Aside from crumbling concrete, the dominant topic in local government circles since the return from the summer break has been the news that the UK’s largest council, Birmingham City Council, is now effectively bankrupt.
Birmingham joins four other local councils since 2021 in issuing what is technically known as a ‘section 114 notice’, meaning it does not have the resources to provide a balanced budget. Unlike other parts of the public sector, councils must balance their budget by law.
The other councils to have issued a section 114 notice are Croydon, Thurrock, Woking and, closer to home, Slough.
At least six other local councils are said to be facing the prospect of issuing such notices by next spring and a leading credit agency last week listed the 20 most indebted councils in England relative to their size (Reading is not on it).
Every one of those councils will have their own story to tell, whether it relates to historic equal pay claims, falling property prices, bad investment decisions, rising interest rates, or the spiralling cost of social care.
No sooner had news of Birmingham’s troubles broke than the Prime Minister was seeking to make political gains. It’s the sort of approach we have grown accustomed to from this Government over the past few years, but he declined to mention, of course, that several of the 20 councils are located in leafy and affluent Surrey or that many are run by Conservative or Liberal Democrat administrations.
Whatever the colour of political control, the stark facts are that for residents who live in those areas, non-statutory public services will now be decimated in the scramble to remain afloat. As always, it is the most vulnerable residents in our society who use public services the most – and they will therefore bear the brunt.
When the Conservative-Liberal Democrat coalition took over Government in 2010 and proceeded with its short-sighted austerity drive through brutal cuts to the Revenue Support Grant for councils, it prompted not only a swathe of service cuts and closures (many of them valuable preventative services which avoid even higher costs down the line), but also fuelled higher levels of debt in local government.
Many councils have borrowed large amounts of money to invest in commercial properties and, ultimately, to generate additional revenues to offset those cuts in Government grants.
In no way does it excuse bad investment decisions, but it would be interesting to know just how many of those struggling councils would have chosen to take that path had the Government of the day been realistic about the funding needed to support the ever-increasing demand for local services, whether that is caring for vulnerable adults and children, increasing demand for new affordable homes, addressing rough sleeping, or a multitude of other challenges.
It does sometimes feel like not a lot has changed since 2010. The Local Government Association – the body speaking on behalf on councils up and down the country – responded to the news from Birmingham by pointing out that councils in England face a collective £3 billion funding gap just to keep services as they presently are, and that the those financial pressures are hampered by one-year funding settlements and one-off funding pots which make sensible planning for the future virtually impossible, keeping councils living hand to mouth.
Funding reforms for local government finance have repeatedly failed to materialise, and the same applies to the long-promised reforms to adult social care. You really have to question whether the Conservatives were ever really serious about them in the first place.
Cllr Jason Brock is the leader of Reading Borough Council and ward member for Southcote
