THOSE FAMOUS REDUNDANCY NOTICES
They may not have been the most famous redundancy notices in the history but the letters terminating the employment of the whole of Liverpool City Council’s workforce in 1985 have been the subject of enormous controversy over the years. They led to Neil Kinnock’s furious denunciation of the Council leadership at the Labour Party Conference and have been defended by some ex Militants as ‘just a tactic”. So what is the truth about them? ‘Inside Liverpool Labour History’ takes a look.
The roots of the issue lie in the Militant-led Liverpool City Council’s 1985 budget. The detail of that warrants an article in its own right, but we need a brief summary here. Since the election of a Labour majority on Liverpool City Council in 1983 the council had campaigned against the Thatcher government’s cuts to local government. In the first year the council - led by the Quaker John Hamilton and his Militant deputy Derek Hatton - had reached an agreement with the Secretary of State Patrick Jenkin. The deal was in fact a successful compromise but was hailed by the Council leadership as ‘a magnificent victory”. This led to Jenkin’s demise - "they trampled over my political grave" - and in the view of many made the prospect of getting any concessions in future years nigh on impossible.
In 1985 there was no doubt that Liverpool faced further huge cuts (some £25-30 million) in its grant from central government but in June the city council passed a budget that included a 9% rate rise. The budget left a large gap between income and spending and the City Solicitor, Bill Murray, advised that ‘the rate resolution was one that in his opinion, would be held to be invalid if tested in the courts. However, unless and until it is so tested…the rate is a valid one”. (our emphasis). In other words, the budget, often hailed as an 'illegal deficit budget', was no such thing. The question was how, if at all, was the gap to be bridged?
Although the budget was at this stage legal, 49 Labour councillors had already been told by the District Auditor that they were to be surcharged a total of £100,000 for the brief delay in setting the budget . It was alleged, on very flimsy grounds, that the delay had led to increased interest charges for which the councillors were liable. The councillors were also to be barred from holding elected office. (1) We should point out that in all the conflict that followed, none of the unions retreated from their commitment to support the surcharged councillors. Indeed, thousands of union members paid monthly contributions to a fund to pay off the surcharge (later increased) and only stopped once the surcharge was paid off.
The council leadership’s initial response to the task of bridging the gap was to support a campaign with other affected councils to force the government to back down. In the event, rightly or wrongly, the other councils passed normal budgets, usually with large rate rises. The leadership then took the view that they needed to buy more time for campaign to build up. To do that they needed to avoid the prospect of running out of money before Christmas, which was the implication of the June budget.
You might wonder how the Council’s workforce was feeling about this. The Liverpool City Council Joint Stewards Committee (JSSC) represented the vast majority of the workforce, the biggest unions being the blue collar GMBATU and the white collar union NALGO. The JSSC had resolutely supported the council and clearly recognised that the money would run out, though it is fair to say that some unions such as the NUT (teachers) and NUPE (blue collar care workers) had serious reservations about the strategy. However, none of the unions had signed up for redundancy, in fact the whole point of the campaign was to defend jobs, not get rid of them.
As the council pondered its next step, rumours began to circulate. In a Campaign News bulletin on 24 July 1985 NALGO told its members:
“Well, the rumour factory is in full swing. The latest one, fresh off the production line - is that the City Council has already printed 30,000 redundancy notices! Like most rumours, this one is complete nonsense. Finance Chair {non Militant} Tony Byrne said on 22 July that ‘this authority will not issue redundancy notices to any member of staff now or at any time in the future’. So another rumour bites the dust”.
Alas, on 6 September the council’s Finance and Strategy Committee resolved, amongst other things, that “immediate steps be taken to convene meetings of the Social Services, Education and Industrial and Public Relations Committees after a meeting with the Joint Stewards Executive Committee with a view to putting in hand the necessary procedures for terminating the contracts of service of all employees because there will be no money to continue employing them”. (our emphasis).
Can anyone spot the subtle difference?
On 27 September redundancy notices were indeed issued to all employees. Most were handed out by senior officers, though NALGO refused to co-operate with issuing them. Some , astonishingly, were delivered by GMBATU members, others were, famously, delivered by taxi, an episode highlighted by Neil Kinnock in his conference speech.
The letters consisted of an official redundancy notice signed by the City Solicitor and, on the reverse, a letter from John Hamilton and Derek Hatton. One passage is worth highlighting here. Militant supporters have later claimed that as the notices were ‘only a tactic’ they would have been withdrawn as soon as the date for the money running out arrived. The letter told a different story; “If the government recognises its responsibility then all notices will be withdrawn”. This, remember, was the government of Margaret Thatcher, the hammer of the miners. They had no intention of “seeing sense”; the redundancy notices would indeed be implemented.
The proposed redundancy of the whole workforce did of course balance the budget, ensuring its legality! This meant that the councillors - already unjustly surcharged - would not face the prospect of further surcharge, this time for millions of pounds. The workforce didn’t just face the prospect of losing money - that they had expected - but also, they would lose thousands of pounds in, for instance, pension rights due to a break in service.
The reaction of the unions differed. GMBATU, led in part by Militant Tendency supporters, supported the council; most of the others opposed the redundancy notices and some impromptu demonstrations took place. The JSSC held a special meeting to consider the situation and voted narrowly to reject the redundancy notices. At a later meeting the Joint Stewards decided to call for an all out strike of all of the council’s workforce and most of the unions, even those who were sceptical of the proposal agreed to support it.
In the event the blue collar union NUPE did not hold a ballot but opposed the strike. GMBATU members voted for strike by 4345 to 2934; NALGO, whose officers supported the strike, lost the vote by 1445 to 3891. The scale of opposition to the strike was perhaps not surprising given the redundancy notice situation and the bad feeling towards the council leadership as a result of what were seen as broken promises. A majority of union members in the city council had voted against strike action.
The council at this stage persisted with its policy and called meetings with union leaders to discuss how basic services could be maintained when the money ran out. In one meeting at least, NALGO’s policy was spelt out; if their members were sacked they would not be running ANY services, vital or not. This was plainly not what the leadership had been hoping for. NUPE, whose members staffed care homes, reported that “GMBATU stewards toured (NUPE) workplaces asking NUPE members to work without pay should the need arise”.
The national unions were alarmed by the situation and ten general secretaries visited Liverpool to intervene. As a result they commissioned a report from a group led by Maurice Stonefrost the Financial Director of the Greater London Council, to assess the situation and if possible suggest a solution. The “Stonefrost Report” suggested a budget was possible based on:
1. No cuts in jobs and services, the capital programme or rents and charges;
2. A 21% rate rise (‘none of which would compensate for government cuts’);
3. Capitalisation and creative accountancy amounting to £19;
4. Creative accounting and borrowing to replace capital receipts”.
Tony Byrne had been busy, too, and loans from Swiss banks were negotiated which would have bought the date of re-engagement forward so that workers would ‘only’ be out of employment for a month, rather than the original four. This cut little ice with the unions opposed to the notices. NALGO had been prepared to face the council running out of money, with all the chaos that would bring. Redundancy, whether for a month or not, involved a legal break in service, with all that that implied.
The Stonefrost Report was rubbished by the council, largely because of the ‘creative accountancy’ but the pressure built from all sides and on 22 November a budget was passed without redundancies, based largely on the Stonefrost principles.
Notes
1. The legislation that enabled this was abolished by the 1997 Labour government.
2. A contemporaneous ‘real time’ description of these events based on NALGO’s Campaign News is published in a separate post.