Electoral Dysfunction: Budget did little to defuse ticking time bomb for local councils
All my bandwidth this week has been given over to the spring budget, the moment of the year when Chancellor Jeremy Hunt tells us his plans for the economy – how he’s going to cut our taxes, or increase and set out where he’s going to spend some of our money.
But this week was a tale of two budgets: the one obsessed over in Westminster and then the budget of Birmingham Council, which has huge repercussions for the city’s one million plus population.
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I didn’t think much about the Birmingham story over the past few days as I joined the rest of the Westminster village in obsessing about whether the chancellor was going to cut national insurance or income tax, administer further public spending cuts to boost tax giveaways (and give a future Labour government a headache) or nick the opposition’s plan to abolish tax breaks for so-called wealthy “non-doms” who live in the UK with a permanent home overseas (FYI: Hunt didn’t shave more off future spending plans but they did nick Labour’s plan to scrap non-dom plan to raise £2.7bn for tax cuts).
But the dire situation of many councils across England is perhaps what is closer to the hearts of our Electoral Dysfunction listeners.
Sure the national budget matters hugely in setting the economic direction of our country and deciding on what public services with prioritise.
But local council budgets service much of our daily bread and butter: Our bin collections, childcare services, adult social care, leisure centres, parks and libraries, our carparks and road maintenance.
Between 2010 and 2020, local government fund suffered a 40% real terms cut in grants from central government.
In December nearly one in five council bosses said they thought it “fairly or very likely” they will go bust in the next 15 months as funding fails to keep pace with inflationary costs, and rising demand for a raft of services – be in child protection or adult social care.
And it was Hayley’s email that landed in our Electoral Dysfunction inbox that pulled my attention out of Westminster.
Hayley, who has been an officer in local government for the last 20 years, emailed in to talk about how “the last few years have been difficult”.
“In a district council setting, that I have always been incredibly proud to work in, I’m now left feeling like I might need to move on – mentally exhausted, emotionally drained,” she said.
“It’s impossible to feel like you are delivering anything meaningful because of reducing finance and increasing demand.
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Good people are leaving and the public perception is at an all low – and I have a huge amount of sympathy for that.”
She added: “I’d love to know Jess and Ruth’s view on the present state of local government, what they think the future holds – and what they think the current government’s intentions for local government are.”
It’s so pertinent this week, because this was the moment, away from Westminster, that Birmingham City Council – the city in which Electoral Dysfunction’s Jess Phillips is an MP, signed off £300m in cuts ahead of a 21% rise in council tax over two years, after declaring itself effectively bankrupt.
Financial measures described as “devastating” to people living in the city, Europe’s largest local authority could not afford to meet its financial obligations – after facing equal pay claims of up to £760m, and an £80m overspend on an under-fire IT system.
Jess, who knows the Birmingham situation all too well, talks about how councils – and this is not politically party specific – have been “massively defunded” but also says “as somebody who lives in Birmingham”, the [Labour-run] council has not been well managed.
Ruth says local government is the “bit of politics that affects people’s lives 100 per cent” and thinks the largest council in all of Europe going bust “should have been a bigger story”.
She also points out that Scotland’s local government is funded by Holyrood, where the row between central and local government over funding is very much live.
We are, says Jess, “sitting on a time bomb” with vulnerable children and adults struggling to access services now, that will only service to build up a bigger bill later.
Communities secretary Michael Gove last month announced a 6.5% increase in funding for local councils in England, but the £64bn settlement is unlikely to quell fears of a wave of de facto town hall bankruptcies, with the Local Government Association saying it was not enough to meet “severe pressures”.
The budget in Westminster did little to defuse this ticking time bomb on Wednesday.
The Institute for Government concluded in its budget wash up that the Conservative administration would “bequeath a dismal public services legacy to whoever wins the general election”, adding “it is also likely that more local authorities could issue section 114 [bankruptcy] notices, necessitating further painful cuts to services.”
Problems likely to be passed to Labour should they win the next general election.
But it’s going to get much harder for Westminster to ignore the continued problems of local government budgets if more council dominos continue to fall, especially in an election year.
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