Faced with rising debts and deficits due to the coronavirus crisis and the last decade of Tory austerity, Croydon Council has declared bankruptcy. In response, the labour movement must launch a mass campaign against the cuts.
The ongoing crisis of capitalism has provoked a catastrophe in local government. The income that councils receive has shrunk dramatically, with a drop in business rates, parking charges, nursery fees, and council tax.
At the same time, this decrepit system is making thousands homeless and millions more unemployed. The result is that many more people are now in need of financial support from local authorities.
Crucially, central government support has been cut back dramatically in the last decade, with a 50% reduction in funding.
The picture then is one of collapsing incomes and skyrocketing expenditures.
Among the worst affected is Croydon Council, which recently issued a Section 114 notice. This is effectively a declaration of bankruptcy, placing a moratorium on future spending. The council has a budget deficit of £66 million and a total debt of £1.5 billion.
Following the bankruptcy, the council will now convene to discuss what measures must be taken to rectify the situation – in other words, what cuts will be carried out.
These cuts will see many local government workers laid off at a time when unemployment is surging, making it increasingly difficult to find work and condemning many workers to long-term unemployment. And they will also have a devastating impact on the wider community, coming on top of a decade of austerity, and in the midst of capitalism’s deepest crisis.
Cuts will only exacerbate the poverty that is widespread in the borough – poverty that is having a particularly terrible impact on the youth. As of October this year, child poverty in Croydon stood at 30%. Meanwhile, just 36.7% of 19-year-olds have attained two-or-more A Levels or an equivalent qualification.
Faced with this dire situation, Croydon Council have attempted to invest their way out of the crisis. To overcome their budget deficit in 2018, the council voted through a £100 million budget for asset acquisition.
Yet a recent auditors’ report has revealed how this strategy has only compounded the council’s deficit woes. The audit statement claimed that investments “were not grounded in a sufficient understanding of the retail and leisure market”.
But it’s not that the council made the wrong investments. Rather, they have been investing in a capitalist market that is already completely saturated – locally, nationally, and internationally. Under these conditions, council investment was never going to achieve the profitability that the Labour council hoped for.
So what is the way forward?
Instead of trying to balance the books through municipal Keynesianism, we need a fightback from the labour movement to protect every job and service. The money is there to pay this – but it’s currently in the pockets of the super-rich, who have amassed huge fortunes before and during this crisis.
But to launch a genuine mass campaign, we need a fighting leadership in the labour movement – figures like Paul Holmes, the rank-and-file members’ candidate standing in the Unison general secretary election, who has promised to fight the cuts at every level.
Paul’s campaign has inspired thousands of members with his pledge to take a worker’s wage as general secretary, and to transform Unison into a fighting union. We encourage Unison members to vote for Paul Holmes in the election that is underway.
The possibility of a left victory in Unison presents an enormous opportunity. This is the biggest union in the country, representing thousands of local government workers. Under a militant left leadership, the union could be turned into a fighting battalion of the working class.
By waging a coordinated struggle against the wave of local government cuts that are coming, the union could become a beacon for millions of workers, who have so far largely been left to fend for themselves.
Break the law, not the poor
The transformation of the unions into fighting organisations would also have its impact in the Labour Party. Croydon Council is, after all, a Labour council.
Rather than attempting to ‘manage’ the crisis or argue for a ‘dented shield’ approach, the council’s attitude – and that of all Labour councils – ought to be that of the Liverpool councillors who defied Thatcher in the 1980s; or of George Lansbury and the Labour councillors who led the Poplar rates rebellion in 1921: “It’s better to break the law than break the poor.”
Even under Corbyn’s leadership, however, thousands of right-wing Labour councillors continued to implement Tory austerity locally. And they were able to get away with this thanks to compliant union leaderships, who did nothing to clear out the careerists and cowards within the PLP and in Labour councils.
No return to ‘normality’
The whole labour movement must be placed on a war footing going forward. Croydon Council is only the first of many councils that will be forced into this precarious position by the ongoing economic crisis.
Even with a vaccine, there will be no return to ‘normality’. Rather, once the pandemic has subsided, the Tories will begin to ‘balance the books’, demanding even more austerity and attacks.
All capitalism can offer going forward is further cuts, chronic unemployment, and homelessness on an unprecedented scale – not just in Croydon, but across Britain and internationally.
As we have seen in Tower Hamlets, or with the Bexley refuse strikers, workers will increasingly come out in struggle against this intolerable situation. But right now their leaders are not up to the task.
We need to build a militant leadership in the labour movement – one that can point the way forward by struggling for the socialist transformation of society: to put power in the hands of workers, and to expropriate the hoarded wealth of the bosses, so that we can fund the services that society needs.