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Labour’s billions meant for public services and climate change now hang in the balance
Prime Minister Sir Keir Starmer meeting Chancellor of the Exchequer Rachel Reeves at Downing Street, London, ahead of the government's first budget, October 28, 2024

IT happened under Harold Wilson in 1966. It happened again in 1974-76 against Labour’s programme for an “irreversible shift of wealth and power” and did so again on a bigger scale in 2009. The bankers, the “gnomes of Zurich” as Wilson called them, stepped in to halt “excessive” government expenditure.
 
The gnomes were not necessarily all from Zurich. Most in fact resided much nearer home or issued their orders from Washington DC.

And in 2009 the intervention was triggered by a global financial crisis caused by unregulated bank speculation organised through the City of London by US banks.

But all resulted in the fast reversal of mildly progressive programmes introduced by the Labour Party. This, unfortunately, seems to be where we are today in the face of a new sterling crisis.

The Tory press is competing to offer suggestions for spending cuts or tax increases that penalise workers. First and foremost, their call is for changes to Labour’s £30 billion programme to rescue public services and combat climate change.
 
This programme is in fact already far too dependent on private sector “partnership” — in the NHS, house building, social care, energy and all sectors of education. These pressures will now intensify.
 
Who will oppose? The trade union movement certainly will. But in doing so it also needs to challenge something the Tory press never mentions: Britain’s fast-growing military expenditure. This is scheduled to consume nearly £300bn in the five years to 2029.
 
Additionally, and crucially, our trade unions need to supply the organisational muscle for detailed resistance by local communities and prevent the far right from exploiting the crisis for its own ends. And in doing so it will have to salvage and redevelop something even more important: our local democracy.
 
This is in immediate peril. Over the past three years, five major local authorities have come near to bankruptcy as central government funding was cut back from 40 per cent of the total to nearly 20 per cent between 2009 and 2019.

Despite Covid, this has never been fully restored. Now, as of last Friday, 14 county councils have postponed their May elections and done so in light of the English Devolution white paper published last month. Associated legislation is expected later this session.
 
This legislation, led by Angela Rayner, will transform our local democracy. The question is whether, in the current financial crisis, it will redevelop or end it. The white paper builds upon the Tory model of elected mayors but for bigger areas.

Some Labour mayors have indeed shown the potential of such centralised powers. But as operated by Michael Gove elected mayors were subject to a new level of detailed Whitehall control. They also largely dispensed with local councillors directly responsible to local wards and electors.
 
The new white paper does make additional proposals for very big overarching regions but again these will not be elected but simply bring together mayors and service representatives.
 
This leads to the worrying prospect that in the context of a new “austerity” mayors will simply manage, not represent. What survives of the £30bn regeneration programme will be used to engineer still closer involvement with the private sector and the type of public-private partnerships that performed so badly under a previous Labour government.

Councillors directly responsible to people locally in towns, cities and villages will be gone. With this, the local focus for mobilisation and argument will be lost.
 
The parliamentary timetable is very tight. There is little time to mobilise campaigns for the regeneration of genuine local democracy. But it is essential that this be done and that the left wins an understanding of its importance. Democracy is nowhere if it is not local.

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