Lord Porter (Con) has warned people could die if the government does not establish sustainable funding for adult social care.
Giving evidence to the Commons housing, communities and local government committee yesterday the chair of the Local Government Association accused the Treasury of “bloody mindedness” on council funding and said he believed small unitary councils are the most vulnerable to financial collapse.
When asked about councils using reserves due to mounting budgetary pressures, Lord Porter said investing reserves to reduce future costs was prudent but using them “to pay the electricity bill” was “insane”.
He added: “If the government thinks the policy going forward is spend your reserves and then we will find some new money after you have spent all your reserves, then the… secretary of state is going to have to explain to the public why these people died because the money wasn’t available.
“I’m not sure anybody who wants to get elected to Parliament wants… to explain why people died because of fiscal policy.”
Pointing out that the government had found the money to give the NHS a long-term funding settlement, he added: “It is only money at the end of the day. Why do we need to lose people because of money?
“We have choices how we spend it, we just need to make better choices.”
Earlier Lord Porter said the Treasury does not understand that investment is required to reduced future costs.
He added: “While their bloody mindedness makes them take money all the time instead of giving money, sometimes it ends up us giving worse services to the people we look after and costs us as taxpayers more money than it should do.
“It is always about understanding the cost of everything and the value of nothing.”
Lord Porter was asked which types of councils he was most concerned could face financial collapse if the government does not act to put local government on a sustainable footing.
He responded: “Small unitaries, they are the first ones I would be worried about most. They have got upper tier pressures and they have got a small tax base to spread the risk over.”
Also giving evidence during the session, chair of the County Councils Network Paul Carter (Con) said when former communities secretary Greg Clark said he would like local government to devise an evidence-based fair funding formula, he thought that would be “a miracle”.
But he said the LGA was now “getting quite close to that space, which I’m gobsmacked by”.
Cllr Carter, who is leader of Kent CC, accepted there would be winners and losers under a new system, but said if agreement can be reached, including with all London boroughs, “we might get a consensus” on a new formula.
He added inner London boroughs were setting councils tax levels at half that of county shires “because the current funding system is too beneficial [to them].”
Referring to a recent PWC report commissioned by CCN, which found London boroughs have enjoyed “surplus” funding of £2.4bn over the past five years, Cllr Carter said: “One of my regrets is that the PwC report didn’t differentiate between inner London boroughs because if you took some of the outer London boroughs, like the ones on the border with Kent, it is not far off the grant system that applies to Kent.”