The funding crisis in local government has reached such a 'tipping point' recently that many hitherto silent national newspaper titles are now reporting on it, with almost all warning that even well-run and fiscally responsible local authorities are at imminent risk of collapse due to the government’s austerity-led butchering of council budgets and local public services.
In addition a cross-party committee of MPs has now reported that councils are facing an 'out of control' financial crisis. Last week the House of Commons Levelling Up, Housing and Communities committee (DHLUC) called on government ministers to fill a £4bn funding gap in council budgets if it wants to avoid a 'severe impact' on local council services - £4bn being the minimum amount necessary just to return local council finances to 2010 pre-austerity levels.
The committee's findings highlight how councils are particularly struggling with increased demand and charges for statutory services (ie those that a council is legally obliged to provide) like adult and children's social care and support for children with special educational needs and disabilities (SEND), as well as support for homeless people and associated temporary accommodation costs.
Looking to the longer-term the committee calls for a fundamental review of how councils are funded, the local council tax system and the delivery of social care services - elements of which the government flatly refuses to fund centrally, preferring to pass the burden instead to local authorities and council tax payers in the form of an additional 2% Adult Social Care precept on top of core council tax demands.
It's helpful to note at this point that each year, before the government decides how much grant funding it chooses to give to councils, it first makes an assumption that council tax will go up by the maximum permitted by law. In effect, the government is setting council tax levels by proxy, because if an authority fails to raise council tax levels every year the government will simply withhold an equivalent amount of central government grant.
The chair of the DHLUC committee is reported to have said: 'Councils being forced to hike up council tax, in a forlorn attempt to plug increasingly large holes in their budgets, is unsustainable and unfair to local people who are, year on year, seeing less services while paying more.'
In addition the committee said the increasing reliance on council tax to fund services will have a disproportionately negative impact on funding levels for authorities in more deprived towns and villages compared to those in more affluent areas where property values are higher and councils are therefore able to raise significantly more council tax for every 1% incurred.
The committee also pointed out that council tax charges were based on 1991 housing data, and because house prices had risen considerably since then people living in the most valuable homes are paying less in council tax as a proportion of their property's value than those in the least valuable properties. This applies particularly to areas like ours where the lower value of properties means that each 1% of council tax raised is much lower than in more prosperous areas. To make matters worse, residents in relatively deprived regions like ours in County Durham have a disproportionately high need for social services, largely because of illnesses and disabilities caused by its industrial legacy, chronic underfunding in communities, scaled-back medical services and generally poor social housing conditions.
To correct these imbalances the committee urged the government to undertake a revaluation of properties, take a look at wider reform of the system and consider introducing additional council tax bands.
So in summary, and to answer many of the funding and council tax queries frequently raised with me by residents, there are three main reasons why we all pay proportionately more council tax in County Durham while local council services reduce and remain exposed to further cuts.
Firstly, the council tax system is a scam, designed to make residents in deprived areas stump up more while householders in more affluent areas pay relatively less. Reform of the council tax system, preferably in the form of a fairer Proportional Property Tax was an option I put to the council. The background details can be found in a post I published on this site last year: https://robcrute-blackhall.blogspot.com/2023/04/tories-and-council-tax-scam-why-we-need.html
Secondly, successive governments have used unnecessary austerity since 2010 as a tool to drastically reduce funding to local councils and services in many working class areas - all designed to pass the burden for vital public services onto local residents through higher council tax bills, thereby leaving the government more money centrally to hand out in personal tax cuts for the rich. The added benefit for ministers of course is that local councils are then routinely blamed for public service cuts forced on them by central government.
And finally, brutal cuts to statutory social care services (which in many councils take up to 70% of total council budgets) drastically reduces the money available for other discretionary local services like highways maintenance, libraries, waste collection and street cleaning. Because social services tend to be focused on more vulnerable people and the elderly, they are not always 'visible' to many residents, who in turn are much more likely to notice cuts in other everyday services in their neighbourhoods.
The overall impact of a system that diverts funding away from poorer areas to those wealthier ones elsewhere inevitably generates questions like 'why do we pay more in council tax while all around us services are reducing'. To put it bluntly, the answer is that we're being taken for mugs. The council tax we pay is swallowed up every year by massive cuts in central government grant funding. And to make a potentially catastrophic situation worse, rising demand for essential social services, and the added cost pressures created by high inflation and interest rates, are tipping many local councils over the edge - and the prediction of an increasing number of social commentators and sector specialists is that there are many more councils at risk of following unless the government gets a grip.
Only a systemic reform of the way the public services are funded can change things for the better. Unfortunately for us successive governments since 2010 have apparently had more urgent priorities than funding local services that provide a lifeline to our hard-pressed residents and their communities.
Until a future government reforms the council tax regime and comes up with a fairer method of redistributing the nation's wealth to those who need it most we'll all continue to suffer the effects of a broken system.
