debtMany of the most pressing public service challenges, from social care to special educational needs to homelessness, are faced by local rather than central government. Some of these are very visible and obvious – the rise in homelessness, deteriorating roads and hospital waiting lists contributed to inadequate social care. Other issues are less visible to anyone except those affected. Examples include the worsening children’s care crisis and the sheer number of families in temporary accommodation.
Local governments in England bore the brunt of the earliest and deepest cuts to public spending under austerity (the situation is different in Northern Ireland, Scotland and Wales, as local government functions and budgets are devolved). Between 2010-2011 and 2019-2020, central government funding was reduced by 55% in real terms.
Budgets have increased since then – the current spending review period to 2024-25 sees a 26% increase – but rising demand for local services means local authority finances are under pressure and under strain, with some areas at or beyond their limits. Last year Birmingham was issued with a section 114 notice, meaning it could not balance its budget and was effectively bankrupt.
Discretionary services have been hit even harder than statutory services such as social care, which are mandated by local authorities: youth services were cut by an average of 40% in the three years to 2019, a cut that some councillors have linked to knife crime. Parks, leisure centres and libraries have all been affected, and in some cases closed, shrinking public spaces and worsening community conditions.
No one denies that local government is under pressure – most politicians agree that new funding arrangements, particularly for social care, are needed – but the election campaign has lacked a clear message on local government budgets, which is worrying. New Analysis Researchers at the Institute for Fiscal Studies point out: Unlike in 2019, the main parties have not made any commitments about future grant funding (which accounts for around 15% of council funding; 57% comes from council tax and the rest from business rates).
It does not say whether local government funding will be prioritised or whether local authorities could face above-average cuts. It also does not indicate whether it will lift the rules requiring local authorities to hold a referendum if they want to increase council tax by more than 3 or 5 per cent (depending on whether they have a social care duty). As a result, voters are left in the dark about the future of the services that matter most to them. The Local Government Association said: An extra £6 billion in funding is needed over two years to close this gap.
The poorest local councils are facing the hardest challenges. Reforming outdated and regressive council tax should be part of any serious equalisation plan. Redistribution of resources between regions needs to be made easier. But Labour and Liberal Democrats Both parties have promised multi-year contracts to make it easier for local authorities to plan, but neither proposes the comprehensive reforms that are needed. The Conservatives have promised multi-year contracts only for social services.
If Labour wins and Angela Rayner becomes Communities Secretary, reforming the relationship between central and local government will be her top priority. However, a lack of budget transparency is bad for parliaments and bad for democracy. Voters should be able to make informed choices, not guesswork.
