Thatcherism’s resistible rise

MARGARET THATCHER'S death and, even more, her reincarnation in Britain's Coalition government led by her Conservative Party makes this a propitious moment to re-examine the history of the 1980s. With severe cuts being imposed on local government, it's especially worth revisiting the rate-capping controversy of 1984-85.

The history of the 1980s was never a simple tale of triumphal neoliberalism. The Thatcherite project was resisted every step of the way, and at several critical junctures was seriously imperiled. During her first term, until the Falklands War in 1982, her government was deeply unpopular. That led to the election in the early 1980s of Labour councils with strong left-wing contingents. As unemployment rose, these councils raised spending on services, compensating for cuts in government grants by increasing "the rates"--the long-established local property tax, paid by residents and businesses.

Determined to close this escape valve, the Tories introduced legislation soon after their 1983 victory to "cap" rate increases in what they considered to be profligate councils. From the start, the proposal was controversial, even within the Conservative Party, where a significant minority, including former Prime Minister Edward Heath, regarded it as an unwarranted centralization of power. Nonetheless, the government pushed it through parliament, and it became law in June 1984.

The debate about how Labour should respond unfolded against the background of the year-long miners' strike of 1984-85. For many on the left, this was an opportunity to open a second front against the government. Support for noncompliance was widespread, but there was considerable disagreement over what form it should take. The strategy eventually adopted--in which affected Labour councils would collectively refuse to set a rate--was a lowest common denominator, the one point of action around which most could unite.

It needs to be stressed that the discussion that led to this decision was intensive and extensive, involving large numbers at the base of the Labour party. The commitment to noncompliance was not due to the influence of conspiratorial "entryists"; it was the result of a wideranging democratic exercise and reflected a determination among Labour members to fight the Tories not only during but between elections.

At the Labour Party conference in September 1984, local government attracted more resolutions than any other topic. The official statement from the party's National Executive endorsed noncompliance and called for unity. Two resolutions went further, pledging support to councils forced to break the law. Both the statement and the resolutions were agreed by a show of hands--not at all the result the leadership wanted.

Their ambivalence was not shared by Thatcher. In a speech in November, a month after the Brighton bombing that targeted her, leading to a spurt of support for the government, she yoked together all her opponents as enemies of the rule of law: "At one end of the spectrum are the terrorist gangs within our borders, and the terrorist states which finance and arm them. At the other are the Hard Left operating inside our system, conspiring to use union power and the apparatus of local government to break, defy and subvert the law."

DESPITE EQUIVOCATION at the top of the movement, the campaign against rate-capping was taken up vigorously at the grassroots. It was inventive, diverse, populist, reaching out to and involving workforces and their unions alongside a wide array of community organizations.

In November 1984, 100,000 local government workers took a day's strike action; 30,000 people marched in London. Through festivals, demonstrations, meetings, publications and events involving youth clubs, nurseries, and play and pensioners groups, the campaign succeeded in alerting a broad public to the menace of rate-capping and its effects on services, jobs and local democracy.

Prominent in the leadership of the campaign and its central strategy of noncompliance were Margaret Hodge of Islington, David Blunkett of Sheffield and Ken Livingstone of the Greater London Council (GLC), all of whom at this stage were vigorously arguing the need for bold defiance and labor movement solidarity.

From the start, it was clear to all that noncompliance might well entail real personal penalties for those Labour councilors involved. If the district auditor found that the council had suffered financial loss as a result of their votes, councilors could be ordered to repay the lost money in a "surcharge." If the surcharge amounted to more than £2,000 each, the councilors would be disqualified from office. On top of that, they could be held "jointly and severally liable" for the total sum lost to the council, not just their individual share of it.

In February 1985, the leader of Labour at the time, Neil Kinnock, issued his famous edict to the Labour Party local government conference: "Better a dented shield than no shield at all." While this was to become (and remains) the prevailing wisdom in the Labour Party, at the time, it was deeply dismaying to activists. Kinnock had effectively advised the Tories that councils who resisted their diktat would be left isolated. It was a declaration, from the top table, that there would be no labor movement unity.

Nonetheless, at this stage, 26 Labour councils remained determined to defy the government. They planned to synchronize their budget meetings for March 7 and 8, coinciding with TUC-sponsored "Democracy Day" demonstrations. On this issue, the government looked vulnerable. Thatcher's popularity ratings had dipped: 60 percent now said they were "dissatisfied" with her. But on March 5, 1985, the miners returned to work after a yearlong struggle. Their defeat became, in the short run, a pretext for giving up the rate-capping struggle, and in the long run, for a general accommodation with Thatcherism.

On March 7, the Times of London made a prediction: "Labour's left-wing councilors value power more than a place of glory in the Socialist Pantheon...[T]hey will cling to office and make the shifts required, shifts which in most cases are perfectly manageable."

The cynicism proved sadly prescient. The first to collapse was the GLC, where Livingstone himself led the retreat, while his deputy John McDonnell and a minority of Labour councilors insisted on upholding the democratically agreed line. When the GLC voted to set a legal rate on March 10, Tory minister Kenneth Baker jeered: "The united front of the militant left has crumbled before our eyes. Instead of opening a second front with the miners, some of their troops have fled the battlefield!"

The other rate-capped councils appeared for the moment to be standing firm. Initially, nearly all voted to refuse to set a rate, and in doing so enjoyed voluble local support. In April, Islington council published a poll of local residents showing that in the argument over rate-capping, 57 percent supported the council and only 20 percent the Thatcher government. Asked what the council should do, 37 percent said they wanted the council to continue not to set a rate, 27 percent wanted the council to resign and force an election on the issue, while only 21 percent wanted the council to back down and set a legal rate.

But as the threats from district auditors became more urgent, one by one, the Labour councils abandoned noncompliance. In Islington, the retreat was marshaled by Margaret Hodge, who denounced her critics for "posturing"--an accusation surely more applicable to Hodge herself, along with Blunkett and Livingstone, who made promises they did not keep.

By the middle of June, all but Lambeth and Liverpool had yielded to pressure. In September, the district auditors gave notice to 81 councilors (49 from Liverpool, 32 from Lambeth) that the delay in setting the rates amounted to "willful misconduct," and that they were therefore required to repay the costs as a personal surcharge. Since in both cases, the amount per councilor was over £2000, all 81 were disqualified from office and barred from seeking re-election.

A series of judicial appeals failed. At the end of July 1986, the Lambeth councilors were given 21 months to pay surcharges amounting to more than £200,000. The following year, Liverpool councilors were held liable for an even larger total of £333,000. In the end, these sums were paid off by donations from the labor movement, though not without personal sacrifices for a number of the councilors concerned.

THE COUNCILORS of Lambeth and Liverpool paid the price of principle. It was a very un-Eighties thing to do. They stood against the current and should be celebrated for that. They kept faith with their electorates and their consciences, even when abandoned by their leaders, vilified in the media and threatened with bankruptcy.

The defeat of the rate-capping campaign was a significant step in the hollowing-out of local democracy and in Labour's long-term adaptation to Thatcherism. Those who led the retreat soon shifted their defense. Initially, it was posed as a stark choice of lesser evils. But gradually, the "evil" became celebrated as a virtue: the "reform" of public services through privatization and attacks on the workforce. Managerialism replaced politics.

And the payoff for the "dented shield," which was supposed to be the election of a Labour government, did not materialise in 1987 or 1992. When it did, finally, in 1997, it did not herald a re-invigoration of local democracy. Instead, the managerial ethos was entrenched via "cabinet" government and executive mayors. The fiscal autonomy enjoyed prior to rate capping was never restored.

Of course, Thatcherism was only the British version of the neoliberal wave of the era. But that global context does not mean its triumph was inevitable. It was resistible. Its hegemony was an end product, established piecemeal, unevenly and painfully. And its triumph required a political struggle.

In that struggle, it was immensely to Thatcher's advantage that every time she singled out a target for attack, she could be confident that the target would be left high and dry by the Labour and trade union leaderships. Thatcher was never the leader of principle vaunted by the media; she was ruthlessly opportunistic. But it was that very quality that made her adept at calling the bluff of the spineless center--whether among the "wets" in her own party or the leaders of Labour local government.