We Need A Complete Rethink Of How We Fund Our Public Services

Councils are in an unsustainable position, and some are nearly bust – clarity on the future shape of the system is desperately needed
Luis Davilla via Getty Images

A few weeks ago, a radio producer called the LGiU office desperately seeking a guest for a head-to head debate on local government funding: “I’ve booked someone to argue that local councils need more money, but I can’t find anyone who disagrees”. That didn’t come as much of a surprise.

I regularly speak with council leaders who nearly all tell me a decade of deep cuts have left them at breaking point. Regardless of party allegiance, senior decision-makers unanimously agree that councils are in an unsustainable position, and some are nearly bust.

Local government in England and Wales is funded through grants from central government (about 54%) made up mainly of redistributed business rates, and locally raised funding (about 46%) which includes council tax and other sources such as car parks, parking permits and the hire of sports facilities.

Local authorities have already seen their central funding reduced, on average, by 40%. In Haringey, for example, the council’s spend per head of population has dropped by nearly a quarter. HuffPost’s What It’s Like To Lose series shows how people have already suffered the impact of the cuts.

However, from next year the Government has committed to phasing out central grants for local government, representing a further cut of more than £1billion at a time when the number of elderly people needing care is growing. Last year, the Prime Minister said it was the end of austerity. Not for local councils, it seems

To offset that savage cut, some councils are borrowing billions of pounds to buy property, supermarkets and gyms. At the same time, residents are paying more and more money to their local authority through higher council tax, and through increased charging on everything from swimming pools to cremations. But they will be receiving less, because it is the money from central government that pays for, amongst other things, adult social care and vulnerable children’s services, which is shrivelling up.

The most worrying aspect of all, though, is that local councils are still totally in the dark about how they will be funded from 2020. With only a year to go before the central grant disappears, the plan to allow councils to retain their local business rate income, which was supposed to make up the shortfall, has is yet to be agreed, never mind rolled out,.

Meanwhile, the government’s ‘Fair Funding Review’, which will change the calculation of each council’s funding needs, is yet to be finalised. The review’s first iteration has been criticised for removing deprivation as a funding criteria and shifting spending away from urban areas.

The LGA has consistently said that resources announced in the Autumn Budget and local government financial settlement are nowhere near enough to meet a gap in overall funding of more than £3billion. Clarity on the future shape of the system is desperately needed but the issue has failed to move up the Whitehall priority list due to Brexit.

Local government is the most important bit of government. Councils deliver the things that really matter most to us: schools for our children, clean, safe neighbourhoods, new homes, care for the elderly. All these services are delivered from the town hall, not Whitehall.

But there’s a paucity of ideas when it comes to fixing council finances: the government wants local authorities to raise more and to be more entrepreneurial, yet it balks from them taking any commercial risk.

Other proposed solutions leave councils with less autonomy when they need more – for instance, some have suggested that social care be delivered nationally or that councils should funded solely through central government grants.

Broadly, councils want to avoid being subject to the whims of central government policy-making to allow them to plan their own finances. Councils are calling for more control over areas of DwP and health that affect their ability to help their residents.

That means a complete rethink of how we fund public services. Instead of letting councils’ spend wither away, we need to localise our spending on all public services creating single place-based budgets that democratically elected leaders can spend in the ways that make most sense locally and that drive down demand.

Lauren Gosling-Powell for HuffPost UK

In a new series, HuffPost UK is examining how shrinking local budgets are affecting people’s daily lives. These are stories of what it’s like to lose, in a society that is quietly changing. If you have a story to tell, email basia.cummings@huffpost.com.


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