SIGOMA chair - 'Fixing Local Government Funding Must be priority'

Posted on August 31, 2023

As the saying goes, all politics is local. Whilst eyes are often drawn to the spectacle and drama of Westminster politics, for most people, their interaction with politics happens at the local level.

Concerns such as whether your bins are collected on time, potholes on local roads are repaired, and enough houses are being built: at their very core these are all questions of local public service provision.

The funding of these local services is not a glamorous political issue, but it is perhaps one of the most important. Giving public services the funding they need is crucial in tackling issues such as poverty, inequality and insecure housing.

Yet despite this, the past 13 years have seen funding for local services hollowed out. Continuous cuts to local authorities have had a devastating impact on people’s everyday lives, with the heaviest burdens of these cuts falling on England’s most deprived regions.

Unsurprisingly, places right across Yorkshire – among those targeted as part of this government’s levelling up agenda – have lost out the most and still continue to do so despite the government’s aim to ‘Level Up’ much of the country.

Research published earlier this year by the Special Interest Group of Municipal Authorities (SIGOMA), which I chair, revealed that since 2010, England’s most deprived council authorities have seen a cut in budgets almost three times as high as the richest.

Local authorities in Yorkshire and Humber have experienced an average real-terms cut in spending of 22.4%, meanwhile in the South East budgets have been cut by significantly less, 12.8%. Focusing on individual local authorities shows an even more unequal picture. Bradford has experienced a cut of 28.5%, Hull 27.9% and Doncaster 25.8%, whilst Surrey has had a cut of 5.3%, Oxfordshire 6.5%, and Buckinghamshire 9.1%.

This comes amongst a backdrop where an increasing number of local authorities, including a number across our region, are raising the alarm of possible risks of insolvency. The result is a cutback in services, with councils closing leisure centres, increasing parking costs and freezing non-essential spending to keep statutory services standing still. The Local Government Association predicts that local authorities are currently facing a funding gap of £3bn over the next 2 years just to continue delivering services, caused by rising inflationary costs and ever-growing demands for services. This is not the mark of a fair and sustainable funding system for local government, that are responsible for providing vital local services.

Fixing the system should be a priority for the government, present and future. Structural change is needed to the way that local government is funded.

It is not enough to give a short-term increase in the pot for local government funding. Over the past 13 years, funding that is distributed based on need has been eroded away leaving a system that benefits the wealthiest authorities. In 2010, a needs driven formula underpinned most council funding, and in 2023, it now forms just over a third. It is the poorest councils, less able to generate sufficient income through Council Tax and Business Rates, who lose the most as a result of this.

Whilst there is scope to incentivise councils to grow business rate income, the main priority of any system should be to recognise the impact of deprivation in allocations of funding for services. This is about rebalancing the system and providing fair funding for local authorities, it need not cost the earth.

There is a moral case in rebalancing the system. Giving public services the funding they need is crucial to underpinning a functioning society. They provide housing, green spaces, care for children and adults, culture, transport and so much more. They help to tackle inequality, poverty, ill health and isolation. Good public services run to the heart of the levelling up agenda.

People in towns and cities like Barnsley, Wakefield, Hull and Sheffield, places that have been hardest hit by the hollowing out of local authority funding, have been crying out for better public services and more equitable funding as they’ve watched local leisure centres and youth clubs close since 2010.

All eyes are now looking towards the next General Election, due to happen before January 2025. But any political party hoping to take or retain power would be wise to remember that the path to power goes through these places.

Read the article in full here.