The Guardian has reported:
A Conservative-run county council has signalled it is close to effective bankruptcy after admitting that “severe financial challenges” mean it is unable to meet its financial obligations in the current year.
I forecast that local authorities might face this situation not long ago, but remain surprised that the government has let it happen in a shire county with so little time to elapse before deeply sensitive council elections. Whilst I am not pretending to know all the details of this case, the fact is that if a council can do this (and it is the first for twenty years, apparently, to do so) then what it suggests are three things.
The first, very obvious, fact is that the squeeze from austerity is not only bringing down the companies delivering public services; it's bringing down the public sector suppliers of public services as well. I think it very likely that the issues are related: pressure on cost reduction has reached the point where there is nothing left to give in either case and the system just breaks. Of course there are detail differences but the similarities are apparent: you cannot do something for next to nothing forever and get away with it. The austerity model is simply out of road.
Second, the perennial Westminster politician excuse that the problem is in everyone else's inefficiency is also life expired. The excuse always has the same tone, suggesting that ‘if only local authorities / schools / the NHS / the police / unions / etc, got their act together then the problems in service supply could be solved and the government's best intentions would be fulfilled'. But that's also not seen to be true now. No amount of supply side reform will ever overcome the fact that real people have to live and work in systems sufficiently flexible to cope with the unpredictable (which requires that there be margins for error that have now usually long since disappeared) and still have enough to take home as pay at the end of the day to repeat that trick in their domestic lives.
Third, this says local democracy has been allowed to whither to the point that it simply is no longer credible. Northamptonshire has no choices left. People will suffer as a result. And such is the structure of local authority financing that central government will now no doubt impose that hardship as a deliberate penal regime to punish the profligacy of the council and those Tory shire voters who had the temerity to elect it. This though is wholly unjust. Councils have little control over their revenues, have been made more vulnerable in many cases on that issue by the removal of central funding and have been subject to increasing statutory demands that have removed choice in what must be supplied. The results are Haringey's appalling housing schemes and the imposition of hardship in Northamptonshire whilst choice is denied as a result of central government imposition.
So what have we got? An unholy mess created by the deliberate choice of George Osborne and perpetuated by his willing and foolish Tory colleagues in parliament, with the LibDems also taking some blame.
And what do the electors of Northamptonshire do now? That's the hard one to answer. Will they realise it's time for change? Let's see.
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We all know what the answer is: it is resorting to the charging of people for services – just as if the Council was a private company. That is what the central Government wants.
The Council tax where I work will go up 5.9% next year. In a year of austerity.
Not so much a ‘nudge’ by the Tories but a bayonet in the back followed by a boot.
The only way I think that this could be dealt with is if the LGA took the Government to court over underfunding.
Referring back to our discussion here on ignorance, just go on any website about a Council’s services and you will see that it is the Council’s get the blame and are being criticised for service failure because most people do not understand how Council’s are funded. Not the Government.
At work we reckon we’ll be lucky to get another 10 years out of our jobs. Before that will be wage reviews and people who are leaving are already not being replaced. And as our pensions are now based on ‘average earnings’ rather than final salary you don’t have to be a genius to work out what that means. And this will affect the economy too – given there will be lots of us living on more meagre pensions than they need to be. Great eh?
As for the Council I work for, it is teetering on the general fund being bankrupt. It is being propped up by a sell off of assets to the private sector who know it is in a bad way financially and use that to its advantage. The Housing Revenue Account (HRA) is now being dipped into to support it by paying for services the general fund can no longer sustain. And that puts pressure on what the housing service (where I work) can do. Tenants are already being encouraged to use the internet to access services.
A question to think about is what a true patriot would do for their country if it was their Government who had become the enemy within? Because that is what the Tories, the Orange Book Liberals and Blue Labour are – the enemy within.
This is no way to run a country at all. This is laissez-faire on a grand scale. The ghost of Nicholas Ridley reigns supreme.
If I am right, someone please tell why the ideas of the dead (Thatcher, Ridley) must make the lives of the living so hard?
But a few always wanted to make life for most hard
We can do it differently
But candidly only if the reality is exposed
Ah! Pilgrim,
“…..And as our pensions are now based on ‘average earnings’ rather than final salary…..”
But not for the senior officers. I’d be prepared to bet they have entirely separate pension arrangements in line with the ‘business executive’ model of money purchase schemes generously funded and contractually guaranteed.
Interesting; if I’m reading this right, it seems KPMG are saying it’s Northampton’s own fault they’re having problems http://www3.northamptonshire.gov.uk/councilservices/council-and-democracy/budgets-and-spending/Documents/NCC%20Audit%20Certificate%202016%20to%202017.pdf
It seems as if KPMG are saying it’s Northamptonshire’s fault that the NHS is failing and creating additional demand on adult services for the elderly.
I think that might be a cause for questioning KPNG’s judgement.
Again
Bill Kruse,
A fascinating document.
http://www3.northamptonshire.gov.uk/councilservices/council-and-democracy/budgets-and-spending/Documents/NCC%20Audit%20Certificate%202016%20to%202017.pdf
That just about sums up how useful audit is. I wonder what they charged to state the bleedin’ obvious without actually stating that the problem is an inadequate budget to meet the council’s obligations and responsibilities.
Precisely
But then you wouldn’t expect KPMG to work out the real problem, would you?
Unfortunately it also further reinforces the household budget analogy in the public’s mind, as they will (understandably) conflate local with national government financing. I’m afraid there’s no feasible overt solution for a government that is so committed to the austerity mantra. People are already suffering and it can only become worse. I know my local (Conservative) authority is struggling to maintain services. It’s an opportunity for Labour if it can get a coherent, truthful message out; but I fear Liam Byrne’s suicide note will still come back to haunt it.
True
I have never understood why local councils’ senior members and officers don’t seem to talk to their opposite numbers in other councils. Concerted response from across the public sector would force the government to take notice.
Insofar as I have come to any conclusion it’s only a best guess: We have allowed our councils to be taken over by officers with a faux business ethos. We pay them and elevate them to the status of business leaders and they have the trappings of smart offices and sharp suits, but in truth they have they have the mindset of middle management.
What they do is implement policies dictated by ‘senior mangement’ and they mistakenly think their line managers are the central government. And they dutifully do what they are told to do.
The notion that they are the servants of their local population and their direction should come to them through the council members has been reversed. The tail is wagging the dog.
Officers dictate policy and pretend they have no choice, but to bow to the budget restrictions imposed from above.
Because this ‘class’ of administrative manager is ombued with the ‘stand on your own two feet’ independence and strength, big-man ethos they do not seek to cooperate so are divided and ruled like sheep.
Does anybody else see it like that ?
I found the words of the recently resigned leader of Haringey, Claire Kober, revealing:
“I’m quite a practical, pragmatic person in all areas of my life. My politics are defined by an approach of: ‘Here’s a problem, let’s solve it.’ But we’re now in a political context that is much more ideological. And my politics aren’t the right politics for that time.”
This reveals how neo-liberalist rentier activity thrives; by being seen as the ‘practical reality’ you have to deal with rather than exposing those structures and creating change. I don’t want to pillory her because I haven’t done her job and I’m sure the pressures are immense but her words seem to show how passive and impotent neo-liberalism has made many of us.
Fascinating
What she ignores is that her ‘practical politics;’ were wholly ideological.
”real people have to live and work in systems sufficiently flexible to cope with the unpredictable (which requires that there be margins for error that have now usually long since disappeared)”
Absolutely. The only redundancy left in the system where I work (NHS), is the sort that is making it easier to find space in the staff car park of late.
Agreed
[…] I have noted this morning, Northamptonshire county council has effectively declared itself on the brink of bankruptcy. This raises an important issues. Councils can go bust. A national government with its own currency […]
County Councillors were elected in 2017 to serve 4 years, and will not face election again until 2021. The Tories were speculating about a 2017 general election when they last set county council budgets.
So I don’t think it is surprising that this is happening at this stage in the electoral cycle. Cambs has also discovered a black hole in its budget.
I have been warning for some time about the pressure of social care spending on local authority budgets. Workers are disgracefully poorly paid and NMW is going up faster than the amount councils have allocated to increase social care spending. Domiciliary care workers have been paid less than NMW because the employers do not pay them for the time they spend travelling between pensioners’ homes. The private sector parasites who have the contracts have no intention of forgoing their profits to put this right.
Agree with all that
They’ve been spending their reserves – In 2016 they stated “The reserves in question are held to “smooth” the payment of a school private finance initiative deal that has higher repayments in its later years. ”
Two weeks ago you’d have been straight in on this angle. But today it’s not PFI costing too much, it’s insufficient spending to cover perfectly reasonable deals presumably, as you haven’t mentioned the PFI deal.
Well work out Northants budget in 2006/7, and then work it out in 2016/17, and then come back and report that there has been austerity.
I notice that Northampton still has a Borough Council. About time they were absorbed as has happened to some other Borough Councils to save admin costs.
Still, it’s the first of these section 114 notices since Hackney and Hillingdon in 2000, and they came back, and they haven’t suffered from outmigration as they turned into places people didn’t want to live.
With respect, do you really think I should think in the nonsensical way that you do?
If so, think again
It’s not just austerity measures that bankrupted Northamptonshire County Council. They failed to increase council tax for many years and boasted the lowest council tax in the UK. This is now also now proven to be a political disaster zone. It was also a council that took the logic of outsourcing to its extreme logical conclusion and extensively used PFI. Northamptonshire represents the failure of neoliberalism and austerity policies based on extreme ideologically driven politics.
As I said, I did not know the detail
That is fascinating
Is there data to show that?
Paul Crofts says:
February 3 2018 at 2:29 pm
“It’s not just austerity measures that bankrupted Northamptonshire County Council……..”
If indeed Northants has been, as you say, a frontrunner in rigourous implementation of government’s preferred policies in respect of local government spending and service provision it’s a fine example of what is wrong with the policies.
The audit report indicates that despite their efforts in cropping budgets they have not reduced the demand for services. I guess it would have worked perfectly if the council were not to have had a population to serve.
Richard, you wrote above “I think it very likely that the issues are related: pressure on cost reduction has reached the point where there is nothing left to give in either case and the system just breaks.”
The irony is that austerity does nothing to reduce costs. It does the precise opposite. You cannot reduce costs simply by slashing budgets. Costs are only reduced when the system under examination gains order relative to the observer. For a system to gain order it must gain information. That includes information in the Paskian sense of Conversation Theory.
Relativity applies to all systems. Our observer is the democratic imperative of the 90%-99%. So, what looks like a viable programme for our system to gain order as in The Courageous State and this blog, relative to the 1% it looks like the breakdown of civilisation and is thus firmly resisted.
Austerity relative to us imports disorder into the system. This manifests itself as the necessities of life becoming increasingly unaffordable for the majority and threaten to be completely out of reach for our children and grandchildren. Cost also manifests as the breakdown in social relations, deterioration in mental health, addiction problems and decreased life expectancies.
Many writers on this blog despair of Labour ever getting its act together in respect of the workings of the economy. Although that will have a certain truth value, it is primarily an observer phenomenon and needs to be understood in that context.
Labours great strength under Jeremy Corbyn and team is the growing emphasis on the democratic imperative. That is the main reason why his opponents fear a Labour victory. It is Labours ace card. The democratic imperative embedded within a resurgent mass labour movement cannot be bought.
I am aware of two major demands on local authority resources that have risen sharply since 2010:
Social Care;
Emergency accommodation for homeless families.
Is there anything else this large? Either of these will bankrupt some LA’s before the end of 2018.
Both are the intended result of central government policies implemented in the last seven years.
Some interesting reading: https://www.lrb.co.uk/v38/n24/tom-crewe/the-strange-death-of-municipal-england. Notably this:
“Northamptonshire County Council — which has to make £143 million worth of cuts by 2020 — has gone even further. Last year it voted to outsource all of its services to third parties to better ‘meet customer expectations’, reducing its core staff from more than 4000 to 150. Its Next Generation Model has created four new ‘service providers’ separately responsible for child protection, care for vulnerable adults, health services and improvements to the county: all are autonomous bodies, responsible to the council, but managed as commercial enterprises, empowered to commission services from private companies, charities or the voluntary sector, paying back dividends and operating ‘free from statutory constraints’. Northamptonshire’s chief executive, Paul Blantern, has said that what’s left of the council, rebranded as County Council Group, will operate ‘almost like a PLC’.
Bear in mind this was written in December 2016. The question is: Did they carry through on the outsourcing, only to find that it didn’t work? Or did they row back on it, and did someone in government tip them over the edge?
(I got sight of this article via the Municipal Dreams twitter feed: it is well worth following if you do not do so already)
Thanks
LRB usually very good
Twitter feed followed
James says:
“Some interesting reading: https://www.lrb.co.uk/v38/n24/tom-crewe/the-strange-death-of-municipal-england. ”
Thanks for that link, James.
It’s one of the most depressing things I’ve read for a long time.
And yet alternatives are beginning to appear.
https://www.theguardian.com/commentisfree/2018/jan/31/preston-hit-rock-bottom-took-back-control
Accepted
And Corbyn has a big opportunity here
Municipal engagement in the local economy was a major feature of the massive increase in well being in the UK in the nineteenth centuries and first half of the twentieth century
It is not incompatible with economic revival now
I would welcome it