While the media focused on the relatively marginal changes
in tax on petrol, alcohol, tobacco and incomes, and on VAT and national
insurance options in March's budget, George Osborne was busily trying to deflect any proper
consideration of the scale or detail of the additional massive spending cuts
for the next three years.
As
the Office for Budget Responsibility confirmed, this will mean “a much
sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over
the past five years” and “a sharp acceleration in the pace of implied real cuts
to day-to-day spending on public services”.
There are big unexplained differences in the control totals
in the Red
Book and in the Budget announcements. Because of other commitments
already made, Osborne’s spending cuts inevitably have to fall on defence, NHS,
policing and local government.
Conservative MPs were already in full cry against any
further defence cuts and the King’s Fund says NHS services – including A&E,
waiting times and waiting lists for routine operations and for cancer – are
deteriorating in a way not seen since the early 1990s. So, which spending lines
do you think will bear the brunt?
Local government has already taken the largest cuts in
spending. Local government services were 19% of total spending in 2010; today
they are just 16% of a smaller cake. And, of course, those cuts haven’t been
evenly distributed so that, for example, Mole Valley DC has had a £9 per head
increase in spending power while Middlesbrough Council has lost £289 per head,
and Tandridge DC has gained £11 while Tameside MBC has lost £185.
Just to rub salt in to the wounds, over the past six months,
Eric Pickles and his ministers have distributed mini-largesse to marginal or
threatened Conservative parliamentary seats. Taken together, Eric’s pork-barrel
politics makes Ronald Reagan’s performance look distinctly amateurish.
In November 2014, the National Audit Office produced a
report, Financial
Sustainability of Local Authorities 2014, which raised a number of concerns
both about the financial sustainability of local authorities and the Department
for Communities & Local Government’s understanding of these challenges.
The NAO said the government had reduced its funding to local
authorities by an estimated 28% in real terms between 2010-11 and 2014-15 and
that further planned cuts would bring the total reduction to 37% by 2015-16,
excluding the better care fund and public health grant.
Although there have been no financial failures in local
authorities so far, local auditors say councils are showing signs of financial
pressure and that they are increasingly concerned about local authorities’
capacity to make further savings, with 52% of single tier and county councils
not being well-placed to deliver their medium-term financial plans. The NAO
concluded the DCLG had a limited understanding of authorities’ financial
sustainability and the impacts of funding cuts on services.
In February 2015, the communities and local government
committee questioned the then permanent secretary and his deputy about the
findings. I have to say that we were no more impressed by Sir Bob
Kerslake’s swansong attempted justification of the scale of local government
cuts than we were by his disappointment at the NAO’s conclusions.
In CLG Select Committee, I asked the relevant minister,
Penny Mordaunt, to give a guarantee that the government’s review of business
rates would not result in any cuts in local councils’ funding. Unsurprisingly,
none came.
I then challenged Eric Pickles about whether the government,
if re-elected, intended to carry on with year-on-year cuts to councils and
whether, in that situation, it would be possible for all councils to remain
financially viable and continue to deliver their statutory services. Answer
came there none.
In our unanimous all-party view, financial sustainability is
likely to be one of the most important issues facing local government over the
next five years. Perhaps everyone will know that it’s really serious when the
online bookmakers start taking bets on which council will go under first!
Clive Betts, Labour
candidate for Sheffield South East. He was chair of the Commons communities and
local government committee in the last parliament
This article first appeared in the Local Government
Chronicle on 23 April 2015
http://www.lgcplus.com/news/finance/comment-and-analysis/osbornes-budget-points-to-a-darker-future/5084232.article?blocktitle=Latest-Opinion&contentID=5828
