There was little seasonal cheer for local authorities in the Autumn Statement. Just the promise of a lot more pain to come
Are there no prisons? Are there no workhouses?’ Substitute food banks and Asbos, and there’s a contemporary feel to Ebenezer Scrooge’s response to the plight of the poor.
In the run-up to the festive season, councils have been lobbying - largely unsuccessfully - for some crumbs from the Autumn Statement table. With the loss of nearly 50% of core funding over five years, and many services for children and older people under threat, you might think they have a reasonable case.
Bah humbug, says communities secretary Eric Pickles, pointing to the relatively healthy level of council reserves. Instead of complaining, and raising council tax, they should shake out their piggy banks, he insists.
It is indeed the case that many councils have set aside extra reserves for the post-election 20% of cuts to come.
This would seem prudent, given that the National Audit Office predicts half of local authorities risk financial failure by 2020, and the Institute for Fiscal Studies says Britain is only half-way through its austerity pain.
In any other line of business (banking, say) putting away money for a rainy day would be considered good housekeeping. But Pickles – whose department the NAO criticises for inadequate financial monitoring – is having none of it.
In reality, English councils have only managed to make savings by shedding a sixth of their staff since 2010 – and being extraordinarily innovative when it comes to shared services and combined authorities.
But as numerous council leaders report in this month’s issue of PF, there are limits to this approach. Many say they are having to make ‘invidious decisions’ that inevitably hit the most vulnerable.
And judging from the work and pension secretary’s Scrooge-like response - and the chancellor's signals on Dec 3 - there’s going to be even less of a welfare safety net in future.
Iain Duncan Smith intends to clamp down on benefit entitlements, to help shave £12bn off the welfare bill. ‘In-work conditionality’ is set to become a modern take on the undeserving poor.
Unless the chancellor has an epiphany, and approves far greater fiscal freedoms for cash-strapped authorities than were indicated in his Statement, councils will face some grim choices in the new financial year.
The NAO says the DCLG should look harder ‘for evidence of financial stress’ in local authorities. Judging from all the flashing warning signs, it’s already here.
This opinion piece first appeared in the December issue of Public Finance
