The sector’s response to the financial crisis facing councils has “not been as strong as it should’ve been”, according to Martin Reeves in his first official interview since becoming finance lead for the Society of Local Authority Chief Executives & Senior Managers.
Mr Reeves said local government’s disparate groups need to have some “really tough, mature conversations” about the way the sector should be financed in the future, and have those sooner rather than later.
“Now is the time for more magnanimous, joined up story-telling on behalf of the sector,” Mr Reeves told LGC. “That includes having some really tough, mature conversations about distribution, about the fact some arguments about certain levels tax and business rates retention in different parts of the country will have a differential impact than others.
“It’s not in a few years’ time, it is now. It is up to us as a sector to say there is a common narrative about our places, about austerity and about it eroding local democracy because there are almost no choices left for us to be made [about how services are funded].”
Mr Reeves said that to date the sector’s response has not been “sufficiently joined up” in outlining what “we really believe the dangers and concerns are and what the alternative funding structures really will have to look like”. He said “the sector needs to take that on the chin” but added it now has an “amazing opportunity to create a powerful narrative because of everything that’s going on”.
The Coventry City Council chief executive added: “Unless we have a really core argument that is compelling to take to government and all of its departments it will be no surprise if our argument doesn’t land.”
Mr Reeves, who was announced as Solace’s finance spokesperson two weeks ago, also said he is “really anxious” about the state of the sector’s finances and added “we all should be”.
He said: “Of course it’s worrying and concerning because there is a limit to how much you can do to deliver the services people need when demand is going higher, budgets are significantly lower and expectation has been made very high.”
Last month Northamptonshire CC became the first council in almost two decades to issue a section 114 notice – something Mr Reeves called “very unusual”.
While Mr Reeves said he “can’t predict” how many more councils could follow suit he said increased service demand, reduced budgets, and no sign of any extra funding means “there will be more challenges like Northamptonshire so now is the time to really sort ourselves out” especially as he said there is “a real sustainability challenge as we approach 2019-20”.
Mr Reeves called council tax “regressive” and questioned whether business rates reforms will provide councils with a stable financial footing because even in “high growth areas” like Coventry and the West Midlands it is “virtually impossible” to “meet demand through business rates uplift”.
“This is really hard yards at a time when we’re seeing uncertainty in the market because of Brexit,” he said.
Moves by the government at the back end of last year to clamp down on councils’ investments were “completely inconsistent and intellectually incompatible” with councils’ ability to “allegedly” take their own decisions.
Although councils have generally managed to cope with an overall funding reduction of about 50%, Mr Reeves warned: “The capacity, not the capability, [to deliver savings] has been hollowed out as we have lost brilliant officers. Chasing savings and challenging partners, and ourselves, requires brilliant people to do that and we don’t have as many of those as we did two or three years ago.”