These are the conclusions of a report on local authority finances in England, issued this morning by the National Audit Office:
Steps taken by the government, led by the Department, have supported local authorities in the COVID-19 pandemic response. The Department's successful monthly collection of data and continued intensive engagement with the sector provided a good evidence base to underpin the financial and other support provided by government. Action by the Department and wider government to support the sector has averted system-wide financial failure at a very challenging time and means that the Department has managed the most severe risks to value for money in the short term.
However, the financial position of local government remains a cause for concern. Many authorities will be relying on reserves to balance their 2020-21 year-end budgets. Despite continuing support into 2021-22 the outlook for next year is uncertain. Many authorities are setting budgets for 2021-22 in which they have limited confidence, and which are balanced through cuts to service budgets and the use of reserves.
The second paragraph is by far the most telling. The last sentence is the most telling of all.
Let's be clear what local authorities do that is vital. It is the provision of care services, above all else.
So, they protect the vulnerable, including many at risk, large numbers of whom will be children.
And what is the government planning for those at risk? That their services be cut. Not only is this recklessly irresponsible at an individual level, it undermines the whole fabric on which we build a fair society. What is worse is that this is entirely unnecessary. The resources to provide the see services exist in out society.
For the sake of money that can be created at will (and is, for Tory friends) the most vulnerable in our society and a whole tier of democracy are to be abandoned, apparently.
Despite that, it seems the Tories are popular. I wish I knew why, because what that seems to say to me about many of the people I must walk past in the street does not bear repeating.
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I received my council tax bill for 21-22 today. A 4.8% increase. While I understand the reasons why, at the same time I do not expect to get anything like that much of a salary increase in the coming year. I briefly saw the clown of a transport minister on tv this morning defending the 1% offer to nurses with the old stuff about what the country can ‘afford’. As the country can afford outrageous budgets for SPADs, PPE procurers, test and trace etc., etc., it is all wearing very thin. The country is collapsing and the tory band plays on.
There goes the neighbourhood folks!!
But please remember that people have been misled in a huge propaganda war created by politicians who represent money mad rich people – those who have promoted such lies and those who have not been good enough to fight them effectively on our behalf.
The ‘money-mad’ have had no choice since 2008 to just give up any idea of subtlety – besides Russia now leads the way in how money can cement itself into society for eternity un-apologetically and un-self-consciously.
I appeal to you all again to say that this is a political failure and not really one to be laid at desperate, hopeless and scared people who are allowed to vote. Keep trying to talk to one another I say.
And it’s not a class thing either. The ignorance of MMT and money creation is just as bad in the supposedly educated middle classes too – and I have first hand experience of this having bought Stephanie Kelton’s book for them and seen the polite but indifferent response and then talk turns to house prices and how to sharpen one’s elbows.
There’s wonderful film on Netflix called ‘Best of Enemies’ based on a true story set in America’s South about racial school integration. I recommend you watch it. There’s a powerful message or two in that film, totally relevant to what we are being put through right now.
If we let ‘them’ divide us, then nothing will change I’m afraid.
I worked in local government for some 15 years in the 1980s and 90s. I saw the changes that took place, and continue today to undermine and underfund LG, are and continue to be Tory policy since Thatcher. The introduction of business rates and (unequal) redistribution of the take in the mid 80s, was just the start (council grants when the poll tax was introduced were even more grossly unfair: Wandsworth getting a grant to give each poll tax payer a bonus, while Liverpool citizens were paying £1,000 each). The grossly subsidised sale of council houses followed by the injunction preventing any of the money raised (other than the interest on it) used for building replacement houses, was another punch below the belt.
When the pandemic started, this government’s ideas of controlling things centrally resulted in thousands of deaths and the NHS close to collapse, all the time neglecting the resources available locally; local government and the military. At last lessons were learnt (at an outrageous price). And now the vaccination is going extremely well because local resources are being used and Boris (this time not run by Cummings) is minding his own business. The downside of this will be the Vacc-effect on the electorate, just like the Falklands effect for Thatcher in 1983. Starmer better get his act together quickly. Boris will call and election as soon as the pandemic eases enough.
The rise in inequality drives the decline of local government. As wealth becomes concentrated in the hands of fewer and fewer individuals and businesses which then contract into wealthy areas so the majority of local authorities are left to raise revenue from a growing number of poorer people, collect business rates from failing town centres and collapsing businesses. The principle that the local area and its population pay to run services it needs becomes totally impossible because broadness of the wealth base is totally eroded. Even where there is a wealthy caucus within the local area local taxes are capped meaning there is a disproportionality of the load falling on the poorer local population.
The only real solution is for central government to pay for the requirements of local government and services. It isn’t rocket science but it is political and guess who hate the poor and love the rich!!!
If we didn’t continue to pay increasing amounts to support local government final salary pensions, then perhaps our local taxes might be sufficient to find the services we need.
What is wrong with paying pensions?
Oh dear Nathan – you really are out of date.
Our public sector pensions were changed from final salary to an average career pension in 2003 under New Labour. I have lost in the region of £4-5K a year because of that even though I will still have to work until I’m 68 to get it. I joined the public sector from the private sector and I knew that my pay would not be as high but the pension was a form of compensation for that. That is no longer the case.
BTW – you do know don’t you that I make significant contribution to my own pension every month from my salary don’t you?
If you really want to have a go why not look into what MPs awarded themselves whilst the rest of the country was in the middle of austerity? I think it was an inflation busting 6+ something percent pension rise, plus they got a £20K pay rise!! I and many others in the public sector have lost so much money that we have worked a year virtually for free. Not even a taxable amount I wager.
Now – before you start telling me I should consider myself lucky blah, blah, blah – let me tell you that I believe that everyone public and private should have a decent pension.
What we must not do is ‘level down’ Nathan – too many people who are hard done by these days delight in seeing others losing and coming down to their level of subsistence. Don’t fall for it Nathan. What we must be doing instead is levelling up for everyone – including you if that is the case.
What is more, the country can afford it, and the economy needs it – for spending and investment.
ED NOTE
This comment was deleted for being abusive to another commentator – which is contrary to the comments policy
Local authorities are also the bedrock of grassroots culture across the UK. Failing to fund local authorities adequately will severely impact the whole range of the arts: drama, music, visual arts, crafts etc as well as local libraries and museums. A nation without culture is a nation which has lost its soul. Is that what the Tories want, or don’t they care as long as the can be seen at Glyndebourne, the Albert Hall etc?
Why must Councils balance their books annually, by law? Can they not have budgets that carry over?
They are essentially nit allowed to borrow
They may save and then spend reserves
But borrowing for revenue is very hard for them
Richard is correct.
I am a housing development officer and we finance new build through loans from our reserves and savings in the housing revenue account (HRA).
However, the HRA is now being used to fund other services – the housing department takes over some support services from the Council which gets around the ring fencing between the CT/general fund and the HRA. At the moment the HRA is not doing too badly, but we’ve been hit by Right to Buy as living in the South East is now too expensive for cash rich southerners and need to build to replace lost rental income to the HRA. But the thing is, looking into the future, the time will pass when the reserves and savings will just get thinner. We are marching towards a crunch point.
Even though we are supposed to run our own HRA as of 2015, Government still interferes and made us put up our internal rate of interest for development by 1 percentage point. So the loans to ourselves now cost more money of our choosing – less money for actual development (and we are talking about millions of pounds) – because Government just can’t make it too easy for us can they? They have to harry us at every point.
Working in the public sector at the moment it’s like seeing a barrel being emptied and scraped of its contents. The only conclusion is that I will probably be out of a job before I officially retire and I can see Councils being wound up and made larger for so-called economies of scale (when in the past, this made them less responsive to local needs). Oh well………….
My Council employer is constantly resorting to selling off its assets (mostly land meant to protect the green belt) and all sorts of financial and accounting twist and turns. The net beneficiary is the private sector BTW in terms of asset sell off- we’ve lost libraries, land, offices. But the private sector has always been employed by the public sector carry out work in housing development. So when we do run out of money, private construction companies will have less work.
Nicholas Ridley is supposed to be deceased. I can assure you that his twisted ideas are not!
The future of public services? Think in terms of Dido Harding and you’ll not be far of the mark.
Thanks
All Scottish Councils set to announce a council tax freeze due to increased funding by the Scottish Government.
Thanks for the studied replies, but my question was a “why can’t they” question. If they kept the local business and Council tax etc., surely that could be discretionary? Isn’t this what happens in the USA. It just seems madness that we are financial vassals of the Treasury.
Blame Thatcher
She destroyed local government in the autonomy in the UK to impose monetary controls on the economy
I’m doing some work with an LA in the area of renewables. There is the possibility of doing a large renewable development. But the LA is not allowed to fund it itself because of the rules that toryscum like Thatcher introduced. Very roughly the development would generate £9 million clear cash per year – which would buy a large quantity of services. The LA is in a very very poor part of the country. None of this matters in the eyes of the toryscum – the poor in their view deserve their lot.
My partner and I will find legal work around mechanisms to circumvent the synthetic restrictions imposed by the toryscum. I predict the inevitable rise of energy orgs based on LAs – if only as a revenue generating mech’ given the decision by Westminster to absent itself from gov’ funding for most of the country apart from the south east.