Next week the chancellor will be unveiling his Budget. It’s an opportunity for the government to begin reversing austerity, and start delivering real pay rises for all public service workers. But, as a recent UNISON report shows, it’s also a time when ministers could show they support local services.
At the moment that’s far from what’s happening. A growing surplus on the government’s share of business rates – which is set to increase by £1.8bn in 2018/19 – is being diverted into central coffers, when it would be better spent supporting local council services.
Despite what the government might argue, there are always smarter choices to be made. Cuts are not inevitable, especially in local government, which has been hit hard in recent years.
Current government plans mean that between 2010/11 and 2019/20 local government will lose a massive £16bn in funding from central government.
Services are being cut or disappearing altogether, libraries, sure start centres and youth clubs are closing, and hundreds of thousands of jobs have gone.
Of course, funding cuts are only one side of the story. At the same time councils are facing inflation increases, which by 2015 had added £7bn to their costs.
At the same time, local authorities have had to contend with the cost of providing services for a growing population.
In England, the population grew by 2.6m between 2010 and 2016, that means it is costing more to provide social care to a greater number of older people who are living longer.
Then there’s the extra costs of commitments like pension contributions, the increase in national insurance contributions, the apprenticeship levy, the landfill tax and extra responsibilities such as local council tax support.
There are no additional funds to pay for these extra costs. Not a single extra penny.
Business rates are a vital source of funding for local services and the law currently says that they must increase in line with the (September) retail price index. Business leaders have been lobbying hard to get increases changed so they are in line with the consumer price index instead.
Newspaper reports suggest the government agrees and the change may be introduced from April 2018 – saving businesses about £400m.
That’s £400m that won’t be available for public services and for councils to spend on local services – and the effect is cumulative. The following year businesses would save another £404m – making the total saving £804m.
One local government finance expert told the Commons communities and local government select committee that:
“Over 20 years, the cumulative loss to local government – or, looked at another way, the cumulative gain to businesses that are paying business rates – is £78bn.”
That is a lot of local government jobs and services. Local government has suffered enough without a further hammer blow in the Budget.
The Chancellor must take the opportunity to fund local services better, not cut them further. The choice is between decent services and lost services. The government must make the right choice, after so many years of making the wrong choices.
