The local government finance settlement has shed light on the amount of money the sector will get in the next financial year – hasn’t it?
The biggest thing revealed in the settlement this year is just how opaque the figures really are. Council ‘spending power’ has, according to the government, been cut by 1.8% - while CIPFA claims the actual figure is 6%.
And what is ‘spending power’ anyway? It appears it is an invention of the coalition government – a new measure to describe the cuts that doesn’t sound as bad as the headline cut in grant funding.
According to the LGA, the settlement represents an 8.8% cut – while CIPFA claims it is 14.6%. And the DCLG just doesn’t give a figure. So who exactly is telling the truth? All this is before we even begin to local at variations between regions and councils.
And then there is the council tax referendum threshold. As with last year, there was much talk of the threshold being cut to 1% - down from the 2% which has become the norm. It remained at 2% - a move described as ‘great news’ by one council leader on Twitter.
Great new? Is it really great news that local government’s council tax limits are dictated by central government, with no room for manoeuvre without an expensive referendum? What price local democracy?
One of my first finance stories on The MJ was the Labour government’s promise to end capping – or at least ‘crude and universal capping’. True to their word, they only ever did detailed and targeted capping from there on out.
Much like Labour, the coalition government has never capped council tax – but a tight threshold has forced cash strapped councils further into a corner with no escape.
The true picture painted by the local government finance settlement is not one of cuts and financial difficulties – it is a picture of smoke, mirrors and fiscal chaos. It is one of central control and deceit in a bid to win a PR war public sector finances. And, to steal a phrase from CIPFA chief executive Rob Whiteman, it is about the political ‘pong-pong of fiscal gerrymandering’.
The local government finance system is beyond broken – it is destroyed, deceitful and inoperable. The only way forward is financial reform and fiscal devolution – before the system breaks down completely.
