England's councils in crisis zone

England's councils in crisis zone

In most of Britain's towns, there are buildings hinting of a more prosperous past. The town halls that once existed were surrounded by a wealth of stone public libraries, swimming baths, and theaters, all encompassing the grand town halls that once held them. Many are long-closed, converted, or owned by someone else. But the symbolism remains - local government used to do stuff.

Today, England's councils are in the worst state of crisis since the foundation stones of these municipal palaces were laid. The city of Birmingham is the iceberg in its effective bankruptcy. Woking, Thurrock, Croydon, Slough, Slough and Northamptonshire have all gone bust. Dozens of more are perilously close - from'red wall' Stoke-on-Trent, to the blue-blooded Royal Borough of Windsor and Maidenhead.

As the Conservatives hold their annual meeting in Manchester this week, the collapse of the English system of local government ought to bother Tory MPs far more than HS2 taxes, or the rights of motorists to drive faster than 20mph. In the backyards of current and former cabinet ministers, in important target seats, and across the country at large, a wave of local austerity is coming.

's the sky is darkening with the wings of chickens coming home to roost,' says Tony Travers, a professor of local government at the London School of Economics.

England's councils face a collective multibillion-pound black hole in their finances, up to £3.5bn on one estimate, as the impact of an almost 60% cut in central government funding since 2010 collides with stubbornly high inflation and pressure on services from an ageing population.

The result will be further cuts to public services, council tax rises, and ever-higher fees for parking and other council fees. Already since 2010 there have been £115bn of public assets flogged to aid filling holes in council budgets. If there's anything left to cut, close, privatise, or pass into charity hands, get ready for that too. What are the plans announced in Woking and Kirklees in recent weeks, which include the closure of swimming pools, care homes, sports facilities, public toilets, and community schemes.

The tragedy for Birmingham, where Joseph Chamberlain put into action the improvement that helped define the Victorian age, is the most pronounced, as the cradle of modern local government. He pioneered the construction of swimming pools and schools, utilizing corporation funds to pay for the town's gas and waterworks.

After Birmingham's financial meltdown, Rishi Sunak vowed to pin blame on the council's Labour leadership. The local party isn't without fault, to say the least. But context also matters, for every Labour-run authority in dire straits, there is at least another Tory or Liberal Democrat one in a similar predicament.

Michael Gove, who is Levelling Up Secretary is in charge of local government, should know better than most. Surrey Heath borough council, in his constituency, is close to effective bankruptcy, while six of its near-neighbours were on a Moody's watchlist published earlier this month.

The mess in this leafy London commuter belt should have more Tories worried. However, the party dominates in parliamentary elections, with several councils falling from its control after racking up huge debts - including Spelthorne, in former chancellor's seat and Windsor and Maidenhead, in Theresa May's.

Many councils took on their debts to alleviate the effects of austerity-era cuts, while borrowing was inexpensive in the period of low interest rates after the 2008 financial crisis. The money was poured into projects to generate financial returns, to plug gaping budget shortfalls, or into the regeneration of the town centre. The most common criteria was awarded to projects that met both of those criteria.

But they were often on to a losing bet. Online shopping, as well as benefit cuts and sluggish wage growth, have drained the lives of towns in recent times, leading to the extinction of consumer spending. The pandemic followed, leaving any council that had been acting as a buyer of last resort in a further mess.

Even for authorities that followed clear from the property market, the cost of providing services has increased as Britain grapples with the highest inflation in the G7, while the cost of living crisis leads more households to need their help. The economic prosperity between Britain's richest and poorest regions is a tougher problem to tackle.

Urgent solutions are frequently required in the context of emergency situations. A new report from the Fabian Society thinktank recommends a greater devolution of tax and spending powers to local communities. It's a tough sell when so many local councils are going bust. It's not without merit, he said.

England is one of the most centralised nations in the developed world, with central government involved in almost every aspect of how councils operate. As much as 95p in every £1 raised goes to the Treasury, which then decides on how best to allocate the money to local areas - often grudgingly.

Greater devolution could help sidestep postcode lotteries and council bidding wars witnessed by Boris Johnson's centralised pots of levelling up money, which were often spent on pork barrel schemes in Tory target seats anyway. Any significant increase in local power will necessitate serious efforts to strengthen local governance structures to prevent future town hall financial scandals.

The case for reform is overwhelming. Voters do not thank any party, locally or in national government, for the steady demise of the most visible aspects of the public realm: town centres, public buildings, parks, streets, and services.