Where next for local government funding?

With each week that passes, it seems that another local authority joins the list of those whose finances have reached crisis point. First it was Northamptonshire County Council that hit the headlines, but top-tier councils in Sussex, Lancashire, Suffolk, Surrey, Torbay and Oxfordshire also seem to be feeling the heat. And Somerset County Council, down the road from me, has just voted through £28 million of cuts over the next two years, leading opposition councillors to describe the council as on the ‘brink of bankruptcy’.

Anybody who wonders how we’ve managed to get into this state has clearly not been paying attention. Demand for local government services has risen steeply, especially adult social care and childrens services, partly due to changing demographics and partly as a result of government austerity measures.

At the same time, the amount of funding available to local government has fallen significantly, again due to government austerity measures. The Local Government Association has calculated that, by 2020, councils will have lost 60p in every £1 of funding from the pre-austerity era.

So this is not just a few rogue councils that haven’t managed to keep control of their finances. This is a systemic issue. And it is one that is going to get worse.

Because local authorities have statutory obligations in respect of adult social care and childrens services, this is (quite understandably) where many of them are prioritising their limited funding. But because demand for these services is rising, the amount of funding left over to provide other services is falling.

And so many of these other services, from refuse collection to libraries to the gritting of icy roads, are being cut. My local council, for example, has removed many of the public litter bins from our town, to save itself the cost of emptying them.

In addition to cutting services, local authorities have been trying all kinds of things to make ends meet. Some are buying commercial properties, in the hope that the income that these generate will help to fill the holes in their finances. Others have been relying on the voluntary and community sector to pick up the slack.

And a few have opted for mergers and full-scale reorganisation in a last-ditch attempt to make things stack up. In Northamptonshire, for example, councillors have decided to replace the county council and seven district councils with two new unitary authorities.

While I can sympathise with the councils involved, the actions that they are being forced to take concern me deeply. Because these actions are being driven by a financial imperative, rather than because they will allow the councils to improve the quality of the services that they provide to local people. They are being taken not because councils want to take them, but because they have no other choice.

Only two things will solve this crisis. The first is genuine innovation in the way in which we deliver public services at the local level. The New Local Government Network has proposed some ideas in its recent publication Rebalancing the power. But such things take time. They take money. And local government doesn’t have much left of either.

The only other thing that can solve this crisis is money. Local government needs a better, fairer and more resilient approach to funding. And ideally one that allows local government to take control of its own financial destiny, rather than leave it at the mercy of Westminster’s machinations.

But as Bob Kerslake, cross-bench peer and former permanent secretary at the Department for Communities and Local Government observed just this week, the Government is far too focused on the shambles that is the Brexit debate to notice that local government is on its knees.

This is not a problem that will go away. And if we don’t do something soon, that list of local authorities in crisis is going to get a whole lot longer.

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