Councils, it seems, are back in favour. After years of being viewed with distrust by Whitehall, they are now ministers’ new best friends.
Town halls have been called on by the government to take the lead in combating the effects of the recession, dealing with climate change and responding to the needs of an ageing population.
The rapprochement continued this week with a speech from Communities Secretary John Denham, in which he claimed that local authorities were essential to delivering personalised services. Denham has also strongly supported the Private Member’s Bill giving councils wider scrutiny powers.
And it is not just the government that has seen the error of its ways. Conservative leader David Cameron has promised councils a power of general competence, as well as new responsibilities for planning (see cover feature on pages 20-23).
The inevitable question, however, is will councils have the resources to carry out these additional demands?
On the plus side, they have been given a relatively generous grant settlement for 2010/11 – a 4% increase, equating to an extra £76bn.
But the other main income source – council tax – is unlikely to rise much at all, with a CIPFA survey this week predicting the lowest ever rise across Britain. The Band D average increase is expected to be 1.8% in England, 0% in Scotland and 3.6% in Wales. See councils to set record low tax rise story.
Some authorities – such as Windsor & Maidenhead and Hammersmith & Fulham – are actually proposing to reduce their council tax bills.
It’s an understandable political move, with local elections just over two months away, but the implications for council services and staffing levels are obvious. Around 20,000 local government jobs have already been lost, and many more are likely to follow.
The fear is that town and county halls will bear the brunt of public sector cuts. As Tony Travers has written previously in PF, many of the ‘unloved and unprotected’ services reside in local government’s domain.
Next year’s grant settlement could easily see a real-terms cut. According to the New Local Government Network, an annual 6% reduction in central grant for the three years to 2014 could lead to a council tax rise of 40% in some cases.
This would of course be electoral suicide, but shows the scale of the decisions to come. Negotiating the tension between political unpopularity and maintaining essential local services will be one of local government’s biggest challenges yet.
Mike Thatcher is the editor of Public Finance
