Malign neglect of local government after 13 years of savage spending cuts has created an ‘existential threat’ to council services. ‘Things are starting to fall apart at the seams,’ warns a Tory source
“Flagship” Conservative-run county councils could suffer financial collapse ahead of next year’s General Election, Tory sources have warned, as local government responded to the extension of austerity in Chancellor Jeremy Hunt’s Autumn Statement last week.
Hunt’s tax cuts for the wealthy will be paid for by another round of reductions to spending on public services, many of which would usually be delivered by borough and county councils.
Under the proposals announced to the Commons by Hunt, non-protected government departments in England face an annual spending cut of 3.4% for five years. For councils, after 13 years of austerity cuts, the Autumn Statement offered no relief, and no hope, as Inside Croydon’s Andrew Fisher reported last week.
A report in yesterday’s Observer newspaper quoted a senior Conservative local government source as saying, “The Treasury is fully aware that some flagship blue counties are right on the edge.
“Falling over just before the election won’t look good.”
Croydon Council issued its first Section 114 notice, an effective admission that it was broke, in November 2020. Then, it was only the second council in England to have issued a S114 this century. In the three years since, a further seven S114 notices have been issued by bankrupt councils, including two more by Croydon, as the financial crisis facing local government in England has worsened.
And while the right-wing narrative is that the bankrupt boroughs are all spendthrift Labour-run authorities – as Croydon was until May 2022 – of the seven councils that have gone bust since 2018, Northamptonshire, Thurrock and Woking had all had their finances managed by Conservatives.
Walk on by: there was nothing in Chancellor Hunt’s Autumn Statement to help struggling councils, and the Tories at Westminster have left local authorities to crash and burn
In Croydon, Tory Mayor Jason Perry issued the borough’s third S114 notice a year ago, predicting he would be unable to balance the books in 2023-2024, the current financial year.
And that was with a record-breaking 15% Council Tax increase imposed on the borough’s long-suffering residents.
Croydon residents under the Tory Mayor now pay the second-highest Council Tax bills in the whole of London, while receiving ever-diminishing services.
Far from “fixing the finances”, as Perry promised when seeking election as Mayor in 2022, Croydon’s parlous position remains unchanged, and possibly worse than he inherited in May 2022.
Under piss-poor Perry’s sketchy plans for 2024-2025 (Cuts: another £31million. Borrowing: another £38million from Government), the Tory Mayor is still firmly bogged down in S114 territory.
Croydon Tories’ narrative, with effective control of the council’s finances now in the hands of a government-appointed panel, is that the lack of any progress is because of the depth of the problems they inherited. They avoid mentioning that half of the borough’s £1.6billion “toxic” debt was left on the books when the Conservatives last held control of the Town Hall in 2014.
That is why, when pressed on the matter at a council meeting last month, Perry was forced to admit, “Essentially, we’re insolvent.”
And the Tory Government is doing nothing to help.
Teetering on the edge: how Inside Croydon reported the Autumn Statement last week
“Horrifying” was how Graeme McDonald, the MD of the local government chief executives’ organisation, described the outcome for councils following Hunt’s Autumn Statement. “Nothing the chancellor announced will change the bigger picture for councils right now,” McDonald said. “The projected spending figures for next year onwards are horrifying.”
Claire Holland, from London Councils, said: “Boroughs are struggling to balance their budgets and the Autumn Statement leaves them teetering on the edge.”
And according to the Local Government Association, as a result of Hunt’s malign negligence towards councils, there is now a collective £4billion funding gap over the next two years.
Sources within the LGA guesstimate that there could be as many as two dozen more councils on the brink of bankruptcy, their situations worsened because of a range of financial pressures, including the inflation crisis created by the Tory Government, wage pressures from staff, ever-increasing demands for adult and children’s services, and steepling increased rates of homelessness.
With a General Election in 2024, and the likelihood of a good few years in opposition awaiting them, the Conservatives at Westminster have decided that the best thing for them to do over this growing crisis in our councils is… nothing. They have effectively opted to leave it as someone else’s problem – regardless of the carnage that the wholesale collapse of local government could create.
The Observer has described the reaction of councils to the Autumn Statement as “furious”.
“The backlash comes after economists concluded that the Chancellor’s tax cuts last week in effect came at the expense of future public spending,” they reported.
“Local government sources said that after austerity since 2010, there was now an ‘existential threat’ to local services.”
The newspaper quoted a “despairing” council leader as saying, “Things are starting to fall apart at the seams.”
Another warned: “We need to have a recognition that if we aren’t properly funded, the rest of the country will fall over.”
A third said: “The system is totally and utterly broken.”
And they quoted “a senior Tory” as saying: “The Treasury is fully aware that some flagship blue counties are right on the edge. Falling over just before the election won’t look good.”
Shaun Davies is the Labour leader of Telford and Wrekin Council who chairs of the cross-party Local Government Association. He said of his fellow councils: “They’ve done the restructures. They’ve done the asset sales, they’ve done the staff reduction, they’ve done the service redesign and they’ve done the transformation. They’ve used the reserves already.
“Once those things are gone, they’re gone. My concern is that there is a wave of councils that will effectively return the town hall keys back to the government because there is just no way out of this.”
And they also quoted Jonathan Carr-West, the chief executive of the Local Government Information Unit which has just surveyed the opinions of council leaders, who are “starting to talk about this as a sort of existential threat to local government”.
He said: “What has surprised me in the last couple of days is just how angry leaders are. It’s big Labour cities like Bradford, but it’s also Kent and Hampshire – big Conservative councils.
“I don’t believe that there is a conspiracy to destroy local government. But I think we are sleepwalking towards a position where councils just won’t be viable.”
And Research for Action, a worker co-op that produces research to further social, economic and environmental justice, said today, “More and more people are saying that the entire local government sector is under threat.
“Sadly, this is no surprise to us…”.
Read more: Tory Mayor Perry admits: ‘Essentially, we’re insolvent’. Again
Read more: Town Hall staff braced for £31m more cuts and job losses
Read more: ‘Uncertainty faced by all local authorities is unprecedented’
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ROTTEN BOROUGH AWARDS: Croydon was named among the country’s rottenest boroughs for a SIXTH successive year in 2022 in the annual round-up of civic cock-ups in Private Eye magazine
I think it’s about time the keys for Croydon ‘were’ handed back.
The cuts to some of our priority services, disabled care, senior care, childrens care are diabolical… this has become a ludicrous borough. I’m ashamed of it now.
I used to be able to hold my head high and say i came from Croydon, but not anymore. Its a Sham borough.
Andrew is very right
The malaise of local Government has a very simple and direct cause. Pickles legislational changes and the cuts to funding with ever increasing liabilities being dumped on local services.
That is the root cause of that problem.
But to take that as the whole wrong in this instance would be ignoring intrinsic and extrinsic factors.
A major part of the debt owed is to the Public fund ie Central Government. Basically instead of putting in correct funding it gave loans that charges interest to Councils. Those loans were to assist local authorities to invest wisely and defray the costs to the public purse over time.
But there were no contols and no audits and as we are aware no accountability at all.
The reason for the lack of funding was that the country was broke, as was a lot of the world economy.
That was caused by the Banking crisis.
The banking crisis was caused by stupid loans (seeing a pattern?)which in a recession caused defaults, but banks and finance companies kept selling those debts and others buying them in a huge pyramid type process to diversify losses.
So imagine a game of musical chairs that when the music stops instead of one chair removed only one was left and that had two legs. Well thats the financial sector 2006/07 – Big Ooops!
Financial controls not great again.
We as a Country are broke. Blair and brown left a few moths and an upright brass rivet behind for Clegg and Cameron.
Choices then for the Coalition?
Raise taxes or cut services.
And so we had the Pickles solution.
After all the Conservatives could not raise taxes could they? We as an electorate do not like that and that would be betraying an ideal.
Yet although we moan about the lack of services I cannot remember anyone being elected on the promise to reverse poor services by raising taxation.
So we get the Politicians we ask for and they know that and pander to that every day.
(That is why in general liars get promoted and honest politicians fade into obscurity. But many elected officers walk that very fine line of compromise to achieve real change over time and take the brickbats for that)
The Pickles wheeze enabled Central Government to get back on its feet whilst beggering local government.
Then the ultra looney wing of the Conservative party decided to take a howitzer to prudence, took over the asylum, and evicted us from the one safeguard of living standards on a never never promise of suger crumbs.
And so we are out of Europe and royally screwed with respects to being an economic force.
Cameron knowing there was no plan B did a runner (obviously on an elastic band)
Still overall we as a society have to face the fact that we are in serious debt. We also have to wake up to the fact that a kitty of £35bn was just pissed away by Hunt with the aim of seeking a re-election next year.
That kitty could have eased local living standards for over 24million people.
2% cut in NI? That could have eased the NHS issues in what will be a bad winter for many vulnerable people and stabilised a service
Simply put
Local and National services are a neccessity for a decent simple life and national growth.
That is the NHS, Police and Emergency services, Transport and local administrations providing environmental, housing, social care et al and the security services including the armed forces
They have to be managed well, openly and honestly and have effective controls.
We as inhabitants of the country also should be doing more in voluntary work in any capacity we can to defray those costs and improve our society.
We as a society also have to fund that and pay fair and reasonable taxes and accept that those taxes will go up and go down as needs and world events dictate.
This Government needs to stop playing with lives when it dumps responsibility on an authority to deliver those services takes our taxes and hoards them centrally for political purpose rather than administrate effectively and disburse funds appropriately.
We may need to also accept that fair higher taxes on those that can pay them are a requirement. We also need to be ensuring that those that profit from our economy contribute a fair rate of taxation to do so.
“They have to be managed well, openly and honestly and have effective controls.
We as inhabitants of the country also should be doing more in voluntary work in any capacity we can to defray those costs and improve our society”
Didn’t they try that one already? It was called the Big Society and consisted of Gavin Barwell spending his Sundays picking up litter. But who will pick up the litter now Gavin no longer needs to get elected? It’s nonsense. You either have public services or you don’t. Doing it yourself for free is not having them.
There are things we can do for free though. The first is not vote in local elections. After all, there is no point in voting for a Councillor or Mayor while Croydon is in special measures. All the important decisions are made by Central Government and their special measures mandarins. It’s as pointless as voting in the former USSR where there was only one candidate on the ballot. Until they give control of the Council back why bother vote for it? So the Councillors get their expenses?
I doubt its just central government all the money is owed to. Already seen the Council on that TV debt collector program. Most people would want cash upfront before dealing with them. If they dealt with them at all…
The reason they’re still in this position is because they’re only putting in £64m/year towards a £1.2bn debt. At that rate it’ll take them 19 years to pay it back, and that’s without interest.