Local authorities are currently putting the final touches to budgets for 2017-18, which will herald another round of swingeing cuts across the UK. These cuts follow £20 billion cuts to the core government grant made between 2010 and 2015, a 40% real-terms reduction.
A new system of funding based on the retention of Business Rates (NNDR), the tax levied on the basis of the value of business premises, is set to completely replace the block grant. A trial of the scheme involving several councils in the North West and Midlands is set to begin from April.
According to the treasurer of the Greater Manchester Combined Authority, they are satisfied that councils cannot be any worse off through participation in the pilot. Hardly a glowing endorsement of the new scheme. There is not yet any finer detail on the proposal which is a kind of “top slicing” or redistribution mechanism to help balance the income levels of local authorities.
But income is likely to be uneven across the country. Boroughs like Westminster or Hillingdon which include government departments and Heathrow Airport will be able to raise much more income than councils like Wakefield or Barnsley. The scheme will allow councils to set their own local business rate, but in an increasingly competitive market for inward investment, it is more likely that there will be a race to the bottom, as councils compete to be the most business-friendly destination. These moves have been introduced under the auspices of providing greater devolved power to regions and local authorities.
Evidence so far suggests devolution has far more to do with the passing down more decisions on cuts than with giving real local autonomy from central government. Since the EU referendum and the uncertainty over Brexit, talk of devolution has quietened down. Many local authorities relied on large grants financed with EU money. How this funding gap will be closed, and what kind of programmes the government will continue to fund will leave many schemes, particularly those inareas of high deprivation, in jeopardy.
Adding further insecurity, the government has also recently lowered the rates for smaller businesses and exempted and provided rate relief to even higher numbers! The background to this is the push to get more people to view themselves as “wealth creators” and entrepreneurs. It is the wholly inadequate answer to cuts to jobs in the public sector and a lack of skilled employment in many post-industrial areas.
The rate of small business failure remains incredibly high. Also most 50% of small businesses collapse in the first five years of trading. Devolution has also produced further layers of bureaucracy and has acted like a kind of regional centralisation, with hollowed out democratic structures. Largely unaccountable bodies like the West Yorkshire Combined Authority, made up of council leaders and party group leaders, alongside Council Chief Executives control large infrastructure projects and transport. The only oversight over these people is through their own council elections.
In both Tory and Labour boroughs and districts decisions can be made that fail to take into account the issues in a given local area. An example is the fiasco of the Sheffield City Region having to re-run its consultation on their devolution deal because Chesterfield residents had not been consulted properly — wasting more of their limited funds. The end result, as in Manchester and elsewhere, is likely to be the imposition of a directly-elected mayor, a further assault on local democracy.
The Institute for Fiscal Studies reports that authorities like Salford, South Tyneside and Oldham have had to cut their services by up to nine times as much as more affluent areas in the last seven years. All of these authorities cut their services by more than 40% compared to 5% and 6% cuts in Surrey and Hampshire. Even in the richest authorities these cuts have frequently targeted the poorest residents and represent a cut in workers’ standards of living.
But it should not be a case of playing off authorities against each other but getting them to campaign collectively as part of the labour movement — to fight against the cuts and for real investment. For both vulnerable adults and children six years of cuts have seen the number of councils who have children’s services rated outstanding drop down to 25%. The number of rough sleepers has risen by 102% since 2010 and by 30% since 2014.
Library visitors and borrowing numbers are also down as councils take away as much funding away from libraries as they can whilst maintaining their statutory duty to provide a “comprehensive library service” under a 1964 Act. The legislation is rarely if ever enforced and many authorities would be in breach of it if it were. More and more libraries are now run by trusts and community groups. There has been a fall in paid staff and a de-skilling of the job; far fewer library staff are now properly-trained librarians. Since 2010, almost 8,000 jobs have been lost, replaced by 15,000 volunteers, keeping libraries open for much shorter hours with a vastly reduced service. More than 350 libraries have closed, and hundreds more are under threat of closure. The government’s Library Taskforce is at best a sop to show they are doing something when they know what is required is funding; at worst it shores up the mythical belief that libraries are now irrelevant.
In four areas — Sefton in Merseyside, Brent in north London, Stoke-on-Trent and Sunderland — more than half the libraries have closed since 2010. In 2016, Lancashire announced they were going to shut twenty of their libraries. Where libraries have been kept open there have been major cuts in stock, reduced opening hours and a much smaller proportion of paid staff. Harrow in north-west London has seen the biggest drop with more than 100 paid employees no longer working since 2010. The whole service in Ealing, Croydon and Hounslow has been outsourced to a private provider.
Reports from the Chartered Institute of Public Finance and Accountancy reports show that book borrowing has fallen year-on-year and that even other services like computer use which most libraries provide free of charge is also dropping. In Doncaster, where five libraries are still run by the city council and 19 by community groups, there were 629,000 book “issues” in 2014, compared with 1.2 million two years earlier. Compare this to the Hillingdon in West London, who refurbished their libraries and have seen a rise in visitors and book issues. There is a clear link between non-investment in the service and a fall in usage. But the fall in usage is used as a pre-cursor to closure.
Helen Milner of the digital inclusion charity The Good Things Foundation has publicly said libraries should not be saved from austerity where they are not performing. She echoes the government’s call for libraries to diversify and offer more services. As other services are cut away, libraries are already offering far more than they once did, and often at the expense of properly-funded community centres, mental health day centres and other services that have faced brutal cuts. As budgets are set, many Labour councillors will be doing their yearly hand wringing over the “tough decisions” they are being asked to make.
Labour Party conference has passed policy against councils setting no cuts budgets and neither Jeremy Corbyn or John McDonnell support councils refusing to pass on the Tory cuts. Since 2010, where Labour councilors have rebelled they have been isolated, easily picked off and effectively abandoned by the labour movement.
But as difficult as it may seem we need to coordinate Labour councilors to work with their local parties and trade unions to lead campaigns against the cuts. This means not token demonstrations of opposition but demanding to get lost funding back and refusing to set a cuts budget. Both Corbyn and McDonnell know a radical anti-austerity Labour government would face huge challenges in reversing the government’s austerity programme, but they must take a lead now and back the labour movement in fighting back to defend and extend local services.
HMRC lets super-rich off the hook
The Commons Public Accounts Committee has looked into the running of HMRC's specialist unit which collects tax from individuals worth more than £20 millon. It found that “the amount of tax paid by this very wealthy group of individuals has actually fallen by £1 billion since the unit was set up” in 2009.
It seems HMRC does not chase these individuals for their tax bills in the same way as it does less wealthy individuals. The report criticised the role that the unit's cosily-named customer relationship managers play, saying “we were not convinced by [HMRC’s] assertion that there is a clear line between giving its view on potential transactions and giving tax advice and we do not think there is enough clarity about what customer relationship managers can and cannot do”.
So HMRC may in fact be helping people avoid tax!? About a third of the super-rich individuals dealt with by the specialist unit are currently under inquiry by HMRC for unpaid tax, with potentially £1.9 billion of unpaid tax collectively. Yet it has an awful record at prosecuting the wealthy for tax fraud — just 72 fraud investigations into high net-worth individuals in the five years up until March 2016, with only one resulting in a criminal prosecution. Not only are the super-rich not taxed enough, they get away with not paying what they owe!
