COUNCILS IN CRISIS: The partisan blame game over the financial collapse of local authorities is unravelling by the week, as ever more civic leaders and mayors admit that there’s no spending left to cut. The next couple of weeks could see a slew of Conservative-run authorities join Croydon on the financial naughty step. By STEVEN DOWNES
Leading the way: Croydon Council may have been first with its S114 notice in 2020, but due to Tory cuts, it is now far from alone
And there goes another one…
Middlesbrough Council in the north-east, which until last May was under a Conservative and independent administration, looks like they could be the next local authority in England to be forced to issue a Section 114 notice because they are unable to balance their budget. Although they are currently just one candidate in an increasingly crowded field.
Seven councils have run up the S114 white flag to declare that they cannot make ends meet since Croydon did so in November 2020. Although only Croydon, first under Labour, then in November 2022 under Tory Mayor Jason Perry, has surpassed all others by issuing three S114s.
There continues to be very gloomy predictions that after more than a decade when the Tory Government has deliberately choked off funding to local authorities across the country, there could be as many as two dozen councils now on the financial precipice.
Today it was reported that Stoke City Council (Labour controlled) has requested £44.7million in exception financial support from the Government to cover shortfalls in 2024-2025 and 2025-2026. Havering (Tory-controlled until 2022), Somerset (Tory-controlled to 2022), Dudley (Tory since 2021, after no overall control) and Bradford (Labour) are in a similar position, with decisive council meetings in the coming fortnight or so.
Doing nothing: Michael Gove
And still Michael Gove, the local government minister, twiddles his thumbs, certain in the knowledge that none of this multi-billion crisis created in public services will be his concern for very much longer.
Ground down by years of austerity, even dyed-in-the-wool Tory shires are now ready to throw in the (blue-dyed) towel while implicitly blaming the government.
Hampshire – yes, Hampshire! – had an official report last month which stated that it’s “pointless issuing a Section 114” since “we have already exhausted all options for saving money”. A Section 114, the Tory-run council’s report stated, “would clearly not achieve anything”.
Pointless: even Tory shires like Hampshire are critical of the government’s local government finance settlement
Hampshire is looking at defining and establishing what can be considered the absolute minimum legal service.
Jack Shaw, a Fellow at Cambridge University’s Bennett Institute (which “rethinks public policy in an era of turbulence and growing inequality”) said recently, “The contours of what are statutory and discretionary [public services] are grey zones, so authorities don’t always have a good understanding of where, service-by-service, savings can be made.”
The Conservative burghers of Hampshire are going to run a deficit of £132million (132million!) over the coming financial year, by using its reserves, but will run out of spare dosh sometime before March 2026. “The over-reliance on reserves to address pressures is unsustainable,” Shaw notes.
Havering, long a bastion of Torydom in north-east London, is also “on the brink”. It provides the acme example of how councils have been choked of the money that they depend on to deliver even basic local services, for the elderly, for children, fixing the roads, keeping public libraries open.
Timeline of despair: how the local council dominoes have fallen. Who is going to be next? Graphic from the Institute for Government
Havering now receives less than £2million per year from government, when it 2010 – the year that the Tories took power in Westminster – it was getting £70million. Compound those cuts over 14 years, and you get a very deep, dark hole…
Havering says it has made cuts and flogged off £160million of assets, but at a meeting just before Christmas, the council leader, Ray Morgon, accused the government of “short-changing” his council in the 2024-2025 financial settlement.
Bradford Council says that they will issue a S114 unless they receive exceptional financial support from the Government – a capitalisation direction – both for the current financial year and for 2024-2025. The Conservatives’ – that means you, Chris Philp – mismanagement of the economy and consequent inflation is reckoned to have cost Bradford an additional £58million this year.
In Birmingham, where they issued a S114 last year, the bankrupt city council has asked permission to hike Council Tax by 21% – a 10% increase from April and another 10% the following year. Lucky old Brummies.
Somerset has a crunch executive meeting on Monday, where they will choose some combination of the following: (a) 10% Council Tax hike, plus a capitalisation direction for £21million; (b) a capitalisation direction for £38million; or (c) Section 114.
Middlesbrough’s meeting is next Wednesday. If their request for a £6.3million a capitalisation direction is rejected, then they’ll issue a Section 114. Although if they listened to their local council colleagues in Hampshire, they might as well not bother.
Read more: Accountancy body launches investigation of ex-finance chief
Read more: LGA warns dozens more councils are on brink of bankruptcy
Read more: #PennReport: No referrals sent to staff’s professional bodies
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“ And still Michael Gove, the local government minister, twiddles his thumbs, certain in the knowledge that none of this multi-billion crisis created in public services will be his concern for very much longer.”………….
Indeed!
No doubt, he will be back to clubbing and all, that entails🙄
Is it not time for the Government to actually take the necessary steps to see where the money has been expended? Given the record numbers of homeless people left in appalling housing despite the law , or on the streets?And failings by so many officers in respect of the Services that they are well paid to provide ?
No, Sarah, it’s not time for the government to look into this. Why?
Because that would be the same government that during the pandemic gave away billions of pounds of our money to their mates and funders for personal protective equipment that was overpriced or didn’t work or both.
The same shower who abolished the Audit Commission that might have prevented the botched refurbishment of the Fairfield Halls and the Brick by Brick fiasco.
The same idiots who shelled out billions of pounds of our money on a leaky aircraft carrier, tanks that don’t work and a high speed railway scheme they’ve decided won’t actually reach central London or Manchester or Leeds.
The same rubbish letting NHS waiting lists rise and turfing genuine refugees out onto the cold streets of London while spending our money on bombing people in Yemen.
If it’s financial probity and accountability you want, the Conservative government will leave you sadly disappointed. If you harbour the hope Starmer’s mob would be different, think again
Come on be fair Gove has come up with a plan to sort this mess out at last. That is to relax the rules to allow councils to sell assets. It just happens to be the same plan that the risible Eric Pickles was selling us back during the start of the Austerity era to deal with Council financing. Something that didn’t work before is being tried again.
A Tory Groundhog nightmare of ineptitude and incompetence.