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Piali Das Gupta: Finance settlement won’t provide stability

Piali Das Gupta
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The 2010 spending review was my introduction to the arcane world of local government finance, under the patient tutelage of the brilliant and much-missed Stephen Jones.

I got my first inkling of the byzantine nature of how local services were funded when the coalition government set out its emergency Budget in June 2010. There were the direct cuts to local authority grants: painful but fairly straightforward. Then there was the tortuous process by which departmental cuts got stealthily passed down to local government in dribs and drabs. And then, finally, the inevitable cost-shunting between public bodies that made managing spending pressures a Sisyphean task.

I start with a stroll down memory lane because I’ve been reflecting on where we thought we would be compared to where we are. In the 2010 spending review, the underlying message was that, if we could just absorb some pain for a few years, we would be frolicking in sunny uplands by now. There was a healthy dose of scepticism in local government, as much the most pragmatic part of the public sector as the most efficient, but also a significant amount of credulity. The 2015 spending review came as a bit of a shock to many in our sector, who had put off making the hardest decisions and now realised that a day of reckoning was inevitable. But there was still the promise of business rates retention by 2020 which, though imperfect, risky and complicated, was at least a step towards financial autonomy. With Brexit, all we really know for certain is that the competition for any remaining government ‘bandwidth’ to sort domestic issues is fierce.

Now, presumably within days of the provisional 2018-19 local government finance settlement being published, where exactly are we? The truth is we don’t know and the settlement won’t really change that. Members of the Society of Local Authority Chief Executives & Senior Managers say increasingly forcefully that it’s not the numbers that worry them as much as the uncertainty. Out of the incoherence that has characterised government decision-making about the funding of local services, the offer of four-year settlements provided a helpful basis on which to give credible advice to elected members about their choices and to develop medium-term financial and workforce strategies. The finance settlement is unlikely to provide much reassurance that we’re not sliding back toward a world where it will be difficult to plan more than a year or two ahead.

Certainty doesn’t make up for deep funding cuts, but it does provide a platform for stabilising public services. The best we can hope for from the settlement is that there are no surprises: no sudden drops in the council tax referendum threshold; no out-of-the-blue rent reductions for social housing tenants; no little slices off this grant or that for a whole different purpose to its original intent. The planning assumptions for council budgets are incredibly tight, leaving very little room for manoeuvre at this stage.

Solace members are a stoic lot. At the Solace summit in November, a riveting session with Sir Amyas Morse of the National Audit Office and Rob Whiteman of the Chartered Institute for Public Finance & Accountancy brought up the question of whether the local government habit of keeping calm and carrying on is serving us well. No-one is seriously suggesting we stand back and let services crumble, but there was a palpable feeling that we must be clearer that things simply cannot go on this way.

Jo Miller, Solace president, has aptly observed that the hand-to-mouth conditions under which councils operate are simply no way to run a business. Councils aren’t businesses, of course – we are a tier of government – but we are in the business of public service. To manage that business well, we urgently need certainty, stability and flexibility. That is the conversation Solace will be looking to have with members, partners and central government in 2018.

Piali Das Gupta, head of policy, Solace

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