The prime minister’s ‘shared society’ speech this week suggested she wants to change the direction of the British state. More intervention seems likely, though there was no reference to additional public money to deal with, for example, improved mental health services. The prime minister will now need to improve the effectiveness of the state’s services, a task which successive governments have struggled with since the 1970s at least.
This new commitment to better and more responsive public services comes less than four weeks after the local government finance settlement for 2017-18. The new communities secretary announced that councils will be allowed to raise council tax to take pressure off adult care budgets. Optimistically, a consultation paper released on 15 December stated there would be “no reduction in funding for councils to deliver their core services for the rest of this Parliament”.
There is no way to expand the revenue base to fund the public services people evidently demand
Tables published alongside the settlement show ‘core spending power’ for English councils at £43.6bn in 2016-17, falling to £43.07bn in 2017-18, then inching back upwards to £43.49bn in 2018-19 and then rising to £44.68bn in 2019-20. So, DCLG’s carefully-crafted words disguise the fact that spending will fall by 1.1% in cash next year, a real terms cut (given inflationary expectations) of between 2.5 and 3.5%. This reduction comes on top of the real terms reductions of 25 to 35% already imposed since 2010.
If adult care is to be ‘ring-fenced’ and the additional council tax precept used to protect it, then all other local government spending, including children’s social care will have to be cut. How improved provision for mental health services can be found within this settlement, it is hard to guess.
The government faces years of difficult budgets. So, therefore, do local authorities. The NHS is in the middle of a media-driven funding crisis, while many other elements of public expenditure remain under huge pressure. No chancellor is willing put up direct taxes on average earners. Consequently, there is no way to expand the revenue base to fund the public services people evidently demand. There is a risk that the ‘shared society’ will simply find itself sharing an insoluble tax and spending problem.
Tony Travers, director, LSE London