Futures Forum: "Councils in Crisis" >>> a quiet revolution in finding new ways to raise money and deliver services
Here are some excerpts from an excellent article in the London Review of Books which takes the long view:
The Strange Death of Municipal England
Tom Crewe
15 December 2016
Britain is the most centralised country in the Western world. Its political system is weighted overwhelmingly towards Westminster, with few institutional safeguards against the writ of Parliament, itself increasingly in thrall to the executive. Of every £1 raised in taxation, 91 pence is controlled and allocated by central government. The austerity programme pursued since 2010 has thrown into relief the vast power differential between central and local government: as chancellor of the exchequer, George Osborne spent plenty of time talking about devolving new powers from Westminster in order to create a Northern Powerhouse, but his most effective act of power-sharing was to transfer the burden of responsibility for deficit reduction onto councils, which account for around 25 per cent of total government spending. No other area of government has been subject to the same squeeze: since the start of the decade spending by local authorities has been reduced by 37 per cent, and is scheduled to fall much further over the next five years. For many councils this will mean the loss of more than 60 per cent of their income by 2020. In Taking Power Back, his 2015 book calling for a renewal of local democracy, Simon Parker describes the consequences as ‘perhaps the biggest shift in the role of the British state since 1945’. There is currently a very real risk that Brexit will distract from austerity – no longer the disaster du jour – which will nonetheless grind on, its victims unheard amid the squabbling and its effects quietly naturalised as part of Theresa May’s new political settlement. Philip Hammond’s first Autumn Statement, delivered to Parliament on 23 November, confirmed that this is the ambition: none of Osborne’s major planned cuts was reversed, an overall budget surplus remains the goal (simply postponed from 2020 to 2025), planned public investment will be extremely modest and focused on infrastructure, while increased borrowing – of £122 billion – signals not some Keynesian bonanza, but rather the need to cover the predicted cost of withdrawing from the EU (a shrinkage in economic growth of 2.4 per cent over the next five years, itself guaranteeing less money for public services in the future).
When we talk about austerity as slashing ‘the state’, we tend to think of the process either abstractly, in percentages and pie charts, as the sum of spending reductions made by various government departments, or, more impressionistically, as the accumulation of individual cuts to public services. Both ways imply an idea of ‘the state’ as the aggregate of central government activity: something that spends, retrenches, provides, withdraws, grows or shrinks. When we think of the extension of ‘the state’ in modern Britain, what comes to mind is the establishment of national insurance, old age pensions, nationalised industries and the NHS in the first half of the 20th century; when we think of its retraction, it’s the wave of privatisations and market-friendly reforms that began in the 1980s, or the onset of austerity in 2010. But this is telling the wrong story, or rather telling the story in the wrong way. The creation of the British state was a municipal project, and the state is now being unmade by the collapse of that project. What we really mean when we say that austerity has slashed the state – it is a vital distinction, and not made nearly often enough – is that it has wrecked the ability of elected local authorities to provide and administer many of the features and functions of the state as we understand them. Without seeing austerity in these terms, we can’t properly appreciate what it has been attempting, and what it has achieved.
Elected town councils in England and Wales were created by the 1835 Municipal Corporations Act (the 1833 Burgh Reform Act had already done the work in Scotland). In the last decades of the 19th century, these local authorities, acting on their own initiative, pioneered welfare provision: they cleared slums, built houses, parks, hospitals, museums and libraries, swimming pools and playing fields. The imperative was often religious: in Birmingham, the new doctrine of ‘municipal socialism’ found its spokesmen in Nonconformist ministers determined that their prosperous congregations should act for the common good. In 1884, R.W. Dale preached that councils
can prevent … tens of thousands of children from becoming orphans. They can do very much to improve … miserable homes … They can give to the poor the enjoyment of pleasant parks and gardens, and the intellectual cultivation and refinement of public libraries and galleries of art. They can redress in many ways the inequalities of human conditions. The gracious words of Christ, ‘Inasmuch as ye did it unto one of these my brethren, even these least, ye did it unto Me,’ will be addressed not only to those who with their own hands fed the hungry, and clothed the naked, and cared for the sick, but to those who supported a municipal policy which lessened the miseries of the wretched, and added brightness to the lives of the desolate. And the terrible rebuke, ‘Inasmuch as ye did it not unto one of these least, ye did it not unto Me’ will condemn the selfishness of those who refused to make municipal government the instrument of a policy of justice and humanity.
Before nationalisation, there was municipalisation: councils of differing political complexions in every part of the country bought out gas, water, electricity and tramway companies, on practical rather than ideological grounds. It made sense for a local authority to deliver essential services to its residents, safely, fairly, accountably and at reasonable prices, reinvesting the considerable income in further improvements. By 1901, one reformer looked ‘forward to the time when joy will be considered as much a necessity in a city as anything else. In that time the citizens, well convinced that all the prime necessities of life must be municipalised, will not fail to demand that this great necessity of joy, or … the means of joy, be also supplied by their local councils.’ In 1930, an MP observed that
a young person today lives in a municipal house, and he washes himself … in municipal water. He rides on a municipal tram or omnibus, and I have no doubt that before long he will be riding in a municipal aeroplane. He walks on a municipal road; he is educated in a municipal school. He reads in a municipal library and he has his sport on a municipal recreation ground. When he is ill he is doctored and nursed in a municipal hospital and when he dies he is buried in a municipal cemetery.
The later part of the 20th century witnessed the gradual but inexorable encroachment of central government on the autonomy of local government. Once experiments undertaken by individual local authorities proved effective – the provision of free school meals in Birmingham, public housing in Glasgow – they were legally mandated across the country, with central government choosing to tie funding to the fulfilment of particular policy objectives. The wave of nationalisations after 1945 was a hammer blow to municipal independence: council-owned gas, water and electricity companies (and their profits) were transferred to central government control, depriving councils of a huge chunk of their independent income. The foundation of the NHS led to the nationalisation of municipal hospitals, not always with positive results: between the wars, Bermondsey council had developed some of the best health services in the country, funded by higher rates, but was forced to reduce them once it became clear they were no longer affordable in a standardised national system. As the century wore on, local authorities were reduced to mere agents of the central welfare state, their ability to raise taxes and decide on the shape of local services progressively limited. By the 1970s, 60 per cent of local government expenditure was determined by central government. By the 2000s the proportion was 85 per cent.
Councils today are caught in a web of obligations, helpless to fulfil them without outside help, and at the mercy of a government that might choose not to provide it. This is especially the case in England, where the will of central government is unchecked by any devolved administration: cuts have been much less severe in Scotland, Wales and Northern Ireland. Councils have a statutory duty, mandated by Acts of Parliament, to provide libraries, social housing, accommodation for the homeless, schools, youth services, cemeteries, buses, parks, rubbish collection, housing benefit, and social care for children, elderly and disabled people, among hundreds of other services. They also have ‘discretionary’ responsibilities not mandated by law, which, in the Local Government Association’s expansive formulation, can ‘range from large economic regeneration projects to the removal of wasp nests’. Around 64 per cent of their funding comes from central government, in the form of ‘specific’ grants – from the Department of Education for the provision of schools, for example, and from the Department of Work and Pensions for the administration of housing benefit – and an annual block transfer known as the Revenue Support Grant. The rest is raised locally, from council tax receipts (their size depending on the value of property in the area), rents, charges and fees (parking tickets, library fines, gym memberships) and 50 per cent of the rates levied on local businesses.
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The Local Government Association predicts that councils will face £9.9 billion of unfunded costs by 2019-20. The Housing and Planning Bill has revived ‘Right to Buy’, forcing councils once again to sell off their (all too few) properties at a discount, without receiving compensation or additional funding to build replacements. This will only exacerbate the housing crisis: Shelter estimates that local government will face a shortfall of £1.9 billion a year as a result, making it impossible for councils to replace the stock that will be sold (up to 113,000 homes in England).
Most threatening of all are the funding changes announced by George Osborne in last year’s budget. English councils will be free to raise council tax by an additional 2 per cent, a so-called ‘precept’ to help plug the gap in social care funding, and to retain 100 per cent of the revenue from business rates, but with a mighty catch: by 2020 the Revenue Support Grant, currently worth £18 billion a year, will be phased out completely.
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The removal of the Revenue Support Grant, meanwhile, will make councils more dependent on the money they can raise from council tax and business rates. This is an extraordinary policy, close to the poll tax in its numb-knuckle levelling act: the poorest authorities in the North, with their low-banded homes and shuttered high streets, are expected to fund services on the same basis as Cambridge, with its high-banded million-pound properties and booming local economy. Nick Forbes has said the grant’s removal would leave Newcastle ‘£16 million a year short, on top of the cuts we are already making’; the chief executive of Doncaster council has described the prospect as ‘unremittingly grim and unsustainable in the short term’. Withdrawing government funding shifts the ground on which councils operate, encouraging business-friendly initiatives and the construction of high-value properties as the only way of increasing income. One expert on local government, Tony Travers, says that Osborne’s reforms will transform the average council from ‘a mini-welfare state into a local economic growth agency’. Redistribution is dead, and trickle-down economics is institutionalised.
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The assault on local government has come from a bewildering variety of directions, but there is a pattern in its violence, and where there is a pattern, there is usually design. Conservative ministers have justified the cuts to council budgets as a necessary and unavoidable response to the public sector bloat which supposedly created Britain’s ruinous deficit. Eric Pickles, the secretary of state for communities and local government between 2010 and 2015, declared that ‘local government is a massive part of public expenditure. It has lived for years on unsustainable growth, unsustainable public finance … People blame the bankers, but I think big government is just as much to blame as the big banks.’ This line of argument has allowed the government to present the slow strangulation of local government as a helpful nudge towards reform, a prompt for councils to make much needed efficiencies and ‘innovations’ in the way they provide services. When (usually Labour) councils complain about funding cuts and threatened services, they are accused of being lazy and attention-seeking, preferring to cling weepily to public sector shibboleths than to embrace radical new thinking. When Enfield council, whose budget has been reduced by nearly 50 per cent since 2010, revealed unpopular plans to remove youth services, Iain Duncan Smith was derisive:
If you look at the successful local authorities, they are the people who have worked out what the vitally important things are that they do, and have managed to get through this process without savaging the things that really matter. My only advice to local councils is that if you get the balance right, you should be able to manage this in a way that is not headline news – doing it with better efficiency. It is like any company, you always face the issue of whether what you spend outweighs what you earn.
Never mind that local authorities are nothing ‘like any company’.
‘The vitally important things’, ‘the things that really matter’, ‘better efficiency’: all these are code for a smaller, narrower, less interventionist state. In 2012 Pickles’s department produced a helpful document for councils entitled ‘50 Ways to Save’: among its suggestions were ‘claw back money from benefit cheats’, ‘close subsidised council canteens’, ‘introduce a recruitment freeze’, ‘scrap trade-union posts’, ‘stop translating documents into foreign languages’, ‘earn more from private advertising’, ‘end lifestyle and equality questionnaires’ and do not ‘routinely spend time and money on Equality Impact Assessments’.
Under intolerable financial pressure, the majority of councils have not only made these sorts of changes but also many more fundamental ones, with the result that they increasingly conform to Tory prescriptions. Seeking to present themselves as competent and effective – they are, after all, still politicians – beleaguered council leaders have often found themselves echoing the ideological language of their Tory overlords, referring to ‘tough decisions’ and the necessity of ‘living within our means’. Righteous fury is still occasionally in evidence, but so too is an understandable desire to make the best of a bad hand: there is much talk of local government learning to work in ‘new ways’. It certainly is. Huge numbers of back-office staff have lost their jobs, and councils have begun to adopt new working models, sharing services with neighbouring authorities, reorganising departments, upping fines and charges and, in many places, reinventing themselves as ‘commissioners’ of restricted and specialised services (i.e. buying them in, rather than providing them themselves). Not every change can be bad news: some efficiencies make sense, and there are gains to be made from refining services so that they are more flexible and responsive to personal needs, though I wonder how long it will take for a scandal to break that reveals some ‘efficiencies’ and ‘back-room savings’ as culpable negligence. But there is a creeping sense that, denuded of workers, increasingly limited to their most basic statutory functions, councils are losing their definition, and turning into something else.
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The transformation of local government has been a Conservative ambition since the 1980s. The political scientist Andrew Gamble was the first to spot that the essence of Thatcherism was its belief in both the free market and the strong central state, the former dependent on the latter to bring it into existence and preserve its integrity through various acts of creative destruction. ‘The New Right,’ he wrote, ‘has to believe simultaneously in the malign and perverse effects of democratic politics on the free economy, and in the possibility of using that same democratic politics and that same interventionist state to reverse the process of creeping socialism.’ Nowhere were the perverse effects of democratic politics on the free economy more obvious than in local government, the backbone of Britain’s welfare state: Graham Stringer, then Labour leader of Manchester City Council, talked of a ‘municipal view of the world – a left-of-centre, Keynesian view that the problems of unemployment, poverty and poor service could be solved by taxation and public expenditure’. Powerful Labour councils, with democratic mandates and an incurably municipal view of the world, threatened to thwart Thatcherism’s desire to impose monetarist discipline and liberate the economy from its social democratic baggage. Patrick Jenkin, then the minister responsible for local government, prefigured Eric Pickles: ‘We have a duty to protect ratepayers from blatant exploitation. We have a duty to ensure that all parts of the public sector work within national economic policies.’
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It is unsurprising, but chilling, to find Gamble warning in 1988 that the ‘logic of government policy’ points to the ‘eventual abolition of local government’. The coming of New Labour rescued local government from extinction, but the histrionic response of several ‘loony’ Labour councils to Thatcher’s 1980s initiatives (especially rate-capping) had left Blair and other ‘modernisers’ suspicious of local initiative: their policy once they were in power was to leave almost all the new restrictions in place, to encourage more outsourcing and to place ever tighter controls on funding. ‘If you want to drive through systemic change,’ Blair has said, ‘you’ve got to drive it through from the centre.’
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The establishment of a neoliberal consensus in Britain has been, in its essence and by necessity, an anti-municipal project. Austerity is Thatcherism’s logical end-point, effecting simultaneously the destruction of local government as a potentially rivalrous state-within-a-state, and the marketisation of nearly every aspect of public policy. Since 2010 the Conservative leadership, following the example of Thatcher and Blair, has diminished local democracy in order to entrench the gimcrack democracy of the free market, with the all-conquering mantra of ‘choice’ relied on to produce its own virtuous aggregations of opinion and activity: it is indicative that the Conservatives have not only brought back Right to Buy but also sought to expand the Free Schools programme so that councils would no longer have any role in the education system. Local government will soon be brought into line with its national counterpart: both limited in their essential functions, outsourcing the greater part of their responsibilities to the private sector.
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The governing political philosophy of the last 35 years has held that the market is best placed to provide for the needs of the people. Local government has been divested of much of its power and independence, leaving the gap between the public and their government to be bridged by private companies, if at all. But it has only ensured that richer Britons are taxed less and poorer ones obliged to spend a much larger proportion of their income on goods they could once have gained for a fraction of the price. In 1981, rent for a council property absorbed less than 7 per cent of an average income; in 2015, for a private tenancy, the figure was 52 per cent (72 per cent in London), far higher than anywhere else in Europe. Soon councils themselves will be floated on the market, cut loose from most of their government funding, with every possibility that they will sink. The institutions that sustained a progressive ‘municipal view of the world’ have been destroyed: the last relics of the expansive, inclusive ‘care-oriented’ state are being shredded. Whatever it does, Theresa May’s top-down, selective ‘protective state’ will not bring them back.
In 1874, Joseph Chamberlain, then mayor of Birmingham, made a declaration of faith:
In the first place I distinctly hold that all monopolies which are sustained in any way by the state ought to be in the hands of the representatives of the people – by the representative authority should they be administered, and to them should their profits go, and not to private speculators. In the second place … I am inclined to increase the duties and responsibilities of the local authority, in whom I have myself so great a confidence, and I will do everything in my power to constitute these local authorities real local Parliaments, supreme in their special jurisdiction.
County Hall opened in 1922 on the south bank of the Thames, across the river from the Palace of Westminster, as the base of London County Council, a real local parliament. It was swiftly emptied of purpose and personnel after the GLC was abolished in 1986, and remained vacant until 1993, when it was sold to a Japanese tycoon for redevelopment. A large chunk of it is now a five-star Marriott hotel. Under allegorical figures and coats of arms are a branch of Pret a Manger, the London Dungeon, a steak-house, the Sea Life London Aquarium and Shrek’s Adventure! One entrance, with its original parquet floor and wrought-iron light fittings (‘County Hall’ is stamped on them), leads into a down-at-heel amusement arcade and a large McDonald’s. Ugly brown plaques screwed in sequence along the façade declare it to be ‘Privately Owned Property’. Walking around, I couldn’t shake the feeling that there had been a palace coup, or abandonment by a fleeing court: a new regime has established itself, but without the time or inclination to chip away at old associations. County Hall is a political gravestone, subject to the desecrations of a crass and irreverent capitalism. An inscription on the side of the building in large gilt letters reads: ‘The Home of London Government 1922-1986’.
Tom Crewe · The Strange Death of Municipal England: Assault on Local Government · LRB 15 December 2016
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