On 29 October, the Chancellor will announce his budget. Shockingly, there are reports that he plans to further increase the cuts to local government funding. This comes on top of local government funding cuts that have slashed budgets by almost half in just a few years.
Bristol City Council has worked extremely hard in the face of these cuts, but reduced services are having an impact on the most vulnerable people. Many other local authorities are even worse affected, many of them at risk of going bust.
This week I wrote to the Chancellor of the Exchequer, arguing for more funding in line with the Prime Minister’s statement that “austerity is coming to an end”. Read my letter below:
I am writing to you in advance of the Budget later this month to ask you to re-consider your intention to further increase cuts to local government. It is clear that deeper cuts will create an emergency in council’s ability to provide essential services.
Councils across the country provide a variety of services that are indispensable for our communities and their local economies. They play a vital role in safeguarding older and disabled people, vulnerable children, and those who are homeless or in need. And when able to, they can play a major role in tackling the housing crisis. Investment in local government is good for the prosperity, environment and health of our nation. It also saves money for other parts of the public sector, reducing demand for services such as the NHS. For these reasons, further cuts to council funding are a false economy which will lead to higher costs, often imposed on some of the poorest people in the country.
Councils already struggling with deep cuts
Since 2010, local government has shouldered a burden of cuts that dwarfs any other area of the public sector, losing almost half the funding it once received from central government. This cut will rise to 60% by 2020, leading to a funding gap of £3.9 billion by 2019/20 between income and necessary expenditure. Alarmingly, this gap is expected to reach £7.8 billion by 2024/25 – not accounting for any unexpected cost pressures.
Even worse, demand for services is increasing as funding is taken away. Since 2010 the number of homeless households increased by 33.9%; the number of looked-after children has grown by 10.9%; and the number of over-65s in need of care has increased by 14.3%. This is in addition to other pressures on their finances such as higher national insurance contributions, the apprenticeship levy and the National Living Wage.
Funding cuts leading to reduced services
The cuts of recent years have led to huge sacrifices: so far 878,000 local government jobs have been erased; there are 455 fewer libraries; 673 fewer public toilets; 1,240 fewer Sure Start centres; 600 fewer youth centres; and over 2,000 bus services reduced, altered or withdrawn.
In Bristol, where my constituency is based, the City Council will need to have cut £300m from its budget by 2023 compared to 2010. In addition, it has had to cut more than 3,000 staff in the last ten years, a one-third reduction. The Labour administration has done well to ensure the continued provision of core services, and the council staff that remain are working extremely hard to deal with the difficult situation they are in.
However, the effect of these cuts is growing ever more burdensome on the city. The number of homeless people has reached crisis point. Dozens of local charities, community groups and advice agencies have lost funding. Other cutbacks have affected the council’s ability to enforce the law and make early interventions supporting vulnerable people. Combined with cuts to other public services like the NHS and police, there is now severe strain on the bonds holding our very society together.
There is little left to cut back
Any efficiency savings that local authorities could have made, have already been made, in most cases years ago. Where it has been prudent for them to use reserves, they have done so. And many councils have, out of necessity, embraced modernisation and commercialisation. These innovations should be celebrated, but will take years to fully bear fruit.
In the meantime, we are now reaching the point where councils’ ability to fulfil even the basic statutory services, such as adult social care and children’s services, is becoming precarious. According to the National Audit Office, ‘The current pattern of growing overspends on services and dwindling reserves exhibited by an increasing number of authorities is not sustainable over the medium term.’
Please listen to the Local Government Association. They are asking that you close the £3.9 billion funding gap that will otherwise arise by 2019/20. If you do not, it’s likely that Northamptonshire will not be the last council to run out of money. Indeed, Lord Porter, Chair of the LGA and a member of your own party, has called for local government to be “at the front of the queue” for new funding if, as the Prime Minister says, “austerity is coming to an end”. I ask you to heed his call.
Sustainable council funding in the future
In the longer term, the sustainability of local government finance could be secured through a variety of additional measures and a more comprehensive devolution of powers. Those detailed in the LGA’s budget submission provide a good starting point.
Councils are responsible for around £1 in every £4 of government spending, but are responsible for raising less than 10% of taxes. Council tax and business rates are increasingly inefficient, unfair and outdated methods for raising revenue. I ask you and other government ministers to work with local authority leaders to find new ways of raising revenue, such as a land value tax, tourism tax, local retention of income tax, or a levy on student accommodation providers. Embracing the opportunity to devolve income-raising powers to councils should secure their financial footing whilst reducing the burden on the Treasury.
In the meantime, however, local government is heading for a financial cliff-edge. Addressing the funding gap now – rather than allowing the crisis to come to a head and dealing with the fallout – will save money, maintain the services we all rely on, and protect the needs of our most vulnerable citizens. Please heed the calls of local authority leaders and make local government a priority in your Autumn Budget.
Thangam Debbonaire MP
Member of Parliament for Bristol West
 This takes into account business rates retention and annual 3% council tax increases.