Richard Harbord: Further signs that local government finance is failing
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The crisis in Liverpool and a fix for education budgets are further indication that local government finance is in need of a root and branch review.
Even for those students of local government turbulence, the last few years will stand out as being significant. The concern must be: Where will it all end?
We all know that local authorities cannot continue as they are at present. That is to say, there are options for the future which are largely unpalatable and certainly do not fit with the innovative and exciting past. Due to a lack of resources and an unsatisfactory framework, local authorities are increasingly providers of statutory services only. And their ability to provide those adequately is under threat.
Austerity
Interestingly, the fabric of democracy depends to a greater extent on the qualities of people prepared to stand for election. In the past they have had real opportunities to add to, and change, their communities. As I have continually pointed out, councillors are not elected to close facilities and cut services.
However, throughout the period of austerity, it became obvious that there was no alternative but to trim and lose services, often those most valued by communities. On the grounds that this was likely to be a short-term problem, some authorities used reserves and muddled through. By the time it became obvious that it was a long-term scenario it was too late.
Thus, we have reached a point where we are no longer surprised at the problems faced. Hence, for the last few months, discussion has been around section 114 notices and a strong desire to minimise their use. Central government has agreed a number of capital financing directives to help local authorities maintain legal balanced budgets and continue to provide a level of service.
Signs
But in the last few weeks there has been new evidence of the difficulties of maintaining vital services with inadequate resource.
Firstly, there was the announcement that a small number of councils had negotiated a deal relating to historic higher needs deficits within the dedicated schools grant.
It was reported that the Department of Education had used £100m to write off their historic and accumulated deficits. In each case, it is reported, sums would be made available over periods of up to five years to reduce, or pay off, deficits in return for making reforms in SEND (special educational needs) services and meeting strict savings targets. It appears other authorities are contemplating a request for similar packages. The chair of the SEND system leadership board made it clear that each solution was the result of individual negotiation and it was certainly not a grant or “free cash”.
However welcome, the device cannot disguise the fact the current system for financing local government is failing. There needs to be a higher quantum and current increases in funding cannot disguise the fact that the system, as a whole, is not back to where is was before austerity.
More importantly there needs to be a root and branch review of the system for financing local government. It is interesting, even looking back a relatively short while, that the system of revenue support grants was dismantled to be replaced by devolution of business rates. this and fair funding which went with it, were never fully implemented.
In addition, of course, council tax has been allowed to whither away from the great hopes for it in 1991. In truth, hopes weren’t that great but council tax was seen as a better alternative than the short experiment with community charge. That said, council tax has never been given a chance. From the early days the increases year-on-year were subject to a “suggested” limit and the failure to update bandings or valuations left it impossible to understand by those who pay it.
Struggling
Sadly, the last few weeks has also brought another independent report and more indications that local government is struggling. This time on Liverpool City Council. The report was published after a best value inspection lead by Max Caller and focuses on serious failings in governance and practice in the services inspected.
It speaks of the “corporate blindness that failed to pick up” problems. The inspectors concluded that there can be no confidence that remedies and required decisions could be taken in a reasonable timescale. Therefore the recommendation was for the imposition of commissioners, supported by directions.
It is the latest in a line of sad reports about formerly well run and good authorities. Unless the whole system of financing and governance changes it will probably not be the last.
Richard Harbord is former chief executive at Boston Borough Council.
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