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We are witnessing the long, slow death of local government

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‘We are staring into an abyss here, and it’s time we faced up to it’. Those were the words of a Conservative councillor in Croydon – in 2013.
Here, ANDREW FISHER, pictured right, says that faced with austerity on a brutal scale, it is time for local councillors from all political parties to force central government to fund them all fairly

The crisis of Croydon Council’s finances has only deepened in recent months. Jason Perry is Croydon’s “Executive Mayor” in name only.

Mounting problems: Michael Gove

The council has effectively been taken under direct control by Whitehall, with Government-appointed commissioners running the show – Croydon’s improvement panel now “directs” rather than “guides”, according to Leveling Up Secretary Michael Gove.

If Mayor Perry had any dignity, he would refuse his £82,000 council salary. He has been relegated to a ceremonial position. Croydon effectively now has two ceremonial mayors.

Conservative Mayor Perry was elected as Croydon’s first directly elected mayor in May 2022 pledging to “fix the finances”. It was a promise he knew he could not keep.

Instead, Perry’s been shunted aside by his own party in government. It should be a blessed relief. The finances are not, and never were, fixable without central government intervention.

But the problems facing Croydon Council aren’t going to be solved by Mayor Perry staying or going – though residents on the receiving end of Perry’s 15per cent Council Tax hike might disagree.

Perry’s failings are relatively minor in the grand scheme of the disastrous situation in which we find ourselves. The reality is that Croydon is just one of dozens of councils across England that have been pushed to the brink over the past decade.

Mayor Perry went to the Department of Levelling Up, Housing and Communities with a special request, asking to be allowed to hike Council Tax by 15per cent. In return, he and Croydon’s chief executive, Katherine Kerswell, begged for a half-a-billion-pound debt write-off. They were rebuffed, and instead Gove gave his commissioners greater powers.

‘Thurrock on steroids’: Woking is the latest debt-laden council to go bust

In 2018, Conservative-run Northamptonshire County Council became the first council this century to issue a Section 114 notice, an admission that the council could not balance its books. It was broken up soon after.

Since November 2020 when Croydon issued the first of its three S114 notices, five other councils have done so as well: Thurrock, Northumberland, Nottingham, Slough and, most recently, Woking.

Many other councils are reporting that they are in dire straits, too: Guildford, Hastings, Kensington and Chelsea, Kirklees, Southampton and county councils Kent and Warwickshire are all said to be teetering on the brink of issuing S114 notices.

Guildford is reportedly in the farcical position of being unable to afford accountants to oversee its finances: “A much-depleted finance team has left non-accountants overseeing key financial controls and led to a reliance on agency staff to offset shortages”, Public Finance magazine reports.

At the beginning of this month, Derby City Council’s chief executive warned that depleted funding means that local authorities are “reaching the end of the road in terms of their financial position”.

Prescient: former Croydon councillor Tim Pollard

That road has been a long and torturous one. In 2013, when the Conservatives last ran Croydon Council, one of Jason Perry’s colleagues, deputy leader Tim Pollard, said “There is a time coming, and it’s not far off, when the costs of dealing with an ageing and increasingly deprived population will mean that there is literally nothing left in many councils’ coffers for anything but social care.”

Pollard concluded: “We are staring into an abyss here, and it’s time we faced up to it.”

Pollard’s words were prescient and are now true for councils up across the country.

While we can all point to examples of local mismanagement in Croydon (under Conservative and Labour administrations), as one could in Thurrock and Woking. too, the underlying and inescapable problem is the deliberate and long-term underfunding of local government.

The issue is particularly chronic in Croydon. Neighbouring Lambeth gets about double the funding per resident.

According to a House of Commons Library report in 2018, “total [council] funding across England was set to fall in real terms by 56.3per cent between 2010-2011 and 2019-2020”.

This is austerity on a brutal scale. Many councils cut back, others, with encouragement from the government, tried to expand their commercial strategy, sometimes with catastrophic outcomes for their residents. The problem is commercial investments can fail as well as succeed.

The Office for Budget Responsibility warned last month that “the accumulated debt associated with these investments remains a risk as commercial property prices typically experience large falls during economic downturns, and recent interest rate rises have added further pressure to debt-servicing costs”.

Another problem for local government is that it is the kitchen towel of central government. It mops up the failures made nationally and those failures have been legion, and are set to deepen. An ageing population, a deregulated out-of-control housing market, and falling real incomes have all increased demands locally, as funding has been cut. And that was true before the pandemic hit.

On the brink: Hastings could be bankrupted for simply doing its legal duties

Currently, unemployment is edging up (and in London is higher than the national average), which will reduce Council Tax revenues and put more demand on already threadbare and overstretched services.

The mortgage market and rental markets are pushing more families to be classified as homeless with the statutory obligations that places on councils.

In Hastings, demand for temporary accommodation led to a £2.4million overspend in its 2022-2023 homelessness budget. The council could literally be bankrupted by meeting its own legal duties.

An economic downturn could accelerate the breaking point of many more councils – and worsen the already dire economic plight for authorities like Croydon. It means planned savings (that virtually every council is having to make in 2023-2024) could turn into unexpected overspends just to meet legal obligations.

Rob Whiteman, the CEO of the Charted Institute of Public Finance and Accountancy, wrote in The Municipal Journal last week, “Sooner or later we will reach a point when a well-managed authority, whose costs benchmark well and resources are managed effectively, hits the buffers through a lack of funding to meet service demands.”

Government funding of local councils is simply not sustainable. Even the usually understated Institute for Fiscal Studies says that local government funding is “broken”.

Fix the finances: Jason Perry must have known that his election pledge was not do-able

The future looks bleak for local government. We are looking at the tearing up of basic services (adult social care, SEND provision, children’s care, libraries and housing duties) unless the Government gives councils a sizeable injection of cash.

Local government has been set up to fail.

If I was a councillor, I’d be calling for a mass cross-party strike of all councillors across the country, until the Government ponies up the cash.

You can point at Tory Thurrock or Labour Slough. But the problem is bigger than that.

Partisan point-scoring might win you an election, but then you’ve got to fix it. And, as Mayor Perry has shown, that’s just not do-able.

It’s time for councils and councillors to make a collective stand.

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