Northamptonshire was first. East Sussex second. There will be a third, fourth, and maybe many more. Local authorities in England are going bust, unable to meet anything more than their basic legal obligations (and, I very strongly suspect, not even that in due course). In the sixth largest economy in the world we cannot apparently afford decent social care, child protection, bus services or the other vital, and very often unseen, services that local authorities provide. Let alone libraries.
This was foreseeable, of course. When George Oborne decided on austerity he imposed it first of all on those furthest from him, so that his (and his Westminster colleagues) risk of suffering adverse reaction was minimised. He is a politician of the most cynical variety, after all. And that meant he picked on the most vulnerable.
Those were the weakest in society.
And the poorest communities in the country. The following data comes via Naked Capitalism and Thiemo Fetzer:
And he picked on local authorities, because he could claim that their spending was not his responsibility. In some cases spending has been reduced by 60% as a result.
And somehow it was assumed that there would be no consequence to this. It was, after all, to use the logic of the Taxpayers' Alliance that Osborne bought hook, line and sinker, just the local bureaucrat and the ‘scrounger', who supposedly validated those council officials role in life, who would suffer for this. The rest of society would, supposedly, be liberated from their interference and the burden that they represented.
The protest of those professionals at the front line was ignored.
The warning that those most vulnerable were really suffering was dismissed: they should stop twitching the curtains and get out to work (yes, Osborne, said it).
The vilification knew almost no limits.
And some councillors actually believed it. And they believed that they should outsource to save money. And cut taxes, because they were a ‘burden'. How wrong they were.
It's taken eight years but the consequences are now glaringly apparent. We have bankrupt local authorities, effectively unable to function any more.
Local democracy in the UK has failed. Just think about that for a moment. The Tories are literally destroying a tier of government.
But that's the existential crisis. More directly, children will suffer as a result.
And so will the elderly.
And those who need care.
And support.
In fact, almost all those who society should protect, but who Cameron and Osborne thought not worthy of consideration, will now pay the price for their callousness.
And what is the reaction of the government that is imposing this deliberate act of cruelty (no other word will do) on millions? I heard a Minister say this morning that they have increased funding to local authorities this year by £2 billion because of the success of their austerity policies.
I did not swear at the radio. Or cry. Although both could have been justified. I instead struggled to imagine how this person (I did not bother to catch his name and anyway do not wish to make this personal: the whole Tory party is responsible for this) can live with himself. And how he could have had such an empathic bypass that he can talk utter nonsense when the facts scream that what he is saying is not just nonsense, but blatantly wrong.
Whilst Brexit distracts us this country is in a real crisis.
As a democrat I mourn what is happening, and the consequence it will have for local accountability.
But much more importantly it infuriates me that the capacity we have to create money is not being used to solve this crisis. In the world of commerce, and of individual responsibility, we have long learned that although debt forgiveness, by allowing a person (or company) to go bankrupt is essential if we are to accommodate the inevitability of failure within society, even if it creates moral hazard, and yet, apparently, there is no way that we can consider this possible within the realms of government. So the people of Greece have had to suffer for the mistakes of their government, their bankers, Goldman Sachs, German bankers and the European Central Bank. We could, of course, have waived Greek national debt. Or it could have been repurchased by the ECB under its trillion euro plus quantitative easing programme. But neither was done. It was thought necessary for the people of Greece to learn a lesson from something that had never been their fault.
And now, very obviously, this Tory minister and the government that he represents wants to make sure that the people of Northamptonshire, East Sussex, and wherever follows, will also learn a lesson for which their only fault is voting Tory. But, of course, many of those who voted Tory will not think that this issue affects them: when (they will think) was the last time their family needed a social worker? They might be surprised: just wait until someone gets dementia in the family and then you might find out. But in the meantime, just like the Minister, some will sit back smugly and think this is not an issue of concern to them.
But it is. We live in community. That is inescapable, whatever neoliberals think. And we need, therefore, to act as a community.
So what should happen? The solution is remarkably straightforward. The debt of the councils who are in dire financial straights, in whatever part of the country they are and for whatever reason the issue arose (let's not play party politics here: the crisis is too big for that) need to be allowed to turn that debt into bonds. And those bonds need to be purchased by the government using a special QE programme created for this purpose. The debt still exists of course. It should be interest-free. It should be due for repayment not less than 100 years hence (by when inflation will have eliminated it, if nothing else has in the meantime). The exercise is wholly costless, unless the debt to be acquired is due to third parties under PFI and other schemes, when arbitration on the fair value of cancellation of the sum owing should be resorted to (taking into consideration the fact that the councils in question are effectively bankrupt and can legally default on their debts without recourse to central government guarantee) . These councils failing be put back on their feet; local democracy can be restored; services can be reinstated and, most important of all, the vulnerable in our societies can be protected.
And all this can be done by simply using the power that the government has to create money out of thin air, just as it did to save our banking system.
Bankers bonuses were protected by QE.
So, too, should the young, the elderly, the vulnerable, those in need of local transport, and others who depend on local authority services where mistakes have been made, just as bankers made mistakes before 2008.
The analogy is obvious.
And it is wrong that when those suffering where the wealthy a bailout was possible and when they're the most vulnerable in society that is apparently not possible.
Action on this is essential. And possible. Now. We can demand it. Please do. Forget the risk of moral hazard. Get on with caring about those who are impacted.
And if anyone is to be impacted, make sure it is the councillors who let this happen, all of whom who share the responsibility by having been in the administrations that bankrupted their authorities should be barred from public office for lengthy periods of time.
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One wonders for how much longer can the Tories hold the country to ransom with their regressive, reactionary and failed economic policies? Regrettably, it seems, for a lot longer than society can probably withstand. These local authority failures are a visible tip of the neo-liberal iceberg. Maybe there is an analogy here with climate change denial while life on the planet is gradually becoming less sustainable.
While it’s all very worrying, hopefully the continuing deterioration in public services at local level will focus more people’s attention on the causes, emanating from Westminster.
And where is the cavalry when you most need it? Back at base bickering about internal procedures and fighting a very public but largely self-inflicted doctrinal battle.
Your last para is so true
And Corbyn still can’t say ‘Sorry, we f**ked up’ because Seumas Milne won’t let him and Corbyn is too frightened of Milne, though I know not why
Do you really know this to be true? It seems to me that you are jumping on a bandwagon here to grind your own axe.
Have you read about what is happening?
Abd reviewed what local authorities are saying?
Or do you live with your head in the sand?
I can offer some evidence of the consequences of the reducing financial support for Councils from the frontline.
Westminster uses Councils to deliver national policy at a local level. This is fine when Westminster takes its responsibilities to its citizens seriously. Not so good when you have austerity and roll-back-the-state-to-nothing Tories (or even New Labour or Orange Book Lib Dems of similar tastes) in power.
The Council that I work for is on the verge of bankruptcy itself. It is well known. Their latest idea to cut more costs is to sell off land and buildings (assets) to the private sector. The privateers drive a hard bargain and get concessions that are at cost to the Council.
However, the Council continues to lose affordable homes to RTB and homeless lists (and their duties to those lists) are rising.
My job as a development officer is constantly undermined because sites set aside for affordable housing are being turned into income for sale into the market. This means that most of our sites are at the arse end of viability because they are very difficult small plots where you cannot get the economies of scale. And then we get criticised by our Estates team (who are selling the family silver so to speak) for producing expensive homes! Great! Even if they close down a children’s home, they do not tell us and we have to be really nosey in order to catch them out (Councillors also tell us what is being disposed of so that we can intervene – bless them).
To address the slow re-supply of new affordable homes, the Council also raids its declining reserves to buy new property in the local market as you and I would do (remember the Government that is underfunding it will still penalise the Council for having too many homeless people in say B&B). The problem here is that once the market knows the Council is buying, the prices go up – so the public purse gets less for its money. And we also get over-valued assets too which is not healthy. Sometimes they have to stop buying and let the market cool down – hence more delay in getting new homes purchased.
This also means that national landowner-developers have us over a barrel – they can get away with providing fewer affordable homes in their developments or hold out for more sweeteners (such as getting reductions or removal of affordable units altogether or money off the sale price because of a caveat here and there that they relieve the Council of).
We hear about ‘triple locks’ here and there in finance but they also exist in other policy areas such as housing supply. It seems that everywhere we turn to make things happen, you run into a dead end or at least you have to jump through hoops doing handstands,with one arm tied behind your back.
It all seems deliberate to me. Environments like this are concocted to destroy. I am 53 years old and thought that I would be able to retire having achieved much more than this. It seems not. Even my team feels the same. It’s like pouring precious water into the sand.
Our output is so slow that we’ll be lucky if we build 35 new affordable homes in the next 15 years. Last financial year the Council lost nearly 200 homes to RTB. Total stock now is just over 13,000. Development is now so low that the Council this year faces returning some of its RTB receipts to central Government as they have been underspent on replacement housing (RTB receipts can fund/subsidise each new home up top 30% of its cost).
You don’t have to be Einstein to work out what is happening. In social housing at least.
But you can conclude this: much of what we do now in the public sector (selling off assets cheaply; losing stock to RTB; buying in the open market) benefits the private sector ultimately. It (the private sector) is the net beneficiary and records that as its contribution to GDP.
I am not against the private sector – most of the builders who work with us to design and build homes are from the local private sector. We are creating and supporting local and national real jobs (and supporting ours too). We are contributing healthily to the economy.
BREXIT is a big deal and we should be concerned about it – absolutely. But the Tories evil, cynical and wanton destruction of the State architecture to support its citizens has not stopped. It will not stop as long as they are in power.
Those Toxic Tories. Damn them. Damn them.
and one day-soon-they will run out of assets to sell.
What happens then?
Strange how the Conservative policy (good for business; more realistic than Labour; giving the people freedom to make better choices for them and their families …and all the rest of the slogans ) will have reduced many or most people to just getting by in a country with few public assets while a few have the benefits.
Surely at some point there will be a reaction?
Because half of them aren’t Conservatives anymore, they are libertarians. My True Blue relative wouldn’t believe me until I showed her an article saying the same thing three years later and sadly too late for the referendum vote. It is less conspiracy and more an ignorance of how things can be implemented. Devolving power is more expensive than centralised, and like Brexit, there was no plan, just a mandate. It was crazy to cut budgets in half. This was later sold as austerity but it started as The Big Society wheeze.
@PSR thanks for your comprehensive post from the front line. I actually know the area you mention quite well having worked at the local government agency tucked away near a village just north of MK. Thankfully retired now but I previously lived in Central Beds who had one of the highest council tax rates and some of the most pot-holed roads I’ve come across (though a recent visit to Sheffield took the biscuit in that respect!). We also had a serious crime issue with no police station (nearest one was Luton over 18 miles away) and a general decay of the infrastructure in the town, broken pavements, lack of facilities etc.
I read in a local news magazine how after a housing development started, towards a crucial phase the builders cried poverty and could not commit to the percentage of affordable homes. The local councils, to a man (and women I guess), rolled over and allowed the builders to virtually delete that aspect.
I now live in Dorset, true blue in the extreme and the services are much better. Not sure what to make of all this, to be honest as Central Beds was also Tory through and through but not to the same extent as here.
It is possible by digging down in Zoopla to find what newspapers the locals buy. This example shows from near where I used to live: https://www.zoopla.co.uk/local-info/?outcode=LU7&incode=2WE. Click on Newspapers in About the neighbours
Powerful Richard
Thankyou
amazing the silence here in respect to above, the government stance here is policy,it was obvious when they started cutting spending to councils by up to 70% on the pretext of austerity where this would lead,bailing banks out for there mates is one thing bailing the plebs out is never going to happen,no doubt we,ve all seen the quality (or lack of) folk running local councils with multi million pound budgets,there well out of there depth,sacking them and replacing with the same ilk will produce more of the same,, i,m surprised that council tax has risen further than it has,but its early days yet.
It is often overlooked that an essential element of the neoliberal dispensation is the emasculation of local government, all for neoliberalism’s hatred of democracy.
This began, of course, under the leadership of the Blessed Margaret, but vastly intensified under the Cameron/Osbourne regime.
As I say often, we are now living the natural consequences of a lunatic expression of political economy.
How did people vote for this? (Don’t worry, I know full well why……)
[…] Cross-posted from Tax Research UK […]
Absolutely spot-on Richard. And I can endorse everything Pilgrim says, and more.
But it’s not just in England. The SNP’s Council Tax Freeze and doubling down on Tory austerity for Councils means we in Scotland are in much the same position – in fact because the CT freeze lasted nine years probably further along the road – as English LAs.
My own Council, 2nd smallest in Scotland, has lost £20m+ in 10 yrs to the CT freeze and around £85m in 8 yrs to Tory/SNP cuts. It really is unsupportable in the medium term – maybe even the short term.
But remember too Holyrood is just a big local council
It’s true that the SG’s budget is determined by the Barnett Formula. But we get better than pro-rata v the UK department average, so the SG has more to spend per head. And, crucially, the SG can spend the money how it likes, there’s no direction or ring fencing by the Westminster. The SNP could maintain spending on LG but it chooses to cut even beyond any cuts it receives from UK. So the plight of Scottish Local Authorities is a compound of Tory austerity (cutting the SG’s budget) and SNP austerity (voluntarily cutting Scottish LA spending by even more). If anything the SNP’s attack on local Government is greater than the Tory attack. And it’s been going on longer.
TBH, the attack on Local Government is unconscionable and unsustainable, whether Tory, SNP or, as in Scotland, both.
So then Alex, why is Labour so unpopular in Scotland
Would you like to remind me?
For those that haven’t come across this “shy retiring” SLab councillor (Alex Gallagher) before, Alex is a councillor in North Ayrshire, who is a prolific user of social media to attack the SNP. Nothing wrong with that, of course, but caution (indeed doubling down caution) is required for anything he says.
As he knows very well, the % of council revenue raised through Council Tax is relatively small, and the real test of the resources available to NAC is best gauged via their main revenue source – the Scottish Government. In the same way, the resources available to an English LA are best measured by their grant from the UK Government (wearing its English hat).
Richard, while I understand your comment (and the UK Parliament seems to want to reduce the Scottish Parliament to the status of a large English council, with the support of both the large English parties) the real question is whether the Scottish Parliament has successfully mitigated the effects of austerity for councils, as opposed to the position in England, where there is no intermediary between the Cabinet and LAs.
Alex, perhaps, has figures that demonstrate that a similar council, with similar responsibilities, in England is resourced to a higher, lower, or similar level to NAC?
Not to be all pissy but I feel the need to point out that the CT freeze was not an SNP policy.
The 2007 SNP minority government was elected on a manifesto pledge to replace CT with a local income tax.
The rest of the parties in Holyrood would not wear that.
The CT freeze is the compromise ‘they’ would tolerate.
There’s no use trying to pin that on the SNP.
With a bit of luck the Greens will force a review and we’ll get a local land value tax.
Richard, I presume you don’t want this thread to be blown off course by a discussion on the failings of the SNP, so I will not respond to Oldnat or Chris. They’re both wrong and they know where to find me on social media if the want to continue the exchange.
Alex
With respect, that is typical if your engagement, which is never, it seems to me, to be on the substance of any issue.
Richard
With respect Richard. The subject is the Tory’s attack on Local Gov. I just pointed out it’s not just the Tories. Entirely on the point and more info for your readers.
You did not answer the question Alex
You never do
No wonder Labour is in such a mess in Scotland
I am a parish councillor in a small village in Bucks, a county bordering on bankrupt Norhtants, about 8 miles away. By chance, I found the newsagent’s listing of deliveries of newspapers asround the village, and was not surprised to see that nearly all my neighbours take the Telegraph, Times,or Mail; only our household and another nearby gets the Guardian. Bucks is a solidly Tory county and Aylesbury Vale District Council likewise is dominated by them. Likewise the other district councils in Bucks. At Parish Council, District Council, and County Council meetings, a constant theme is the need – I ought to say “need” with quote marks – to keep local taxes low. Once, the Parish Council was forced to increase its precept by 20%. A torrent of criticism and fury ensued. Why was the local tax going up? What extravagances had the council indulged in that made it need to drain cash from the community (of mainly wealthy middle class professional and managerial and self employed business households) so much cash? What was the explanation for this utter profligacy? (Answer – increased costs of hedge and grass cutting due to services until now done by the county council and now devolved to the parish). The fact is wealthier classes do not want to pay taxes and put great pressure on the councils not to increase the council tax. Yet the same individuals gripe about the potholes and the decaying state of the roads, and the infrequency of grass cutting and hedge cutting and so forth. They want councils to do the work but not to raise the money to pay for the work. Bucks is squeezed – by capping of expenditure, by having got rid of its council housing years ago, by increased costs of social services and children’s services and care for the old. Libraries are being shut, services cut to the minimum, costs passed over by devolution of services to town and parish councils Meanwhile, ferocious sackfuls of cash are poured into the potholes that pockmark the local roads, while the archaeological service, grants to the arts and culture, fbudgets for libraries, all the things that make life in the sixth largest economy in the globe cultured and civilised , are being starved of money as local authority funding dries up. Bucks is not as far into insolvency as Northants, but it is struggling. And the reason is simple: capping of expenditure, and the Tory philosophy that requires low taxes above all else. And since the county will always be ruled by the Tories, thee will always be a Tory run council, and the county will always be slouching like some rough beast to Carey Street.
Thanks
A Tory MP was interviewed on the To-day programme this morning defending the shortfall in local education spending. Mr Humphrys asked him about how they’re going to find extra money for councils and suggested a land tax! Needless to say his point was ignored and he didn’t pursue it.
Typical
IDS, who brought us UC and other goodies and who lives in a nice house provided by his FiL, says, along with his think tank CSJ, modelled in his own image, that UBI will bankrupt the Treasury. ‘Duncan Smith said: “A basic income in the UK would require a giant tax hike for all, hurting those on the lowest incomes the most. It would send businesses fleeing the country in droves and would bankrupt the exchequer. Fans of a basic income also assume robots will replace jobs. Some jobs will go and new jobs will take their place. Basic income is a direct disincentive to retrain, upskill and seize new opportunities.” ‘ (http://www.thenational.scot/news/16398025.iain-duncan-smith-think-tank-claims-basic-income-would-be-worse-than-universal-credit/)
Coming from someone with his track record looks like UBI is dead in the water. Wonder what he thinks of the JG?
IDS =
Irritable
Debt
Syndrome
In other words the dumbo (like so many of his neo-lib brethren) does not understand the power of being a sovereign currency producing nation. Nor do they understand money. It is hard to believe that we are governed by such unknowledgeable people – that’s the nicest way to say it.
But then – what if they knew that they could print money and they are deliberately not doing so for ulterior motives? What does that make the Tories if that is the case? And then what would we be prepared to do about it?
Maybe this problem could be solved together with another one, namely the undemocratic House of Lords. What if we replaced the House of Lords with a Chamber that would have representatives of the City Councils?
These representatives would be elected and they would be stakeholders that could hold the government to account at least as well as a House of Lords.
On first hearing I like the sound of that Alexander.
I have been fighting this corner all over the world for ten years, ever since my research showed that popular revolts were most often triggered by discontent at failure of social services – from Kiev to South Africa, and Cairo to Tunis. Our problem is we are not rising up. Just what does it take for the comatose unions and the absent NALGO to confront this neo-lib govt which is squeezing our communities to death?
[…] Labour could do better. I bothered to explain this weekend how it could take on the issue of failing councils and solve it by pursuing a policy that puts the vulnerable first. I have heard nothing from Labour […]
It is the American way.
Brexit will bring more of it.