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Backlash against Hunt as Tory-run councils feel the squeeze

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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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