Councils are preparing their budgets for 2008-9. Some councils, notably Newcastle and Southampton, are planning sizeable cuts.
In recent years, such cuts have been rare. Cumulative central government controls since the 1980s have reduced local councils to little more than local agents of central government.
About three-quarters of local councils’ budget comes in allocations from central government; rates for the council tax which is most of the other quarter are subject to central government “capping”; councils are legally obliged to do some things, and restricted by law and government regulation from doing many other things (for example, from building new council houses, except in the tiniest numbers).
With central government income relatively buoyant in recent years, the local government workforce has actually increased from 1.67 million in 2003-4 to 1.70 million in 2005-6 (latest figures). The biggest factor there is a rise in the number of teachers. With other local government functions increasingly privatised or contracted out, teachers are 27% of all local government employees.
In late 2007 the Government published its figures for local government finance in 2008-11. The Local Government Association (a consortium of England’s local authorities) described it as “the worst settlement for a decade”.
The numbers included an assumption that local government will make “efficiency savings” of 3% a year. But 50% of local government expenditure goes on wages, and a large part to education; and however more “efficient” teachers become, councils cannot at will increase class sizes.
The Government will “help” by trying to cut teachers’ and local government workers’ wages in real terms, with the 2% limit, due to be locked in with three-year settlements. But additional pressure is being put on the system by “single status”, an agreement for restructuring local government pay which was made in principle in 1997 with details to be negotiated locally in each local authority by April 2007.
A number of local authorities “stopped the clock” in April 2007 and continued negotiations on the basis that the deal would be backdated to April 2007. According to the Financial Times (6 February), two-thirds of councils have not yet agreed a deal.
According to the Local Government Information Unit, the impact of the central government allocation for 2008-11 will vary from area to area. “Some local authorities will be under enormous strain, finding efficiency targets difficult to meet without cutting services”.
A socialist policy would demand a big expansion of local government autonomy, including the right for local government to tax businesses, including businesses not in the local government which employ workers from that area. Immediately, socialists must be on the alert to support local government workers and service-users fighting against the squeeze likely to come in many budgets this April.