Last week the secretary of state for levelling up, housing and communities confirmed the final local government finance settlement for 2024–25. This comes at a time when local authorities across the country are facing a perilous situation; one created by the Conservative programme of austerity.
Local authorities face bankruptcy
A survey conducted by the cross-party Local Government Association (LGA) in December 2023 found that one in five council leaders and chief executives in England think it is very or fairly likely their chief finance officer will need to issue a Section 114 notice, which indicates the council is unable to set a balanced budget.
We are, quite literally, on the brink of seeing a number of local authorities go bankrupt. How have we got here?
The answer is quite simple. Since coming to power in 2010, the Conservative Party has cut the core spending power of councils in England by 18.9%.
Councils have legal duties to provide a range of vital services for citizens. The Conservatives expect them to deliver these services with significantly fewer resources. The consequence is that over half of councils in England have said they are unsure whether they will be able to fulfil their legal duties to deliver statutory services next year.
Councils are simply not being given enough money by the government to deliver the services on which millions of people rely. And the poorest areas have received the biggest cuts.
Cuts to services in the North
England’s most deprived 10% of council authorities (nearly all in the North of England) have seen a cut almost three times as high as the richest 10% of councils. On average the poorest 10% of councils in England have received a 28.3% cut in the last 13 years (2010/11 and 2023/24), whereas the richest 10% of councils have received a 10.1% cut on average during the same period.
Here in the Wakefield District we have suffered a real terms cut of £76mn since 2010, which is 17.5%. This is £472 per household. Our council has done its very best to make a declining pot of money go around, but we urgently need a significant increase in funding.
More public spending isn’t the answer to every problem, but when the root of the problem is councils not having enough money to deliver the services they are obliged to deliver, it is the only credible answer.
Local government finance settlement
Therefore, I am disappointed by the local government finance settlement for 2024–25. The core spending power of councils is set to increase by £4.5bn, which is a 7.5% increase. However, when you look beyond the headline figure and factor in inflation and the huge cuts councils have received over the last decade, this barely touches the surface.
The LGA has said: “The settlement does not provide enough funding to meet the severe cost and demand pressures which have left councils of all political colours and types warning of the serious challenges they face to set balanced budgets next year.”
In addition, the government’s proposals mean that council tax is set to rise nationally by 5%. They are shifting the burden of council funding onto the public.
This is yet another Tory tax rise targeted at working people who have already faced an almighty decline in living standards in recent years.
This sums up 14 years of Conservative government. Under their stewardship they have cut public services to the bone to fund tax cuts for the richest in society. Only recently they removed the tax on bankers’ bonuses, whilst hiking taxes for working people by freezing income thresholds.
Conservatives favour the rich
This is who they are. They stand for the interests of the super-rich, no one else. They stand for economic decline when what we desperately need is a new economic settlement. Such a settlement must begin with funding local councils properly.
There is more wealth in our society than there has ever been, yet our public services are crumbling. The issue is that our economy is structured so that all the wealth being created is being funnelled up to the richest in society, whilst working people see their living standards fall.
Taxes on the richest in society are low by historic standards. When the British economy was the most productive in Europe after the Second World War, the highest rate of income tax was around 90%. Today it is just 45%.
Denmark today has a top rate of income tax of 56% and is ranked as having the second highest quality of life in Europe. By comparison the UK is ranked as having the 17th highest quality of life in Europe out of 36 countries.
Of course, we must invest in our nation’s industries and infrastructure, which would also grow our tax base. But if we want to see an end to the neglect of public services, then we must be bold enough to reform our tax system so that the huge sums of wealth that have been amassed by the super-rich is taxed appropriately.
Wealth doesn’t trickle down by itself. An active state must play a role in ensuring wealth is distributed fairly.
Austerity has led our country down the path of national decline. We must do things differently from now on. This starts with giving local authorities the resources they need to serve the people they represent.
