Local Government funding is in turmoil. Over the next three years, Derby City Council is forecast to require an additional £28 million of savings.
The Council recently accepted a four-year settlement from the Government, which means that the grant we get each year from Westminster is known until 2020. This means that we can plan how to manage our services and prepare for the future. But the reality is that more tough decisions will be required if we are to balance the books each year.
The Local Government Association has estimated that social care for the elderly and disabled faces a funding gap of at least £2.6 billion. But not only did the Chancellor fail to provide any additional funding for social care in his Autumn Statement, he also failed to guarantee the basic level of funding already built into our budget for the next three years. The Government cannot continue to ignore the social care funding crisis. It must be resolved to help protect some the most vulnerable in society.
The Government have made it abundantly clear that they want councils to be self-sufficient, so we rely less on the money we receive from Westminster. For this to succeed, local authorities need to be given full freedom to levy council tax and business rates, while generating other sources of revenue.
However, the current plans to devolve powers are far more limited. By 2021, councils will be able to retain 100 per cent of the business rates we collect. But this brings both opportunities and threats, while in isolation is not enough to address the funding crisis.
Derby has a successful history of investing in economic regeneration, including the hugely successful Pride Park development and the recently completed Infinity Park. Continued economic growth could yield additional income for the Council which would then be reinvested in front line services.
But an uncertain economic future and a further recession would dramatically impact the funding the Council will receive from business rates. What is more, it would disproportionately affect authorities in the most deprived areas. Like so many of the Government’s flagship policies, it will divert funding away from the councils with the greatest need into the coffers of the wealthiest areas in the South-East.
It’s therefore vital that we continue to fight for a Fair Deal for Derby, in the face of the unrelenting cuts to council budgets. And Derby is by no means alone: local authorities up and down the country are faced with similar problems, as they try to deliver their statutory responsibilities on an ever shrinking pot of funding.
In Birmingham, a Public Interest Report by auditors Grant Thornton found that the financial pressure facing the council was unprecedented. The report stressed that the authority, which is the largest in Europe, would be unable to manage its financial risks from 2017/18 without prompt action.
On Merseyside, Liverpool City Council has seen a 58 per cent cut in Government funding since 2010. Burdened by its low council tax yields and reliance on Government grant, their auditors have warned that the authority faces a ‘tipping-point’ in 2018/19 when they could struggle to fund all their statutory services.
And it’s not just urban authorities that face crisis. Conservative led Northamptonshire County Council was criticised as it was revealed that over half of £65 million of planned cuts were not on target to be delivered this year.
These examples are symptomatic of a crisis that is spiralling out of control. The Government have devolved the pain and blame for austerity to local councils for too long and the results are alarming. Across Britain, public services we know residents hold dear are being damaged beyond recognition.
Councils of all political persuasions must come together to demand a fair deal for local government.