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Never mind the Council, I feel personally victimised. Yes, “victimised”, Sir Bob…

Never mind the Council, I feel personally victimised. Yes, “victimised”, Sir Bob…

🕔29.Dec 2014

Chris Game, from the Institute of Local Government Studies at the University of Birmingham, gives a masterclass in local authority funding and explains why he has every right to victimised. Are you listening, Sir Bob and colleagues at DCLG?

You may have seen that Sir Bob Kerslake, author of the recent scathing review of Birmingham City Council, has got himself a nice little Christmas present and retirement earner – as Chair of the London King’s College Hospital Foundation Trust.

I’m sure, even if seasonal sentiment didn’t oblige it, that we all wish him well. We wouldn’t want to seem curmudgeonly, would we, despite his reckoning that we, or at least our council, are a load of whingers.

For some reason – because, contrary to convention, it didn’t feature in the report itself – Sir Bob even chose to use the provocative and apparently headline-seeking V-word in his personal Executive Summary, asserting (p.9) that:

Birmingham City Council too often sees itself as a victim.

It immediately reminded me of the famous quote from Joseph Heller’s Catch 22: “Just because you’re paranoid doesn’t mean they aren’t after you.” In this case, just because you feel victimised doesn’t mean you’re not.

And right now, never mind the council, I personally feel VERY victimised by the Government’s 2015-16 local government finance settlement, reported recently by Paul Dale.

I can’t better Paul’s characteristically full and balanced report. But, if you’ll indulge me, I will try to personalise it.

Grants and grant funding can seem both bewildering and paint-dryingly boring. But, at our combined average age of ten, my younger sister Jennifer and I didn’t know this, we reckoned we’d cracked at least the essential principles – which was fortunate, as we and our mum were even more heavily grant-dependent than Birmingham City Council.

In our traditional patriarchal household, my father was the sole wage-earner, and he funded my mother through her weekly (Friday) ‘housekeeping’ grant, and us children through our weekly (Saturday) pocket-money grants.

Opportunistically, through grandparental charity or the undertaking of ‘errands’ (mainly me) and ‘chores’ (J), we could increase our revenue spending power. But we could also suffer largely non-negotiable grant-loss, to pay for the upkeep of J’s pet rabbit (Thumper), a cricket ball-broken window, or – seasonal touch here – Christmas gifts for the aforementioned grandparents.

The point is that, callow as we were, we understood perfectly the distinction between grant funding and spending power – unlike the sections of our media who either parroted or headlined not the settlement’s actual words – let alone its meaning – but DCLG ministers’ political message.

ITV was typical: “the amount of funding councils will get in central government grants will be reduced by [a mere and obviously manageable] 1.8% in 2015-16 (bracketed steer added).

That’s what ministers hoped we’d hear, but for them the F-for-funding word has become the no-no that the V-word should have been for Sir Bob, and nowadays they rarely mention it.

‘Amount of funding’ is much too coarse, measurable and comprehensible. It’s far more refined – and cryptic – to talk of spending power (SP), particularly if you’ve got your own special definition.

What Local Government Minister Kris Hopkins announced, therefore, was that “the average spending power reduction for councils in 2015-16 is just 1.8%”.

Indeed, with “the additional transformation money the government is giving councils to improve services, this reduction falls to 1.6%” (emphases added).

See, it’s getting even better. Moreover:

those facing the highest demand for services continue to receive substantially more funding. For   example, Middlesbrough has a spending power per household of £2,441,, which is £871 more than the £1,570 per household in Windsor and Maidenhead.

This is the fifth year in which ministers have attempted this sleight of hand, and, to be fair, most of the media have caught on. Most did report that the 1.8% cut is not in councils’ grant-funding, but their spending power – though still only a minority, including of course the Chamberlain Files, explained the distinction and its significance.

It would have been like my father deciding in one of the 1950s’ sterling crises that we should all (kids included) be in it together, and imposing a 3 pence austerity cut in my pocket money of 2 shillings and sixpence (2/6 = 30 pre-decimal pence) – but overlooking that he’d already cut it by sixpence for cricketing misdemeanours, which I’d subsequently made up through errand work.

As he might have explained to my mother, it was only a 10% reduction in my spending power, not the 12.5% grant cut I was claiming. And besides, he knew of better-off families in Westcliff (SE Essex’s nearly-as-posh equivalent of Windsor and Maidenhead) whose children didn’t even get weekly pocket money.

Following the Coalition’s ideological decision to reduce the budget deficit largely but selectively through public spending cuts, local government ministers in 2010-11 faced the tricky problem of explaining to the public that they’d be cutting central government grant funding of council revenue spending by an unprecedented 28% in cash terms (40% in real terms, allowing for inflation) over four years, with 21% ‘front-loaded’ in the first two years.

The scale of ministers’ task can be seen in a simple but powerful chart in a recent House of Commons research paper, in which the dark green columns represent the savage annual average percentage cuts in councils’ grant funding, in contrast to the generally modest increases to which they’d been accustomed. Their solution: to replace the nasty dark green columns with much less alarming light green ones.

grant settlement

First, they – or their civil servants – restructured the whole grant system, to make before-after comparisons more difficult. They then created their Revenue Spending Power measure, which they claimed would – by including council tax receipts, certain specific grants, and NHS social care funding – give a fuller picture of a council’s overall financial position.

Fuller, yes, but not full. Contrary to what is stated in the Government’s Plain English Guide to the 2015-16 Grant Settlement (para. 3)income from fees, charges and investments is NOT included in SP.

These are income sources likely to decline in a recession and whose addition to SP would emphasise, rather than de-emphasise, councils’ grant dependency – so nothing like as politically helpful as the contrived SP measure, which could instantly reduce a 28% grant cut to a 14% cut in spending power.

Ministers, then, view SP in the same way as Humpty Dumpty in Alice Through the Looking Glass. It can mean just what they choose it to mean – or more, or less.

If, say, they excluded council tax receipts from SP, any percentage grant cut would immediately become more (bad). If, on the other hand, they could include the whole of the new Better Care Fund – a single pooled budget to incentivise the NHS and local councils to work more collaboratively – any cut would immediately become less (good).

Yes, of course it’s confusing; it was designed to be. Present the public with two, three or more magnitudes of ‘spending power cuts’, and the chances are we’ll either turn off altogether or hear the one that’s shouted loudest: the Government’s. For 2015-16, as we’ve seen, the Government’s figure is 1.8% – or possibly 1.6%.

As Paul Dale noted, the Local Government Association (LGA), attempting to get its retaliation in at least simultaneously, released its own figures to coincide with ministers’ announcements.

These showed first that the Government’s total funding support to local authorities will be cut by 13.7% from the 2014-15 figure. It’s that F-for-funding word again, so ministers didn’t bother mentioning it, but it’s shown as a provisional figure in the Commons chart.

The LGA’s second calculation is that, if council tax income were excluded from SP – since it’s a completely different type of income from government grant – the average reduction would be not 1.8%, but 3.7%.

Third, if you also exclude the NHS’s portion of the £3.5 billion Better Care Fund and include in SP only the estimated £2 billion spent on social care services by local authorities, the arguably rather truer average reduction in councils’ revenue spending power becomes 8.8%, or nearly five times the Government’s figure.

And that, to repeat, is the average for all English local authorities – and even under the Government’s SP figures, individual authorities could lose up to 6.4% of their spending power, while others would receive a nice little increase.

But, especially with a General Election imminent, ministers want to persuade us, in the words of their Patronising – sorry, Plain – English Guide (para. 5) – that “the settlement is fair to all councils, and all council tax payers … Those areas most reliant on central government support will continue to receive the most grant.”

That last sentence is just disingenuous. Any formula or block grant comprises both a redistributive element, to compensate for local authorities’ differing needs, and a negative ‘resources’ element, to reflect their differing ability to raise their own money through council tax.

Even this government hasn’t contemplated abolishing the redistributive principle altogether. But judge for yourselves, using the Government’s own definitions and figures, whether its way of doing things is “fair to all councils”.

Birmingham’s cut in spending power, headlined in Paul Dale’s report, is 6% – close to the Government’s maximum 6.4%.

Cuts for other West Midlands metropolitan authorities run from Sandwell (5.1%) and Wolverhampton (5%), through Walsall (4%), Coventry (3.9%) and Dudley (2.8%) to Solihull – the sole Conservative-controlled council and, as it transpires, the only one whose SP will increase (+0.4%).

So Birmingham’s cut is proportionately the greatest, despite, as the Kerslake Report noted, its having “more poor children than anywhere else in England” (p.6), and being overall one of the most multiply deprived authorities in the country.

According to the Department for Communities and Local Government’s ranking of England’s 326 local authorities by multiple deprivation Birmingham is 13th most deprived, Sandwell 9th, Wolverhampton 20th, Walsall 35th, Coventry 53rd, Dudley 113th, and Solihull 212th – almost precisely the same order as that for percentage SP cuts.

As the parable puts it: “For whoever has, to him more shall be given, and he will have an abundance; but whoever does not have, even what he has shall be taken away from him.”

That’s not my idea of fairness to all; so yes, as a Birmingham citizen and council tax payer, I do feel victimised.

Moreover, I particularly resent being advised not to by Sir Bob, still Permanent Secretary at the DCLG, that was criticised just weeks ago by the National Audit Office for not even bothering to monitor the impact of its own council funding cuts or the serious problems of financial sustainability they’re causing.

In fact, I’ve quite lost all that seasonal sentiment I had when I began.

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