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Leeds City Council in danger of bankruptcy
How the trade union movement should fight back
Iain Dalton, Leeds Socialist Party
The Covid-19 crisis has pushed councils up and down the country into a new financial crisis. The Centre for Progressive Policy thinktank expects eight out of ten tier-one local authorities to face the threat of bankruptcy. Labour-led Leeds City Council is the biggest of the councils to publicly raise this possibility.
With business rates suspended for the year, and drops in council tax payments likely due to job losses and pay cuts under furlough schemes, as well as charges for parking and gyms suspended at present, the council faces a big drop in income.
Despite pledging at the outset of the crisis to 'do whatever is necessary', the little over £40 million pledged in emergency government funding comes nowhere near meeting the projected shortfall which is just shy of £200 million. While this year the budget is estimated to have a £60 million shortfall, the 2021-22 budget is currently projected to have a £120 million shortfall!
This comes on top of a decade of cuts, with the council already planning to make £80 million in 'savings' over the next few years. According to the council's own figures, the cuts in central government core funding amount to £1.7 billion in total over the last decade. If, instead of implementing these cuts, the council had fought them, it would be in a far better place to deal with this crisis.
The cuts have been painful, with around 3,200 full-time equivalent jobs going. One council shop steward explained how, in the last five years, the team he was part of in the council has halved, while still expected to carry out the same work, receiving no, or below-inflation, pay rises.
The council has made a number of demands on the government, including £59.9 million of additional funding to help balance the budget. But these have just been confined to letters to the government, with no strategy of mobilising a campaign to acheive this demand. Instead, the council is talking about the chief financial officer issuing a section 114 bankruptcy notice, calling for an immediate stop to non-statutory spending, and passing an emergency budget this summer. New notices of redundancies have been issued to local government unions.
Instead of looking at a new cuts budget, the council leadership should instruct officers to look at all options available to defend jobs, terms and conditions, and services, including reserves and borrowing powers, if necessary. Labour councillors who are serious about fighting austerity should pledge not to vote for any cuts.
Given the huge numbers of councils finding themselves in a similar position, those Labour-led councils like Leeds should convene a conference to discuss a strategy of how they could fight for the funding they need to protect jobs and services.
Leeds Socialist Party members hold important positions within Leeds Trade Union Council, the local body bringing trade unions together in the city. We will be arguing to build on the struggle we have developed in recent years linking up with community campaigns - such as a successful parents campaign to stop cuts to 16+ special educational needs and disability student school transport.
A campaign to fight this new round of cuts, drawing together local government trade unions, in particular, alongside the wider trade union movement and community groups, is necessary. This should start with a mass lobby of any council meeting discussing a new cuts budget, preparing for strike action against redundancies if necessary.
In The Socialist 1 July 2020:
No going back
What we think
Lessons from history