News that Birmingham City Council has issued a Section 114 notice, the local government equivalent of declaring effective bankruptcy, has prompted a predictable flurry of political point-scoring at national level. It has also served as a reminder that struggles to make ends meet have become familiar to many local councils in recent years, including in London.
Croydon Council, of course, has had to do the same thing as Birmingham no less than three times in the last two years, most recently last November. As with other councils around England that have found they cannot make ends meet, such as Thurrock, Northamptonshire, and Slough, Croydon’s story is particular to it. But several more have warned that they are close to the brink. And London Councils, the body representing all 33 of the capital’s local authorities, has long been raising a collective cry for more funding from national government.
It says that boroughs’ overall resources are 18 per cent lower in real terms than they were in 2010, when the Conservative-led coalition government came to power and introduced its programme of public spending cuts, known as “austerity” and when Greater London’s population was almost 800,000 people smaller.
An independent assessment of the pressure on London boroughs has been made by the Institute for Fiscal Studies (IFS), which in its recent study of how much public spending local areas across the country receive said that London as a whole gets 17 per cent less money that its share as measured against estimated need (page 57).
Within that overall figure, the IFS found significant variations between boroughs. It also pointed out that some – it named Westminster, Wandsworth, Hammersmith & Fulham and Kensington & Chelsea – set Council Tax levels “far below the national average” and that if they chose instead to adhere to that average, each “would have more than £300 more total funding per capita [for each resident]” (page 24).
Even so, many of London’s local council appear entitled to feel hard done by and some are facing significant budget gaps – Barnet, for example, says it must find £23 million from somewhere, citing an “ongoing” post-Covid rise in costs. The government is under pressure to reconsider how it treats local government in general. The question many, not least in London, are now asking is whether their fortunes will change if there’s a change of government next year.