austerity

Inflation and Local Authority Budgets

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Andrew Coulson

Our two main political parties are locked in a strange debate about the next budget, on 6 March. The elephant in the room is the underfunding of local government.

In the nearly 14 years of Conservative government, the core spending power of local authorities has been cut by 27% in real terms.[1] The County Councils Network has “warned that its members are under extreme pressure, and that the authorities they represent are set to overspend by almost £650m this year due to spiralling costs, particularly in children’s social care and home to school transport, which was contributing to a £4b funding deficit for those authorities over the next three years”. In addition an increase in the National Living Wage is expected to costs these councils £230m next year.[2] This has happened at a time when the ability of councils to raise their council taxes has been held down, for 2024-5 to below 5% for all but a tiny number of councils.[3]  One of its consequences has been the inability of the employers in local government and the NHS to negotiate pay settlements which reflect the rate of inflation, or anything near it.

My reading of the present position is that Gove on the one hand and Rachel Reeves on the other are playing chicken. Each are waiting for the other to move first. They both know that after the general election a new government will have to settle the long-standing pay disputes in the public sector, and that it is not possible, year after year, for the pay of staff employed by local government and the NHS to rise by less the rate of inflation. The consequences are visable: depressed morale, a haemorrhage of experienced staff, and dependence on immigration to employ new staff. Rachel hopes that the Conservatives will be forced to confront this before the election. Gove wants the Labour Party to commit to doing it, because as of now any settlement is unfunded.

My view is that the understanding of inflation both by the two main political parties and the Bank of England is naive, especially as it relates to government policy. The starting point should be that inflation affects the distribution of income. It is an intrinsically political process. Most large companies and the richest people have means through which they can compensate for any inflation. Those who do not have the power or muscle to do so pay the price. Thomas Piketty[4] showed that inflation was the main means by which the middle classes paid for much of the costs of two world wars.[5]  In those inflations, and in the last significant inflation in the UK, which followed the OPEC hikes in oil prices in the 1970s, the trade unions were strong enough to ensure that wages rose at around the rate of inflation. This is no longer the case.

Yet the recent inflation has given the Government unprecedented increases in tax, which means that, if they so choose, they can afford wage increases. Most of this extra income arises from not raising the ceilings on higher rates of tax. Jeremy Hunt would like to use it to lower rates of income tax. The IMF (no less!) has told him that it is not appropriate to do so at this time.[6] The main reason, not always clearly stated, is that there are many unfunded challenges, but of these the public sector pay disputes (and perhaps the need for additional spending on defence, where difficulties in retention and recruitment are also partly a matter of pay settlements not keeping up with inflation) are top of the list. 

Economists in the UK, the USA and other developed countries have had little to say in recent years about inflation. As if it is no longer a problem, which it probably isn’t if inflation stays at around 2%. But the present inflations, driven by wars, the climate crisis and the lockdowns, are another matter. Economic theory is little help. All the traditional theories have been shown to be false. It is not true that inflation and unemployment are opposites: we can have both together, so-called stagflation. Or that it can be controlled by limiting the supply of money, which is not possible when most of it is created by banks which lend far more than they hold in deposits. Or that it is either created by unexpected demands or by unexpected costs.

The British Government urgently needs to resolve the disputes about pay in the public sector, and to do so recognising that most local government employees are substantially worse off than they were before. The Labour spokesperson Angela Rayner has made the practical proposal of negotiating a three year settlement.[7]  It cannot come soon enough.

Andrew Coulson is a nationally-recognised expert on scrutiny in local government and is particularly interested in governance by committee.

[1] Local Government Association, https://www.local.gov.uk/about/campaigns/save-local-services/save-local-services-council-pressures-explained 2024

[2] https://www.countycouncilsnetwork.org.uk/councils-in-significantly-worse-financial-position-after-the-autumn-statement-with-seven-in-ten-now-unsure-if-they-can-balance-their-budget-next-year/

[3] A prescient academic law professor, writing as long ago as 1984, wrote “It seems to me that the provisions for rate-capping … are little removed from a proposal to replace elected councils by administrative units. For a very long time, local inhabitants have enjoyed the right to elect local representatives with the power to tax, and so to determine, within modest political limits, what level of services shall be provided in the locality. … I have no difficulty in saying of an Act to put a limit on the rates leviable by a local authority that it is politically unconstitutional”. John Griffiths, in the Preface to Half a Century of Municipal Decline 1935-1985, George Allen and Unwin, 1985, p.xii

[4] Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, 2014

[5] The point was also made by one of his critics, Joseph T Salano, “War and the Money Machine: Concealing the costs of War beneath the Veil of Inflation” in John V Denson (ed.) The Costs of War, Routledge, 2nd edn. 1999 

[6] David Milliken and William Schomberg,  https://www.reuters.com/world/uk/imf-cuts-uk-growth-outlook-2025-after-stronger-past-performance-2024-01-30/

[7] “Rayner floats three year pay deal”. Municipal Journal, 14 Feb. 2024

The value and necessity of our green spaces and natural assets

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Rebekah Roebuck

Witton Lakes, Stockland Green, Birmingham: Photo by Tom Roebuck

Open spaces, whether green spaces (e.g. parks or forests), blue spaces (e.g. canals or rivers) or grey spaces (e.g. urban squares) have long been understood to be of great importance and value to society. Be it the creation of the Porticus Pompeiana in Ancient Rome or the wider opening of the Royal Parks to the public in the UK throughout the 1800s, the connection between open spaces and society’s wellbeing is complex but enduring. However, with the increase in financial precarity across local government, their status and quality may be at risk. This blog emphasizes the value of citizen relationships with open spaces using flash ethnographic research from four cities across the world, including the role of community organisations before considering potential impacts of local government finances for green spaces in Birmingham.

Norval Foundation, Cape Town, South Africa: Photo by Lauren Richards

Open spaces entail a wide range of places, including recreational facilities, public parks, heritage sites, beaches, and public squares. On an individual level, citizens around the world connect with local open spaces for a variety of often highly contextual and personal reasons. Open spaces can be places where people connect with heritage, with art and culture, developing a sense of self and connecting with the environment they live in. They are spaces we might use alone but can also act as hubs for community building and socializing.  We may choose to visit a park for a few hours, stay at a beach all day, or simply sit outside in public squares during lunch breaks.

Central Business District, Nairobi, Kenya: Photo by Saina Kiprotich

Some of our open spaces are treasured and achieve status such as becoming a UNESCO world heritage site. One such example is in Morocco, where Chellah, an ancient archaeological site and fortified necropolis, is listed and protected by the Moroccan authorities, and well maintained so visitors can feel safe and secure while enjoying the natural beauty and historical significance of the area. The standard, cleanliness and perceived safety of an open space impacts the desire of local residents to use it. In many places, including Birmingham, Nairobi and Cape Town, the standard of open spaces varies significantly, with more affluent neighbourhoods often having better maintained spaces

but some are simply ‘left behind’, neglected, or subject to fly tipping or dumping, causing visual pollution, and spoiling open spaces.

Chellah, Rabat, Morocco: Photo by Ilias Defaa

This lack of equality around green space access is well recognised by Birmingham City Council, who have a 25-year City of Nature Plan, with an ambition to be recognised as a city of nature, with the Birmingham Future Parks Accelerator Project developing an environmental justice map of the city by ward with ‘access to green space’ comprising one of the factors that generates the score, the first local authority in the UK to develop a tool to measure environmental justice.

The relationship we have today with our open spaces is gaining focus both here in the UK and globally. Increased attention to climate change, the importance of biodiversity and the value of open spaces as assets which can help with climate mitigation and adaptation is growing, alongside the intrinsic benefits to local people and communities.

However, despite this growing recognition, and plans such as the BCC City of Nature Plan and the West Midlands Combined Authority (WMCA)’s five year Natural Environment Plan, funding for parks in the UK has been cut significantly. The State of UK Public Parks 2021 report published by the Association for Public Service Excellence (APSE) found that the UK has lost a total of £690 million funding for parks between 2011-2021, providing ‘woefully inadequate’ funding for local authorities.

Community groups, such as in Birmingham, often provide support voluntarily alongside accessing grants not available directly to local authorities to improve and develop the space for use. Birmingham Open Spaces Forum coordinate and support the 130+ ‘Friends of’ and other community groups across Birmingham that caretake and protect not only those spaces that seem traditional to open spaces; parks, fields and gardens, but also litter pick in the streets, and maintain other smaller patches of ‘green’, which some may overlook, but are of equal importance. Cotteridge Park in the south of the city provides a gold star, ‘Green Flag’ awarded example of the success possible with volunteers.

‘The Shed’ at Cotteridge Park, Birmingham: Photo by Rebekah Roebuck

The value of open spaces is not always easy to quantify. However, under the concept of natural capital, there is an increasing drive to define a financial value on the services provided. Birmingham’s 600 blue and green spaces (over 4,700 hectares (47 Km2), not to mention the famed ‘more miles of canals than Venice’), is estimated by Birmingham Future Parks Accelerator to be worth around £11 billion, with £4 billion linked directly to the wellbeing of its residents.

In the light of Birmingham City Council’s proposed service cuts, including city operations which includes responsibilities for parks, the role that community groups play in the protection, maintenance and guardianship of our green spaces feels even more critical. BOSF are backing the ‘Save Birmingham’ Campaign, formed in response to concern about the prospect of a ‘fire sale’ of vital spaces. They are asking local residents to nominate spaces and other facilities as an “asset of community value”, to demonstrate the public support for these and with a view to potentially developing further co-operative solutions for spaces in the future.

Be it simply the reduction in servicing and maintaining our parks, to the more serious prospect of the selling off or repurposing of open space assets, it seems likely that despite the recognition of the growing necessity to protect these open spaces, they may be at risk. To achieve environmental justice and equality of access to open spaces in Birmingham, how parks are funded, maintained, and improved must remain a focus for local government.

Rebekah Roebuck is undertaking a PhD on the governance of energy decarbonisation in the Department of Public Administration and Policy at the University of Birmingham. She is also interested in environmental justice, disability rights and community engagement. She can be contacted at [email protected]

https://www.linkedin.com/in/rebekah-roebuck/

This blog derives from a longer blog on Open Spaces and Mobility published for the University of Birmingham developed via a EUniWell project focused on international collaboration, written by the author alongside Ilias Defaa, Lauren Richards, Nana Amponsah and Saina Kiprotich.

Beyond the Numbers: A Holistic Approach to Section 114 Notices in English Local Government

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Dr Philip Whiteman

In English local government, the issuance of a section 114 notice is often perceived as a dire financial omen, signalling a council’s descent into insolvency. While financial stability is undoubtedly a cornerstone of effective governance, it is crucial to recognize that section 114 notices reveal more than just a precarious financial situation. They serve as a beacon, illuminating underlying issues that extend beyond the confines of spreadsheets and budget projections. Either way, the government’s Department of Levelling Up, Housing and Communities (DeLUHC) tends to respond with intervention and the imposition of commissioners to direct the authorities concerned.

The poor financial position of many authorities may be the direct result of years of underfunding by central government and we can expect many more councils to serve section 114 notices, but it would be improvident to assume there are no further underlying causes.

Nottingham City Council’s recent declaration of a section 114 is a clear indication that some authorities are simply folding due to a broken funding formula, but this is not the sole cause of failure in all cases. When looking at other authorities, alternative underlying causes are present. Further examples include:

  • The BBC Panorama programme highlighted how Thurrock Council was rendered bankrupt following a series failed investments in a solar farm, highlighting disastrous procurement practices, lack of accountability, poor governance, and inappropriate delegations to officers.
  • Birmingham City Council’s problems did not emerge overnight and were a culmination of challenges created by a historic equal pay-claim and botched procurement a new IT system, Oracle. Underpinning this was poor financial planning, governance, accountability, and a failing internal culture.
  • Woking Borough Council racked up a deficit of £1.2bn following the building and acquisition of major property portfolio. Against these investments, the authority had acquired loans from the Public Works Loan Board and other local authorities, accumulating debts that it could not service.
  • Liverpool City Council’s woes are not confined to finances. Government commissioners were appointed to Liverpool City Council in June 2021 following a damning Best Value inspection by Max Caller CBE on matters pertaining to poor leadership, unacceptable performance, poor resource management and a failure to engage with citizens.

Government appointed commissioners tasked with overseeing councils in financial distress must adopt a holistic approach, venturing beyond the immediate financial crisis to uncover the root causes of the council’s predicament. This requires a comprehensive examination of the council’s structural framework, external environment, performance management and internal governance practices.

Structural Challenges: A Precarious Foundation

English local governments face a unique set of structural challenges that can hinder financial stability. The relentless rise in service demands, coupled with a funding system that often fails to keep pace, places immense pressure on council budgets. This mismatch between resources and responsibilities can lead to a cycle of overspending and financial strain.

Commissioners must delve into the council’s structural framework, assessing whether the current allocation of resources aligns with the council’s responsibilities. They must also evaluate the effectiveness of the council’s revenue-generating strategies, ensuring they are maximizing their income potential without overburdening residents.

External Factors: Navigating Turbulent Waters

Local governments are not immune to the vicissitudes of the external environment. Economic downturns, shifts in government policies, and natural disasters can all have a profound impact on a council’s finances. Commissioners must assess the council’s vulnerability to these external factors, evaluating its risk management strategies and identifying potential contingencies.

Internal Governance: Cultivating a Culture of Accountability

While structural challenges and external factors can undoubtedly contribute to financial distress, internal governance failures often play a pivotal role. Poor financial planning, inadequate risk assessment, and a lack of transparency and accountability can erode a council’s financial stability.

Commissioners must scrutinize the council’s internal governance practices, ensuring that financial decision-making is sound, risks are appropriately assessed, and accountability is firmly established. They must also foster a culture of transparency, empowering residents to hold their council accountable for its financial stewardship.

A Holistic Approach: Beyond the Financial Storm

In the aftermath of a section 114 notice, commissioners must resist the temptation to focus solely on immediate financial stabilization measures. Instead, they must adopt a holistic approach, addressing the underlying structural, external, and governance issues that contributed to the council’s financial crisis.

By adopting a comprehensive view, commissioners can guide councils towards long-term financial stability, enabling them to deliver essential services to their communities without succumbing to the pressures of insolvency. Only by addressing the root causes of financial distress can we ensure that section 114 notices no longer serve as mere harbingers of financial doom, but rather as catalysts for positive transformation.

Speculating on further interventions

Speculation is precisely that. Estimates vary widely in terms of how many further councils are anticipated declare section 114 notices, but a clear signal of further failures exists:

  • In July 2023, ITV News cited a leaked DeLUHC document which estimated at least 26 bankruptcies over the next two years.
  • The Institute of Government has estimated that 10% of councils are at risk over the next two years.
  • The Special Interest Group of Municipal Authorities (SIGOMA), a representative body for 47 municipal authorities, published a survey in June 2023 which showed that five of their members were at risk.
  • A Local Government Association Survey conducted in November 2023 revealed that almost one in five local authority leaders and chief executives believe that their authority may have to declare a section 114 notice.

Whilst estimates vary, there is evidence that further authorities will become vulnerable to government intervention via the imposition of DELUHP appointed commissioners.  This raises a final question; can the predicted number of authorities realistically be serviced?

Birmingham’s contribution to local government numerology

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Chris Game

Right – we, meaning I, must start with a dilemma declaration. How to deal with a major national news item – “Birmingham City Council declares itself bankrupt” – the consequences of which, as a long-term Birmingham resident and ratepayer, will affect you personally and about which in the distant past you might well have been invited to opine seriously and professionally. Yes, carry on being retired and/or pretend you’re still on your hols.

Obviously, I’ve chosen an alternative route, emphasising background and context and stuff that might just provide some clarification, or at least updating.  And, if it seems frivolous, tasteless or just indulgent, I apologise. Blame me, not the editor.

I’ll start, as it’s in the intendedly eye-catching title, with numerology – the study of the hidden, divine or mystical meaning of numbers. Even if you’re not into it, you’ll quite likely have come across ‘angel numbers’, aka ‘lucky primes’ – sequences of digits that supposedly bode well and make you feel good. Or, as the ologists put it, messages from the spiritual universe offering insight, wisdom, and directionality – three-digit ‘lucky primes’ usually including 127, 151, 163, 193, etc.

And which bunch of local government personnel, more than most, could benefit from having such character traits built into their job descriptions? Section 151 Officers, of course; aka Chief Finance Officers (CFOs) – those required by Section 151 of the 1972 Local Government Act to arrange and take responsibility for the proper administration of their local authorities’ financial affairs.

Just check out the numerologists. “The energies of number 1 combined with the vibrations of number 5 … a sign from the divine realm that you need to be strong, act as a leader, and be in control of your future life …” etc. etc.

The only problem being that, with a bit of searching, you can get similar hokum for almost any three- or four-digit number. So, somewhat to my disappointment I admit, no fiddling whatever would have been required of the Office of the Parliamentary Counsel – the people who actually draft our laws – to ensure that these matters would be dealt with by Section 151 of the 1972 Act.  Excepting possibly the Satanic 666, which would make the Act impossibly long anyway, almost any three-digit number would have served.  

I knew this back in 2017, but I’ve habitually kept a vague look-out for any published follow-up from my INLOGOV blogs and admit that I was quite chuffed when a few years ago one was picked up and passed on by Room 151 – the “online news, opinion and resource service for local authority Section 151 and other senior officers covering treasury, pensions, strategic finance, funding, resources and risk …”.

Chuffed too to that, albeit over a lengthier time period than I was envisaging, the broad thrust of my argument of more being on the way has proved to be accurate – a somewhat nerdy argument, admittedly, that can certainly be made even nerdier, but that, for current blogging purposes, can also be tolerably summarised in a few sentences.

So here goes!  If a council’s Chief Finance/Section 151 Officer (forever male, of course, in the 1988 LG Finance Act, although Birmingham’s current Interim Director of Finance happens to be Fiona Greenway) reckons his council’s expenditure is likely to exceed available resources, he issues a Section 114 Notice prohibiting any new spending apart from that funding statutory services and existing contractual obligations. OK, geeks, they’re technically ‘Reports’, not ‘Notices’, but that really, really isn’t the serious issue.

It’s a situation in which things are pretty obviously and publicly getting out of hand – current spending way over budget, reserves virtually exhausted, no imminent solution. The alternative, however, is worse: Section 24 of the Local Audit and Accountability Act 2014, or washing your dirty linen in public – the council’s EXTERNAL auditors appending a Section 24 ‘Recommendation’ to their Annual Audit letter, “copied to the Secretary of State”.

Which may sound chummy, but, I suggested, was “the bullet-shaped chumminess of a Mafia ‘message job’”: very nasty, and rarer even than 114 Notices – historically. Yet – and this is what prompted that 2017 blog – in the space of two months two Section 24s had been issued, to councils at the very extreme ends of the council scale spectrum: the Scilly Isles and Birmingham, the latter’s then Labour Leader, Cllr Sir Albert Bore, describing it as “the most concerning audit letter” he’d seen in his 36 years as a councillor. For the record, though, and without further explanation, that’s the last you’ll read of them in this particular blog.

The distinctions between the 114/24 courses of action were interesting and debatable, but you didn’t have to be a terribly nerdy follower of local government finances to see the probable beginnings of a trend, so it was pleasing to have been reckoned insightful by the serious pros in Room 151. Especially when the trend didn’t gather pace as quickly and widely as I speculated it might.

However, given the way local government finance ‘works’ in this country, particularly under Conservative administrations, it was only going to be a matter of time, and gradually the signals became unmissable – accelerating in quite a big way with (then Lab) Croydon LBC in late 2020, who issued not one but two s114 Notices in successive months, having again failed to balance its budget in the permitted 21 days of grace. Understandably, it prompted a Commons Inquiry by Clive Betts’ ever-watchful Local Government (sorry – Levelling-up, Housing & Communities) Committee.

Slough BC (Lab then, C/LD now) was next in July 2021, despite having been one of eight councils granted “exceptional support” the previous year, as Ministers became increasingly concerned at the adverse publicity generated by threats of councils ‘going broke’.

Come December and Cumbria’s Copeland BC (Lab then, since abolished and incorporated into Cumberland) was reported to be “in Section 114 territory”, but was soon overshadowed by (Lab) Nottingham City Council’s unlawfully diverting cash from what should have been a ring-fenced Housing Revenue Account to ‘General Funds’ – an ‘accounting error’ which personally I found extraordinary, since it’s one of the few bits of tekkie lg finance that even I know. And it dragged on.

2022 saw serious acceleration. In May Northumberland Council (Con)issued a s114 for unlawful expenditure, including allowances paid to the council’s Chief Executive. It was possibly the case generating least sympathy for the beleaguered council, whose elected members and officers went public with their mutual distrust – not the only such example, but probably the bitterest. 

Towards the end of 2022 it became clear how desperate the situation – or at least the search for commissioners available to ’intervene’ – was becoming, as returning Local Government Secretary Michael Gove sought to launch anticipatory “turnaround programmes” short of sending in commissioners – ‘risk-mitigation directions’, in Govester jargon.

Not in time, however, to prevent Croydon LBC (NOC) issuing its third s114 in three years, and Thurrock Council (Con) having the courage/desperation to report that it would require “exceptional support” from Gove’s Department “over a number of years … to stabilise our financial position and give us time to have balanced budgets.”

At which point – after an obviously uplifting Christmas and New Year – “Whitehall officials”, in the person of Jeremy Pocklington, Permanent Secretary of the Department for Levelling Up, Housing and Communities (DLUHC), had the confidence/nerve/effrontery to announce to a Select Committee that even at the time sounded, well, brave.

As reported in The MJ (Jan 10th), “Whitehall officials are not expecting councils to issue further Section 114 notices in the coming weeks … our assessment, looking at the sector as a whole, is that the financial position is sustainable … strengthened by the additional resources made available in the Autumn Statement.”

Apart, that is, from the nine councils within the Special Interest Group of Municipal Authorities (Sigoma) who warned last week that they could issue a Section 114 notice by 2025; Stoke-on-Trent City Council (Lab) that announced this week that it is on the verge of bankruptcy … oh yes, and Birmingham.

Chris Game is an INLOGOV Associate, and Visiting Professor at Kwansei Gakuin University, Osaka, Japan.  He is joint-author (with Professor David Wilson) of the successive editions of Local Government in the United Kingdom, and a regular columnist for The Birmingham Post.

The Jaws of Doom – still relevant a decade on

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Chris Game

“Things from the past you’ll never see again”.  I came across a listing of these recently, and they were – well, moderately interesting. More so, anyway, than the accompanying “trends that have unfortunately returned” – pleated skirts, corsets, and structured vests, whatever they were.

The never-see-agains included smoking adverts, bubblegum cigarettes, and rotary push lawnmowers – to which I might easily have added “The Barnet Graph of Doom” as at least a never-expected-to-see-again.

It was a visual aid devised a dozen or so years ago primarily for the councillors of the London Borough of Barnet. It would come, however, to be associated with/appropriated by Birmingham City Council, and something with which some INLOGOV colleagues were so taken that it was discussed and illustrated in these pages not once but repeatedly – by, inter alia, me in May 2012 and January 2013 and the Institute’s then Director and this blog’s progenitor, Catherine Staite, in December 2012 and October 2013. Indeed, as Catherine notes in that second blog, it at least part-prompted an INLOGOV ‘book’ or, more accurately, Discussion Paper.

Impactful at the time, then, but at least not prominently, I presumed, over the ensuing decade. Certainly I, though at best semi-detached from these matters nowadays, was genuinely surprised to be confronted by its reappearance in a recent Financial Times (indeed, its double reappearance). Somewhat less so that it was credited entirely to Birmingham City Council, with Barnet getting, as my mother would have said, nary a mention. Which justifies at least a brief résumé, and for more senior readers a bit of reminiscence.

Some 15 years or so ago the very Conservative Barnet LBC acquired the not entirely flattering moniker of ‘easyCouncil’ – that precise orthography/spelling, though frequently ignored in the media, being arguably the policy’s most appealing attribute. With its stray upper-case C intendedly referencing the easyJet business model that inspired the council’s almost boundless outsourcing drive for no-frills efficiency, it embraced pretty well all services, from reduced-size waste bins and privatised street cleaning to limited ‘personalised’ adult social care budgets.    

Improved and cheaper services were obviously the aim, but senior officers foresaw that the sheer scale of demographic change – more children, more elderly – would in any foreseeable future take up an unmanageable proportion of the Council’s increasingly constricted budget. “No libraries, no parks, no leisure centres – not even bin collections”.  Hence the original Barnet Graph of Doom. The one on the left of the illustration, that is – the other, pleasing if more alarmist one, being a public ‘reminder’ tweeted a few years later, just as the social services budget was seriously taking off as forecast.

The Barnet graph, described at some length in my first blog and more summarily by the Guardian’s Public Services editor, David Brindle, started life as part of first a PowerPoint, later video, presentation used by the Council’s Chief Executive, Nick Walkley, to:

“focus the thoughts of colleagues and councillors …  In five to seven years we get to the point where it starts to restrict our ability to do anything very much else. Over a 20-year period, unless there was really radical corrective action, adult social care and children’s services would need to take up the totality of our existing budget.”

The tone, as Brindle noted, was deliberately alarmist, with the policy making no provision, inter alia, for Barnet’s anticipated rise in income through regeneration schemes. As an illustrative device, though, it was hugely effective. It featured regularly in local government media, and also in presentations by the late Sir Bob Kerslake – then Permanent Secretary at the DCLG, and whose outstanding career in both central and local government was fulsomely recounted following his recent death.

Alarming, yes, but “Where are the jaws?”, I hear you ask – and, of course, there weren’t any, yet. They were Birmingham Council’s contribution when it took the idea over and “simplified/dramatised” it by, as Patrick Butler put it, again in The Guardian, projecting “a ‘budget pressures’ line rising steeply to the top right of the grid, and a ‘grant reductions’ line crashing to the bottom right.”  It featured prominently as a ‘Jaws of Doom Graph’ in the council’s 2013 Budget Consultation document, and could indeed resemble, as Butler suggested, “a child’s depiction of a shark, or crocodile, about to bite its prey. Lunch, in this case, appears to be local government itself.”

In my January 2013 blog I sought to address the question of whether the ‘doom-mongering’ was entirely fair: Were “Birmingham and urban councils generally, or Labour councils, or the country’s most deprived areas, being particularly harshly treated by the government’s grant funding cuts?”

Which, you’ll be relieved to learn, I’ll not be bothering you with here – not least because, as already noted, for the vast bulk of the past decade I’ve personally given these particular ‘Jaws of Doom’ and their graph scarcely a passing thought. Now, though, I wonder whether that’s simply another consequence of a retiree’s detachment from the daily concerns and parlance of local government personnel. Could it be that this is what today’s finance officers jaw about, as it were, down the pub of an evening?

For suddenly there it was, weeks before the journalistic ‘silly season’, and in ‘The Pink Un’ – no, not Norwich City FC’s newsletter, but the albeit self-styled “worldʼs leading global business publication”: “The Jaws of Doom” graph in its original glory, and not once but twice. First, in a kind of editorial intro by Associate Editor, Stephen Bush, commending to readers William Wallis’ “excellent piece … featuring this alarming chart [shown on the right below] about the … ‘jaws of doom’ facing local authorities”.  And then Wallis’ article itself.

As you’d expect, it’s a good summary presentation – that I’d certainly be recommending to students, if I still had any – the thrust of which is that:

 “for more than a decade, local authorities in England have been sacrificing services and staff to what they call “the jaws of doom” – a reference to a graphic produced by Birmingham city council to show worsening budgetary pressures, that resembled a crocodile’s mouth.

Between rising demand for social care and other essential services, and the dwindling funds councils have received to provide these, discretionary spending on everything from libraries to youth clubs has already been eaten up.

Although local authorities won a better than usual financial settlement for 2023-24, 9.4% up on the year before, inflation running at 8.7% is eroding any benefits.”

And, having already well exceeded a thousand words, that’s where I’ll stop … though not before sharing the interesting and, more importantly, interactive graph of Sigoma’s English Indices of Multiple Deprivation also included in Wallis’ article – not new, so doubtless familiar to some readers, but to me unfamiliar, informative (see added results), surprising in places, and, I felt, worth sharing.  It made me (almost) sad not still to be lecturing and so able to play with it in public, as they say!

Chris Game is an INLOGOV Associate, and Visiting Professor at Kwansei Gakuin University, Osaka, Japan.  He is joint-author (with Professor David Wilson) of the successive editions of Local Government in the United Kingdom, and a regular columnist for The Birmingham Post.

A Japanese view of Jeremy’s budget

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Chris Game

I had an interesting Budget week. I was part-hosting a Japanese academic colleague – Prof Toshihiko Ishihara (Kwansei Gakuin University) and his wife, Midori – making their first overseas trip since Covid. They briefly visited Birmingham, where Toshi was an erstwhile INLOGOV Associate, but were based in London, where I’d agreed to organise a theatre visit.

I’d booked tickets for a well-reviewed modern-day play, Romeo and Julie, loosely based on one of Shakespeare’s. Single-sentence synopsis: Julie – a bright, Cambridge University-bound, aspiring astrophysicist – is emotionally torn between uni and her affection for young single dad, Romeo, effectively sole carer for his baby daughter afflicted with Poonami.  

No, the Poonami doesn’t feature in Shakespeare’s version, but, researcher that I am, I’d discovered it’s a real medical thing, meaning affected babies’ sudden, massive, uncontrollable bowel movements. Better still, that etymologically Poonami derives directly from the Japanese tsunami – a sudden, volcanic, unstoppable wave. My guests were delighted – and the play too was excellent.   

The following Wednesday, however, was Budget Day – followed by the Birmingham Post’s impassioned coverage of our region’s “Power grab”, the “seismic shift in devolution as West Midland leaders take more control from Whitehall”, etc. (pp.1,7) – guaranteeing some amused but tricky questions from someone who both lives with and studies serious mayoral governance.

It was the national news headlines, though, that I was obliged to address first, and the UK’s “unsustainable … biggest since the war … tax burden” – characterised by Chancellor Jeremy Hunt as something horrendous and to be avoided, certainly by a Conservative Government, at almost any costs.

We’re not Basil Fawltys, but my Japanese friends and I tend not to mention ‘the war’ that much. Anyway, the timescale wasn’t really the issue. It was that highest-level tax forecast of 37.7% of Gross Domestic Product (GDP) – and yes, we do make life harder by colluding in almost invariably labelling it a “tax burden”, rather than, say, the “quality-of-life price” that the tax helps pay for.

What Toshi and other Japanese students of these things invariably query is: why the excitement/horror over a tax-to-GDP ratio currently almost identical to theirs? Yes, ours is indeed a higher ‘burden’ than those of, say, the US or Switzerland. But, as shown in the Office for Budget Responsibility’s Chart A, both we – at roughly 34% of GDP – and Japan are currently in the bottom third of “advanced economies”, and even at a forecast 37.7% we’d still be mid-table and some way BELOW both most sizeable West European countries, plus bits of Eastern Europe too.

It’s interesting. Pollsters never ask us if we prefer NOT being an ‘advanced economy’ – you know, one with fully staffed and functioning health and social services, decently funded schools, reliable public transport, etc.?  And I’m not sure how collectively we’d answer. Clearly, these things do cost money, yet we obviously like visiting these higher-taxed places for our holidays.  Not Denmark perhaps – top, with its 47% tax ‘burden’ – but France, Austria, Italy, Scandinavia, Greece, Spain, Portugal, etc.

It’s presumably at least partly these countries’ ‘quality of life’ (QoL) that attracts us – which, unsurprisingly, correlates broadly with ‘tax burden’. There are several QoL indexes, one being Numbeo’s. It’s not the most methodologically sophisticated, but it does produce nice maps, collectively summarising its measures, which include purchasing power, safety, health care, cost of living, and pollution.

Netherlands, Denmark and Switzerland are currently top, scoring nearly 200 QoL points. Then the usual suspects – Finland, Iceland, Austria, Australia, New Zealand, Japan (13th) etc. – down to No.21 – UK 166.4, just ahead of Croatia. Disappointing, but could be worse – bottom at 84th is red Nigeria, not with ‘nul points’ exactly, but only 40.

The underlying, systemic problem, obviously not mentioned by Chancellor Hunt, is precisely his Department: His Majesty’s Treasury – first time I’ve typed that! – and its overbearing central funding control, currently exercised politically and communicated by him. And formerly by, among others, one George Osborne – which is where the irony starts. When Chancellor of the Exchequer, Osborne launched, and currently chairs, the Northern Powerhouse Partnership (NPP) – self-described as “the leading voice of business and civic leaders across the North”.

And currently a very shouty voice. For, within days of Hunt’s Budget pronouncements, along came Osborne with his NPP ‘wrecking ball’ – a clumsily titled but potentially headline-making report: Fiscal DevoNation – The Blueprint for How to Devolve Tax to the Regions of England. The Treasury, he and his Powerhouse chums now reckon – and as local government has complained for years – far from being the provider of solutions, is itself the problem. Its voice is the overwhelmingly dominant one in what Osborne nowadays sees as a damagingly over-centralised fiscal system. Just like when he was boss.

The NPP’s solutions involve, at least eventually, full-scale fiscal devolution. The “most unfair” council tax – with its outdated property values – stamp duty (paid on purchasing residential property), and business rates should all go, eliminating the Treasury’s all-powerful role altogether. The at least eventual replacement, following a comprehensive revaluation of all homes, would be a locally set land value tax, plus three new council tax ‘super bands’ for the most valuable properties, with revenue to be shared across the country.

Yep – that’s radical, but there’s more – like the localised hotel tax that numerous other countries already have, which NPP reckons could raise an annual £5.5 millions for the Lake District alone.

But I digress – from what my Japanese visitors really wanted to talk about: that Budget highlight of a “seismic shift” in devolution, to the West Midlands and Greater Manchester regions, and their elected Mayors, Andys Street and Burnham, who will get new multi-year devolution funding deals, and be allowed to retain business rates – to be followed by further such agreements across England.

At the time of writing, there hadn’t been a direct response from Northern Powerhouse as to how far down the ‘full-scale fiscal devolution’ road this might take us. As for a Japanese reaction, well, this blog is already overlong; but their response would probably start with the country’s written constitution, and the local government chapter guaranteeing its role and “the principle of local autonomy”. It’s an ultra-crude summary, but basically the national state does currency, diplomacy and defence, and pretty much everything else is left to the 47 prefectures and 1,700 or so municipalities. And heading those municipalities … directly elected mayors!

As the American phrase puts it: ‘Way to go’ – in both senses.  

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This is an adapted version of an article that appeared in the March 23rd edition of the Birmingham Post.

Chris Game is an INLOGOV Associate, and Visiting Professor at Kwansei Gakuin University, Osaka, Japan.  He is joint-author (with Professor David Wilson) of the successive editions of Local Government in the United Kingdom, and a regular columnist for The Birmingham Post.