IN one fell swoop, the Chancellor has created a perfect storm for Northern councils. It is one that many of our local authorities will struggle to withstand.
In spite of George Osborne’s rhetoric, his Autumn Statement missed an opportunity for real and meaningful fiscal devolution to local authorities. Instead, he offered two traps that will impact every corner of the North.
First, the local government grant, which provides the largest component of council funding, will be scrapped. Councils will instead retain all of the business rates that they raise.
Although welcome in principle, without a built-in redistributive element it’s hard to see how this will do anything other than reinforce existing inequalities between North and South.
The current system takes account of local circumstances and ensures a fairer distribution of funds from central government. Remove Whitehall from the equation completely and we’re left facing a Darwinian nightmare where the strongest, richest councils will survive and prosper, while the rest, and more importantly the vulnerable people they care for, are left out in the cold.
In the case of Kirklees, my own council, the funding gap left by these changes is estimated at more than £30m annually. In comparison, Westminster Council’s budget will increase 10-fold.
We urgently need to know how the redistributive safeguards hinted at by the Government will work otherwise Northern councils could be left with a huge funding shortfall.
Secondly, the Chancellor has given councils the power to raise council tax by two per cent for social care. The Government estimates that this will raise £2bn by 2020 – a figure dwarfed by the Local Government Association’s estimate that the funding gap for adult social care will have hit a staggering £7.9bn by then.
In addition, the Institute for Fiscal Studies says there is no way the Government can actually guarantee money raised from this precept be spent on social care, while the Social Market Foundation’s warning is more stark. They say that the social care precept will mean plenty of additional resources for councils in the South, but much less for many councils in the North.
Councils with higher elderly populations and high, complex adult social care needs will suffer disproportionately. Disparities in health, age and need are being disregarded.
For Kirklees, the two per cent precept would raise just £2.8m a year. Overall, the council estimates that the consequences of the Chancellor’s Autumn Statement will be an overall cut of 20 to 30 per cent by 2017. This is on top of the cuts of that they have had to cope with since 2010.
Councils in the most deprived areas with the greatest social care needs will raise less than a third of more affluent areas. Those who rely most on the government funding will be least able to meet the needs they have through council tax rises. If you want to exacerbate the crisis in social care, this is how to do it.
There is also a broader problem that this policy does not confront.
The Conservative MP and GP Sarah Woollaston, chairman of the Health Select Committee, says we cannot have the Government’s seven-day NHS without ensuring social care is properly funded. In fact, she says, the fate of the NHS rests with social care. The link between the two is crucial and the two need to be treated on equal terms. Wrap around care, addressing delays with discharges from hospitals and tackling bed blocking are all dependent on a system of social care that is fit to cope.
Rather than pinning council tax increases on local authorities, the Government need to take positive action to fund and plan for social care for the next several decades.
Both these polices are traps for Northern councils and are part of a package of devolution that ties one hand behind our backs. These are not good deals as currently devised – especially for councils with a low tax base and high needs. Councils will be forced to take further difficult choices about cuts to vital local services, raise council tax or most likely do both.
I hope the intent that we can see in the Chancellor’s latest devolution offer serves as a stark warning to all of those in Yorkshire who are working towards meaningful devolution. And there is the challenge for those of us who care deeply about devolution: we have to find a way to make this work – in spite of George Osborne.
Jo Cox is Labour MP for Batley & Spen and a member of the Communities and Local Government Select Committee.