Councils in crisis

In October 2017 The Chartered Institute of Public Finance and Accountancy warned that many local authorities were running down their reserves to ‘plug gaps in day-to-day spending’ and would soon find themselves in ‘significant financial distress’. On 2 February this year, Tory-controlled Northamptonshire County Council issued a section 114 notice – the first of its kind in 20 years. This means it has banned new expenditure on services except those that protect vulnerable people and will not be able to produce a balanced budget by the end of the year, as required by law. An inspector’s report concluded that the county council should be scrapped and replaced with two new unitary councils.

The CIPFA said more local authorities were likely to follow suit because of the severe central government cuts handed down since 2010. Grant funding from government will end by 2020, meaning councils will be expected to rely on council tax and business rates for most of their revenue. The Institute of Fiscal Studies (IFS) has calculated that even if council tax revenues increased by 4.5% a year, adult social care spending is likely to amount to half of all revenue from local taxes by 2035. Most councils are raising council tax by 4-6% including a 2-3% precept for Adult Social Care. If councils meet their social care costs through local tax revenues ‘the amount left over for other services – including children’s services, housing, economic development, bin collection – would fall in real terms by 0.3% a year, on average’, the IFS warned.

The Labour Party could have stood up for the working class by refusing to implement the cuts ordered by central government. Instead it has stood with the ruling class. In September 2016 the party introduced a rule which meant disciplinary action could be taken against Labour councillors who opposed or abstained on legal – ie pro-cuts – budgets. Labour claims that the Tories are solely responsible for the crisis engulfing council budgets but in reality it has been wholly complicit.

FRFI correspondents from around the country have sent in reports detailing the state of the public finances in their areas. We demand that councils set budgets that meet the needs of the people.

Lewisham (Labour): Funding will have been cut by 63% between 2010 and 2020. It has had cuts of £160m between 2010-11 and 2017-18, with a further £22m to come in 2018-19. It ended the financial year to March 2018 with a £13m deficit. Council tax will rise by 4.2% in 2018-19.

Greenwich (Labour): The rate of homelessness in the borough has risen by 20% a year since January 2015 despite a massive construction of tower blocks on the Greenwich Peninsula and into Woolwich.

Southwark (Labour): Southwark Council says it has suffered the biggest cuts in government funding of all London boroughs: this year it amounts to £12m. Its 2018-19 budget needs to be almost completely self-funded. This year’s budget faces an overall shortfall of £40.7m.

Royal Borough of Kensington and Chelsea (Tory): The richest borough in the country has had its debt cap lifted from £221m to £371m to assist with the Grenfell recovery. £100m of this will be spent on new houses and the rest on repairs, maintenance and improvement. There is no promise that any of the newbuilds will be at social rent because that would lead to a deficit over 30 years.

Camden (Labour): Funding to services will have been cut by half, £169m, between 2010 and 2019. The Greens have supported the budget proposals. An additional £20m of cuts are needed by 2021. The Homeless Outreach Team has had £200,000 stripped from a £521,000 budget. The Netherwood Centre for dementia sufferers has been closed. The council is looking to raise at least £1bn by selling off council property.

Haringey (Labour): Haringey has had a 40% cut in government funding, over £160m since 2010, including a 45% reduction in staff. The council has sold off many of its offices and public buildings. £15m more needs to be cut over the next two years.

Redbridge (Labour): Cuts since 2010 total £132m, with a further £55m to come in the next five years. 2018-2019 budget cuts of £26.5m include £3.6m to children’s and youth services.

Waltham Forest (Labour): £98m has been slashed from 2010 to 2016 and another £35m will be taken off between 2016 and 2019.

Newham (Labour): Newham has received a £106m cut in government funding in the past five years. It points out that it will receive £284 less for every home in the borough compared to £57 per home in Tory-controlled Richmond. Newham’s reserves have risen from £70m to £433m but its £563m LOBO loans debt means that the equivalent of 125% of council tax revenue goes straight back into repaying interest on those debts.

Tower Hamlets (Labour): Tower Hamlets will have cut its budget by £58m, down to £344m, by 2020. In 2017 it introduced a three-year plan to save £1 in every £6.

Birmingham (Labour): £650m of cuts since 2010 have hit schools, homelessness services, libraries and children’s centres. The council has now proposed closing the city’s 14 remaining public nurseries. In the most recent draft of the 2018-19 budget, which the Labour majority council voted to approve, a further £53m of cuts were proposed with another £123m to be implemented by 2021-22.

Nottingham (Labour): £20m of cuts to public spending were voted through in March, with a further £7m to follow later in the year. Nottingham City Homes (NCH), for one, will lose £500,000 each year for the next three years. £144,000 will be cut each year for the next three years from drug and alcohol services, affecting an estimated 20,000 people. The cuts also include 200 council job losses, £1.5m from the Better Care Fund (joint health and social care services), a loss of £123,000 to Family Support Workers, £835,000 through delaying residential care for elderly people, and £2.25m to transport services for people with additional needs.

Liverpool (Labour): Since 2010 Liverpool’s authority has made total budget reductions of £330m - down from £523.72m to £243.9m. That figure will drop even further to less than £215m by 2019-20. The council says frontline services will be ‘significantly reduced’, although it says homelessness services have been ring-fenced. The council has £100m in unpaid bills for costly PFI schemes.

Manchester (Labour): Since 2010-11 full-time staff numbers have been slashed by 38%, from 10,444 to 6,452. Despite £271m of budget reductions the council still has a deficit of £30m. An £8.4m dividend from the council’s share in the ownership of Manchester Airport Group originally earmarked for capital investment has mostly gone towards servicing the deficit. Proposals to raise council tax would bring in an estimated £17.3m. However, an extra £30m is needed for Adult Social Care.

Salford (Labour): A further £11.2m is set to be cut. £198m has been cut since 2010 after a 50% reduction in government funding, the equivalent of £60,000 a day.

Newcastle (Labour): £13.3m in budget cuts have been voted through for 2018-19. A total of £283m will have been slashed by 2020. The council had 9,954 contracted employees in 2010. By 2017 this had plummeted by 38% to 6,190. Remaining council workers are in line for a 2% pay increase this year while Newcastle council chief Pat Richie will get a 4.5% pay rise, increasing her already bloated salary by £7,000 to £168,923.

Dundee (SNP): The SNP has cut the budget by £15.7m, including most controversially to school meals. The SNP inherited a £11.6m deficit from Labour because of its commitment to Public Private Partnerships to build schools. Social care workers have forced the SNP to stop a split shift pilot scheme that included threats of redundancy and privatisation.

Glasgow (SNP): The SNP had to rely on votes from the Green Party to get its budget through, including a £10m cut to the social work department. The SNP has inherited from Labour outstanding equal pay claims of thousands of working class women – 26,912 claims remain unresolved.


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