DG #52 preview: The coming storm
A preview of our story about the crisis in British local government in issue 52 of Delayed Gratification
The 52nd issue of Delayed Gratification features an article co-written by Rob Orchard and Matthew Lee about the spate of British councils declaring effective bankruptcy. Marcus Webb speaks to Rob about why Thurrock, Woking and Birmingham may just be the tip of the iceberg.
Marcus Webb: Why did you want to write about local government in the UK?
Rob Orchard: When Woking council went effectively bankrupt in June it was the biggest financial failure in the history of local government in the UK. This spectacular failure to turn a town of 100,000 people into the ‘Singapore of Surrey’ was a fascinating story, and I had considered writing a piece on it for the previous issue of Delayed Gratification, which covered April to June 2023. I’m glad we waited a bit longer because the story became considerably bigger in September when Birmingham City Council, the biggest local authority in Europe, also declared effective bankruptcy. At that point I started doing more research along with my colleague Matthew Lee, who co-wrote the article in issue 52, and it quickly became clear that the crisis in local government is far more widespread and severe than just a handful of councils. Not a single council issued a section 114 notice – meaning they can no longer balance the books – between 2000 and 2018, but four councils declared effective bankruptcy in the past 12 months. And from what lots of people working in local government are saying, that’s probably just the tip of the iceberg.
MW: What’s going wrong with local government?
RO: All sorts of things. Until now it’s been quite easy to point the finger at mismanagement and bad financial decision-making – Croydon, Woking and Thurrock all lost millions through poor commercial investments and the main thing that sank Birmingham was an enormous legal bill from an equal pay case brought against the authority more than ten years ago. But it looks very likely that many of the local authorities that declare effective bankruptcy in the near future will do so through no fault of their own. So many of them are struggling. Funding from central government is a small fraction of what it was in 2010, at the start of austerity, and social care costs have increased so much since Covid that many local authorities simply cannot balance the books, regardless of any cuts they make. For this article Matthew went to the London borough of Havering, which is an example of a well-run borough that’s in deep financial trouble.
MW: What did you find when you visited Woking?
RO: I went at a time when the local council was consulting residents on possible cuts. The reality is that the council has a deficit running into millions of pounds and central government expects these cuts to services to be drastic. I spoke to the council leader about what’s happening locally as well as the CEO of a company that provides a door-to-door transport service for people with limited mobility. The service is about to be axed and that’s going to have a profound effect on hundreds of local residents. The mood there is pretty grim.
MW: And what did Matthew discover when he visited Havering?
RO: The leader of the council there described the situation as desperate. He insisted that his council was well-run and efficient, and explained why it was likely that they would have to issue a section 114 notice in the future despite doing nothing wrong. He said that their funding from central government has fallen from £70 million in 2010 to under £2 million today and that their social care costs have increased to the extent that they need to spend almost that entire government grant to cover the cost of putting a single child in a secure children’s home. They’re now shutting libraries and cancelling the Christmas celebrations and undertaking all sorts of cost-cutting measures, but they’ve got no chance of balancing the books without some kind of injection of cash. And they’re not the only ones. If nothing is done by central government soon, many local authorities will issue section 114 notices, and it’s going to be ordinary people who will pay the price.
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