The public accounts committee report published today, Financial sustainability of local authorities 2014, is shocking, but sadly not surprising. Their evidence reveals not just the impact of funding cuts on the financial sustainability of local government, but the scale of the Department for Communities and Local Government’s negligence through their inadequate understanding of the implications of their decisions on the delivery of statutory services.
The report identifies ‘a failure of leadership’ from the communities and local government department. That would be the polite term. This is more than just Eric Pickles’ pointless posturing over bin collections, council publications or whatever takes his fancy on a given week. The failings are more systemic: by failing to provide proper accounting oversight across government with respect to the impact of cuts on core services local government delivers or even to collect data on the impact on levels of provision in communities, the communities and local government department is ‘creating risks to value for money’.
As councillors who are working hard to ensure services are maintained will know, the increasingly desperate situation we are facing is having an inevitable knock-on effect. The Local Government Association has warned the continued underfunding of social care will continue to impact on National Health Service pressures, and new LGA analysis published today shows that the crisis of elderly care funding means that from April councils will have to divert £1.1 billion from other services like fixing potholes and running libraries and museums to plug the gap.
This is no way to run a country and people rightly expect more. While the government talks the talk on tackling the deficit the reality is that reductions in spending in one area are leading to additional costs elsewhere in the system, a fact which this report makes clear. This ‘cost shunting’ suits the short term political purposes of the coalition government, but it is building up problems for the future.
The report highlights the significant variation in funding cuts between local authorities – reductions range from five per cent to 40 per cent. Newcastle city council’s heatmap and analysis of the cumulative impact of cuts demonstrates that areas with the greatest levels of deprivation have been hit hardest. This makes a mockery of Cameron’s early claim that those with the broadest shoulders would bear the burden of deficit reduction.
As this parliament draws to a close, the committee’s report highlights the fact that we cannot continue into the next in the same direction. Talk of ‘back office efficiencies’ and tinkering around the edges will not get us through the next five years. Whitehall needs to fundamentally reform the way it works and the funding silos it perpetuates which are a bad use of public money. All too often they result a waste of human potential too, as services are reduced to picking up the pieces rather than being enabled to reform, innovate and integrate more effectively to pick up problems before they become critical.
We now need a new settlement with local government which ensures long term funding, combined with budgets pooled from different departments and devolved to local areas to ensure public investment actually has an impact where it is needed. We cannot afford to spend ever-increasing sums of money addressing the costs of failure in the system.
Labour local government has admirably led the way over the past five years in demonstrating what it can achieve even in a cold financial and political climate nationally. Let us now focus on making sure from May we can achieve partnership with a national Labour government that can work with local government to build a sustainable system and turn us back from the brink.
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Jim McMahon is leader of the LGA Labour group and leader of Oldham council He is also a former chair of the Co-operative Councils Innovation Network.
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