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Civic JAM – our ‘Just About Managing’ councils

Civic JAM – our ‘Just About Managing’ councils

🕔07.Dec 2016

It was a short seven-word sentence that really struck me: “Budget cuts for 2017-18 total around £100m.”  It was in Kevin Johnson’s preview of the Labour Group’s budget meeting – up front, in the second or third paragraph – but IT DIDN’T MAKE THE HEADLINE, writes Chris Game

I know Birmingham’s big, and everything its city council does is big. But taking £100 million out of the budget in a single year – which could easily be more than half as much again, depending on what happens to our top-up contribution to the WM Pension Fund – and it not getting a headline: that really is a sign of the times.

It serves too to illustrate the conceptual chasm the council and its elected members have to bridge in the forthcoming budget consultation in trying to explain to us voters the nature and scale of the budget problems they face, and that even our collective views can make any difference whatever. That’s what mainly prompted this post.

Real disposable income per head in the UK has risen by roughly 1% since 2010 – not roughly 1% each year, as over much of the previous decade, but 1% in total. It follows, with that national average, that most of the ‘just about managing’ (JAM) households courted by the Prime Minister must fall below it.

A recent Resolution Foundation think tank report provided some illustrations, the severest of which was a 28-year old couple with a baby, and a single full-time earner in low pay, whose net income would have dropped since 2010 by £760 or nearly 4 per cent.

Our local councils are both similar to and different from households. The basic difference is that all UK councils are statutorily required to at least ‘just about manage’ every year. Unlike some countries’ local governments, or NHS trusts or private households, they must set a balanced budget. No deficits or credit card debt for them.

The similarity is that both households and councils are on the receiving end of several years of central government austerity cuts. So, as councils prepare to consult us on their 2017-18 draft budgets, it’s worth noting that the starting point for every major West Midlands council is at least twice the 4 per cent income loss since 2010 of the harshest hit JAM households – and mostly several times the loss.

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The biggest, Birmingham, is also proportionately the biggest sufferer, having today less than two-thirds of the £1.16 billion it had to spend on day-to-day ‘revenue’ services at the start of the decade. Not so much JAM as JAMDO: Just About Managing? Dream On!

The figures quoted, the most objective available, are from an extended Institute for Fiscal Studies (IFS) monitoring of all English councils’ spending on day-to-day ‘revenue’ services – excluding education, funded nowadays almost entirely through central government grant – over what should have been exciting and even revolutionary times for local government finance.

An exceptionally centralised system of grant funding based on councils’ centrally assessed spending needs is being replaced by one in which councils will increasingly fund themselves by retaining their business rates and being incentivised to grow their local economies.

As described, though, this generally welcome reform has clashed with and been dominated by the Government’s separate austerity drive of severe year-on-year grant cuts to all ‘unprotected’ public services, including many, and particularly the ‘big ticket’ children’s and adult services, provided by councils.

The outcome, calculates IFS, is that English councils have seen an average real-terms funding cut of over 25% since 2009-10, with revenue from central government grants and redistributed business rates falling by 38%.

Inevitably some services, the more discretionary ones –  cultural, leisure, and environmental services, planning and development – have suffered greater than average cuts. Likewise, so have some councils – notably those serving the poorest communities that are consequently most grant-reliant.

Which largely explains why – or at least how – councils in the most deprived areas, like Salford, South Tyneside, Slough, and Westminster, dependent on grant for at least two-thirds of their funding, have taken cuts since 2010 of around 45 per cent, while Surrey and Hampshire, with around one-third grant dependence, have escaped with cuts of just 1 per cent.

The West Midlands contains no absolute extremes, but nevertheless some very marked disparities. Warwickshire and Worcestershire are the lowest grant-dependent councils, and each have had their funding cut by 8 per cent. Shropshire and Staffordshire, somewhat less grant-dependent, have seen cuts of 13 and 16 per cent respectively.

Among the metropolitan boroughs, Birmingham’s 34 per cent cut stands out on its own, followed by Sandwell, also with 70 per cent grant dependence and a 21 per cent funding cut. Wolverhampton, Solihull, Coventry, Dudley and Walsall all start their budget-making with between 10 and 20 per cent less funding than in 2010.

As a former Chancellor used to say, we are indeed all in this together, but some are a great deal deeper in than others. And if you’re hoping the PM’s compassion for beleaguered families might be about to stretch to JAM councils, well, don’t hold your breath.

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