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Austerity, so-called devolution and the social care crisis

Austerity, so-called devolution and the social care crisis

🕔15.Dec 2016

Like the editor of the Files, I’m a Guardian reader, and in this Tuesday’s edition there were two articles of particular interest to me as someone who for many years tried to fascinate University of Birmingham students, both home and international, in the workings and exceptional features of British local government, writes Chris Game.

The first article was the front-page interview with Birmingham City Council chief executive, Mark Rogers, that Kevin discussed in yesterday’s posting. From a very senior and respected officer, rather than a party politician, and appearing virtually on the eve of today’s 2017-18 Local Government Finance Settlement, it gave a particularly alarming insight into the state, in the nation’s second city, of social care services – the last minute ‘bail-out’ funding of which is likely to provide the Settlement’s headlines.

I obviously don’t intend re-discussing Rogers’ views. Rather, I want to link some of the other pre-Settlement reports and speculations with the second Guardian report of what in my edition was headlined: “Secret plans to slash overseas students by almost half”.

Even when you realise that the slashing’s definitely of student numbers rather than actual students, the lengths to which the Home Office is reportedly prepared to go will make unsettling reading for all our city’s universities and colleges. They most certainly do need airing, debating, and maybe more. But not here, not now.

The thought I want to raise is that, were students from a pretty high proportion of the 150-odd countries represented on my university’s Edgbaston campus to read some of this week’s headlines relating to our local government, they’d surely be bewildered and many probably shocked.

Following six years of successive governments’ ‘austerity’ cuts to local authority grant funding, we have a national crisis in adult social care, finally acknowledged even by ministers. It went completely unmentioned in the Chancellor’s Autumn Statement just three weeks ago, but this time something tangible in today’s Finance Settlement seems certain – probably giving councils fractionally more discretion over how they manage the social care council tax precept introduced by Chancellor George Osborne last year.

For the immediate purposes of this post, though, the particular form and conditions of any conceded short-term cash injection are immaterial. It can be almost taken for granted that, given the gravity of crisis, it will be both inadequate and misdirected.

Inadequate, certainly in places like Birmingham, where, as council leader John Clancy has noted an additional 1% on a Band D council tax bill will raise under £3 million, against over £6 million in, say, Surrey. Misdirected because, as experts like the King’s Fund argue, making better use of the Better Care Fund, which spans both the NHS and local government, would be both more efficient and effective.

But returning to my international student observers, it’s not any actual measures, but a contextual study of this week’s pre-Settlement hints, that I reckon could be eye-opening.

All that’s needed are a couple of almost randomly selected leading paragraphs, the following being from Monday’s Sky News, with emphases added:

The PRIME MINISTER is reported to be PREPARING TO ALLOW [council] tax precepts to be increased …allow[ing] councils, WHICH HAVE SEEN REDUCTIONS IN GRANTS OF MORE THAN 40% SINCE 2010, to draw in extra cash to cover the soaring cost of social care.

And, explaining how this would be similar to last year’s last minute sticking plaster:

A 2% precept – the amount TOWN HALLS CAN ADD TO COUNCIL TAX BILLS TO PAY FOR CARE FOR THE ELDERLY AND DISABLED – was introduced by former Chancellor, George Osborne.

And there you have it, the full financial and fiscal centralism of our governmental system in the raw – and A LOT more centralist not only than virtually all other EU and OECD countries, but than many of those in Asia-Pacific, Latin America, and even the former Soviet Union.

In India, for example, over half the revenue from the 25 taxes its citizens like to think they pay is collected by sub-national (state and municipal) governments, rather than by central government. In Argentina and Brazil it’s over 40%, in Japan and Vietnam over 35%, and on average across more than a hundred of the world’s major countries it’s 10%. And in Britain … our single local (council) tax contributes just 5.9% of the country’s total tax take, the rest going, of course, to the aptly named Treasury.

Which, from a local perspective, means that roughly two-thirds of an urban, social care-providing council’s revenue (day-to-day services) funding will come from central government grants (over 70% in Birmingham’s case).

By contrast, perhaps 10% will come from Council Tax – the only local tax the council has any control over whatever – and even that for the past several years has effectively been capped by central government.

The immediate context of the present care crisis, therefore, is that it has been substantially and deliberately created by central government’s year-on-year funding cuts, leaving councils now dependent on that same central government’s PERMISSION to raise their only local tax from their own local taxpayers by a modest and functionally inadequate percentage – on condition, of course, that they spend it in precisely the way ministers specify.

The broader context, for the benefit particularly of overseas observers, is provided by the estimable Global Observatory on Local Finances, which just last month published its first survey of the structure and finance of 100+ sub-national governments around the world.

Two edited figures from the survey are included here. The first compares the average population size of countries’ most local tier of sub-national government – in our case, unitary, London, borough and district councils. The second, from which the above-quoted statistics were drawn, shows the proportion of all tax collected that goes directly to sub-national governments.










They are, hopefully, largely self-explanatory, at least to the extent of highlighting the very basic, but important message: that Britain’s local authorities, though among the world’s largest, have one of the more minimal local taxation discretions.










And for domestic observers, the conclusion, suggested in the title, is that any pretence at serious devolution, with or without elected mayors, will remain essentially a mirage without some worthwhile measure of fiscal devolution. But that’s for another day.

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