“Council cuts are putting the vulnerable at risk, Tory peer says”

“LGA chief says austerity could damage local authorities ‘beyond recognition’

Local authorities have reached the point where relentless financial cutbacks are putting the wellbeing of vulnerable adults and children at risk, the Conservative leader of the Local Government Association (LGA) has warned.

The Tory peer Lord Porter said that after eight years of austerity during which £16bn has been stripped from municipal budgets in England, councils risked being “damaged beyond recognition” and communities depleted of vital services.

An £8bn black hole in council budgets would open up by 2023 unless ministers stepped in to close the gap between spiralling demand for adult and children’s social care services and shrinking town hall incomes, he said.

“We’ve reached a point where councils will no longer be able to support our residents as they expect, including our most vulnerable,” Porter added.

As well as problems coping with demand for services for elderly and disabled adults, the LGA says councils are struggling with an explosion in the number of children in care, and a rising bill for 80,000 homeless families placed in temporary housing.

An LGA briefing on the prospects for local government states: “The failure to properly fund these services puts the wellbeing of some of the most vulnerable residents at risk, and this cannot go on.”

Porter’s intervention, ahead of the LGA annual conference, which opens in Birmingham on Tuesday, reflects councils’ increasing concern about the precariousness of local authority finances, and frustration that ministers are ignoring the escalating crisis in social care.

While the NHS last month received a five-year £20bn cash injection, the government’s plans to overhaul the funding of adult social care services, originally due in a green paper before the summer, were delayed until the autumn. Council bosses have warned that in many areas these services are on the verge of collapse.

The fragility of many individual councils’ finances has increased speculation that more local authorities could follow Northamptonshire county council into bankruptcy. In May, Tory-controlled Somerset called for an overhaul of council funding after it was warned by auditors it could go bust.

Council leaders are also worried about the political consequences of having to sacrifice popular local services such as libraries, Sure Start centres, parks and leisure centres to divert funds into core services such as social care.

Bus services in ‘crisis’ as councils cut funding, campaigners warn
Porter said: “Councils now spend less on early intervention, support for the voluntary sector has been reduced, rural bus services have been scaled back, libraries have been closed and other services have also taken a hit. More and more councils are struggling to balance their books and others are considering whether they have the funding to even deliver their statutory requirements.

“If the government allows the funding gap facing councils and local services to reach almost £8bn by the middle of the next decade, then our councils and local services will be damaged beyond recognition.”

The LGA is calling for councils’ funding problems to be addressed through a government spending review expected in spring 2019, which is likely to set out public services funding plans over the four years to 2023.

A Ministry of Housing, Communities and Local Government spokesman said: “We recognise the pressures councils are facing, so we are working with local government to develop a funding system for the future. Over the next two years, we are providing councils with £90.7bn to help them meet the needs of their residents. On top of this, we are giving them the power to retain more of the income they get from business rates so they can use it to drive further growth in their area.”

Labour’s Andrew Gwynne, the shadow communities and local government secretary, said: “This new analysis is a damning verdict on eight years of Tory austerity. Our public services are straining at the seams, whilst the government continues to cut funding.”

https://www.theguardian.com/society/2018/jul/03/council-cuts-are-putting-the-vulnerable-at-risk-tory-peer-says

The Great Public Asset Sale!

No mention of community hospital sales – many hospitals having been financed by the local population.

And it begs the question: if the community has no assets and is getting only statutory services which are funded out of general taxation – what are we paying (increased) council taxes for?

“Libraries, swimming pools, youth and community centres, town halls, parks and other open spaces were among more than 4,000 public assets sold by local councils to developers and other private buyers last year.

Sales appear to have risen since George Osborne, who was then the chancellor, changed the rules in 2016 to allow local authorities to use money from sales of publicly owned buildings and land to cover running costs. Campaigners say that authorities facing financial pressures are denying future generations access to many community assets.

Locality, a network of community organisations, submitted freedom of information requests to all 353 local authorities in England asking about asset sales, of which 240 responded. The results showed that councils sold 4,131 buildings or plots of land last year.

Tony Armstrong, the chief executive of Locality, said: “One of the concerns we have is that many local authorities are just selling these assets off, and until now we have not had a clear picture of the scale of this.” He called for more buildings and sites that councils could no longer operate to be transferred to community groups that could run them on a not-for-profit basis.

Richard Watts, of the Local Government Association, said: “With local government facing an overall funding gap in excess of £5 billion a year by 2020, councils face difficult decisions about how best to use their resources to support local services, day-to-day activities and to protect public assets. Before a decision is made to sell an asset, the cost of selling it versus the benefit it could bring is considered carefully.”

Source:Times (pay wall)

The super-rich turn out to be mean – imagine that!

“Just 350 of the 15,600 wealthiest households in Westminster, one of the country’s richest boroughs, have answered the local authority’s call to voluntarily pay extra council tax to help tackle the homelessness crisis in the heart of London.

In February, the Westminster council leader, Nickie Aiken, wrote to all residents in the most expensive band H properties to ask them to consider paying an extra £833-a-year “community contribution” to help fund youth clubs, homelessness services and visits to lonely people.

But only 2% of the households have stepped forward to help their poorer neighbours, the Guardian can reveal. Those asked to consider making an extra contribution include the residents of the Candy brothers’ luxurious One Hyde Park apartment complex in Knightsbridge and those living in hundreds of multimillion-pound mansions in Mayfair, Belgravia and Maida Vale.

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Residents in Westminster pay the lowest council tax in the country, with band H payments of £832 a year plus another £588 to the Greater London Authority. In Poole, Dorset, the band H charge is £3,358.

While very few of Westminster’s wealthiest residents have answered the council’s plea for help in maintaining essential services, they are paying tens of thousands of pounds a year in service charges to maintain their luxury buildings. The service charge on a £6m one-bedroom apartment in One Hyde Park comes in at more than £22,000 a year. The most expensive flat in the development was sold to the Ukrainian billionaire Rinat Akhmetov for £135m in 2011.

Aiken said she introduced the voluntary contribution scheme following “a growing number of requests from some residents who live in the highest valued homes that they wanted to voluntarily contribute more than their existing council tax”.

The council said that in a pilot consultation more than 400 people responded positively to the survey saying they would support the scheme. But it appears that many may have failed to follow through on their initial enthusiasm. “The outcome of our consultation reflects the kind and generous spirit of Westminster residents,” Aiken said in February. “It also confirmed what I had heard from people I had met on the doorstep that those in the more expensive homes are willing to contribute more to community projects. The scheme is most popular among residents of the most expensive homes.”

However, four months down the line, Aiken said just 350 households had contributed a total of £342,000. The biggest single donation was £2,500. “This scheme had its cynics, but the number of contributions we have had are proof that an innovative idea like this one can make a difference,” she said. …”

https://www.theguardian.com/money/2018/may/13/westminster-wealthiest-households-failing-pay-extra-tax-community-contribution

“Trying to maximise income purely from commercial revenues is NOT what the public want.”

CIPFA chief executive Rob Whiteman has told a conference this morning”

“… At some point in the next 15 – 20 years local government needs to be reorganised. We need to be aware reorganisation would be a good thing.”

But he predicted there was unlikely to be “any meaningful local government reform” for some time.

Local government must rebuild trust with the public, Whiteman told his audience. “In its present form, local government is not perfect.

“I do not think that trying to maximise income purely from commercial revenues is what the public want.”

Don Peebles, head of CIPFA UK policy and technical, echoed this, suggesting local government’s commercial investments should be more about keeping council finances afloat rather than maximising profit.

He said recent changes to the prudential code – the statutory guidance for local government on borrowing and investments – reflected that “the priority is not maximisation of return but the protection of capital”. …”

https://www.publicfinance.co.uk/news/2018/05/local-government-uncertain-place-10-years

Council borrowing so high, government intervention may be needed

EDDC is borrowing to fund the building of its new HQ and to fund its “Growth Point” and is also considering going into the housing construction market.

“Local authorities could face further intervention by central government if new changes to investment and treasury codes fail to dampen council borrowing levels, according to a senior Whitehall official. …

[A conference speaker said] … “said: “When last year local authorities borrowed an additional £3.8bn, that was a £3.8bn increase in net debt. “That was £3.8bn less that the chancellor had available to distribute as funding across the board at the last budget. “So, local authority borrowing does have a real world impact in the overall quantum of funding that is available to government.”

In addition, he said that concerns have been raised that councils investing in particular asset classes can drive prices up, creating a bubble.

New principles on proportionality included in the code were triggered by some smaller authorities taking on huge sums of debt relative to their size, Caller [the speaker] added.

“We had concerns that those authorities who were doing that were effectively assuming that government stood behind their risk. “That is not the statutory position, and it is not a position we want to encourage. “What the legislation says is that effectively it is council tax payers that have to make good any deficit in those assumptions, not central government. We want people to remember that.” …

http://www.room151.co.uk/treasury/councils-could-face-additional-intervention-if-borrowing-rates-continue/

“Scrap ‘highly regressive’ council tax, says thinktank”

“Council tax is an outdated and regressive levy on households that should be scrapped in favour of a progressive levy on property, according to a report by the Resolution Foundation.

The thinktank said council tax had become almost flat-rated in some areas to leave it resembling the much maligned poll tax of the early 1990s.

Someone living in a property worth £100,000 pays around five times as much council tax relative to property value as someone living in a property worth £1m. This is exactly the kind of result that opponents of the poll tax wanted to avoid and in stark contrast to income tax, which increases with incomes in a progressive way so higher earners pay a higher average tax rate,” she said.

There are eight council tax bands that determine annual charges. All the bands are based on 1991 property prices following the failure of successive governments to sanction revaluations.

The highest band (H) is for homes valued at £320,000 and above, despite the average London houseprice now being more than £480,000. Purbeck district council in Dorset will charge band H homes £3,747 from April while Wandsworth council in London, which hosts some of the most valuable homes in the UK, will charge £1,433.

The foundation said ministers should consider replicating the 2017 reforms implemented in Scotland across England and Wales, which involved increasing council tax rates in the top four bands and generated a little over £1bn.

An alternative reform would be a “mansion tax” surcharge of 1% on the value of properties worth more than £2m and 2% on the value of properties above £3m, which would also generate just over £1bn.

A broader overhaul could involve a switch to a 0.5% charge on all properties that would result in a £100,000 home in Newcastle being charged £500 a year and a similar sized £1m home in London charged £5,000 – a £3,000 increase on current charges. …”

https://www.theguardian.com/money/2018/mar/20/scrap-highly-regressive-council-tax-says-thinktank

Last legs for Thelma Hulbert gallery?

Owl says: The gallery, in Honiton, has swallowed up around £500,000 of our council tax money over the last few years. Could The Beehive (also a gobbler of funds in the past) perhaps house the gallery’s art and activities?

Or, here’s a thought: display it in the new £10 million HQ currently under construction in Honiton!

“Unprecedented increases in council tax starting in April will not offset cuts to services including children’s centres and libraries, local authorities have warned.

The Local Government Association (LGA) said councils in England would raise an estimated £1.1bn through higher council taxes in 2017-18, but this would not cover the £1.4bn lost through cuts to central government funding plus the higher wage bill of £1bn.

Nearly half of English councils with responsibility for providing social care for adults and children will increase council tax by the maximum 5.99% allowed – 2.99% for general council tax plus a further levy of up to 3% to pay for the care of older and disabled adults – but this will not prevent further cuts to services, according to the LGA.

Councils will continue to reduce or close services such as children’s centres, libraries, leisure centres, parks, museums and road repairs to plug growing gaps in adult and children’s social care and homelessness services, it says.

The widespread emergence of what some councillors have dubbed “pay more, get less” budget settlements comes as town halls struggle to balance the books after years of cuts in core government funding.

Northamptonshire county council effectively declared itself bankrupt earlier this month after admitting that rising costs and shrinking income made it unable to set a legal budget.

The council must set out revised plans for cuts at a meeting this week after an auditors report warned that its existing proposed budget plans were “not credibly achievable”.

Northamptonshire’s predicament highlights how councils are increasingly reliant on one-off measures such as dipping into reserves, or selling buildings and land, to meet the spiralling cost of social care. Those pressures are being compounded in some cases by the failure to deliver savings with existing cuts.

The LGA said 147 of the 152 English authorities that provide social care services would levy a 3% council tax precept from April to raise extra cash for the care of older and disabled adults. Although this will raise an extra £548m, it will be wiped out by the cost of meeting the national minimum wage.

These councils face additional costs estimated to be at least £400m over the next 12 months as result of a legal judgement that requires care employers to pay the minimum wage to carers working sleep-in shifts, backdated for six years.

Out of the 152 “social care” authorities, 108 also plan to increase general council tax by between 2.95% and the maximum 2.99% allowed. This will raise an estimated £548m. Five councils have said they will freeze council tax for 2018-19. …

… A spokesman for the Department of Housing, Communities and Local Government said: “As part of our finance settlement, we are delivering a real-terms increase in resources to councils over the next two years, more freedom and fairness, and greater certainty to plan and secure value for money.

“We want to work with local government to develop a new funding system for the future and encourage councils to submit responses to the review currently under way.”

England’s councils have experienced a 40% cut in central government funding since the start of the decade and face a £5bn funding gap by 2020.

The Local Government Information Unit thinktank warned this month that many English local authorities were teetering on the edge of financial crisis.”

https://www.theguardian.com/society/2018/feb/26/council-tax-hikes-will-not-stop-cuts-to-local-services-authorities-warn