Cllr Nick Rushton is the County Councils Network finance spokesman and the Leader of Leicestershire County Council
Uncertainty is the only certainty at the moment in Westminster: it is unclear who will be the new Prime Minister, and it is unclear who will make up a new government and what its domestic priorities will be.
It is also glaring that not one of the 10 candidates for the top job in the land has mentioned local government. That must change.
That uncertainty is projected onto us in local government. The current upheaval means that it is unlikely we will see a Spending Review this year, or the planned reforms to local government finance implemented next year.
If this comes to pass it will be bitterly disappointing, however extenuating the circumstances. Next year will be ten years since austerity began. There is a desperate need to reform a broken local government finance system in the fair funding review, and for the Spending Review to address the pinch areas.
Faced with unprecedented financial pressures, councils have shown how it has been just about possible to cope with austerity, transforming services and doing more for less. In a sense, austerity has shown the best of local government – we have done more than any part of the public sector to restore the finances of this country whilst maintaining services, despite cost and demand increases.
But so far we have had nothing in return and the truth is that the elastic can barely be stretched much further.
Last month the County Councils Network (CCN) released a new report with PricewaterhouseCoopers (PwC), which looks at the challenges facing councils in a different way.
There has been plenty of analysis of the sustainability of funding in local government in recent times, but most has narrowly focused on who has suffered the most from reductions in funding. Instead we should be looking at what resources councils really need to provide services.
PwC’s analysis for CCN, one of the most detailed to-date, does precisely this – projecting spending need and the ‘funding gap’ facing local services up to 2025.
The headline results are stark. If no extra funding is made available, councils in England will face a £51.8bn cumulative funding gap that must be filled by 2025. This falls to £30.2bn if councils put their council tax up by a further 2.99 per cent each year for the next five years.
To fill the rest of this gap, most of us in local government, particularly in counties, will be left with unpalatable choices. Pressures on children’s services, notably funding for children with special needs and disabilities, are increasing daily. It is no use government spokesmen saying that spending is at record levels when it takes no account of demand, mostly brought about by legislation. There will be further charges simply to preserve existing services, especially in adult social care, and increasing reductions in library and recycling centre services, road conditions, streetlights, and youth and school transport.
Whilst this sounds like a race to the bottom, it is a situation facing even the most well-run councils and it omits another hugely significant need for funding, which is not yet getting the attention it deserves. In Leicestershire, population growth alone over the next 25 years is estimated to cost us an extra £600m to finance the necessary roads, infrastructure, and schools. Of course, we are not alone. Unless the government recognises this and respond appropriately, its central ambition to drive housing and economic growth will stall.
Importantly, the analysis from PwC confirms what many of us in England’s counties have known for a long time: counties are the most exposed to financial pressures but are the least resourced to deal with them. Whilst all the time giving rural residents a rawer deal than those living in other parts of the country. In total, the 36 county authorities in CCN membership make up 41 per cent of the total funding gap (£21.5bn) facing all councils in England.
Due to historic underfunding of county areas, we have less ability to preserve highly-valued services compared to other areas of England, most notably London. The report demonstrates that over the past four years, if London had been providing a level of service more comparable to other councils, it would have had a funding surplus. Conversely, CCN councils have around £1bn of ‘unmet need’ in their historic expenditure. That is not to say that the capital has not faced financial challenges – of course it has. And it is not to say that councils in London do not have specific cost and demand pressures, but their funding compared to counties (councils in London currently receive 64 per cent more per person) has allowed them to deliver a more substantial local service offer.
Therefore, the government’s fair funding review simply has to take place. There will have to be some transitional funding but it must, without fear or favour, address a broken system of financing local authorities.
Conservatives have always prided ourselves on low tax and high quality services. But if all we are offering is yearly tax rises and service reductions, it is probable we will be punished further at the ballot box. Contrast the county elections of 2017 where we won a significant number of seats and councils, to how well the party performed last month. Unless we set out an ambitious offer for residents, we risk losing voters in our heartlands.
The plight of local services must be on the mind of the next Prime Minister when it comes to the domestic agenda in England. It is imperative that the Prime Minister and new ministers talk to us – we are, after all, their base both in terms of the leadership election and for the party as a whole, especially after last month’s election results. Conservative Party revival and renewal always starts via local government.
We look forward to hearing the new government set out its vision for local authorities in the debates over the next few weeks, when we must continue to press the case for sustainable and fairer funding.