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Local Government Funding is Not Fit for Purpose: Investigating Local Council Experiences

Not-Too-Stealthy-Taxes: A reflection on Hunt's budget, with a a focus on taxation

After reaching out to local councils across the country with the simple question of ‘how local government finances affect your community,’ the reality becomes clear. With a lack of adequate funding in an age of austerity, high inflation and a cost-of-living crisis, almost every council across the United Kingdom is struggling to support their communities.

As today’s Lords debate on ‘local government finance and the impact on local communities’ ensues, gaining first-hand insight on how local councils grapple with restricted funding, afforded to them by central government, is imperative.

‘A survey by the LGA found almost half of England’s 317 councils believed they would not have enough money in 2024-5 to ensure the delivery of even essential services. More than 20% said they were at risk of having to issue a section 114 notice.’

Leader of Eastbourne Borough Council, Councillor Stephen Holt.

An understanding of local council experiences in the current situation:

‘The safety nets we all expect to be there for uncertain times, to catch us if we are unlucky enough to fall, have been stripped away.’

Leader of Welwyn Hatfield Borough Council, Councillor Paul Zukowskyj

Leader of Hampshire City Council, Councillor Rob Humbly, highlights that the financial pressures now facing Hampshire County Council, and local councils nationwide are unprecedented, and they come on top of more than a decade of national austerity during which they have already had to reduce our budgets by more than £0.6 billion. The funds that they have available simply don’t stretch as far as they used to, as demand in key areas like children’s and adults’ social care continues to rise, alongside escalating costs.

Councillor Euan Jardine notes that many councils are ‘left in the dark’ regarding what they should and should not provide. In the realm of sport and leisure, without clear policy direct and adequate funding, there is a loss in vital sports and physical activity facilities, which will negatively impact on the health of current and future generations. Gone are the days when Local Governments could rely on yearly core funding from Central government to transform and regenerate their region – only hope lies in levelling up and regional growth deals. Any decline in service standards is not due to lack of effort but rather a consequence of insufficient funding.

Leader of Plymouth City Council, Councillor Tudor Evans states that in 2010 Plymouth received £123.8 million in revenue support grant from the Government. In 2023 they received £11.6 million. Think about that – £123 million to £11 million. The crisis has worsened ever year, and instead of fixing the problem, it has cynically ensured that council services are reliant on council tax income. National factors beyond their control, including higher energy costs, inflation costs, and the cost-of-living crisis have put local government in an unprecedented position. It has increased demand and cost pressures on social care and homelessness services.

In Shropshire, Councillor Lezley Picton states that their rural geography and older population exacerbates the issue. The Government’s Fair Funding Review, which begun in 2016, has been shelved until after the General Election – ‘this cannot go on’.

Leader of Eastbourne Borough Council, Councillor Stephen Holt draws on his experience of his own restricted autonomy – they are currently spending 49p of every £1 of council tax collected on temporary accommodation. He claims it is wholly unsustainable and totally disproportionate to the level of funding our council receives.

Similarly, Councillor Denise Jeffery claims that it is fiction that councils are struggling simply due to local mismanagement. She highlights that Wakefield spend 39p in every £1 caring for vulnerable adults and older people next year. And 27p in every £1 supporting our children. Taken together, that’s two-thirds of their entire budget allocated before they even start to think about bins, parks and roads.

Councillor Mohammed Butt explains the situation for Brent Council. He writes that Since 2010 our core funding from government has reduced by 78%. This has meant that delivering our statutory services (while still investing in our discretionary services) has become a constant balancing act. The choice should not be so binary, with just as many of our residents utilising our library service as they do wraparound support for vulnerable adults.

Local Councils in Scotland:

While some English councils have already declared effective bankruptcy, Scotland’s councils are not far behind. Councillor Stephen McCabe states that ring fencing of funding for Scottish Government policy priorities, like the expansion of free childcare, and huge areas of education and social care, means cuts Councils must make fall disproportionately on community services – services that have a significant impact on our quality of life.  The financial crisis facing councils has been exacerbated by the Scottish Government’s Council Tax Freeze – those who benefit from a freeze are only those on higher incomes living in higher banded properties.

Leader of West Dunbartonshire Council, Martin Rooney highlights that in the current financial year, his council faced £21 million funding gap. The Scottish Government cut their core funding by £1.7m but gave them £2.2m back on the condition that they froze council tax, which took away their primary means of raising revenue locally.  They are experiencing sustained cuts to revenue funding since 2006 which equates to over £30 million of recurring savings made in their area over the period which has led to reduced services for our communities. Reduced ability to provide low-cost childcare for school pupils and changes to how they travel to school.

Council proposed solutions to address the matter:

The most important yet blatant solution, Councillor Denise Jeffery suggests, is to merely acknowledge that there is a problem that exists. She calls out for a long-term plan, stating that councils need stability so that they can plan. This is supported by Councillor Grace Williams, she claims that we need the certainty to plan ahead – councils cannot do this when they are only receiving funding settlements covering a year.

Councillor Paul Zukowskyj states that the fate and futue of Westminster and Local Government are intertwined – neither can survive without the other, the sooner all involved realise that, the better. That doesn’t mean Westminster playing to the gallery and claiming we are all wasting millions on equality and diversity, it means really listening to the problems local governments faces and working together to develop real solutions.

Councillor Rob Humbly further suggests that they must take early action to look at how to address the crisis in the years ahead. Similarly, Councillor Rachel Girvan states that to move towards longer-term funding arrangements, we need longer-term thinking, system-wide and ‘thinking big’ must come first.

Calls for a new government with a renewed focus and plan were ubiquitous. Leader of Plymouth City Council, Tudor Evans claims – to fix this problem, we need an election, a new government, as the next government will urgently need to put in place a long-term plan for government finances. Similarly, Councillor Stephen Holt expresses that this current situation needs a rethink to make sure he can continue to deliver the services ‘[his] residents deserve.’  

Councillor Mike Bell goes further – he proposes a ‘Great Local Government Reform Act’ – this would tackle council tax so that it reflects the appropriate basis for generating local revenue and was more clearly linked to ability to pay. It would devolve real responsibilities down to communities where local is just simple better. It would deliver a general power of competence to benefit communities and the tools to use them via the freedom to generate income in other ways that met their local needs including tourism taxes and similar.

Finally, as pointed out by Councillor Mohammed Butt, over the next 12-months as national party manifestos are drawn-up, council leaders of all political colours are looking eagerly of a taste of what is to come. The time is now for change, give local government the tools and resources to invest in our communities and we can be at the coalface in driving the gains in productivity, prosperity and placemaking the length and breadth of the United Kingdom.

Final thoughts:

In grappling with the critical issue of local government funding, the testimonies of council leaders across the UK offer a stark portrayal of the challenges faced by communities nationwide. The pervasive theme underscores the urgent need for systemic change and a long-term plan to address the funding crisis. From Hampshire to Shropshire, from Brent to West Dunbartonshire, the narrative is clear: the current funding model is inadequate and unsustainable.

The call for action is present through the voices of all council leaders, echoing the necessity for stability, foresight, and collaboration between local and national governments. Suggestions for reform, from longer-term funding arrangements to devolving real responsibilities to communities, point towards a fundamental reimagining of how local authorities are funded and empowered to serve their constituents.

There is a collective plea for a new government with a renewed commitment to addressing the systemic issues at play. As the time for change is becomes more and more pressing, the onus lies on policymakers to listen to the voices of local leaders and enact meaningful reforms that will safeguard the future of communities across the United Kingdom.

To read more on Curia’s work concerning ‘Levelling Up’, click here.

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