Into the unknown with spending cuts
By Allister Hayman Monday, 24 August 2009
Major cuts in public spending are inevitable, but with the main political parties reluctant to outline their policy on the issue, there are concerns that councils may pre-emptively cut, or scrap, renewal services. Allister Hayman reports.
Over the last few months, public spending has become a key political battleground. So taboo has the word "cuts" become that politicians on both sides of the House now tiptoe around it to the extent that it has become the proverbial elephant in the room of public discourse.
Conservative leader David Cameron and shadow chancellor George Osborne have made much in recent weeks of their self-professed honesty in the face of the dire state of the public finances. In a speech this month, Osborne reiterated his belief that the UK has entered a new "age of austerity" and warned that councils would need to go further than mere efficiency drives to reduce the public deficit. But Osborne stopped short of saying that this would mean spending cuts. Instead, he said "reform" would be sufficient, ensuring that "money goes further and you get more for less". Osborne insists that the Labour Party has no plans for reform and, as such, if Gordon Brown were to be re-elected as Prime Minister, would be forced to cut front-line public services.
The Labour Party, on the other hand, accuses the Tories of planning massive cuts after the next general election, hitting basic services.
This, then, is how the political debate over future public spending has gone: cuts, when they are mentioned at all, are what the other lot will do. However, anyone who read this month's report on the recession's impact on public finances by public services watchdog the Audit Commission will know that, no matter who occupies numbers 10 and 11 Downing Street after the next election, there will be cuts in public spending, and they will probably run deep.
Furthermore, as the Audit Commission report makes clear, councils are already cutting spending on voluntary bodies, reducing support for vulnerable households and shedding jobs as they prepare for swingeing public spending cuts in the next three-year spending period, which begins in 2011. The report says that all councils' finances have been hit by the recession and that redundancy programmes have already begun in nearly half of district councils and a third of all others. The same proportions of each have also begun reducing budgets for services, the report adds, either through cuts or by further restricting eligibility for services such as home help and social care, while some have opted to cut non-statutory services altogether. "Most are currently using the first option (of reducing budgets), but others may need to be considered as service demands increase," it says.
The report also says that 17 per cent of district councils and eight per cent of all other local authorities have already embarked on cuts to programmes delivered by third sector partners, with services either scrapped or brought in-house. Worse still, as the Audit Commission notes, these budget cuts come as councils are braced to deal with an expected surge in social problems such as alcoholism, addiction, domestic violence and a rise in crime, following a sharp increase in business failures and unemployment in the past year. The cuts, the report says, could impinge on councils' ability to mitigate the impact of the recession on their areas.
Sir Jeremy Beecham, vice-chairman of the Local Government Association, has warned that councils are being hit by a "perfect storm" and has called for Government to devolve more funding to them. "Intervention taken at the local level is more effective and can get under way quicker than big national schemes that can take months to roll out," he says. Indeed, this is what the Audit Commission's report recommends. It says that more power and funding should be devolved to councils so they can tailor responses to their local issues more effectively. But devolution from central to local government has progressed slowly to date, and measures to give councils more powers before the next election seem unlikely.
If elected, the Tories plan to devolve powers to councils, but these may come too late to impact on the current public spending squeeze. And crucially, critics argue, reform of governance still fails to address what will have to be cut. Osborne has pointed to examples of flagship Tory boroughs that are taking on the challenge of austere times. He says that Hammersmith & Fulham in west London, which has outsourced many of its services and cut jobs and is the only UK council to have cut its council tax three years running, is a model of a council doing more for less.
Elsewhere, there are more radical approaches. In the London Borough of Barnet, Mike Freer, the council's Conservative leader, has embraced Osborne's "age of austerity" rhetoric with Thatcherite zeal - he speaks of stripping back council services to the minimum because, as he puts it, he doesn't want to provide "the same mess for less" - and has had no qualms about wielding the axe. For example, children's swings in Barnet's parks will not be replaced when they wear out, according to Freer. Library services have also been reduced, community warden schemes scrapped and culture programmes binned. He has also cut council staff numbers by a quarter to 3,200 and hopes to reduce this figure to 200 by turning the council into a purely strategic body that outsources services.
It is not clear whether such radical plans would fit within Cameron's brand of "compassionate" Conservatism. But while the Tories and Labour trade blows over public spending, councils of all political hues, and third sector bodies that rely on their patronage, are already feeling the pinch and are planning for an austere future. Until politicians address this reality and speak honestly about what they would cut and what they would keep if elected, more councils, fearing they might otherwise go bust, may follow Barnet's lead. In the absence of reasonable discourse, radical ideas may flourish. For children who like swings, that would be rough justice indeed.
- When it Comes to the Crunch is available via www.regen.net/doc