UK lockdown restrictions may be easing. But at the same time it seems that austerity is about to come knocking at the doors of millions of people. And so far, the government is doing nothing to stop it.
As The Canary previously reported in April, Liverpool City Council is in dire financial straits. It was facing a £44m black hole in its budget due to “increased costs and loss of income”. This is despite the government giving it £34m as part of its £3.2bn package to support local authorities. The council warned at the time it would have to start reducing services. And the mayor Joe Anderson said it was potentially facing ‘bankruptcy’. And now, the extent to which other councils across England are in similar positions has been revealed.
The Centre for Progressive Policy (CPP) thinktank has done research into local authorities’ finances. The Local Government Association (LGA) said there was likely to be a £6bn shortfall in local authority funding. But the CPP went further. It found:
- 131 out of 151 English upper tier councils don’t have enough financial reserves to make up for increased expenditure and loss of income.
- This figure includes 18 out of 19 councils which have former “Red Wall” Labour constituencies in them; the very areas the Tories pledged to help “level up”.
- Councils have “in effect” £5.5bn in reserves. This is 7.1% of their budgets. But the CPP says coronavirus has increased upper tier councils’ costs by 10.8%.
This is where the problem lies. In short, councils are paying out more than they can afford. The CPP gave Hackney as an example. It said the council:
has already publicly stated they expected the cost of the crisis to be £72m or a 13% increase in their expenditure. This shows that unallocated reserves are highly unlikely to solve the gap in funding caused by Covid-19 for either individual councils or the sector as a whole.
The Guardian reported that councils are facing a stark choice: cut spending on all but essential services or face bankruptcy. For example, Bath and North East Somerset Council has already said it will have to make £22m in cost savings. ITV News reported that this includes:
reviewing the timetable for delivering capital projects, and reducing the council’s salary budget by leaving vacancies unfilled and offering reduced hours.
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stopping the school meals service, reductions in highways maintenance, charging for green waste collection and reduced funding for adult social care and mental health support services.
Essentially, councils are going to impose austerity to make up for the lack of government help. But there is another way.
The Socialist Party is calling on councils to pass “no-cuts” budgets. It says:
It has always been feasible for councils to stop all cuts and invest in services, and use their reserves and borrowing powers.
This would have created the space for individual councils to technically produce ‘balanced budgets’. These anti-austerity budgets could then be used to build public support for a campaign to win back the money from the government, and to coordinate with the other Labour councils around the country.
As The Canary previously reported, before the pandemic, Wirral council did this. Admittedly councils’ budgets have got bleaker since coronavirus hit. But instead of imposing austerity on some of England’s poorest people, councils should work together to force the Tories’ hands. After ten years of austerity, many communities may not cope with more cuts. So now is the time for councils to take a stand.
Featured image via YouTube – 10 Downing Street
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