Clive Betts: Is austerity over? Try telling that, Theresa May, to local councils

Can Theresa May's claim that austerity is over be taken seriously? Clive Betts MP thinks not when local councils are still making cuts.
Can Theresa May's claim that austerity is over be taken seriously? Clive Betts MP thinks not when local councils are still making cuts.
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EARLIER this year, the National Audit Office confirmed that Government funding for council services in England had fallen by 49 per cent since 2010.

Cambridge University’s recent report, using Institute for Fiscal Studies-compiled data, confirmed that the average council’s spending in England had been cut by 24 per cent since 2010.

This compared to a 12 per cent cut in Wales and 11.5 per cent in Scotland. It appears that the Scottish Parliament and the Welsh Assembly have been able to mitigate the harshest cuts. Don’t be surprised if there is a renewed call to revisit the Barnett Formula.

Further, the report confirms that the deepest cuts have been forced on the most deprived areas. Thirty councils have had cuts exceeding 30 per cent (seven exceeding 40 per cent), with only one (Westminster, whose net car-parking income alone exceeds the Government grant of most authorities) not in the areas with the highest levels of poverty and the least ability to secure income through charges and regeneration.

Meanwhile eight authorities, all relatively wealthy, have had cuts of less than 10 per cent. When the leaders of some of those authorities, like Surrey, have been loudly complaining about the financial challenges facing their authorities, it does make you wonder how they would have coped with cuts on the scale of those in the North.

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The Government has already announced another £1.3bn of cuts in local government revenue resources. So, what are we to make of Theresa May’s claim that ‘austerity has ended’, while whispering ‘from the next spending review’? As this is the third time she has announced it – and we have absolutely no idea what any Brexit deal or no deal might mean – the answer is ‘probably not much’.

And how does this all square with Treasury chief secretary Liz Truss’s claim that “we are not making cuts to local authorities. What we have done is given them more revenue raising power”.

When challenged about the veracity of this absurd claim, the Treasury said: “The 2018/19 Local Government Finance Settlement confirmed the third of a four-year settlement for local councils over the Spending Review 2015 period.

“This settlement ensures a 2.1 per cent increase in cash terms in local government Core Spending Power between 2015/16 and 2019/20 – £44.7bn in 2015/16 and £45.6bn in 2019/20.”

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As all the reputable fact-checkers have confirmed, a 2.1 per cent increase in cash terms over that period is inevitably a significant real-terms cut.

One supreme irony is that, while the Government and private companies have been able to benefit from low interest rates, local government has effectively been estopped from doing the same in respect of its long-term high interest debt, particularly from the 1980s and 1990s.

To deter councils from, at its simplest, swapping high-interest debt for low-interest alternatives, the Government forced the Public Works Loan Board (PWLB) to impose financial penalties which made such swaps uneconomic.

It is now estimated that councils are being forced to pay – even after the payment of penalties – close to an additional £1bn in debt interest this year alone. Without action in the Budget, we can continue to expect to see more Sure Start centres and libraries closing, road and park maintenance declining, and a falling capacity in trading standards and food inspections. We can’t wait another year for austerity to end.

The Local Government Association is predicting a £3bn funding gap for children’s services by 2025. The number of children coming into care keeps increasing, with the recent Care Crisis Review suggesting that poverty, caused by austerity policies, is a driving factor in this rise. Even Conservative MPs are warning that another Baby P situation is just around the corner.

As for adult social care, the recently-announced extra £240m is just the latest sticking plaster. And it’s a sticking plaster which doesn’t cover the immediate wound, let alone the growing gash.

The Conservative leader of North Yorkshire County Council – an authority which has had only single-digit funding cuts – says that we have an existential crisis in adult social care “littered with Green and White Papers which have promised much but failed to provide the comprehensive reform that is so badly needed”.

All the background talk about social care reforms to be announced in the Budget is about addressing the problems decades in to the future. Of course, we need a long-term solution and, preferably, one that has the backing of all parties. But we must also see an adequate response to the challenges that are facing individuals, families and councils day in and day out. Anything less is a disastrous failure.

Clive Betts is the Labour MP for Sheffield South East. He chairs Parliament’s Housing, Communities and Local Government committee. This article was first published by the Local Government Chronicle earlier this week.