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You can find the current article at its original source at https://www.theguardian.com/commentisfree/2018/feb/04/the-guardian-view-on-council-spending-a-crisis-unfolding
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| The Guardian view on council spending: a crisis unfolding | The Guardian view on council spending: a crisis unfolding |
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| Sun 4 Feb 2018 17.57 GMT | Sun 4 Feb 2018 17.57 GMT |
| Last modified on Sun 4 Feb 2018 22.00 GMT | |
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| More than it ought to be, council finance is a niche interest. But to those who take an interest, it was only a matter of time before eight years of spending cuts drove a council somewhere in England into the wall. That unwanted accolade has now been won by Northamptonshire county council, which revealed on Friday that it had run out of cash and was banning expenditure on all services except for its statutory obligations to safeguard vulnerable people. It has already made nearly £10m of cuts. Now libraries, bus services, even road gritting, will take another round of cuts. | More than it ought to be, council finance is a niche interest. But to those who take an interest, it was only a matter of time before eight years of spending cuts drove a council somewhere in England into the wall. That unwanted accolade has now been won by Northamptonshire county council, which revealed on Friday that it had run out of cash and was banning expenditure on all services except for its statutory obligations to safeguard vulnerable people. It has already made nearly £10m of cuts. Now libraries, bus services, even road gritting, will take another round of cuts. |
| At about the same time that Northamptonshire was declaring itself close to bankruptcy, Claire Kober, the Labour leader of Haringey council, announced her resignation. She had come under sustained local attack over her council’s plans to redevelop some of the borough’s social housing by outsourcing it to the controversial company LendLease. This metropolitan housing crisis is very different from Northamptonshire’s financial catastrophe; the political implications for Labour of its local government problems are in another category to the financial consequences for the Tory-controlled council 100 miles north. But at the heart of both is a single cause: the government’s vice-like grip on local government spending that drives councillors to take big risks that they perhaps do not fully understand, to sustain services in the face of a £5.8bn funding shortfall. | At about the same time that Northamptonshire was declaring itself close to bankruptcy, Claire Kober, the Labour leader of Haringey council, announced her resignation. She had come under sustained local attack over her council’s plans to redevelop some of the borough’s social housing by outsourcing it to the controversial company LendLease. This metropolitan housing crisis is very different from Northamptonshire’s financial catastrophe; the political implications for Labour of its local government problems are in another category to the financial consequences for the Tory-controlled council 100 miles north. But at the heart of both is a single cause: the government’s vice-like grip on local government spending that drives councillors to take big risks that they perhaps do not fully understand, to sustain services in the face of a £5.8bn funding shortfall. |
| Northamptonshire bragged about its pioneering “easy-council” approach when it was introduced three years ago. The council outsourced every service it could, shedding all but 150 of its 4,000 staff. They were transferred to four new service providers, part-owned by the council but run like private companies, down to the payment of dividends. | Northamptonshire bragged about its pioneering “easy-council” approach when it was introduced three years ago. The council outsourced every service it could, shedding all but 150 of its 4,000 staff. They were transferred to four new service providers, part-owned by the council but run like private companies, down to the payment of dividends. |
| It has not taken long to discover that private sector management can no more deliver adequate services on too little cash than the council can itself. By last autumn, it was running into trouble. A peer review by the Local Government Association concluded that “major shortfalls in achievement” were so serious that the council was relying on reserves to keep going. The review speculated that the Conservative-controlled council was hoping for a Whitehall bailout – not unreasonably, since Surrey county council had threatened a referendum on a 15% council tax rise to make up the shortfall in its social care budget – only to get emergency support in the form of “a gentleman’s agreement” that had been reached after direct intervention from the chancellor, Philip Hammond. Mr Hammond represents a Surrey constituency. But Northamptonshire lost out: instead, last month Sajid Javid, the communities secretary, announced an independent inquiry into the council, not least because it recently moved into a £53m new council HQ. | It has not taken long to discover that private sector management can no more deliver adequate services on too little cash than the council can itself. By last autumn, it was running into trouble. A peer review by the Local Government Association concluded that “major shortfalls in achievement” were so serious that the council was relying on reserves to keep going. The review speculated that the Conservative-controlled council was hoping for a Whitehall bailout – not unreasonably, since Surrey county council had threatened a referendum on a 15% council tax rise to make up the shortfall in its social care budget – only to get emergency support in the form of “a gentleman’s agreement” that had been reached after direct intervention from the chancellor, Philip Hammond. Mr Hammond represents a Surrey constituency. But Northamptonshire lost out: instead, last month Sajid Javid, the communities secretary, announced an independent inquiry into the council, not least because it recently moved into a £53m new council HQ. |
| But Northamptonshire will not be the only council on the brink of bankruptcy. The crisis in public spending has become the overwhelming factor in domestic politics: as we report, hospitals are still cancelling operations; academy trust chains are getting emergency handouts just to stay afloat; social care has needed repeated extra cash. Defence is feeling the pain. At the end of last year, the Whitehall Monitor concluded that the government had institutionalised crisis management, doing nothing until the only option was an emergency cash injection. It is an insult to public services and the people who try to run them to expect them to function under this regime. | But Northamptonshire will not be the only council on the brink of bankruptcy. The crisis in public spending has become the overwhelming factor in domestic politics: as we report, hospitals are still cancelling operations; academy trust chains are getting emergency handouts just to stay afloat; social care has needed repeated extra cash. Defence is feeling the pain. At the end of last year, the Whitehall Monitor concluded that the government had institutionalised crisis management, doing nothing until the only option was an emergency cash injection. It is an insult to public services and the people who try to run them to expect them to function under this regime. |
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