Breaking the link between funding and social needs – local government finance

December 15, 2014

The funding of local government has been notoriously complicated, subject as it has been to constant changes by governments in the methods of funding. However, since 1929 “it has been used to some degree to promote equalisation – that is, to ensure that the funding available to local authorities bears some relationship to the need for services in the local area.” (House of Commons Library Research paper: English government finance – issues and options September 1st 2014) Reforms in 1948 and 1959 “broadened the influence of equalisation, applying it to most central government funding”.

Prior to 1990 local authorities were able to keep all the income they raised from rates, both domestic and business, and the government then gave a top-up in the form of rate support grant, based on an assessment of local needs. From 1990 the new system instituted greater Westminster control over local authorities as a result of ‘grant’ being determined centrally. The government controlled what was raised locally and determined how much of it each local authority could keep. Even so, funding levels at least bore some relationship to an up to date estimate of local needs in each area. In contrast the new system that the coalition government has introduced marks a fundamental change because the link between funding and an annual uprating of needs has been ended. Download a PDF here articlonnaoreports or read on below. Read the rest of this entry »

Failure of ‘austerity’

November 30, 2014

Interesting to see that David Renard has signed a joint letter to the Observer with other Council leaders from all three main parties. It’s a shot across the bows of George Osborne in the run up to the autumn statement. It says that “further reductions (in local government funding) without radical reform will have a detrimental impact on people’s quality of life and will lead to vital services being scaled back or lost altogether”. “More of the same” in the autumn statement “cannot be an option”, they say.

They express their concern that the rising cost of care for the elderly “will not only jeopardise our services but will push costs onto the NHS which will have to pick up the pieces if we cannot protect adult social care or provide the services that will keep people healthy.”

The purpose of the letter is to raise the need for powers to be devolved from Westminster. To that end it says that

It is vital that the autumn statement sets out a new settlement for England which puts powers beyond Westminster and shares out tax and spending across the UK on a fair basis.” Read the rest of this entry »

Osborne’s “pointless machismo”

November 29, 2014

With the Chancellor’s autumn statement due next week, advance notice has been given of yet another political trick designed to put Labour on the spot. Osborne is proposing to introduce a law which will make it an obligation of the next government to end the ‘structural deficit’ by 2017-18. He will challenge Labour to commit to this ‘prudent’ policy or else denounce them for not being serious about “tackling the deficit”.

However, the proposal has not been well received in quarters where the Chancellor’s ‘austerity’ programme has been supported. The Financial Times has dismissed his new law as “pointless machismo”. The FT applauded his ‘flexibility’ when there was a downturn in the economy in 2012. They said he “sensibly refused to impose further significant cuts and pushed out the date for achieving fiscal balance”. However, they denounce him now for rejecting this former ‘pragmatism’ and having spent the last year “inventing unnecessary limits in their room for manoeuvre.” This included a refusal to consider raising taxes and promising a middle income tax cut of £7 billion.

The government’s pledge to create an absolute surplus, bemoans the FT, means adding tens of billions of extra cuts.

“Taken together such commitments would turn a difficult fiscal situation into an impossible one.” Read the rest of this entry »

The FT throws a grenade at Osborne (and Balls)

November 11, 2014

Yesterday’s lead article on the front page of the Financial Times was positively incendiary (Osborne faces doubling austerity cuts to £48 billion a year to hit targets“). David Cameron wrote last month that most of the cuts in the austerity programme had been achieved, with ‘only’ £25 billion a year still to be removed from budgets, “but FT analysis has found that less than half the required reduction has been made.”

“The level of cuts is nearly twice the £25 billion estimate because that figure does not include planned cuts for two years out of nine – 2015-16 and 2018-19 – and takes no account of the effect on departmental spending of rising numbers of pensioners and increases in pensions payments. The Institute of Fiscal Studies last month criticised Mr Cameron for omitting the first and last year of the next parliament when calculating the size of the cuts to be made.”

The FT estimates that if the ‘ring-fence’ of health, education and overseas aid remains then the ‘non-protected departments’ face real cuts of 33% against the 21% cuts they faced between 2009-10 and 2014-15. Read the rest of this entry »

Wiltshire FBU resonse to the ‘consultation’ on merger

November 2, 2014

The Wiltshire FBU has written a detailed response to the ‘consultation’ on merger with Dorset Fire Service. It deserves wide circulation. Anybody interested in the impact of central government cuts should read it.

You can dowload it here FBU WILTSHIRE RESPONSE DOC


Government ‘economic fairytale’ unravels

November 1, 2014

In the first 6 months of the financial year, from April 2014, government borrowing was £58 billion. In September alone it was £11.8 billion. Total government debt in September was £100 billion higher than a year earlier, at £1.45 trillion. By the standard of its own aims this shows the failure of the government’s austerity programme. What the economist Ha-Joon Chang calls the ‘economic fairytale’ of the coalition government is beginning to unravel. Events are catching up with them both on the political and economic level.

When it introduced its first budget in June 2010 the Office of Budget Regulation forecast for 2014-15 was

  • Current account deficit of £16.9 billion
  • Public Sector Net Debt of £1,284 billion
  • Public Sector Net Borrowing of £37 billion.

Yet the 2014 March Budget forecast showed

  • Current Account deficit of £67.6 billion
  • Public Sector Net Debt of £1,395 billion
  • Public Sector Net Borrowing of £95.5 billion

Since March the situation has deteriorated with the PSND already £56 billion over the forecast with only 6 months of the year gone. Read the rest of this entry »

Demand the right to keep all our business rates

October 29, 2014

Before 1990 local authorities were able to keep all the rates they collected locally, both domestic and business rates. Changing that was one of the means by which Thatcher imposed central government controls on local authorities. Writing in the Advertiser David Renard expressed the view that the debate on ‘devolution’ of power in the wake of the Scottish Referendum gave “a unique opportunity to investigate what Councils should do and how much we can prise from the distant hand of Whitehall”.

Fredrick Douglas, a campaigner against slavery, once said that “Power concedes nothing without a demand. It never did and it never will.” If anything is to be prised out of Whitehall then there has to be a clear demand. One such demand is that Councils should be able to keep all the business rates they raise locally. According to the Council Leader Swindon collected somewhere in the region of £107 million in business rates last year. However, the (non-education) grant we received was only £64.9 million. Read the rest of this entry »


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