26/09/2016 18:51 BST | Updated 27/09/2016 11:46 BST

Labour To Ban Illegal 'No Cuts' Council Budgets In Bid To Protect Councillors From Deselection

No return to the 1980s

Christopher Furlong via Getty Images

Labour councillors are to be barred by the party from setting illegal ‘no cuts’ budgets.

The reform, part of a package of rule changes put before the annual conference on Tuesday, follows moves by leftwingers to pressure local authorities not to set budgets.

The rule change is in part aimed at protecting councillors from deselection threats from Jeremy Corbyn supporters who want more ‘radical’ action by town halls to prove they are opposing the Tory government.

Under the proposals, which have been approved by Labour’s ruling National Executive Committee (NEC), councillors who vote against or even abstain on party policy will face “disciplinary action”.

The rule change, which has been approved by party lawyers and passed to HuffPost UK, states:

“Members of the Labour group in administration must comply with the provisions of the Local Government Finance Act 1988 and subsequent revisions and shall not vote against or abstain on a vote in full council to set a legal budget proposed by the administration.

Members of the Labour group shall not support any proposal to set an illegal budget. Any councillor who votes against or abstains on a Labour group policy decision in this matter may face disciplinary action.”

The rule change is part of a wider package of party reforms, including the landmark decision to expand the NEC to include places appointed by the Scottish and Welsh Labour parties.

But the package also includes the key change to ensure sitting Labour leaders will automatically get on the ballot in a leadership challenge, ensuring that backers of Corbyn have to vote for it.

Some Momentum groups across the country have been agitating for their local Labour councillors to pass ‘no cuts’ budgets that potentially break the law.

The ‘Lewisham For Corbyn Momentum’ group last year lobbied its Labour council to oppose planned closures to libraries and community centres, and started a petition for “a no cuts budget”.

Liverpool Daily Post and Echo/PA Archive
Derek Hatton shows his membership cared after being expelled

But Labour nationally is still scarred by the bitter internal rows over rate-capping and illegal budget setting of the 1980s.

After Margaret Thatcher capped council budgets, 15 Labour authorities defied her by refusing to set budgets.

Liverpool City Council, run by Derek Hatton and Militant, set an illegal “deficit budget” that sparked Neil Kinnock’s famous conference speech attacking “the grotesque chaos of… a Labour council hiring taxis to scuttle around a city handing out redundancy notices to its own workers.”

Several ‘moderates’ in the party believe that the resurrection of calls for illegal budget setting is just part of a strategy to deselect councillors and replace them with more radical party members.

But once party rules change to compel councillors to set a legal budget, they can say that the issue is out of their hands.

Christopher Furlong via Getty Images
Jeremy Corbyn and John McDonnell

After sustained and repeated lobbying from Labour council chiefs, Jeremy Corbyn finally agreed to write a letter last December making clear that he did not back illegal budgets.

In a joint letter with John McDonnell and Jon Trickett, he pointed out that councils had no choice but to set budgets.

“Failing to do so can lead to complaints against councillors under the Code of Conduct, judicial review of the council and, most significantly, government intervention by the Secretary of State.

“It would mean either council officers or, worse still, Tory ministers deciding council spending priorities. Their priorities would certainly not meet the needs of the communities which elected us.”

PA/PA Archive
A young John McDonnell and Ken Livingstone on the GLC

In their most bitter falling out, John McDonnell was fired by Ken Livingstone as the GLC’s finance committee chairman in the 1980s after he refused to carry out Tory cuts.

McDonnell this summer joined ‘Red’ Ted Knight, former Lambeth leader to mark the 30th anniversary of the rate-capping rebellion.

Speaking to a crowd of Momentum activists, the Shadow Chancellor said:  “I’m proud, extremely proud, of all my comrades in Lambeth and elsewhere who stood firm.

“I’m proud of the 11 in the GLC who stood firm. I think they were heroes and heroines of their time. We should be honoured to back them.”

Many on the Left still believe that a ‘symbolic’ refusal to carry out Government cuts would prove councillors are speaking up for victims of the Tory cuts.

Councillors, who often predate the huge influx of new Corbyn-supporting party members, could still face reselection problems in the coming years.

Although focus is often on deselection of MPs, councillors make up a large chunk of the party’s power base and have two representatives on the ruling NEC.