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Friday 19 November 2021

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Councils are in the cuts frontline but TUSC report shows they can fightback

No one can dispute that local councils have borne the brunt of years of Tory austerity. Or that councils, and the vital local public services that they provide, will once again be in the frontline as the establishment politicians seek to pass on the costs of the Covid crisis to the working class in the months and years ahead.

As local authorities begin discussing their spending plans for 2022-2023, which they will finally agree at budget-setting meetings in February or March, we can already see the scale of the cuts that are being prepared. Manchester city council is talking about an £85 million budget shortfall within the next three years. While Liverpool is planning £19 million cuts next year, including 6% of its current spending on adult social care.

But a new report from the Trade Unionist and Socialist Coalition (TUSC), How Much Reserves Have They Got?, (at https://www.tusc.org.uk/txt/456.pdf) shows that councils actually do have the resources to pass no cuts budgets next year - not as a long-term solution to the funding crisis, but as the first step in a mass campaign for more government funding.

How much reserves have they got?

This is the fourth report produced by TUSC providing brief statistical profiles of the councils across England, Scotland and Wales that have Labour-led administrations, currently 125 in total.

Information is given for the gross expenditure of each authority - the total cost of the councils' services - and the amount each council held in useable reserves as of April 2021. The figures give a picture of the substantial financial firepower at the disposal of Labour-led councils - if they were prepared to use it in defence of communities and their local public services.

Altogether the councils in the TUSC survey control budgets of at least £82 billion. As TUSC has pointed out in previous reports, this gives Labour-led councils a combined spending power greater than the gross domestic product of nine EU countries and the state budgets of sixteen. At the same time, the councils combined hold around £15.32 billion in General Fund reserves, £2.07 billion in Housing Revenue Account reserves, and £2.59 billion useable capital receipts reserves. This does not take into account the borrowing powers councils also have to add to their spending power.

This shows the possibilities that are there - in fact, not only to resist further austerity but how councils could make significant improvements in peoples' lives here and now.

What could be done

The Labour Party Manifesto for the 2019 general election, produced under the leadership of Jeremy Corbyn, included at least 46 policies that local councils have the legal powers to implement now, without waiting for new legalisation. These policies were analysed in an earlier TUSC briefing paper, Could councils implement the pledges in Labour's 2019 Manifesto?, available at https://www.tusc.org.uk/txt/434.pdf, with a supplementary report on what councils could do to implement Labour's green industrial revolution policies, at https://www.tusc.org.uk/17481/23-02-2021/could-councils-implement-the-green-policy-pledges-in-labours-2019-manifesto

The 'Grey Book' document accompanying the Manifesto produced by the then shadow chancellor John McDonnell, Funding Real Change, provided costings for these policies. It is more than worthwhile examining these and comparing them to the resources that are at the disposal of Labour-led councils today as revealed in the new TUSC report.

Labour under Jeremy Corbyn and John McDonnell committed, for example, to extending free school meals to all primary pupils - at a projected cost of £900m. A pledge to re-open the SureStart early years centres closed since 2010 and restore funding was costed at £974m. A new National Youth Service for children and young people was promised (£1.1 billion). And the restoration of Educational Maintenance Allowances for 16-18 year olds in education was costed, along with equalising Further Education funding with schools funding and an expansion of life-long learning resources, at £1.4 billion. And these are costings for national provision, remember, not just for those authorities in 'Labour council land'.

The 2019 Manifesto also promised to deliver "the biggest council house building programme in more than a generation", with £75 billion earmarked from the promised Social Transformation Fund to build 150,000 new council homes. There is no question that councils can borrow against their Housing Revenue Accounts - and that the housing account reserves held by Labour-led councils are more than enough to begin now the delivery of the 2019 promise.

Seriously, what excuses have Labour councillors got not to act? Except that, with only a small minority of exceptions, they are unwilling to come into confrontation with the government and head the mass campaign that would be necessary to secure these policies with long-term central funding. But trouble is coming anyway for council finances as the Tory government will seek to pass the costs of the Covid pandemic onto working class people and their public services. There must be a fightback.

Resisting post-Covid austerity

The Covid pandemic obviously had a major impact on councils' finances, with local authorities having to spend on personal protective equipment, housing rough sleepers, public health support for testing, and so on, while losing revenue from fees, charges and the reliefs given to businesses during lockdown. The government was obliged to compensate with additional grant income, although this did not fully meet the projected funding gap that councils expect to face in the 2021-2022 financial year and beyond.

The government grants have however arrived in councils' accounts. This is reflected in the figures in the TUSC report, particularly the general increase in councils' reserves compared to our last survey in 2018. The 21 Labour-led councils in London, for example, have seen their general fund reserves increase by £1.24 billion from 2018. The general fund reserves of Labour councils in Wales have grown from £630m to £998m; for the nine councils in Yorkshire that remained Labour-led it has been almost a doubling, from £937m to £1.81 billion, and so on.

This undoubtedly masks the medium to long-term funding crunch that councils face. But by the same token, with the money in the bank, the figures show that no Labour-led council has insufficient resources to pass a no cuts budget for 2022-23 as the first step in a mass campaign for more government funding - if the will was there to fight. The fact that the Johnson government has been forced to give additional funding once shows that it can be forced to do so again.

TUSC has previously produced detailed material on how councils' reserves and borrowing powers could be used to produce an arguably legally-compliant no cuts budget - which has never yet been challenged by our opponents. The latest edition of the briefing document, Preparing a No Cuts People's Budget, is available at https://www.tusc.org.uk/txt/450.pdf

Now the new report on councils' reserves confirms once again TUSC's central message - that councils, and individual councillors, have a choice. Councils are in the cuts frontline but they can fightback.


People's Budget campaigning questionnaire

The TUSC All-Britain Steering Committee is appealing to all TUSC groups, individual members, and affiliated organisations to organise campaigns for a local People's Budget for their council area.

As society moves on from a Covid-crisis footing, a local People's Budget campaign could play an important role in bringing together trade union branches, campaign groups and community organisations to fight at a council level for what communities will need in the 'new normal' - not the cuts to public services that Tory policies will inevitably demand.

To help focus local campaigns we have produced a short questionnaire (available in Word format at https://www.tusc.org.uk/txt/457.doc) for local TUSC groups or the constituent organisations of TUSC at a local branch level. If your group covers more than one local authority and you can provide information for all of them, please complete a separate form for each council.

Please try and return questionnaires - to the TUSC National Election Agent, Clive Heemskerk, at [email protected] - before the date of the January steering committee meeting (to reach us by January 7th). It doesn't matter if every detail is not complete as information can always be added later.