Category Archives: Austerity
If the economy ‘tanks’ post-Brexit, will shopping mall and carpark revenues be enough to compensate for government cuts?
“Years of chronic underfunding have left local government ‘on life support’ “
123 of England’s 353 councils sent information to the 2019 State of Local Government Finance survey, conducted by the Local Government Information Unit and Municipal Journal. Chris Tighe (possible paywall) reports that Jonathan Carr-West, chief executive of the LGIU, has warned of a future in which care for the elderly and for vulnerable children could be funded from shopping centre investments and car parks – “a significant risk if the economy ‘tanks’ “.
Survey findings include:
- More than half of English councils will eat into their reserves.
- Four out of five are investing in commercial developments to supplement their revenue this year to compensate for central government funding cuts.
- Nearly half of the local authorities are planning to cut services.
- Most will raise council tax this year and increase charges to stay afloat.
- A quarter said planned cuts to services in the coming year would be noticed by the public.
- 10 local authorities said they were concerned they would be unable to deliver the legal minimum service for residents.
- Last year, Northamptonshire county council was given special permission to sell its head office and rent it back after running out of money.
- Several other authorities have warned they are close to collapse.
- 8 in 10 senior council decision makers believed the current system for council funding was unsustainable.
- 82% were considering commercialising council services to raise extra money
- and 57% wanted to sell council assets.
- Children’s services and education were the top immediate financial pressures, for the second year running.
- Adult social care is still under severe strain
Four out of five English councils are investing in commercial developments to supplement their revenue this year to compensate for central government funding cuts.
The government’s annual funding settlement for local authorities, outlined in December, assumed that every council in England would implement the maximum 4.99% council tax increase, including 2% ringfenced for adult social care, in 2019-20. Analysts say that would add around £80 to the annual average bill for a Band D, mid-market, home — currently £1,671. An additional £24 can be added to the charge to fund the local police force.
But the Local Government Association said the tax rise would not be enough to prevent service and job cuts after eight years of austerity. It said councils would have lost almost 60% of their central government funding between 2010 and 2020 and face an overall funding gap of £3.2bn in 2019/20.
Jonathan Carr-West warned: “In the future, care for the elderly and vulnerable children could be funded from shopping centre investments and car parks, which carries significant risk if the economy tanks.” This year’s government spending review would, the survey warned, be “make or break” for vital local services.
As the media was focussing on Tuesday’s Brexit vote in the Commons, this morning only subscribers to the New Statesman read about the written statement by the secretary of state for housing, communities and local government, James Brokenshire.
In what the writer, Anoosh Chakelian (right), said is becoming a bleak pattern, the government chose Theresa May’s second attempt to pass her Brexit deal on which to publish its statement on local government finance.
A reassuringly generous set of dispensations?
The statement by James Brokenshire (left) opens with eight substantial paragraphs detailing increased funding in a wide range of sectors, summarised in the New Statesman:
“As first announced in the Budget, the government is releasing extra chunks of funding for social care and potholes, as well as more money for high streets. The government calculates that its settlement adds up to a rise in core spending power for councils from £45.1bn in 2018-19 to £46.4bn in 2019-20: a 2.8% cash increase. (It has also reiterated the £56.5m across 2018-19 and 2019-20 to help councils prepare for Brexit, which we can’t really count as extra funding as it’s to fill a Brexit-shaped hole.)”
Councils are to be awarded £56.5 million across 2018-19 and 2019-20 to help prepare for EU Exit. It lists “a broad package of measures and confirms that Core Spending Power is forecast to increase from £45.1 billion in 2018-19 to £46.4 billion in 2019-20”.
This information is meaningless to the general public. Are they going only to the 117 largest councils listed here, or should district councils and London boroughs be included? And will they be distributed according to need, population, or other criteria?
Anoosh Chakelian’s verdict: Far from generous. She points out that after eight years of austerity, cash-strapped councils will still face a funding gap of more than £3bn this year, according to the Local Government Association.
She adds that the pressure to set legal budgets, with an average 49% drop in real terms spending power since 2010 and rising social care demands, means that councils need substantially more than a 2.8% rise.
Decisions on business rates retention and a fair funding formula for local government have been postponed, despite the planned consultations having taken place and their findings published.
Noting that the long promised green paper on adult social care has not appeared and the funding announced is ’a short-term one-off’, she quotes the head of the National Audit Office, Amyas Morse, who said last March: “Current funding for local authorities is characterised by one-off and short-term fixes, many of which come with centrally driven conditions.”
Though James Brokenshire asserts that this settlement answers calls for additional funding in 2019-20, and paves the way for a more self-sufficient and reinvigorated system of local government, Anoosh Chakelian concludes: “This means councils will continue to operate in a financial void, unable to fund public services properly, while waiting for something to change in the promised Spending Review later this year”.
MPs ask how ‘the other England’ can be strengthened so that fellow citizens are not “pushed into destitution”
A Bournville reader draws attention to an article about Heidi Allen, Conservative MP for South Cambridgeshire, and former Labour MP Frank Field, now a backbencher. They are touring the poorest areas of Leicester Newcastle, Glasgow, Morecambe and Cornwall. Frank Field said they want to know “how the soft underbelly of our society – ‘the other England’ – can be strengthened so that none of our fellow citizens are pushed into destitution”.
Robert Booth, Social Affairs correspondent for the Guardian, reports that their widely publicised inquiry began in London where testimonials from those with first-hand experience of food poverty exposed the barriers that people face in securing support from the government, when faced with extreme life hardships and personal difficulties.
“Unless we blow the lid off it, my lot are not going to listen”
He explains that Heidi Allen had asked Frank Field if he would join her on a tour of the UK to show the government the “other England” shaped by the austerity policies pioneered by Allen’s party. She added: “Unless we blow the lid off it, my lot are not going to listen.” This is not a new concern: in her 2015 maiden speech Heidi Allen gave a detailed criticism of proposed cuts to tax credits, saying, ‘today I can sit on my hands no longer’.
Evidence from Leicester which they will be presenting includes accounts of:
- an illiterate man sanctioned so often under universal credit that he lives on £5 a week;
- a man who had sold all but the clothes he was wearing;
- someone told to walk 44 miles to attend a job interview, despite having had a stroke, to save the state the cost of a £15 bus ticket;
- a surge in referrals to food banks from 5% since the introduction of universal credit in June, to 29%;
- an elderly person – after her son, who had suffered a stroke, had been sanctioned 15 times – said, “The system needs more caring people. They are like little Hitlers”;
- another was expecting the bailiffs to take back her two-bed council house because she was in arrears, including on bedroom tax. Her second bedroom is used by her granddaughter five nights a week, so her son can work, but that doesn’t count – only children qualify’
The bureaucratic struggle to claim benefits is a big problem, carefully and accurately portrayed in Ken Loach’s internationally acclaimed award-winning film, I Daniel Blake (snapshot and link to brief video below). 65% of the most vulnerable people who come to Leicester council for help have never used a computer and don’t have a smart phone or an email address, needed to fill out forms.
A brief extract from the film – those who have seen it will remember that the computer session becomes far more stressful and eventually – as often happens – aborts for no fault of the ‘client’.
According to Feeding Britain, a charity set up by Field which now includes Allen among its trustees, after housing costs, 41% of children in Leicester – more than 34,000 – are living in poverty. The Leicester South parliamentary constituency was in the poorest 2% of constituencies in the UK in 2018. Over the last two summer holidays, in the most deprived parts of the city, over 15,000 meals were served to almost 1,650 children, using government funds.
In the Leicester Mercury, Leicester South MP Jon Ashworth said after reading the latest research findings: “These shocking statistics show high levels of child poverty in Leicester South. It is clear that the Government is failing working families, and cuts to Universal Credit will make child poverty even worse. It is appalling that since 2010 the number of children living in poverty has reached four million under this Government, and the Government is still maintaining the benefit freeze.”
Today, Times columnist Clare Foges, a former member of Boris Johnson’s mayoral team and then David Cameron’s speech writer, challenges the narrative that Brexit is down, in large part, to a high-handed and callous establishment’s neglect of the “left behind”, deploring the belief that:
”Those in poor northern constituencies and bleak coastal towns were left trailing in the gold-flecked dust thrown up by the golden chariots that bore the wealthy, the Londoners, the elite onwards — throwing back their heads to laugh heartily and pour some more Bolly down their gullets while failing to give a monkey’s about those in their wake”.
Truly, those in poor northern constituencies and bleak coastal towns were and are left trailing – but the elite do not spend time laughing at them – those people are neglected because they are simply of no interest.
She asserts that the deindustrialised towns have suffered because of globalisation or automation, not because those in government sat on their hands.
But the elite constructed, fostered and continue to be enriched by globalisation and automation – the system which impoverishes many is necessary to their lifestyle. Clare admits that “When you know that you are on the lower rungs of a socio-economic ladder that reaches, at its heights, into the realm of millionaires and sports cars and Maldivian holidays, you may well feel resentful. It must be profoundly demoralising to see swathes of your countrymen and women enjoying seemingly easy success while you struggle”.
She also concedes, “Of course there is serious poverty and inequality in our country, but over the past 20 years in particular governments have tried a thousand different policies to reduce them” but fails to mention the ways – under recent Conservative governments – in which people on low incomes and those in poor health have been harassed, ‘sanctioned’ and deprived of their due allowances, in order to make derisory savings. She adds:
“I don’t deny that the Brexit vote may have been driven in part by resentment. Yet here is the crucial point: just because people have felt cruelly neglected by the powers that be, it doesn’t mean that they actually were . . . Let us not mistake a failure to revive left-behind areas with wilful neglect. For the most part the much-traduced “establishment” has been well-meaning and hardworking in pursuit of a fairer country.”
Yes, wilful neglect does imply a degree of awareness – the correct term is indifference; ‘left-behind’ people are simply not on the radar of the affluent, preoccupied by “sports cars and Maldivian holidays”. She ends with more burlesque:
“With a more benign and interventionist establishment at the helm, the taxes of rich people could be spread thickly all over the country with no fear that wealth will flee; billions could be borrowed for major infrastructure projects with no damage to our economy; the streets of Grimsby and Oldham would be paved with gold. By giving this impression, we are inviting people to vote for Jeremy Corbyn and his fantasy economics”.
But would those in government circles – who benefit from corporate sinecures, stock exchange speculation and commodity trading – be willing to change the globalised system for one in which government invests in strengthening the economy through regional production and supply chains? Or will they oppose such changes with all their might, to maintain their current privileges?
Universal credit is NOT an incentive to work for the single able-bodied: 63p of every pound earned is clawed back
Focussing on undue delays causing hardship, highlighted on this site, The Times and the FT in 2017 asked ‘is universal credit – to date – a disaster?’
The FT today says “Universal credit is a plum example of how not to reform public services. The theory was broadly sound: the simplicity and real time data of the universal credit would ensure people were always better off in work. The reality, however, has proved calamitous”.
Conservative and Labour politicians, such as Jacob Rees-Mogg, Johnny Mercer, Gordon Brown and Frank Field, are now demanding that the government reconsiders the national rollout.
John Major has warned that UC could lead to a repeat of the poll tax debacle of the early 1990s, which saw riots against the then Conservative government.
A reader with a postgraduate degree was asked to look at these sections on a government-recommended benefits calculations site:
Work allowance for Universal Credit (Ed: able-bodied & childless need not apply)
If you/and or your partner are in paid work, you might be able to earn a certain amount before your Universal Credit is affected, this is called the work allowance. Your work allowance will depend on whether you are single or part of a couple and whether your Universal Credit includes amounts for housing costs, children and/or limited capability for work. The table below shows the different levels of monthly work allowance.
The Universal Credit earnings taper is a reduction to your Universal Credit based on your earned income. The taper rate sets the amount of benefits a claimant loses for each pound they earn. The earnings taper rate is currently 63%. This means for every pound you earn over your work allowance your Universal Credit will be reduced by 63 pence. To work out the earnings taper that applies to your award:
- Take your total monthly earnings figure after tax, National Insurance and relevant pension contributions have been taken off
- Deduct your monthly work allowance, which is the amount you can earn without your benefit being affected (if you are eligible for one)
- Apply the taper rate by multiplying the remaining earnings by 0.63
This is the amount that will be taken from your Universal Credit maximum amount when calculating your award.
Even the post-graduate reader found these instructions ‘far from simple’ and in no way producing a simpler and more effective system.
Esther McVey, the work and pensions secretary in charge of the scheme, confirmed last week that families will be poorer under UC. She did not deny reports that millions of families could be up to £200 a month worse off when it is fully rolled out.
The chairman of the Commons work and pensions select committee has described the project – running well behind schedule – as a “shambles, leaving a trail of destruction” and in its assessment this year, the National Audit Office doubted whether the system would ever deliver value for money.
The current Universal Credit system is NOT ‘fit for purpose’
Keep Our NHS Public Birmingham (KONP) says, “It looks like we’ve won our campaign for a publicly-funded (non-PFI) Midland Metropolitan Hospital in Smethwick/West Birmingham!”
The construction of the Midland Metropolitan Hospital in Smethwick collapsed after Carillion crashed spectacularly in Jan 2018 leaving the hospital half built. Then the bankers behind the ‘private finance initiative’ pulled the plug on the deal.
KONP Birmingham immediately organised a protest outside the hospital site demanding that the Treasury, health ministers and the Government should fully fund the hospital and run it properly under government and NHS control! Supporters included Birmingham TUC (BTUC), Unite the Union West Midlands, Unite the Community Birmingham, West Midlands Pensioners Convention and Birmingham Against the Cuts.
A month later, the Sandwell and West Birmingham Hospitals Trust Board voted to tell the Government that the only viable option for the completion was direct government funding, a full vindication of the KONP Birmingham campaign argument.
The Government and Hospital Trust has now reached an agreement to finish construction work with the Government providing funding for the remainder of the building work at Midland Metropolitan Hospital – which will see the new hospital built by 2022.
Birmingham Against The Cuts (BATC) says: “We believe that the Midland Met fiasco is a final nail in the coffin of successive governments’ love affair with PFI /2”
BATC gives a very cautious welcome for a publicly funded Midland Met Hospital in Smethwick/West B’ham (no PFI!) and expresses its continuing concerns:
Firstly, there is a delay in starting completion until early summer 2019, partly because the half built hospital was rotting away without any protection for 6 months and an additional £20m worth of work will have to be done from this September.
Additionally, the Hospital’s Trust Board Chief Executive has been dropping in phrases to his announcements such as “making cost improvement programmes above national norms”, “limited reconfigurations”, etc, which reflect the concern in Dr John Lister’s 2016 review (right) of the privately financed hospital published by KONPB and BTUC when the Midland Met was first mooted.
We don’t think enough about local government, one of whose jobs it is to mend potholes. When in our own lives our nearside front tyre is shredded, the pothole, Parris believes, represents “a momentary twitching-back of one tiny corner of a great curtain, behind which lie, no, not potholes, but a million anxious human stories, caused in part by cuts in public spending”.
He adds that accidents due to potholes are usually relatively trivial compared with cuts which for others may have meant:
- the loss of social care in dementia,
- no Sure Start centre for a child,
- the closure of a small local hospital
- or the end of a vital local bus service.
Potholes are a parable for others that matter even more. Unfilled potholes put lives at risk and have become a symbol of the damage done to every walk of life by spending cuts.
All the pressures on those who run government, local and central, are to worry about the short-term. it is usually possible to leave issues like road maintenance, decaying school buildings, rotting prisons, social care for the elderly, Britain’s military preparedness or a cash-strapped health service, to tread water for years or even decades. “They’ll get by,” say fiscal hawks, and in the short-term they’re often right.
- Nobody’s likely to invade us;
- the NHS is used to squeezing slightly more out of not enough;
- cutting pre-school provision is hardly the Slaughter of the Innocents;
- the elderly won’t all get dementia at once;
- there’s little public sympathy for prisoners;
- teachers can place a bucket under the hole in the roof
- and road users can dodge potholes.
Parris continues: “But beneath the surface problems build up. The old get older, and more numerous. Potholes start breaking cyclists’ necks. Care homes start going under. The Crown Prosecution Service begins to flounder. We run out of social housing. Prisoners riot. And is there really no link between things like pre-schooling, sports and leisure centres and local outreach work, and the discouragement of knife crime?”
“When New Labour was elected in 1997 we Tories groaned as it tipper-trucked money into the NHS, school building and other public services. Thirteen years later when Labour left office the undersupply was monetary, the red ink all too visible”.
Parris asks: “Must we forever oscillate like this?
One answer: Green & Labour Party leaders would meet these needs and avoid red ink by redirecting the money raised by quantitative easing.