament of the councilors:

The gamesmanship is over. Mr. Ted Knight and Mr. Derek Hatton and their municipal followers have long deserved a come-uppance for their extravagant refusal during the “rate-capping” campaign to act responsibly in office.

Reflecting also the determination of the ruling class to make the Liverpool working class pay, it commented:

While the financial crisis plays itself out, nothing must let the Liverpool councilors off the hook they fashioned for themselves two years ago when they announced their intention to “confront”. Liverpool, this sad city, must be an object lesson of the consequences of irresponsible administration: if its people return a Militant-dominated council, they must be the first witnesses of the result. The spectacle for the rest of us may be unhappy, but how else can the public’s education, in financial and administrative necessity proceed?

The District Auditor was quite clearly an arm of the government. Indeed, they had never been genuine auditors, that is accountants merely checking the books of local authorities. They had been installed in the Nineteenth century as a means of keeping down relief to the poor to an absolute minimum. When the Poplar councilors fought in the early 1920s for decent levels of outdoor relief to the unemployed, they were harassed by the auditors. Between 1922 and 1926, 5 surcharges were imposed on Poplar Borough councilors and 9 surcharges on Poplar’s Labour Poor Law Guardians, for paying “too generous” wages and unemployment relief. These accumulated to tens of thousands of pounds, and successive Liberal and Tory ministers, including the hard nosed Neville Chamberlain, were forced to “remit” – that is, waive – the surcharges as unrecoverable. However, after the defeat of the 1926 general strike, which also undermined the struggle of councils like Poplar, the local bosses, organized in the Municipal Alliance, went onto the offensive. Among other things they challenged Chamberlain’s right to remit the surcharges, and the judges ruled against the Tory minister. Ironically, in view of the renewed clamor about “retrospective legislation”, Chamberlain was forced to introduce legislation to legitimize his illegal remission of successive surcharges. At the same time, however, his Audit (Local Authorities) Act of 1927 gave District Auditors drastic new powers, notably introducing for the first time the power to disqualify democratically elected councilors for 5 years.

In the 1930s, the District Auditors were used to fend off reforms being pressed by the increased Labour representation on councils. During the post-war economic upswing the role of the District Auditor receded into the background when councils dominated by Labour were under control of the right wing, who were prepared to merely manage the system. But beginning with the surcharging of the Clay Cross councilors in the 1970s, and particularly in the1980s, local government has increasingly become a battleground between labor and capital as the capitalists have attempted to snatch away the reforms given in the post-war upswing.

Under the 1982 Local Government Finance Act the District Auditor was given new and draconian powers, becoming, under the control of the National Audit Commission, an instrument for promoting “local government efficiency”, “value for money”, and “good housekeeping”. This was capitalist code for slashing jobs and services. The District Auditor was the local representative who would enforce the rolling back of the “boundaries of the welfare state”.

The Tory government armed the auditors with a battery of new legal powers which allowed them to investigate local councils and to act as judge, jury and executioner in issuing certificates of surcharges and disqualification. As the case of Liverpool and Lambeth demonstrated, this was without even giving councilors the right of an oral hearing!

The District Auditor’s actions in Liverpool created a sense of unease throughout the labor movement. If Liverpool could be successfully prosecuted by the District Auditor, what fate lay in store for other councils like Sheffield, Camden, Hackney, Lewisham and Islington. They may not have gone as far as Lambeth and Liverpool, but they had also delayed setting a rate. There were those, like David Blunkett and others on the “soft left”, who had capitulated on the rates battle in order to safeguard their parliamentary futures. Now it appeared as though the District Auditor was coming for them. No wonder Blunkett was to the fore in denouncing the surcharges. He correctly pointed out in the Guardian (10 September) that it was a

totally unnecessary and vindictive attack on individual councilors who are doing their best to defend local communities and vital services… the penalties of surcharge and disqualification do not apply to MPs, businessmen, or indeed others in public life, but fall selectively on councilors who now face financial ruin and disqualification.

A major Labour spokesperson on local government, he attempted to warn the judges to desist from attacking the councilors:

This action confirms our long-held view that the Audit Service is being used as a political tool by the Tory government. I want to give notice now that any penalties imposed on councilors will be remitted by the next Labour government. There is no ambiguity about this.

The Labour leaders were ambivalent, if not completely hostile, to Blunkett’s correct interpretation of the decisions of the 1984 Labour Party Conference. He reinforced his position, by sending a letter to the NEC which extracted relevant sections from recent conference decisions to underline the point. He summed up the decisions of the Labour Party Conference as follows:

(1) The next Labour government (will) indemnify those councilors defending local government as outlined in this statement, threatened with disqualification and surcharge. (NEC Statement, The Defense of Local Democracy, Services and Jobs).(2) (The next Labour government will) recompense from central government funds, individual councilors penalized for resisting the rates legislation (Composite 21 – Conference 1984).

(3) (Conference) commits the next Labour government to repeal repressive legislative measures… and indemnify Labour councilors defending local government (Composite 30, 1983 Conference).

(4) Labour will also enact legislation to abolish the penalty of personal surcharge of individual councilors (Labour Manifesto, 1983).

(5) We will also retrospectively cancel any penalties imposed on councilors for actions taken by them – in furthering their own local manifesto policies – which conflict with local government laws introduced by the Tories… (Labour’s Program 1982).

The Labour leadership were at this stage concerned that the councilors should “pursue their case against disqualification and surcharge through the courts rather than bring their communities to a standstill”. According to t he local government correspondent of the Daily Telegraph, “The Labour front bench argue that recent judgments show that the court believe that the fixing of local rates is a matter primarily for local councilors.” This touching faith in the law was not borne out. Moreover, after the councilors had heeded the advice of the Labour leadership and had been crucified by the judges, the reaction of Kinnock, Cunningham and Straw was “I told you so.”

Labour’s main opponents in Liverpool, the Liberal-SDP Alliance, were eager to get their hands back on the levers of power. John Cartwright, the SDP’s national spokesperson on local government, pressed for an early hearing of the Lambeth and Liverpool cases, a call echoed by Liberal leader Steel. The Alliance also demanded that the Audit Commission reveal all the details of other Labour councils which had delayed setting a rate. All of this of course was in the “public interest” and had nothing to do with the fact that the Alliance were hoping for ammunition that they could use in the May 1986 elections.

Labour’s opponents were confident that they would ride back to power on the backs of the District Auditor. Not so Anthony Bevins in The Times (27 December). He quoted “government sources” who he claimed believed:

that even if the courts disqualify Labour’s 48 Liverpool council rebels from office, there are many more Militants waiting in the wings to take their place… and they suspected the hard core of Labour voters in the city will have been so taken in by the extremes of Militant propaganda that they will automatically replace the Labour rebels with their sideline “substitutes”.

However, the ever hopeful Sir Trevor Jones confided to The Times that he expected a “breakthrough in the may elections”. It was not the first or the last time that he was to be proved wrong.

Pursuing the case through the courts was extremely costly. By the end of 1985, it had risen to £40,000. The councilors applied to have the case heard in Liverpool because almost half of them were unemployed. Lord Justice Mann turned down this appeal.

The press, in view of the colossal financial burden on them speculated hopefully that the councilors would be out of office before the beginning of 1986. However, the labor movement rallied round and the necessary finances were provided to carry the fight to the High Court. Prominent was the Transport and General Workers Union which lent £50,00 to the councilors’ Appeal Fund. A special issue of Liverpool Labour News – Not the Echo was distributed widely throughout the city and nationally.

During this period the Liverpool councilors and the miners occupied a special place in the hearts of the labor movement. As the High Court appeal opened, the Daily Mail (15 January 1986) made the heartrending appeal “Don’t disfigure the High Court”, referring to the fact that “Banners festooned the High Court railings. Placard carriers crowded the pavement outside.” The protest of the Liverpool and Lambeth working class was “disfiguring the splendid sculpture of the High Court”.

More in tough with reality was Arthur Scargill when he declared at a special rally in Lambeth on the eve of the case that: “like the miners’ strike the attack on Liverpool and Lambeth councils was an attack on civil liberties in Britain… the unelected District Auditor, acting in parallel with government wishes, issued surcharges on the councilors in September”.

Unconcerned about the plight of the Liverpool councilors the right wing were still hell bent on pursuing their vendetta against Liverpool Militant supporters. This earned them the undying hostility of those, like Eric Heffer, who were close to the workers of Liverpool. Incensed at Hattersley’s charge of “political corruption” which was a factor in the defeat in the January 1986 Old Swan by-election, at a Labour Party NEC meeting Heffer slammed his fist on the table white with rage, and said to Hattersley: “You should feel ashamed of yourself. If you don’t, I feel ashamed for you, you stinking little swine!”

The Labour leadership may dissemble about the “non-political” character of the law, not so the serious representatives of the bourgeois. The Times (13 January) in a significant editorial headed “Fiat Justitia” (let justice be done) gave its instructions to the judges. It commented that four years previously the court had come out against the District Auditor who had charged Camden councilors, among them Ken Livingstone, for acting “contrary to the law”. It commented, “That decision gave a green light to conduct in a number of urban local authorities which has embarrassed defenders of the principles of local self-government and encouraged those calling for further centralization of the administration of Britain.” It then shattered all the pleas of the bourgeois experts, echoed by the right wing of the Labour Party, that the courts were “above politics”. It said, “Whatever the court said, it will be making a judgment about the legitimate distribution of power in society. In short, it will be engaging in politics.” And those sitting in judgment on the Liverpool and Lambeth councilors acted accordingly.

The first time that the councilors appeared in court was to appeal against the arbitrary judgment of the District Auditor! Both sets of councilors had been surcharged and disqualified, fined and stripped of an important democratic right, for losses of a little more than £100,000 for each council. The main charge of the District Auditor was that because the council had delayed setting a rate by something like two weeks, the government delayed paying £8 million in housing benefits. The District Auditor decreed that because of this, the city had lost interest of just over £100,000. And yet the government had still received the interest. Thus from the standpoint of public funds in general, there was no “loss” at all!

Crown Agents Losses

In a series of articles by Lynn Walsh, Militant showed how government ministers had been responsible for the loss not of £100,000, but millions of pounds in circumstances which highlighted “the blatant double standard by which the machinery of justice operates, along clear class lines. There is one law for the rich and another for the poor.” £180 million was squandered in the Crown Agents scandal. But the 75 people under criticism and considered to be at risk were granted immunity from prosecution on charges of fraud, corruption, exchange control avoidance, etc.

Moreover, when the Smith white settler regime declared unilateral independence in Rhodesia, now Zimbabwe, an oil embargo was sanctioned by the Wilson Labour government. The major oil companies, particularly Shell and BP (the 51 percent owned by the British government) broke the embargo. An investigation took place, but when the Tory government came to power in 1979, they announced there would be no prosecutions and in effect “retrospective immunity” was granted to all those involved in a twelve-year conspiracy. This netted millions of extra profits for the oil companies and prolonged the agony of the black population of Zimbabwe.

There was no trial for the racketeers and stock exchange swindlers – the real criminals of the “millionaires tendency” who were involved in a series of scandals at the time when the Liverpool councilors were being dragged before the courts. As mentioned earlier, multi-million losses of Johnson-Matthey Bank were headline news in the press, and yet no prosecutions were undertaken against those who perpetrated this massive fraud.

The council’s case was ably prepared by solicitors Mike Fisher and Louise Christian of Christian Fisher, together with barrister Beverly Laing. Presenting the arguments in court Steven Sedley QC completely undermined the case of the District Auditor. He showed that the claims that the councilors had “deliberately set out for confrontation” and “refused to manage the local economy” were completely false. He gave an outline of the social conditions which led to the return of the Labour council in 1983. He showed in great detail that far from acting “irresponsibly” the council was barely able to provide minimum services that would constitute a civilized existence.

However, much of the proceedings revolved inevitably around the entangled framework of local government legislation. Sedley showed that the councilors had to contend with a whole range of duties, and with often irreconcilable legal demands. As democratically elected representatives, they had the right to use their own judgments on what course to take. Moreover, there had been no legal deadline for setting a rate. In 1984 they had delayed in setting a rate, had continued to campaign and had forced the Secretary of State (Patrick Jenkin) to think again. As a result they had won extra resources.

Sedley also dealt with the role of the District Auditor as prosecutor, judge and jury rolled into one. The District Auditor was obliged to give the councilors a hearing – but incredibly failed to do so. He had accused the councilors of lying, but had given them no chance of answering back. Seasoned observers considered that the case outlined by Sedley on behalf of the council was quite devastating. Felicity Dowling commented:

It’s ironic that after the argument has been won several times over among the people of Liverpool, who recognize the council’s real achievements, the issues now have to be put all over again in the court. But the evidence shows just how impressive the council’s case is. We were quite justified in delaying the rate to demand further negotiations with the government. It is unfortunate that there is not a much wider audience than this courtroom for all the evidence on our side.

Despite the very effective presentation of Liverpool’s case the court found, predictably, in favor of the District Auditor. The capitalist press lifted the veil of silence which had surrounded the case and greeted the verdict as “appropriate… municipal punishment”. It was in fact an act of unparalleled class spite. Three unelected High Court judges declared 80 Labour councilors guilty in the words of Derek Hatton of providing jobs, housing and opposing Tory government cutbacks. They had been surcharged and banned from holding public office for five years. The total estimated cost at this stage awarded against them was approximately £4,000 each. When the verdict was announced, some, like John Hamilton, broke down in tears.

Mr. Justice Corfield made a scandalous personal attack on Lambeth Council Leader Ted Knight, accusing him of having “reached a pinnacle of political perversity.” There were gasps, even amongst some of the lawyers, at the completely biased political character of some of the comments of the judges. Mr. Justice Russell astonishingly said: “It is entirely wrong for such a majority to regard themselves as bound to exercise their discretion in relation to that policy in accordance with their election promise, whatever the cost and other considerations may turn out to be.” In other words, the Liverpool and Lambeth councilors were found guilty, severely fined and banned from office for daring to implement the promises upon which they had been elected. The “norm” was to promise one thing in opposition and do the opposite in power.

The Daily Mail gloated, “A punishment well deserved.” It devoted the whole of its front page on March 6, 1986 to the case with the banner headline, “Not fit to rule.” Lord Justice Glidwell wept hypocritically over the “severe social deprivation in Liverpool and Lambeth” but declared nevertheless: “However great our sympathy for those in need, this is an area into which we may not enter. Considerations of this kind play no part in our decision.”

Even The Times, while welcoming the decision, was forced to comment on the severity meted out to the councilors: “There are many public officials who, without penalty, have lost the public purse considerably larger sums than the £230,000 involved here.” Nevertheless, the government were obviously pressing the Audit Commission to take action against the 300 or so other Labour councilors in other authorities who had also delayed setting a rate. The Daily Telegraph reported:

Government ministers are at odds with the members of the Commission on the issue. The ministers feel that the High Court judgment on Wednesday leaves the Commission with no option but to move for further sums against the Liverpool and Lambeth councilors and against others for money allegedly lost.

The mood for vengeance in the government ranks was indicated by the Daily Telegraph’scomment: “Some Tories feel that the Commission has become soft on the issue.” However, even Banham, the head of the Audit Commission and future Director-General of the Confederation of British Industry, had some glimmer of an understanding of the widespread anger at the sentences and their severity. The Daily Telegraph summed up his unease when it reported that: “It feels that it has been cast into the role of an arm of the government, rather than an independent adviser.” Like some modern Pontius Pilate, Banham could wring his hands and weep at the prospect of councilors being fined and possibly jailed, but nevertheless generally supported the action of the courts.

But it was the reaction of Labour’s front bench spokespersons which particularly outraged the Liverpool labor movement. Keva Coombes not known for his Militant sympathies, on the day the councilors were surcharged, threw a “temper tantrum” at a Merseyside County Council press conference for a Hong Kong businessman who was setting up a joint venture with Littlewoods in Knowsley. He declared, “On the very day they face the court’s decision in London, our members are sitting here giving comfort to some people who have been opposed to our existence. I am always in favor of jobs, but we are not here to feed the fat.”

The Labour leadership were absolutely silent about the vicious anti-working class implications of the High Court’s decision to uphold the District Auditor’s surcharge and disqualification of the councilors. Their attitude encouraged the ruling class to consider going further in their attacks on the other 300 councilors. Indeed, the Liverpool Labour councilors counsel, Stephen Sedley, had privately told the councilors that the intervention of the labor leadership had been “absolutely disastrous”. Militant commented on the attitude of the Labour leaders:

While the Tories are using the courts to crucify councilors, Kinnock is misusing the Labour Party’s constitution to do the same. On the same day that this judgment was made, a Tory minister announced the diversion of £500 million from the cash-starved inner cities to the Tory shires. What were the Labour Party and trade-union leaders doing? The General Secretary of the Labour Party was busy cooking up charges to expel some of these councilors from the Labour Party.

Retrospective Legislation?

Those councilors next in line for surcharge began to exert pressure on the leadership of the labor movement. David Blunkett declared, “No one has been found guilty of corruption or any criminal offence. Local councilors are subject to rules and laws which apply to no other body of people. The Labour Party is committed to reform the law.”

The Guardian (March 7) gloated over the difference between the attitude of Labour’s front bench at the time of the Clay Cross affair and their current posture. It pointed out that at the 1973 Party conference, Edward Short, Deputy Leader and not remotely left wing, told the delegates that “the next Labour government would see the rebel councilors right. In the event, it was Mr. Anthony Crosland, also a man of Labour’s right, who lifter the automatic disqualification for office that had been imposed.”

Applauding the attitude of Kinnock and Cunningham, the Guardian went on: “The Labour Party is now beginning to learn that lesson [and] could ultimately become a much healthier party than it was in 1973.” That is from the standpoint of the bourgeois! To be sure, Cunningham had said that the next Labour government would abolish the power to surcharge and disqualify, but he said that it would be “unthinkable that a Labour government would lift penalties from surcharged councilors on the grounds that this would be ‘retrospective legislation’.”

Lynn Walsh, in an article in Militant, pointed out that Cunningham’s claim “even from the point of view of liberal jurisprudence is nonsense”. He went on:

The traditional objection to retrospective legislation is based on the generally fair principle that no-one should be convicted and punished for doing something that was not a crime under the law at the time. But if a future Labour government abolished a law which, as John Cunningham admits is reactionary and oppressive, what legal principle stands in the way of that government giving recompense to those who suffered under an outdated, oppressive law.

The Bournemouth 1985 Labour Party Conference had demanded that a future Labour government lift the fines on the councilors. But Kinnock was deaf to all but the capitalist press. The Daily Mirror said: “The 81 Labour councilors who lost their legal fight against personal surcharge and a ban from office have no one to blame but themselves.” In a vitriolic editorial entitled, “Councils of despair” which was no different to a Sun editorial, it declared that the councilors “deserve what they get – from the courts and the voters”. And yet legal experts, who were a thousand miles removed politically from the Liverpool councilors, were protesting about the political interference of the courts in council business and their bias against Liverpool and Lambeth councilors. Owen Lomas, a lecturer in law at Birmingham University pointed out in the Guardian, “It has quite literally led to unelected, unaccountable and faceless QCs performing policy and decision making functions which are the province of elected councilors.”

Not once did Labour’s front bench spokespersons make similar speeches. David Blunkett was also faced with the possibility of surcharge. However, in his usual fashion, he attempted to water down conference pledges on the issue. On the television program This Week Next Week he stated that the party conference had decided to lift “the inquiry of surcharge and disqualification”. But he went on, “You can’t retrospectively lift disqualification. You would instead have to deal with the question of whether you compensated people who had been made bankrupt.” It was left to Dave Nellist, Labour MP for Coventry South-East, to state clearly on the same program:

The Conservative government had introduced retrospective legislation for people who had lost their jobs because of trade-union closed shops. Now if it’s good enough for the Tories to support and defend their class, then nothing short of that is going to be good enough for the majority of the rank and file in the party.

When a vaguely worded resolution was moved at the Labour Party Local Government Committee, Kinnock was found to be the only one voting against. He declared that there was no possibility of any government led by him in indemnifying councilors for breaking the law: “We owe it to the people concerned not to entertain fantasies or kid people, but to back and help those in greatest hardship.” When pressed over conference resolutions which were clearly on the side of the Liverpool and Lambeth councilors, Kinnock hid behind the fact that none of the resolutions had got a two-thirds majority on a card vote” which could have included them in a manifesto.

After the meeting, Blunkett and Cunningham explained to Kinnock that he was not being tied down by giving verbal support to this resolution. He then changed his mind and agreed to support the resolution! He was mollified by the fact that the resolution said that “disqualification of any elected councilor carrying out party policy will be lifter upon the passage of appropriate legislation”. In other words, a bill would be introduced into Parliament to lift the surcharges. This would mean that only the remaining period of disqualification would be lifted and therefore Kinnock was safe in not supporting the principle of “retrospectivity”!

On compensation, Blunkett with weasel words declared “consideration will be given to the best and most equitable method of dealing with compensation for loss incurred in a way which does not undermine the labor movement’s clear commitment to the upholding of the law”. This was an attempt to square the circle, a classic fudge by Blunkett. Kinnock also agreed to support the setting up of a “hardship fund” for the Liverpool and Lambeth councilors. However, a similar fund for the Clay Cross rebels had netted just £200. In reality it would be left to the efforts of the councilors and the labor movement in Liverpool and Lambeth to raise the colossal sums to continue the legal battle.

Even this minimal measure earned Kinnock the denunciations of the Daily Express which declared that he was “aiding the lawbreakers”. Thus on this critical issue, the reformists once more neither satisfied the working class nor the labor movement, but irritated the bourgeois. A clear and simple class position on the law would have enormously encouraged the active workers in the labor movement in the battle against the Tories and capitalism. But the fudging of Kinnock, Cunningham and company, combined with the witch-hunt and retreats on policy, paved the way for the discouragement and demoralization of the active Labour workers which was to be a key factor in the defeat of Labour in the 1987 General Election.

The disquiet of the ordinary members of the Labour Party filled not just Labour journals but the letters columns of the bourgeois press. One letter to the Guardian (March 12) declared:

Retrospective legislation is not, in ordinary circumstances, acceptable; but it is no novelty. How, in this case, it can be morally wrong to use it to remedy so serious an injustice, it is not easy to see.

Another referred to the Liverpool and Lambeth councilors:

They have been grossly and unfairly victimized. That an elected officer can be disbarred from office and brought to financial ruin for doing what he honestly conceives to be his civic duty, must dismay all who believe in the democratic process… The spectacle of well-heeled Labour front benchers turning on their cold little smiles as they murmur “I told you so” is not edifying. These gentlemen seem more bent on weeding out and expelling the foot soldiers of the poor than on fighting the real enemy. I am a member of no political party, group or tendency, but I do know a Welsh hawk from a scouse handsaw.

Another wrote:

I do not write in support of Militant, neither am I opposed to disciplinary action being taken against Labour Party members who break the rules. However, it can be argued that the greater contribution to Labour’s defeat in 1983 came from the disloyal intervention of Messrs. Wilson, Callaghan and Healy, rather than from the ultra-left.

David Skinner, one of the surcharged Clay Cross councilors, came to the support of his Liverpool and Lambeth comrades in an interview in the Guardian:

“Anybody who breathes socialist air should be saying, ‘Stand up and fight Thatcher as the miners did’. It is no good saying that and then stopping when it gets too hot – you cannot have it both ways.” He [Skinner] sees the Lambeth and Liverpool situation as identical to Clay Cross, albeit with a different stance from the Labour leadership. “Kinnock and Cunningham do not own the Labour Party. It belongs to us. What will happen will be decided at the Party Conference.” He also appealed to the other 300 councilors facing the threat of surcharge: “They should say they don’t want preferential treatment. They should point out that their colleagues and comrades in Liverpool and Lambeth have been hammered. They should say ‘We broke the law and demand to be sentenced’.”

The “careerist left” non unnaturally did not heed David Skinner’s advice! Nor would the Labour leadership need to have looked into the annals of local government to find more than one precedent of “retrospective” legislation.

Militant showed that “Transport Minister Nicholas Ridley was found to have acted unlawfully in taking £50 million from the Greater London Council for London Regional Transport. He merely changed the law retrospectively to avoid having to repay the money.” Moreover, in early 1987, Ridley once more introduced “retrospective” legislation on a gargantuan scale. His officials had discovered that the Department of the Environment had been acting “illegally” in its dealings on the Rate Support Grant since 1982! When he announced this in the House of Commons there was uproar. Heseltine, who had been the Environment Minister, declared: “If I am to understand the thrust of my Rt. Hon. Friend’s remarks, is it that I have spent £20 billion illegally?”

To the Court of Appeal

Faced with enormous costs for the case, Labour began to organize bucket collections in the city Center. The vengeful Liberal councilor Rosemary Cooper demanded the police stop such collections. Indeed, when they enjoyed a brief tenure of office by courtesy of the House of Lords in March and April 1987, the Liberals used their powers to suppress street collections. Nevertheless, Labour continued to receive enormous support from the working class. In view of this, a decision was taken to go to the Court of Appeal. No great faith was placed in the judges, but it would give more time to develop the campaign in Liverpool and nationally. And it was necessary to test out all the organs of bourgeois law in order to give a visible demonstration to the labor movement of its class character.

The councilors appealed to the courts for legal aid. In the meantime, the right wing in the TGWU attempted to have the financial lifeline which had been given to the Liverpool councilors, withdrawn. The fact that 48 working men and women had put their position on the line to defend the jobs of thousands of TGWU members, was nothing to them. But the pressure from the union membership stayed the hand of the right wing.

The bourgeois continued their offensive against Liverpool and other councils which had delayed in setting a rate. The Daily Telegraph (April 17) demanded that the Audit Commission proceed against the 300 Labour councilors in the other authorities who had delayed setting a rate:

There will be some, including those on the government’s side, who will argue that it is enough to make examples of Liverpool and Lambeth. They will say there is nothing to be gained from more court cases which the opposition can present as a further attempt by the government to erode local freedom. But it is not for the Auditor, or any of those who may influence him, and that includes the Audit Commission, to listen to these siren cries. He must resist the temptation to follow the dictates of political caution. Ratepayers have a right to see their case presented if there is a legal case to answer. This must be the only criterion for the auditor.

The Audit Commission’s Liverpool satrap McMahon, responding to this pressure, produced a venomous report, just before the local elections stating: “The council’s financial and management systems and style is seriously out of hand and urgent steps are needed to correct the situation.” Tony Byrne declared, “This is an election document in its timing and tone.” John Hamilton pointed out that although McMahon had been District Auditor for twelve months, he had not approached him or any other leader of the council to discuss the figures in his report.

The Association of Municipal Authorities (AMA) were outraged at McMahon’s intervention. David Blunkett on a visit to the city commented, “To present a distorted picture at the time of an election is very worrying.” The AMA was concerned that the Auditor had not followed “parliamentary guidelines” in consulting with councilors and officers before publishing the report. Labour unequivocally demanded the removal of McMahon and a public enquiry into the report. Even Trevor Jones, while seizing on the documents as election ammunition, conceded that the language of the Auditor was “a little strident”.

In the May 1986 local elections, as explained in Chapter 22, Labour once more scored a stunning victory. Nevertheless, the witch-hunt against Militant supporters by the Labour Party NEC and the hounding of the councilors by the High Court, continued. In the midst of this battle on June 13 Tribune took time out to speculate: “Left candidates prepare to take over from Militant”. Tribune‘s predictions in this respect were on the same level as Sir Trevor Jones’ predictions of an imminent Liberal takeover.

The Tribune confidently announced “one member of the group predicts this week that if the councilors lose their appeal, the Militant organization will collapse”. They were to eat their words, because of the enormous development of support for the councilors amongst all layers of the labor movement in Liverpool, despite the witch-hunt. The comments ofTribune were an indication of the degeneration of this formerly “left” journal. They were now looking towards the organs of the bourgeois state to deliver them the positions which they hankered for in Liverpool and which they could not get on the basis of political support.

In a series of meetings throughout June and July, the tremendous support amongst the Liverpool working class for the councilors was demonstrated again and again. Even in the Mexico World Cup, Liverpool fans supporting England gained an enormous amount of publicity for a flag with “Liverpool City Council” emblazoned on it.

At a public meeting a Liverpool woman got up and simply said “Thank you to the Liverpool councilors” and sat down again. In other words, the avalanche of filth which still continued to pour down on the councilors had as much effect on the mass of the Liverpool working class as a dewdrop on a hot stove. Even a local radio interviewer, on leaving the area, declared that the city council had done “a brilliant job”.

Although denied legal aid by the High Court, the councilors took their case to the Court of Appeal in July. Their case was presented in a very effective fashion by leading QC, Louis Blom-Cooper. He stressed in particular that the councilors had never been given an oral hearing before the District Auditor. If they were facing criminal charges they would have got much fairer treatment. The District Auditor would have had to have proven their guilt, not the councilors to prove their innocence, as was the case under existing local government law.

On the charge of “willful misconduct”, the allegation that they not only acted unlawfully but deliberately did so, the District Auditor would have had to prove his case “beyond all reasonable doubt”. Above all, in a criminal trial the verdict would lie with the jury. The councilors were already innocent before the court of the labor movement. But no jury, after considering detailed evidence, would have convicted them of wrong-doing.

Blom-Cooper pointed out that the District Auditor had erred in law by saying that the rate should have been fixed by the end of May:

He is imposing a date beyond which it would be willful misconduct not to fix a rate. But there is no date by which a rate must be fixed. It depends on reasonableness. To be willful misconduct it must be in the minds of those denying a rate that it will be unlawful.

Despite the crushing case of the councilors, and its able presentation in the court, the Court of Appeal judges as far as the Liverpool councilors were concerned, were “hanging judged”. Their blatant class bias was shown by their interventions. One of the three was the infamous Lord Justice Lawton, who was a fascist candidate for Hammersmith in 1936. Labour councilors asked how such a judge, with his ingrained hostility to the labor movement and democratic rights, could possibly give a fair hearing to councilors on trial for carrying out socialist policies. One of his more liberal interventions was to picture Derek Hatton as a Viking bent on pillaging taxpayers’ money!

But he was extremely even-handed: he also described former Environment Secretary Patrick Jenkin as “Ethelred the Unready”, presumably for giving concessions to Liverpool in 1984. An indication that Lawton took his line straight from the authoritative organs of the bourgeois was shown by his comments: “If Ethelred the Unready paid Danegeld one year, they could get it from him another year. That is the issue.” The term “Danegeld” was lifted from The Times editorial of two years earlier.

Innocent but Guilty!

On July 31, the three Court of Appeal judges upheld the decision of the District Auditor. Their written judgments reinforced all the fears of Labour councilors that they could not get a fair hearing before judges who were biased against them and poured scorn on democracy itself. They dismissed the idea that the District Auditor had acted in an unfair fashion: “The majority party seem to have had their thinking dominated by the mandates on which they have been elected,” said Lord Justice Lawton. He gave a classic expression of the capitalists’ insistence that defense of their system must take precedence over any promises to the electorate: “Pursuit of their political objectives was not a valid excuse for not performing their statutory duty.”

The judges dismissed the fact that “losses” which the councilors were being surcharged for arose from the government deliberately withholding DHSS housing rebate and Crown property payments. Blom-Cooper’s restatement of the fact that the Treasury had collected the interests on this money was airily dismissed.

The Court of Appeal accepted that in 1984 Liverpool gained more cash from the government after refusing to set a rate, but then went on to say, “By April 16, 1985 no rational member of the majority party could have believed that there was any hope of persuading central government to make further grants out of central funds.”

The judges made a stream of hostile comments during the trial. Lawton remarked, “It is a matter of human experience that political zealots, as some of these councilors are [presumably unlike himself when he was a fascist candidate in 1936], so delude themselves about reality that lying is unnecessary for them.”

Two of the three judges conceded the central points of the councilors’ appeal – that they had not been given a fair hearing by the District Auditor. Lawton and Dillon agreed that McMahon should have allowed an oral hearing. But having accepted that the District Auditor had acted unfairly, they then decided that the hearing in the Divisional Court (the first High Court of Appeal against the surcharge) “cured” this unfairness. The Court of Appeal’s rejection of the councilor’s case caused widespread anger in Liverpool and nationally. The councilors were, however, given leave to appeal to the House of Lords in early October.

Meanwhile, the Post shrieked at the end of August, “New bid by Militant to keep power.” They had woken up to the fact that in the event of the removal of the 47 councilors, the replacement panel of candidates included a high proportion of well-known Militant supporters. The national press picked up this theme in an attempt to embarrass Kinnock. The Daily Mail on August 23 said “Militant gang defeats Kinnock’s purge”. Its editorial lamented, “The Militants who never give up… they never tire and they never go away. These people never give up. As Derek Hatton, Deputy Liverpool Council leader says, ‘there are ten waiting in the wings for every sidestep which one has to make’.” For once, Labour workers in Liverpool could agree with the Daily Mail!

The Liberals, ever eager to get their hands on the council pie, demanded through David Steel that the House of Lords should meet to throw out the Liverpool councilors. Liberal MP David Alton declared that the councilors needed to be dismissed immediately, otherwise under “Labour leadership Liverpool ratepayers faced a 60 percent rate rise and a £50 million budget deficit for the next financial year.” In the event, Labour set a budget with a 5 percent rate increase in early 1987. No apology for this slander was forthcoming from Alton.

The House of Lords Appeal began in late January 1987. Blom-Cooper once more outlined the case of the councilors. He pointed out that “over the past 140 years every District Auditor, with one exception, had given the opportunity of an oral hearing to everybody likely to be surcharged for misconduct”. In summing up Labour’s case, the Echo (22 January 1987) for once reported accurately:

He [the District Auditor] did not give them the opportunity of an interview. It was a sensible decision not to make a rate in 1985. The loss of income in the short term would have been outweighed by extra money in the long term. It is uncertain whether there was ever a real and measurable loss.

Guilty!

One redeeming feature of the House of Lords appeal was that after the third attempt, legal aid was granted for this hearing for at least 30 of the councilors. The five Law Lords examined the Liverpool council’s appeal in the first three months of 1987. The verdict of “guilty” on the 47 councilors came as no surprise but caused widespread anger within the labor movement and particularly on Merseyside. A staggering £242,000 estimated legal costs claimed by the District Auditor was added to the surcharge of £106,103.

Councilors who were democratically elected in successive elections from 1983 onwards were debarred from office for five years by an unelected District Auditor, a decision enthusiastically endorsed by unelected judges. The highest “court” in the land had carries through a “legal coup” not just against the 47 councilors but against the population of Liverpool as well. The 47 were denied the elementary democratic right to stand for elected office in their native city. Moreover, the legality or otherwise of the council’s budget of June 14, 1985, according to Lord Keith of Knikel, was not the issue: “the point is that the delay in setting the rate led to delay in receiving various items of income, including government contributions in respect of rates on crown properties and… rate rebates”. But as we have shown, there was absolutely no loss to the public purse whatsoever.

Lord Keith claimed that the non-making of the rate was used deliberately “as a lever to prize additional money from central government”. But as Militant commented, “Wasn’t the government using the deliberate withholding of payments as a lever to force Liverpool into a cuts budget?” Lord Templeman accepted that Liverpool had delayed in 1984 and received more cash as a result. But the Auditor had taken no action then, yet he had “changed circumstances” in 1985.

The argument that the District Auditor had acted unfairly by not offering them an oral hearing was dismissed. These unelected Lords also declared that neither the mandate of the councilors, nor the sincere beliefs that they were acting in the interests of ratepayers was a defense. In justification of their decision Lord Templeman took an excursion into history: “Political leaders from Robespierre the sea-green incorruptible to Gandhi the prophet of non-violence have acted in the sincere belief that it was necessary to break the law in the interests of the nation’s citizens.” He added, however, that after breaking the Salt Laws (imposed by Britain’s colonial government in India), Gandhi, “acknowledged the correctness of his conviction and appropriate sentence”. But even he had to admit that Gandhi’s illegal campaign had “hastened the repeal of the salt tax and the dawn of independence for India”.

The Echo printed the frustrations voiced by one youngster on hearing the Lords’ judgment: “It’s too complicated. It’s sub-section this, clause that. What I want to know is, what’s happening to my dad?”

The press had waited for this moment for four years and they were determined to extract the maximum potential capital. The Sun declared, “Labour blow as Hatton’s sacked by Law Lords.” The Daily Express stated, “Final defeat for Hatton’s shock troops.” Derek Hatton’s reaction, however was to declare that the 47 were proud to be found “guilty” of building houses, schools and defending the working class of their native city. Tony Mulhearn declared defiantly, “They cannot expel us from the working class.” While there was widespread disappointment in the labor movement, with relatives of the 47 breaking down in tears at the savagery of the judgment, the leadership kept their heads, pointing out that this decision of the Lords was only the end of a chapter. They stated: “For the next six weeks, there might well be a Liberal-Conservative pact to run the city, but that will be short-lived”. They were certain that Labour would be returned to power at the May elections. This was dismissed as wishful thinking at the time, but the prediction was born out to the letter in the May 1987 elections, when the colossal sympathy for the council within Liverpool engendered by the Lords’ decision was undoubtedly the key factor in the sweeping victory of Labour.

Militant summed up the case: “The Lords’ judgment is one thing; the judgment of history will be different.” Such was the feeling in the city that the Catholic and Protestant Bishops declared that the enormous financial burden imposed on the 47 was “without parallel” in the government system. They also praised the former Labour council for its housebuilding policies. However they also called for prayers for the city and for “cooperation across party barriers for the good of the city as a whole”. Not for the first time, the working class of Liverpool was to ignore this advice of the Bishops in the election six weeks later.

The anger directed at the Law Lords was only exceeded by that which labor activists directed at the Labour leaders whose comments on the Law Lords’ decision fuelled the sense of outrage. Cunningham in a press statement put the knife in:

the disqualification of these councilors, and their surcharge, was the inevitable result of a course of action pursued by the City Council at the behest of the now wholly discredited Militant Tendency… As a party, we also have to live by our rules. Members of the Militant Tendency, against whom there has been sufficient evidence, have been expelled. Neither the Labour Party, nor the people of Liverpool, will again tolerate a Militant-maneuvered council.

But the support of the labor movement for the councilors was shown a few days later at the North-West Regional Conference of the Labour Party. The conference voted to support the 47 surcharged city councilors. Against the advice of the Regional Labour Party Executive, it also voted to press a future Labour government to lift the surcharges on the 47, as well as the five-year ban on them holding office. Unions such as the TGWU, AUEW, TASS, NUR and the National Union of Seamen, voted solidly in favor of the councilors. The right-wing officials were embarrassed at the success of the resolution. Walworth Road’s policeman, Peter Kilfoyle, even told the mover of the successful resolution, Pete Tyson from Mossley Hill, “that he would now be on his way” in a none too veiled threat of disciplinary action.

Tory-Liberal Junta

With the dismissal of the 47 Labour councilors, a Tory-Liberal junta took control until the May elections. They immediately set in train their promised “counter-revolution”. They announced the sacking of Sam Bond, Liverpool’s Principal Race Relations Officer, and Beryl Molyneux, who was employed in the Education Department and who had committed the ultimate crime of defecting from the Liberals to Labour three years before. Sir Trevor Jones, the Liberal leader, installed his wife as the Lord Mayor. He demanded immediate preferential treatment from the government to solve the problems which he claimed had been inherited from Labour.

Thatcher refused to meet a delegation. But on television on the evening of the councilors’ dismissal, Rhodes Boyson, Tory Local Government Minister at the time, indicated that he would “lend a sympathetic ear” to any approaches from the new council. The Financial Times (March 14) even hinted that:

in Whitehall, it had been suggested that options might include a judicial review of the council house contracts to get them quashed. Mr. David Alton, Liberal Chief Whip said yesterday one action might be one-off government help towards clearing loans of the city of £30 million from a Swiss and a Japanese bank.

The Liberals were searching desperately for a way to end Labour’s housebuilding program. This in turn set alarm bells ringing in the private building companies which had done remarkably well out of Labour’s housebuilding program which had created an extra 10,000 jobs in the building industry. Their pressure was probably one of the factors in the incrediblevolte-face of the Echo when it came out against the Liberals on the eve of the May elections.

While the Liberals were protesting at Liverpool’s “mountain of debt”, statements by government ministers had revealed that Liverpool was not at all unique in this respect. The city’s loan debt of £680 million compared quite favorable with £816 million for Manchester, and £575 million for Sheffield. These amounts were dwarfed, however, by right-wing controlled Birmingham’s £1.3 billion debt. Moreover, a government minister, Chope revealed that “when the Liberals left office in 1983 Liverpool’s loan debt was £557 million”. But the Liberals still continued their noisy campaign against Labour alleging that it had put the city “in hock” to international bankers.

The labor movement continues its campaign to help the 47 councilors. A magnificent social, organized by Militant supporters, attracted the support of Ricky Tomlinson and Tony Scoggo who were actors in the television series Brookside. Letters flooded in to Labour papers commenting on the unfairness of the judgment against the councilors. A rates clerk wrote to Militant:

Many big firms only pay their rates when they receive a court summons, which could be three months after their rates are due. Even then the courts treat big firms in a different way to ordinary workers. A firm summoned to court with a rate demand of £30,000 pays the same costs as a person who owes £10 on their house. Of course, the interest that you can earn on £30,000 is a lot higher than the couple of quid that the court costs come to.

In the street collections in Liverpool, there were numerous examples of the enormous support and devotion that was felt by ordinary working men and women for the stand of the councilors. Collectors were approached by a woman and her son, who have them a moneybag full of pennies and twopences: “Can you give this to the councilors – it’s not much, it’s just the kids’ pocket money.”

Even in the bourgeois circles there were worries about the implications of the Law Lords’ decision. One letter in the Financial Times summed this up:

It is not unreasonable that those elected are responsible for their actions, but the electorate’s sanctions (except in the case of fraud) should surely be limited to non re-election, coupled with disqualification for those who refuse to attempt to operate within rules that existed at the time of their election… if the principle of surcharge were to be applied to MPs, would they be as quick to accept responsibility for their actions? If “failure to set an oil depletion policy” carries the same penalty as failure to set “a legal” rate, the bailiffs would be descending on a house in Dulwich [Thatcher’s retirement residence] as well as a few in Liverpool.

However despite the contradictions in the law, the bourgeois as a whole were not concerned about legal niceties. Having failed through the use of the mass media to evict the Labour councilors from office, they had set their minds on carrying through a legal coup. Bu crushing the Labour councilors they hoped thereby to crush the spirit of resistance to the Tory government which the councilors stand had engendered in the majority of the Liverpool population and had reverberated through the length and breadth of Britain. They had their judgment, they temporarily were successful in expelling the councilors from office. But they had not and will not succeed in crushing Militant either in Liverpool or elsewhere. Indeed the stand of the councilors was to prove an enormous inspiration in the battle not only in the May elections of that year but in the subsequent battles that opened up in the aftermath of the 1987 general election.

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