Remarkably, it might have been even worse. James Brokenshire’s speech at the recent London Council’s summit left leaders of local government in the capital with reasonable hopes that this London MP is a secretary of state who feels at least some of the budgetary pain George Osborne and Eric Pickles chose to inflict on them way back in 2010. But don’t be too thankful for small blessings. The nest of vipers currently passing for a national Conservative government has every intention of squeezing a bit more blood out of the boroughs in order to sweeten up its voters in the shires.
On Thursday, Brokenshire published his provisional local government finance settlement for England for 2019 to 2020, proclaiming an “extra £1.3 billion” in “core spending power” – up from £45.1 billion in the current financial year to £46.4 billion. However, the Institute for Fiscal Studies (IFS) says that overall funding for local government in England is still set to be £0.6 billion less in real terms than it was in 2015-16, even when you add in business rate and Council Tax income. And where will Brokenshire’s numbers leave local government in London?
A full answer to that question will not emerge until a further process has been completed, entitled the fair funding review. Thursday’s provisional settlement is about the size of the local government funding cake in England. The review will be about deciding the size of the slice of it and future settlements different local government authorities get.
The IFS said back in August that the fair funding review “could hit Inner London boroughs like Westminster but help councils in more suburban and rural parts of England”. Of Thursday’s provisional settlement it says that “relatively more funding” continues to be found for richer councils, which is hardly a good sign given how many of England’s poorer ones are in the capital. And when you borrow into the full, 72-page technical consultation document published with the provisional settlement you find a few devilish details that seem to mean bad news to come.
For example, a section on “sales, fees and charges” (starting on page 61) essentially says that local authorities making a financial surplus from car parking charges might end up getting less support from the government as a result. A study for the RAC Foundation published last year found 15 of the 20 English local authorities with the highest takings from parking fees and penalty charges were London boroughs, with Westminster (a hefty £73.2 million), Kensington & Chelsea (£32.2 million) and Camden (£26.8 million) topping the national list. London boroughs tend look to parking charges both as a way of deterring private car use, in line with policies for lessing air pollution and congestion, and as a source of much-needed cash. Now, the government is pondering making such measures grounds for cutting deeper still.
Another item of interest in the technical consultation is the concept of “remoteness” (from page 41). Falling under the larger heading of “area cost adjustment”, this is mooted as a way of recognising the particular costs of providing services for people in isolated areas. “The government is therefore minded to make a separate remoteness adjustment using a proxy measure of journey times from small groups of households to major towns and cities,” says the document. This looks like good news for residents of the Isle of Wight, who are heavily dependent on ferries to get to Portsmouth and back. It is not such good news for tightly-packed Londoners, even those who use a ferry between Woolwich and North Woolwich.
What is to be done? Well, London Councils, the body that represents the capital’s 33 local authorities – 32 boroughs plus the City of London, since you ask – is already making its case with a campaign for proper, long-term funding arrangements for local government in general. It has its eye on the government’s next spending review, which should be completed by this time next year, arguing that the cake should be made bigger for all and that London’s particular needs should be better recognised.
There is no question that the boroughs, especially some of those with many people in great need of good services, have taken an austerity hammering. “By 2020, councils in London will have absorbed a reduction in core funding of 63 per cent (over £4 billion) in real terms since 2010,” London Councils says. Slashing budgets to the bare minimum is, in any case, a false economy.
The orange line on the graph at the top of this article is the one to concentrate on. It shows how the spending power of the capital’s councils has declined. While Surrey threatens to collapse and Northamptonshire actually does it, the very ingenuity with which London’s local authorities have managed to hold their finances together despite a huge increase in the number of people they have to serve is set to generate a further penalty. James Brokenshire is not well-named. It is not the shires that are to be broken.