Council budgets around the country are under severe pressure and struggling to balance their books. Analysis shows nine out of ten major local authorities not having enough cash to cover spending plans. After ten years of funding cuts through austerity, local services have already suffered severely and have had to cut back on services. The additional impact of the pandemic has put councils under severe pressure. They have to struggle to balance the books as well as provide the vital services required.
Some councils have gone bankrupt as a result. Croydon Council issued a notice in November that it cannot meet its legal requirement to balance spending. They had to call a halt to all but essential spending. There is increasing concern that a decade of cuts to local authority funding, combined with income losses during the pandemic, could push more councils into bankruptcy. This will affect vital services like elderly care, disabled care and children’s services, as well as many other public services we all rely on. Instead of directing more funding to local councils, the government is doubling down on starving local government of funds.
Councils around the country are struggling to work out how to fund the things they need to. The government predictably blamed Croydon Council and said they need to manage their own funds. But this ignores the fact that since the coalition government in 2010, funding to local councils has been cut by almost 50%.
The impact of this is deeply felt across the country. We have spoken to three councils in Sussex. Each one told us about the difficult decisions they have to make and are faced with tough messages to communicate to their communities. They have to work out how to preserve as many services as possible, and how to raise more revenue through council taxes and other charges. This then leads to tough criticism from citizens in those communities who have to pay those taxes and charges.
In Lewes, where there is a progressive alliance running the council, Councillor James MacLeary said:
“Every council up and down the country is facing major budgeting challenges. This is mainly as a result of government cuts to local government funding and is being made worse by the impacts on revenue from Covid-19. Thanks to careful management, Lewes District Council is in a stable position financially, but we are facing a real challenge over the coming years. The government, despite telling councils to do whatever it takes to respond to Covid-19, has not done very much to fill the funding gap. Our priority is to protect frontline services and ensure that we are able to act on our priorities around sustainability, building quality council homes, and improving services for residents.”
Brighton & Hove
In Brighton & Hove, the Green Party took over the council in July 2020. Over the last ten years, the council has lost £110m of annual funding as a result of government cuts. They are working hard to protect as many services as possible for local residents.
Phélim Mac Cafferty, leader of Brighton & Hove City Council said:
“Key services like children’s centres and libraries are protected while we are investing in important initiatives such as youth unemployment support and funding for rough sleeping. At this time of health crisis, we are supporting the care of our vulnerable adults and learning disability services to help people recuperate and maintain their independence. The pandemic has seen our city suffer a huge economic shock, and this is why we are planning ahead with support for local businesses and our culture hospitality and tourism sectors, which are under pressure like never before.
“This is also a budget for the future, with major investment to avert the climate crisis and in warmer homes, sustainable transport and safer streets.
“From public health to bin collections, it’s clear that council services have been central to the pandemic response. We stand with residents and businesses who are struggling at this time and in the weeks ahead will continue to forge a path to recovery for our city. Despite what are probably the most testing times in living memory, we’re continuing to deliver financial stability for Brighton & Hove during the crisis.”
The government has shifted blame for its decade of under-funding councils by ruling that most of the ability to fund services (85%) will depend on increasing council tax by up to 5% next year. This leaves councils with no choice but to increase bills to bring in desperately needed funding to protect services, at a time when we are acutely aware of the burden that could place on some households.
This is a tricky balance for councils who want to run council tax reduction schemes for those on low incomes. Brighton & Hove’s proposed council tax reduction scheme means that for those on low incomes, council tax bills should in fact reduce. They will have to increase fees in places such as parking charges to fund this. This will balance with investment in housing, health, social care, the environment, housing and tackling high energy bills.
Councillor Hannah Clare said:
“We are determined to keep as many services as possible running. Now is the time people need those services the most. Services like libraries, council-run nurseries, early help support, youth services and supported employment for adults with disabilities. These services make a huge difference to people, it must be devastating for other councils across the UK to be losing them. We feel the rising fees and charges – the change in council tax too, so we will do everything we can to invest in the services people need.”
In Hastings, the council faces higher costs, providing temporary accommodation for homeless families. In papers seen by Sussex Bylines, the council not surprisingly points to 2020/21 as a challenging year, with an estimated deficit of £756,000. Hastings Council is able to balance the books only by dipping into reserves. But this is not a long-term option – reserves will hit their bare legal minimum by 2022/23.
According to Councillor Peter Chowney (former Hastings Council leader and now its financial management and estates portfolio holder), the situation may be far worse due to the uncertainties of lockdown and the impacts of an economic downturn. The council has already faced reduced income from car parks and its cliff railway, a popular tourist attraction.
Underfunding by national government over the past 10 years has increasingly put all councils under pressure, and they have to try and find new revenue streams. Hastings Council purchased commercial property. This has enabled the council “to keep our head above water,” according to Chowney. He said the council also saves money on emergency accommodation for the homeless by buying its own temporary housing.
Hastings Council is also one of the few councils running a council tax reduction scheme like Brighton and Hove, which takes some very poor families out of paying the tax altogether.
With people losing their jobs as we face an economic crisis, councils have to battle to keep their community services going in the face of cuts from Westminster. Opposition MPs fight the government for their constituencies in these tough times. A committee of MPs has criticised the Treasury for its “worryingly laissez faire attitude” to the state of local government finances. They warn of a risk that local council debts could drag down the “whole of government”. With the government holding a majority of 80 MPs, it is tough to achieve any change to policy for opposition MPs who continue to fight for local councils.
Caroline Lucas, MP for Brighton Pavilion, told Sussex Bylines:
“Westminster is out of touch with what people in our city tell me is important. Our team connects meaningfully with our residents to truly understand their pressures, worries, thoughts and feelings so we can do what is right and what is needed for our future. The Tories have failed to do the right thing at every possible moment and are creating division and despair. I’m so proud to see Brighton and Hove’s Green councillors doing things differently.”
With tough choices for every council to make, and no clear sight of when we will emerge from the lockdown, there are tough times ahead for local communities. Of the three councils we spoke to, we can see that they are doing what they can to protect vital local services for residents. Budgets are going through councils for approvals over the next couple of months. Keep an eye on proposals, meetings and agreements from your local council. We will be doing the same at Sussex Bylines.