In an opinion piece, Ealing Liberal Democrat finance spokesperson and Southfield Councillor Gary Busuttil, says central government needs to do more to ensure local councils are properly funded in order for them to do well.
The one thing that the last few weeks has told us, is that some difficult decisions will be made shortly. Local government has been at the forefront of austerity in recent years, for the most part local government has had to absorb some of those cuts without having to cut services altogether. However, Liberal Democrats have seen that residents have experienced a reduced level of face-to-face communication.
Local authorities previously had been able to plan for those budget cuts and presented balanced budgets at the end of the financial year. However, over recent years some councils have fallen into bankruptcy such as Croydon Borough Council, Northamptonshire County Council and Slough Borough Council which have been the most prominent.
Liberal Democrats say that local government faces a quadruple whammy of 1) rising costs, 2) loss of income from uncollected taxes from covid, 3) rising interest rates making it more expensive to borrow money to carry out projects such as affordable housing, and 4) the chancellor requesting “efficiency” savings, which might mean another period of austerity. One thing for sure is that if councils are unable to plan budgets robustly, Ealing Council might either go bankrupt, cut back services to the bone, or simply not to provide some services at all. None of these are acceptable.
If the Tory government is serious about combatting low growth, then it needs to value the contribution local authorities make to the wider economy. Local authorities don’t just clear streets of rubbish, look after our parks, or collect council tax, but many Councils have ambitious plans with building much needed affordable homes, creating jobs, supporting businesses, and improving basic local infrastructure.
Many Councils in the UK do not have the means or the incentives to transform their fortunes. The Tory government announce money for various things and then let local authorities fight for them.
Local politicians spend copious amounts of time competing for what money is available rather than thinking about what their areas really need. In the UK just 6% of taxes are raised locally. In Sweden for instance, that’s 37%. Look at the way Low Traffic Neighbourhoods (LTNs) were funded. The government announced a pot of cash which local authorities could apply for within a short specific time period. Labour then raced to implement LTN’s to receive the cash, not really thinking whether it’s what the local area wanted or needed.
Such a big contrast for local authorities in being able to raise funds compared to Sweden, creates inertia, and bitty, short-termist rather than long-term, holistic improvements. I believe the time is now necessary to rethink how local government is funded. Local government understands the local restraints, and therefore should then be invited to help troubleshoot low growth. Until they do, a government hungry for growth is likely to be disappointed.
