The October meeting of the Trade Unionist and Socialist Coalition (TUSC) all-Britain steering committee agreed a new TUSC report examining the broad financial position of the 32 local authorities that will form the ‘election battleground’ for the first scheduled ballot box test of the Starmer government in May 2025.
With the Tories controlling the majority of these councils, against the backdrop of Labour’s new austerity agenda it will be even more necessary for anti-austerity campaigners – between now and the May elections – not just to say ‘no cuts’ but to explain how councillors could defy the government and defend local public services if they wanted to.
The TUSC report – entitled How Much Reserves Have They Got? and available at https://www.tusc.org.uk/wp-content/uploads/2024/10/2025-Reserves-Report.pdf – provides the detail for the battleground councils to supplement previously published TUSC material on how it is possible to prepare a no cuts People’s Budget if the will is there (see especially the 55-page briefing document at https://www.tusc.org.uk/wp-content/uploads/2022/11/450.pdf).
Below we publish extracts from the introduction to the report by Clive Heemskerk, the TUSC National Election Agent. ■
Councillors can say No to Labour’s Austerity 2.0 agenda
The new How Much Reserves Have They Got? TUSC report has been produced amidst multiple warnings of the developing financial crisis facing local public services, after 14 years in which councils lost an average 40% of their core funding from central government. One such warning came in early October from the County Council Network – an association which covers many of the councils with elections in 2025 – predicting that 16 county and rural unitary authorities were at risk of ‘Section 114’ technical insolvency notices by 2026.
To be sure the County Council Network, of predominately Tory-led council administrations, has its own axe to grind. Desperate to retain their last remaining power base, Tory councillors have begun to opportunistically position themselves against Labour’s cuts – in Wirral, for example, calling on the council to lobby the chancellor Rachel Reeves against the withdrawal of winter fuel allowance payments to local pensioners.
In essence the Tories’ ‘solutions’ to the funding crisis are just different cuts. In Tory-controlled Derbyshire County Council, for example, proposing to charge the parents of children taken into Section 20 care services half the costs of looking after them. In Buckinghamshire, also Tory-led, it is refusing to fund schools’ special educational needs provision for pupils without an education, health and care plan. The County Council Network report is full of such ominous ‘reform’ ideas to effectively re-distribute austerity misery between different groups of working class people.
But that’s all the more reason then to have the facts and figures at hand to show how a real fightback against New Labour’s ‘new austerity’ could be fought – if there were fighting councillors in the County Halls. And that, along with the other TUSC resources available (at https://www.tusc.org.uk/resources/), is the purpose of this report.
What should be done?
TUSC has consistently explained, in our briefing document Preparing a No Cuts People’s Budget (https://www.tusc.org.uk/wp-content/uploads/2022/11/450.pdf) for example, that councils have the ability to resist austerity. It is possible to set No Cuts budgets that, while not permanently resourcing local services, provide a ‘breathing space’ to organise a mass campaign to compel central government to properly fund councils to do so.
In essence the strategy we propose is that councils should creatively deploy the borrowing powers that they have to avoid making cuts; and use their reserves to cover the cost of the initial interest and loan repayments (the Minimum Revenue Provision in the official jargon). It is obviously more nuanced than that, stretching the legal as well as financial elasticity that is involved in budget-making, with the detail explained in our previous material – which has never been substantially challenged by TUSC’s (many) establishment opponents!
But what is different this time, making a strategy of defiance even more realisable as councils draw up their 2025-2026 budgets, is the new political terrain of a new Labour government.
Councillors have always been able to exercise their own judgement on the advice they receive from their Chief Financial Officers (CFOs) when they come to vote on budget-making decisions in the council chamber. Their legal duty is actually to “determine whether they agree with the CFO’s statutory report issued under section 26 of the Local Government Act 2003” which means, of course, that if there are genuinely different assessments that could be made, councillors can make them. And that includes whether or not councils can reasonably expect further support from central government to meet their real funding requirements.
He’s not ‘Iron Starmer’!
Our report gives information for all of the councils included on the gross expenditure of each authority – the total cost of the councils’ services – taken from the council’s published 2023-24 statement of accounts, and then the level of reserves they hold, including earmarked reserves. Combined the 2025 battleground councils have £7.538 billion in general fund and capital receipts reserves that they could use to resource a fightback.
Can a council legally use earmarked reserves? Some will be restricted – for example, school reserves (although they can be used to support ‘licensed deficits’ for schools to prevent teacher and support staff redundancies, for example). But the legal position is that most earmarked reserves may be used on a ‘short-term temporary basis’ for other purposes provided the funding can be ‘reasonably expected’ to be replaced in future years. Which is, of course, a political calculation – could Starmer’s New Labour government be made to pay-up for local council services or not?
All council Chief Financial Officers’ assessments inevitably include an element of political judgement on this question (and others) but councillors can also make their own judgement.
The situation now is different, for example, to that facing councils in the early 1990s. And how many council officers in October 1990 began drawing up budget proposals for the 1991-92 financial year even thinking that, just five months later, Margaret Thatcher and her poll tax would have been defeated and the Community Charges (General Reduction) Act would have gone through parliament, increasing government support for local authorities by £4.3 billion (nearly £11 billion in today’s money)?
Are councillors really saying that it would be more difficult to force Starmer and Rachel Reeves to retreat on local council funding than it was to force the ‘Iron Lady’ Tory prime minister to retreat in 1990?
TUSC doesn’t think so – and hopefully there will be many working class community campaigners, trade union fighters, and socialists who will come forward to make that argument in the fight over council budgets in the next few months and as candidates at the ballot box next May.