Kevin Small’s warning that next year’s budget might only be balanced by the use of ‘exceptional financial support’ (EFS) is very worrying, but no surprise. Already 18 councils have been granted it by government. The crisis of local authorities, which is coming to a head, is the result of the austerity programme which the coalition and Tory governments implemented, and our long time Swindon Tory administration supported. It was the modern equivalent of the use of leeches to bleed some sick individual. It has made the condition of the patient even worse.
The thing about EFS is that it provides no support. It is simply permission for a council to sell off assets, use capital receipts to fund every day spending, or borrow more. It is a recipe for a financial death spiral.
The Chancellor declared that austerity is over. It is not. Local government faces a continuation of it. The £1.3 billion extra funding provided in the budget is completely inadequate. The Local Government Association estimates that the funding shortfall, just over the next two years, will be £6.2 billion. Between 2010/11 and 2022/23 £24.5 billion has been cut from council spending.
The Spring Spending Review is expected to bring forward a three year ‘financial settlement’. But unless there is a significant increase in funding for local government then more councils will be asking for EFS or issuing Section 114 notices, a declaration that they cannot balance their budgets. Hampshire council says that a section 114 notice is inevitable for them in 2026. Newham Council has recently asked for EFS. One of the factors that has driven its financial crisis is the spiralling cost of temporary accommodation.
One of the austerity measures which the coalition brought in was to freeze the funding that councils receive for the cost of housing homeless families. Even today councils only receive 90% of the 2011 Local Housing Allowance rate! Unfortunately, Rachel Reeves took the disastrous decision to freeze LHA, which as well as hitting local authorities will impact on tenants in the private rented sector, where rents continue to race ahead of inflation.
Whilst Swindon Council does not have anywhere near as many households in temporary accommodation as a Borough like Newham, it has a growing gap between the cost of temporary accommodation and the funding which the government gives it. That has to be covered from General Fund income. The government needs to cover the actual cost of temporary accomodation if councils are to prevented from sinking.
The decay in the physical and social infrastructure resulting from austerity, which is all too visible in the town, will continue unless the government changes its priorities. Imagine what local authorities could do with the £22 billion thrown at the worst polluters such as BP, for questionable technology such as carbon capture. Local authorities could have begun to overcome the dire consequences of austerity, improving their services and building more council housing if this funding had been given to them. It would have created jobs all over the country instead of a few places.
In the political system we have, pressure is brought to bear on members of political parties to stay silent when they believe governments are committing errors. But it is more important to ‘speak truth to power’ than to accept being treated like foot-soldiers who have instructions handed down to them from on high. Without internal democracy in which honest and open debate is normal, leaders behave like autocrats, and errors will not be corrected.
Local authorities have to be given the resources to end austerity and begin to reverse it, or their collapse will be calamitous. It’s time to stop talking as if a national economy was like a household budget. Let’s remember that in far worse economic conditions than we face today, the Atlee government founded the welfare state, launched the NHS, and built nearly a million council homes. If they had decided that they had to ‘balance the books’ none of that would have happened.
Martin Wicks
Martin Wicks 