by Kieran Neild-Ali, grassroots assistant at the TaxPayers' Alliance
The 2020-21 Local Government Finance Settlement has proposed an increase in central government funding for councils across England. The government package includes a new £1.41 billion Social Care Grant for adult and children’s services. That is an additional £1 billion in grant funding. Council tax referendum principles remain largely unchanged. Councils can increase core tax up to 2 per cent, and by an additional 2 per cent if they have social care responsibilities, without a referendum1.
The announcement by the government has been welcomed across the benches in the House of Commons. The debate in the chamber on the 24th February saw both Labour and Conservative MPs back the extra funding2. The focus of the extra spending is primarily on tackling social care.
Secretary of State for Housing, Communities and Local Government, Robert Jenrick stated:
“These measures mean that the Government are making almost £6 billion available next year across adult and children’s social care. I appreciate that this is only the start. Fixing social care is one of the defining issues of our generation.”3
The government is right that funding social care is a huge issue facing local authorities. However, most people can see that yet more money is not a long term solution. The government's decision to dispense more money from the public purse into council coffers is built on a fallacy. Firstly, they believe that current council budgets are so stretched they can barely pay for front line services. They also assume that councils in the UK are competent at governing their locality and cannot make anymore savings. As TaxPayers’ Alliance supporters know, these assertions are wrong.
Looking at the response from MPs shines a light on this situation. Conservative MP Daniel Kawczynski welcomed the increased funding for local councils4. Specifically, he cited Shropshire council as being burdened with high social care costs. Yet Shropshire council, like many others in the UK, is a menace to itself and has caused its own financial trouble.
Although the council purportedly cannot afford social care, it can instead afford to hire a ‘Pothole Expert’, to the tune of £130,000 for a six month contract. The expert was solely hired to ‘analyse’ potholes. Shropshire has also spent £381,236 on two consultancy firms which gave advice on their £24 million over budget HQ refurbishment project. The refurbishment is £6 million over budget and spiraling out of control with its 2021 deadline looming. As a result of its own failures, the council has dipped into its financial reserves to plug a £37 million spending gap. The council has noble ambitions to make long term savings, including pulling services together in one place. But for now, the situation is concerning. Shropshire taxpayers would no doubt prefer that the council could get its own house in order before being given more cash.
Jack Dromey, Labour MP for Birmingham Erdington, also argued for extra funding. He did not, however, admit that Birmingham council has also fallen foul of the fiscal responsibility residents expect. The TaxPayers’ Alliance Town Hall Rich List revealed that Birmingham City Council employed the third highest paid council employees in the UK 2017-2018. The Strategic Director of Major Programmes and Projects took home a remuneration of almost £450,000. Birmingham also had 28 staff members on a remuneration over £100,000.
Birmingham is also spending over £13 million on moving a bus depot 300 metres up the road. The cost of the project is spiralling out of control and has prompted an internal investigation. The Strategic Director of Major Programmes and Projects is clearly not earning his keep.
It also seems that the council cannot perform its most basic functions and is costing taxpayers thousands as a result. Birmingham councils’ inability to collect bins on time has forced the council to make payouts to hundreds of individual residents worth £4,500 in compensation.
Gary Sambrook MP for Birmingham Northfield contested the reason for Birmingham’s need for extra funding. He rightly pinned the blame on the administrations’ inability to control a budget or deliver services properly5. It’s refreshing to see MPs standing up for taxpayers in this way.
Both examples illustrate that councils are not entirely cash strapped, and if they are, their own incompetence doesn’t help. But Shropshire and Birmingham are the tip of the iceberg of local government failure. The TPA Weekly Bulletin has many examples of this sort of wasteful spending across the UK. If councils face a social care crisis, they ought to give their fat cat bosses a pay cut, scrap their multi million pound vanity projects and collect their bins on time. There are plenty of ways to make savings - and if they’re stuck for ideas, we’d love to hear from them.
Ultimately, a long term solution is needed to issues like social care, and local authority funding itself. This means increasing reliance on local tax revenue rather than government handouts. This is possible, for example, through a local income tax as proposed in our Single Income Tax report, forcing councils to facilitate conditions for business growth in order to increase tax yields and foster a self reliant local authority. But until that time, taxpayers expect councils to show much more fiscal frugality.
1. Ministry of Housing, Communities & Local Government, Equality Statement: The 2020-21 Final Local Government Finance Settlement, 2020. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/867980/LGFS_Equality_Statement.pdf
2. House of Commons Debate, 24th February 2020, Vol. 672, cols 8-131.
3. House of Commons Debate, 24th February 2020, Vol. 672, cols 116.
4. House of Commons Debate, 24th February 2020, Vol. 672, cols 9
5. House of Commons Debate, 24th February 2020, Vol. 672, cols 118.