A new financial year is just around the corner. The government is reportedly in the mood for tax cuts ahead of the elections; the opposition speaks of iron budget discipline. And all around us a familiar disaster rages on: a continued increase in demand for our most crucial public services, which the financially frustrated municipalities tasked with delivering them simply cannot meet. The result is a story that speaks volumes about the state of twisted denial in Westminster: more and more cities and counties are now facing municipal bankruptcy, but no one in any position of national power and influence seems to want to talk about it.
The dire situation of councils across England now raises an obvious question: at what point might we collectively realize that hundreds of local crises now add up to a national catastrophe? Our political culture is too Westminster-centric to follow the stories and connect the dots; the dreaded term ‘local government’ still causes glassy eyes. But across the country the picture is now the same, and things are rapidly approaching the point of complete collapse.
Related: The UK council could go bankrupt due to a £60m gap in special needs spending
Until last year, the handful of councils that had issued section 114 notices – a reference to the part of the Local Government Finance Act 1988 that covers insolvent local authorities – were largely mired in stories of financial mismanagement. Then came the fall of Birmingham City Council, which was forced into bankruptcy late last year over the mishandling of an equal pay claim and a £100 million IT project. At that moment, a long-standing fear became inescapable: that, regardless of the mistakes and shortcomings of certain council leaders, a systemic crisis was about to erupt. The evidence came as Nottingham City Council collapsed amid talk of a starkly familiar gap between local revenues and the enormous costs of continually trying to patch up our frayed social fabric.
Nearly one in five council leaders in England now say they are likely to go bankrupt in the next 15 months. The latest places to see warnings of a financial collapse are Stoke-on-Trent, Middlesbrough, Somerset, Bradford and Cheshire East. The recently announced increase of 6.5% in the resources that the government gives to the municipalities will hardly affect the parties. In both deprived and affluent parts of the country, the millions being cut from local services reflects the fiscal cruelty of George Osborne’s cuts. This time, however, there is a crucial difference. After long years of endless austerity, austerity now automatically brings endless cruelties. That is why the new Labor leader of Stoke City Council has spoken of “unpalatable decisions that will damage our sense of what is right and wrong”.
How we got here is hardly a mystery. The money councils receive from central government suffered a real cut of 40% between 2010 and 2020. Inflation has blown further holes in their finances, and the pandemic caused a sudden halt to cash flows from car parks and leisure centres. Meanwhile, councils have to deal endlessly with the kind of social mess left by decisions in Westminster and Whitehall. As poverty increases, so does the pressure on local social workers, not least those involved in child care. When the mainstream education system pushes out children with special needs, municipal budgets take another hit. Much of what councils face is shaped by one of the deepest stupidities of austerity: the fact that the erosion of early intervention programs – Sure Start is probably the best example – means that people’s problems are only picked up when they reach their limits. crisis point, and therefore addressing it is even more expensive.
From 2013, councils will be allowed to keep a greater share of the money they receive from local business rates – which was good news for the more affluent places, but an extra burden for the kind of areas where such income is paltry at best. This unfairness has continued to fester, but even relatively wealthy areas are now feeling the pressure. For example, Hampshire now faces a financial shortfall of £132 million. There are plans to withdraw all funding for homelessness services. Street lights are turned off between midnight and 5 a.m. Cuts are being made to buses and school crossings. An estimated 4,000 people will be asked to contribute more to the costs of their social care.
Perhaps the most vibrant element of our councils’ shared disaster centers centers on libraries, museums, leisure facilities, parks and what little remains of youth care. As these things are scaled back to prevent the collapse of social care, people will be pushed even further into a dystopia of rusty swings, closed swimming pools and the perpetual complaint that there is nothing for children to do – the everyday social reality that has has determined almost everything over the past fourteen years and now seems to be getting even worse. This is why the neglect of councils’ predicament by both the media and politicians at Westminster leaves much of our national plight unnoticed: if you want to understand why so many voters feel exhausted and jaded, this is an important rode.
Related: Nottingham City Council is backtracking on Sunak’s claims that he has let residents down
Which brings us to the immediate political future. As when? – the Labor Party wins the next election, it will not make much progress if it allows this rubble to continue to pile up. Our own councilors will also be among the loudest voices calling for immediate help – but so far there are very few signs that it will come. Keir Starmer recently visited Leicester, where he was asked about the Labor council’s fears of bankruptcy and the prospect of deep local cuts, and what he could do in response. His response reflected a deep-seated belief that voters associate Labor with reckless abandon, and that any calls for spending should therefore be loudly rejected. “We will have to live within the constraints of an economy that has been badly damaged over the past fourteen years,” he said. “So I’m not going to make promises I can’t keep.”
The reason he sticks to that line may be understandable, but that doesn’t mean that contact with reality will survive. A Labor leader I spoke to last week spoke of an inevitable shift in his party’s position. “They’re going to have to deal with more section 114 notices, and more councils are really struggling, so they’re going to have to get money from somewhere,” he said. ‘They’ll have to do it something.”
It struck me that that day shadow ministers were staging a so-called watershed battle over whether children should be required to have their teeth cleaned. There is perhaps another example of the howling gap between the narrow horizons of our politics and a national crisis about to explode.