Hackneys moment of truth

30 Nov 00
On December 11, managers at the London Borough of Hackney will learn whether the current crisis caused by a gaping hole in the budget will be compounded by a mass walkout of council staff.

01 December 2000

Ballots on industrial action have been jointly organised by Britain's three biggest public sector unions, Unison, the GMB and the TGWU, with the results due to be announced on that date. If, as expected, workers vote in favour of strikes in protest at the £22.5m package of cuts approved by members on November 6, the first day of action will be seven days later.

The walkouts will be just one more problem for managing director Max Caller. The fundamental complaint of workers is that the cost-cutting measures – up to 250 redundancies, across-the-board pay cuts and privatisation of uneconomical services – are punishing them for the mistakes of the politicians and managers.

Along with many others, both within Hackney and beyond, they are demanding to know what went wrong. The question is complex and the answer difficult to fathom.

The success of hard-Left Labour candidates in winning control of Hackney in 1982 heralded an era of savage political fighting, often within party groups, that has plagued the council chamber ever since, the low point being a schism within the ruling Labour group in 1995. This, combined with councillors crossing the floor to join rival parties in unprecedented numbers, led in 1997 to a hung council which, according to a recent Audit Commission report, had no effective political leadership.

In the same year, council officers were given much greater control over their budgets through an initiative called Transforming Hackney, pioneered by former chief executive Tony Elliston. It devolved control of budgets to individual departments, allowing them far more influence over their own spending, and has been blamed by the current joint Labour-Tory administration as the seed from which Hackney's present woes sprang.

The Audit Commission report says Transforming Hackney 'leaves the council with neither the resources, culture nor cohesion to face the resulting service and financial failures with any confidence'.

This is a charge that Elliston, who left the council in 1999 after running it for four years, vehemently denies. He told Public Finance that the initiative was destroyed by a combination of political paralysis and resistance to change among the workforce.

'The principle of devolution was something I had tried successfully at Brent and it had been done in other authorities. It was an ambitious programme to address Hackney's problems and it achieved an enormous amount – improving customer focus and clearing out some of the bad practices,' he said.

'There was a core finance function and accountants out in all the departments. But I and a number of others underestimated the sheer cultural resistance to change. You assume that if you tell people to do something and put systems in place, then they do it, but they didn't. We all believed things were happening that weren't. We had people who actually lied to us.'

Elliston saves his harshest criticism for the councillors, whose internecine political conflict he holds responsible for rendering the council's problems insoluble.

'Political leadership is the key to the problems because there hasn't been any. The politics of the place were rancid – you couldn't get a decision made and the members were constantly undermining your efforts. As soon as something was agreed, the vested interests would object to it. The members just didn't care about services, they only cared about political advantage,' he said.

Elliston also says the government must accept its share of the blame for what has gone wrong. He is adamant that constant inspections by a plethora of public bodies have seriously hampered efforts to tackle the authority's problems.

'Hackney was completely inundated with inspections – Ofsted, Benefit Fraud Inspectorate, the Audit Commission. At some point you have to stop inspecting and start doing, because you're not learning any more from the inspections. Otherwise, you spend the whole time just managing crises,' he said.

The role of central government in bringing about Hackney's misfortunes is also highlighted by Labour MP Diane Abbott, whose Hackney North and Stoke Newington constituency falls within the borough's boundaries. While she accepts the immediate problems are the result of mismanagement in recent years, Abbott argues that the failures go deeper.

'There are underlying systemic failures to do with the government's approach to regeneration and the inner cities. Instead of having different pots of money there is a need to look at Hackney as a whole and work out the level of need,' she told Public Finance.

'I'm also worried that the government's formula of cuts, privatisation and asset sales is not one that Hackney can sustain. Reluctantly, I think the time has come for the government to send commissioners in to run the borough in the short term to stabilise services.'

This call for immediate government intervention is shared by others. The Local Government Act 1999 gives the Department of the Environment, Transport and the Regions power to intervene directly in authorities deemed to be failing, and some are wondering why this power has not been exercised.

A DETR spokeswoman said it was up to the Audit Commission to recommend intervention, which it had not done, but the department would be monitoring progress at Hackney very closely. The new management team had given ministers some confidence that the council could resolve its own problems and it was being given a final opportunity to do so.

'We will provide support in the form of consultants who will undertake a wide-ranging review of individual services and the corporate approach to service delivery by the council,' she said. 'Ministers throughout government have full support in the newly installed managing director, Max Caller, and will give him their full support in turning round Hackney.'

But Elliston issued a stern warning about the scale of the task Caller faces. 'If there is a real will to do this, then it is possible. But he will not succeed if the other parties involved will not allow him to. On all sides there needs to be an end to the fascination with disasters and things need to move forward.'


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