Shades of reality

Jeremy Beecham

Jeremy Beecham on why the latest local government financial settlement is much tougher for some than Ministers make out

The literary sensation of 2012 was Fifty Shades of Grey – a novel focusing on sado-masochism. Its political counterpart, albeit without the masochism, was the Local Government Finance statement –otherwise known as 'Fifty Shades of Pickles', published on the last day before the Christmas recess. 

This was accompanied by 50 “sensible savings” ranging from the banal, like not providing mineral water at council meetings, to the blindingly obvious, like improving council tax collection rates – though how that squares with the pending cuts in council tax benefit is difficult to envisage. Pickles’ patronising prescriptions to experienced council finance officers and elected members, who have led the public sector in improving efficiency and value for money for many years, would in any case go nowhere near closing the yawning gap between rising costs and demand, and the precipitate fall in Whitehall support.

When it comes to the recently published Mid-Term Review we move from the realm of fiction to fantasy. The allegedly “shared instinct for decentralisation” on the part of Tories and LibDems has apparently become: “an organising principle”, with “an historic shift of power ... to put our counties, cities and citizens in control of their own affairs“. And all with “sweeping reforms to increase local authority freedom including the removal of ring-fencing in local government finance” and the “the ability to finance themselves independently through retaining 50% of the business rate” – the latter, of course, set by the government!

Yet Pickles was the first Cabinet Minister to offer up cuts, of 30%, to George Osborne after the general election, and he continues to preside over a massive reduction in resources on a scale unprecedented even by the standards of the Thatcher governments. Characteristically the finance statement and its accompanying documents were riddled with inaccuracies, so much so that the website was taken down after representations from council treasurers. Council tax support grant has been double counted, the cut in Early Intervention Grant understated, and other cost pressures ignored. Newcastle’s City Council’s cut in spending power and grant funding is more than double the published figures.

Equally characteristically, Pickles not only underestimates the scale of next year’s cuts he said next to nothing about even bigger cuts to follow in 2014-15, which will course come after this year’s county council elections in which the Tories will be defending the gains made in 2009.

And make no mistake, the cuts in 2013-14 will hurt, especially in areas of greatest need (in inner London, the North West, North East, Yorkshire and the West Midlands) but also including parts of shire counties elsewhere – places like Great Yarmouth  and other coastal towns suffering alongside the cities.

Ministers are determined to move inexorably away from a needs-based system which, for all its unevenness at least sought to address the disparities between more and less prosperous areas, to one based on crude numbers. The government’s New Homes Bonus, largely financed by top-slicing money which would have been coming to councils any way, will see resources diverted from the less prosperous to the more prosperous. 

Before the 2010 election the Tories were complaining that too much money was going into the urban areas, which they regarded as being Labour. Today, they’re certainly reversing that trend. 

Infuriatingly they compare Newcastle to Wokingham, citing a difference in spending power, ie council tax and grant, of £700 per dwelling. But half of that is due to the higher costs of adult social care in a much poorer and less healthy population, a sixth to council tax support, another sixth to grants for homelessness, £95 for children’s social care. And to add insult to injury Wokingham, where unemployment is 2% against Newcastle‘s 7.3%, actually gets £124 more funding per dwelling for ‘damping’ protection against loss of grant.

It’s not surprising that Newcastle’s  Leader, Nick Forbes facing cuts of £100m per year by 2015-16 is calling for grant distribution to be determined by an independent body rather than by Ministers. 

The same view was taken in 2008 by a leading Tory. 

His name? Eric Pickles.

Lord Jeremy Beecham is a Shadow Local Government Minister in the House of Lords

Published 17th January 2013


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