The prospects for the new unitary authority recently imposed on Somerset are not good. Like local government everywhere, the county is having to cope with a dysfunctional funding system and a decade of austerity. It will soon have to cope with the extra costs of reorganisation, estimated at over £16m. On top of this, however, leaders in Taunton will also have to struggle with the legacy of short-sighted decisions by an earlier Conservative council.
According to the Centre for Cities, local government has been hit hardest by austerity, “shouldering a greater share of the cuts than any other area of public spending”. In the decade from 2009/10 to 2019/20 central government grants to local government fell by 37 per cent in real terms. Although council tax increased over the same period, this was not enough to offset government cuts, so residents paid more to receive less. The spending power of local authorities was reduced by some 16 per cent, despite increased demand for vital services such as adult social care.
The consequences of this sustained period of neglect are plain to see. Some 800 libraries have been closed since 2010. Almost £1bn has been cut from spending on youth services, leading to the closure of 760 youth clubs over the same period. Two years ago the Institute for Fiscal Studies estimated that “councils have cut what they spend themselves on housing, transport, planning, and cultural and leisure services by 40 per cent or more per person”.
The painful consequences of reduced service provision are felt by those who need them most. Six years ago the Joseph Rowntree Foundation reported that “The poorest communities and residents are being hardest hit and those least able to cope with service withdrawal are bearing the brunt.” The cuts continued unabated.
In 2019 the Institute for Public Policy Research (IPPR) made the same point. In a report headed “Hitting the poorest worst” they documented the impact of cuts in public health provision on the poorest communities. The degradation of local services, alongside growing inequality, is a major cause of the disproportionate impact of the Covid pandemic on the poor in the UK.
Planned changes to the way councils are funded seem designed to bake in inequality. Since 2015 government has been removing central grants to local authorities, making them reliant on locally-generated funds – council tax, business rates and commercial operations. It is obvious, however, that councils in more affluent areas have both a greater capacity to raise money, and less need to spend it. It is poor people who are most in need of public services.
Differences between poor and richer authorities were recognised historically, as councils in poorer areas got more government grant. Under the new system, redistribution is attempted by, in effect, ‘taxing’ the business rates generated in an area. Government gives more of the money raised back to councils with the greatest needs. At present 50 per cent of business rates income is redistributed in this way. It is currently planned, however, to reduce the proportion to 25 per cent in April 2022, and subsequently to zero.
If no attempt is made to equalise the funding of authorities in different circumstances, it will not be only the poor who feel the pain. Cuts to planning services or trading standards, for example, will be felt by all classes in less affluent areas. Potholes will be obvious to all.
There is a more insidious consequence of constant cuts. The reduction of local government services to just those that they are legally obliged to provide represents a threat to local democracy itself. In the measured words of the Centre for Cities “the combination of cuts to budgets and the increase in demand for social care mean that local authorities …. are increasingly becoming the providers of social care only. If they are to continue to play a role as custodians of their places, then a change in the amount and structure of funding they receive will need to be addressed”. Put more bluntly, if people cannot make choices about priorities for their area, our system of local government is not worthy of the name. Why bother to vote?
A Somerset county councillor explained to me how this is playing out locally. The councillor was increasingly aware of just how much of the county council budget was being spent on a relatively small number of people with very high-cost needs. It was right that these needs were prioritised, but equally right that the details were not the subject of public debate. The consequence, therefore, was “that most people see their council tax going up year after year, but their bins are not being emptied and their potholes are not being filled. It undermines their faith in local government as a whole.”
Somerset is not alone in facing these issues, but as the creation of a new unitary authority looms, there is an extra twist. For six years the Conservative administration imposed a council tax freeze; longer than any other county. Since the amount by which a council can raise tax in any one year is severely limited, those missed opportunities to help fund better services are lost forever. The cumulative impact of these short-sighted decisions is a £24m hole in the county’s base budget.
That deficit will be carried forward into the budget for the new unitary authority. The fear is that a new Conservative administration would seek to fill the gap by selling off assets inherited from the district councils, such as social housing. Selling off assets like the county farms has been one way the county council has balanced its books in recent years but, inevitably, there are fewer and fewer assets left to sell. The risk, confirmed at a recent briefing for councillors, is that the maintenance of a service as basic as planning enforcement cannot be guaranteed.
So the council whose new structure residents rejected will struggle more than most to balance its books. Things look bleak for Somerset citizens.