When New Labour first began to plant its size nines all over the centre-ground of politics, you heard people complaining that the Tories and Labour were basically just the same. Our answer was a quote, I think from an Australian politician, who said the difference may only be half an inch, but it’s the half inch where we all want to live. This week the Tory government hacked away the half-inch where we want to live.

The unkindest cuts fall on local government. Councillors will find themselves managing decline over the next five years: making decisions about what to close and who to sack. First will come the soft options: closures of libraries, museums, playgrounds and swimming pools. Then the tough choices: home helps, services for disabled people, pensioners and children. The irony is that after next May and the May after that, Labour will control many more councils, and the Tories and Liberal many fewer. Thousands of newly-elected Labour councillors will face heart-breaking decisions in their first weeks in office.

In the coming years, local government will swing dramatically to Labour. Councils will throw up the next generation of leaders, just as it did 25 years ago with David Blunkett, Margaret Hodge and Ken Livingstone. Local government policy will dominate the NEC and party conference in way it hasn’t for two decades. Out in the cold at Westminster, Labour will be running the major towns and cities once again. People look incredulously when I tell them that when I was a press officer for the Association of County Councils (ACC) in the mid-90s, it was Labour-controlled.

In the 1980s, Labour in local government adopted differing approaches to the cuts imposed by Tory governments. Liverpool, then controlled by the Militant tendency, and Lambeth, controlled by Bennites, sought direct conflict with the government, including breaking the ‘rate-capping’ law by setting budgets which spent more than the council raised in revenue. In Liverpool the rate support grant (RSG) was cut by £30m by the Tory government. Famously 30,000 council staff were handed 90-day notices delivered by taxi as a ‘tactic’ to draw attention to the ‘theft’ of £30m from local people. It ended, of course, with Kinnock’s theatrical denunciation at Bournemouth, and a retreat by the council. Other Labour councils, led by ‘soft-left’ leaders such as David Blunkett in Sheffield adopted the ‘dented shield’, which meant protection of services for the most vulnerable within the limits set by central government. It was accompanied by vigorous campaigning, rallies and demonstrations.

This time round, Labour must adopt a similar stance. The trick will be to set budgets which protect core services, but clearly blame the Tories and Liberal Democrats for centrally-imposed cuts. Recent council by-election results in Sheffield, Oxford and Medway suggest that the public understand full-well who’s to blame. A modern version of the ‘dented shield’ would mean that Labour-led councils should seek to protect services, lead protests against the government, but not seek martyrdom. We need responsible leaders, not riddled corpses. Extremism of the kind we saw in Liverpool, Lewisham and Lambeth in the 1980s did the party no favours; the damage took years to repair.

Which brings me to Tower Hamlets. All members of Labour should be disturbed by the election of Luftur Rahman. The new mayor of Tower Hamlets, with a budget of over £1bn, has alleged links to the Islamic Forum Europe (IFE) and the Labour NEC has barred him as a Labour candidate. The IFE in turn has links to Jamaat-e-Islami, the Islamist movement which wants to replace parliamentary democracy with a supranational caliphate. The early evidence from Tower Hamlets is that turnout was low, especially amongst the white working-class voters who are in the majority in the borough, and previous Labour supporters were discouraged by Ken Livingstone’s intervention in support of Mr Rahman and against the official Labour candidate.

The result in Tower Hamlets will give succour to some very unsavoury groups and individuals, who will see entryism into the Labour Party and taking control of councils as a tactic which can deliver a major platform and resources to the Islamist cause. This is the new Militant Tendency, supported by ‘useful idiots’ like Livingstone, and the NEC needs to think very carefully about what to do next. The rules are clear: any member who backs a candidate standing against Labour is liable for expulsion. If there’s evidence that Livingstone publicly supported Mr Rahman, he should be booted out.