Saturday, 28 January 2017

The strange death of local government - a comment on setting budgets (and what we do)

‘No new money from central government is being provided to councils in 2017/18. In fact, more than two thirds of councils will actually be worse off next year than they were expecting.'
You will have heard this sort of observation many times over many years. This version is from the current chairman of the Local Government Association (LGA), Lord Porter. The problem is that, while I think Lord Porter is right, over the years the repeated cries of pain from local government have destroyed much of our credibility on this matter - there may now be a wolf but nobody believes us.
That Night a Fire did break out--
You should have heard Matilda Shout!
You should have heard her Scream and Bawl,
And throw the window up and call
To People passing in the Street--
(The rapidly increasing Heat
Encouraging her to obtain
Their confidence) -- but all in vain!
For every time she shouted 'Fire!'
They only answered 'Little Liar!'
And therefore when her Aunt returned,
Matilda, and the House, were Burned.
Or in less poetic terms:
"Surrey County Council should hang their heads in shame.

"Surrey residents will have seen their council tax go up by around 85 per cent in the last two decades and have every right to feel that their local representatives have let them down once again."
So says the Taxpayers Alliance as it argues how paying councillors, high salaries for top officials and trips to conferences show there's no need for tax increases. After all, local government always says this:
"After years of striving to keep council tax as low as possible or frozen, many town halls have found themselves having to ask residents to pay more council tax ..."
That's Cllr Claire Kober, leader of Camden and chair of the LGA's resources board.

So is there any truth in all this? Are local councils being stripped bare as the easiest target for national government demanded austerity or is there still largess, waste and unnecessary expense out there in local government land?

I can't really comment on Surrey or indeed any local council other than my own, Bradford. Here's the state of our budget:

For the sake of precision, this is the 2016/17 revenue budget, third quarter report (taken from the papers for a Corporate Overview and Scrutiny meeting on 2 February 2017). What it shows is that Bradford Council's net expenditure for 2016/17 is £378m and gross expenditure is £1,230m (net expenditure being that gross figure less income). This is, for us mere mortals, a lot of money and most of it - including most of the income - is public money.

You will appreciate how, given the scale of the money we spend, saving a hundred thousand or so on paying councillors, senior officials or trade union reps isn't likely to fix the problem (assuming - see above - we accept there is a problem). And nor is this where we're spending the money. I'm going to focus on the unfunded part of the table above - the 'net budget' figure of £378m. This is funded from two sources - local taxes (council tax and, at some point, business rates) and Revenue Support Grant (RSG). When you hear about cuts to local budgets what is being talked about is reduction in RSG. It is the stated intention of the government to reduce this grant to zero - it is currently around £138m in Bradford. Some local authorities in England already have no RSG - the government cannot cut the budget of, for example, Sevenoaks District in Kent because they no longer give it any grant.

But enough of where the money comes from what about how its spent. Were I to ask an average Bingley Rural resident to tell me how much is spent on highways and how much on social care, I'd probably get similar numbers. The reality here is that we spend around ten times as much on social care as we do on highways. Look at that table above and you'll see that the net budget for adults' and children's care amounts to £207.8m out of that £378m net budget - that's 55% of the total net budget and over 70% of the money we spend on delivering services. Yet these are, in the main, hidden services that only the individual recipients know about.

In the budget planning papers for 2017/18 Bradford's finance director reports that, in terms of delivering care, we plan to spend £158m in the forthcoming year (note this is a different definition and calculation from the table above). And this will support 6,200 vulnerable people at a cost in excess of £25,000 per person. Oh, before you call this a scandalous waste recognise that this represents £480 per week in a world where average weekly cost in a care home (not a nursing home) is, according to Which, £600. And this hides significant cross-subsidy:
According to the healthcare market intelligence provider LaingBuisson, residential care homes in England currently need to charge fees of between £590 and £648 per week.

However, the average fee paid by English councils for residential care of older people was just £486 per week in 2016/17.

LaingBuisson estimates this means residents who pay from their own finances are filling a funding gap of £1.3bn a year.
What we're seeing in top tier local government is its gradual decline from being a maker of place into being the funder of care for vulnerable people. For county councils this is even clearer as they don't provide services such as refuse collection, leisure services, housing and economic development that metropolitan districts like Bradford provide. I'm guessing that the proportion of county budgets spent on providing care is touching 70%.

Linked to this shift in local government priority is a secondary truth - we really have very little control over these budgets. With adult care the entitlement to care is set out in law and local authorities have a duty to provide (or enable provision of) that care. If an older or disabled person - and there are growing populations in both areas - qualifies, the council has to provide and has to pay. For children we have a little more flexibility but most councils rightly seek to avoid increasing the risks and government retains (and exercises) the power to intervene and direct decisions in children's services.

This strange death of local government belies the scale of our spending and the importance (or even self-importance) of councillors. The sad reality for many councillors is that their local parish or town council has more flexibility in decision-making than does the grand top tier council with its fine offices, highly paid officials and more-or-less full time councillors. None of this is a criticism of local councils or councillors but rather a recognition - something even the TPA recognises in its more measured moments - that most of the financial challenges facing local councils point back to national government where, despite all the rhetoric, local councillors are largely seen by officials as bumbling fools that get in the way.

I remember a grumpy old Labour councillor in Bradford called Syd Collard who, on the minibus to some planning committee site visit, went on at length about how being a councillor was a waste of time these days and he wouldn't recommend it to anyone any more. My Dad - a councillor for 35 years - says much the same. Wherever we look and regardless of national government cant about localism our ability to make local decisions about local services to local people are constrained by the interference of government regulations and the prejudices of the 'Man in Whitehall'.

I'm sure Syd and my Dad would agree that local government is important. But right now local councils - the top tier ones at least - are in danger of becoming merely the agents of care delivery for a combination of the NHS and national government departments. Without belittling care as a service, this isn't what we need and reminds me daily how the stupidity of the poll tax and the arrogance of ministers since resulted in the emasculation of local councillors - a gentling enacted in law by Blair's 2000 Local Government Act that left most of us sitting on the backbench being 'community leaders' rather than doing what people think they elected us to do.



Anonymous said...

I must be missing something here;

The Gross Expenditure is basically the total amount expected to be spent, yes? And the Income figure you refer to as "public funds" only partially covers that, so the Net Expenditure is unfunded, but is covered by council tax and business rates?

So presumably the Income figures are only the RSG, and council tax and rates income are not Public Funds?

Simon Cooke said...

The income figure includes things such as the money for schools and public health grant which are 'public funds' but in local government accounting terms are treated as income. This reflects the fact that both grants are ringfenced - we can only spend them in the manner determined by the government department providing the funding.