Councils must challenge Government fearlessly for pandemic cash

By John Tizard | 05 June 2020

Local government is rightly protesting that the Government does not renege on its promise to reimburse local authorities for the financial costs arising from the COVID-19 pandemic.

As has been reported over the last few weeks in the MJ, local authorities have been hit by a double financial whammy. In responding to the public health crisis, they have had to incur significant additional unbudgeted expenditure. They have properly got on with the job, the expenditure has been unavoidable and certainly it has been fully justifiable. However, they have also lost and continue to face major shortfalls in revenue such as car park revenues, income from leisure services and much more. 

Seemingly, the Government is not now committing to meet all the additional expenditure and is apparently expecting local authorities to absorb the loss of planned and budgeted income. It is claiming that this is what it promised. This is disingenuous given the strong clear commitments made by ministers, including the Secretary of State for Housing, Communities and Local Government; and it is irresponsible too.

There are reports of several local authorities of all political persuasions, location and type – metropolitan, unitary, county and district – facing a real prospect of effective bankruptcy; and many others are having to contemplate cutting still further critical services such as adult social care and making staff redundant to balance their books. This is wrong.

Government has rightly found massive sums of money to support the private sector, to protect employment (though in this case, for how much longer?) and to fund the additional costs in the NHS. I am not denying that this expenditure was necessary but why should local government again be the poor relation to the NHS?

The Local Government Association (LGA) has been making representations to the Government about the financial urgency across English local government. Inevitably, perhaps, the opposition groups on the LGA have been more vocal than the current Conservative leadership of the LGA about this failure of government to commit the necessary finance to ensure that local authorities can survive and can serve their communities.

Local government has had its central government funding cut dramatically since 2010 and local services have been severely reduced or closed as a consequence of austerity. The Government has been continually reducing financial support and expecting local authorities to raise more revenues locally. However, the pandemic and economic downturn (and we are likely heading for the worst downturn since the early 18th century) will inevitably lead to less ability to raise sufficient taxes, whilst placing even more pressure on already underfunded and stretched local government services. There is likely to be a strong correlation between those places with the greatest need and those with the least ability to locally raise sufficient funding. Therefore, there is a case for some restoration of the austerity imposed funding cuts too and very strongly for an extension of redistributive central government financial support.

English local government’s voice should be loud, its message clear and its willingness to challenge the government bold and fearless. Ideally, there should be a united voice as all local authorities and the communities they serve are at risk, though they are likely to be greater in those areas with the most social disadvantage and economic challenges. I urge local government to unite on this vital issue - and to show unity. Local government needs to reach out to others to support a campaign for Government to meet its commitment (and, I suggest, its duty) to fund local authority shortfalls. Charities, local voluntary and community groups, trade unions, businesses and others should be enlisted as they all have an interest in and benefit from good local services and sustainable communities.  Locally and through their national bodies, these groups should be enlisted to support local government.

I am not suggesting that central government should automatically consider bailing out any irresponsible property speculation based on borrowing by local authorities as this is a different issue. The COVID-19 emergency has led to a deeper realisation that ‘public services matter’. It has exposed the impacts of underfunding and the latent impact of austerity. It has also demonstrated that local government has a major role to play in the response to the crisis. For example, the Government has rather belatedly but thankfully acknowledged that local government should be leading the test, trace, and isolate programme.

It has also called on local government to find shelter for rough sleepers – though perplexingly, it may not continue to fund this. Public health is a critical local government service. And local authorities have been expected to address issues in schools and social care, even when they do not have a direct responsibility for or control of these critical services.

Interestingly there are signs but too few that government has recognised that centralisation and centrally managed solutions are not always the answer to every aspect of major crises such a COVID-19.

Collectively, local government should take advantage of the current public mood and political reality to insist on the funding of lost income and extra costs arising from COVID-19 - but it should go further, much further. This has to be revenue finance - not the right to additionally borrow.  And most certainly, the rumour that the Government might consider allowing local authorities to borrow to fund revenue expenditure must be rejected.

I am not suggesting that central government should automatically consider bailing out any irresponsible property speculation based on borrowing by local authorities as this is a different issue.

It is also the time for local government to seek to reclaim powers lost or taken from local authorities over the last few decades, especially the last one. These include the restoration of strategic and operational roles for schools and social care – including bringing social care in-house. Local government should consider making the case for the introduction of a new version of the last Labour Government’s ‘Total Place’, with local authorities having a strategic responsibility for much more public expenditure in their place than they currently do, and being accountable for this expenditure and outcomes.  There is even a case for considering a local government role in strategic NHS commissioning.  Such approaches could lead to better outcomes and better use of scarce financial resources.

The recovery from the economic devastation of the COVID-19 crisis is going to require local action and local leadership – not just the actions central government. Local authorities can and should be seeking to take control of local economic policy. The adoption of policies and approaches such as Community Wealth Building, the ending of outsourcing and the marketisation of services, using procurement for public benefit, and introducing local green new deals to create fairer, inclusive local economies whilst addressing inequality, local employment, and local sustainability.  Local government does not need to ask or wait for central government permission to pursue these policies - as an increasing number of local authorities are already demonstrating in practical ways. It should expect central government to support and not local initiative.

Local government has a significant role to play in a COVID-19 rescue, recovery, and reform agenda; and the measures listed above have a major role to play. Central government should be persuaded that this is the case and respond by respecting, properly funding and enabling local government to be a governance and delivery partner - not a subservient agent.

Local government needs to be bold and seize the opportunity of the moment.

John Tizard is a strategic adviser, former council leader and former chair of the National Association of Voluntary and Community Action

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