Growing pains

WHILE savers will be frustrated by the Bank of England’s decision to maintain interest rates at a historic low, the announcement was indicative of wider economic uncertainty.

It also suggests that the need to secure economic growth, an issue that the Government is belatedly confronting, is taking precedence over the recent rise in inflation, and its wider impact on day-to-day costs.

This is particularly pertinent in the field of local government. As town halls come to terms with huge cuts to their government grants without increasing council tax – the coalition’s stated aim – rising costs are adding to the challenge.

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It also explains the open letter signed by 88 local Lib Dem leaders. They believe that the Government has lost sight of the impact of the economy on local services because Ministers are being too zealous when it comes to cutting costs.

There is certainly evidence to support this argument; Eric Pickles, the Local Government Secretary, appears – at times – to be unsympathetic to the valid arguments that are being put forward at a local level.

Equally, some councils – Lib Dem and Tory – are in denial about the budget deficit. While some authorities have accepted this, others are still clinging to the belief that the coalition will bow to public pressure.

It is unlikely to do so, given that the coalition intends to eradicate the deficit by the end of this Parliament. Nevertheless, this should not preclude Mr Pickles from having a more constructive relationship with local authority leaders.

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If this happened, there might – just – be a better understanding of the difficulties, locally and nationally, and a need for the most effective cost cutting ideas to be shared between authorities. For, as the coalition, is so fond of saying, “we’re all in this together”.