If you cut someone to the bone and then lend them money to buy bandages does that sound fair?
Council leaders up and down the country, including Stoke-on-Trent’s Jane Ashworth, might be forgiven for pondering the question as they seek to balance their budgets.
On Tuesday Stoke-on-Trent Council agreed a budget for the coming year that requires £8 million of cuts – far less than those forced on Birmingham and Nottingham this week, but still significant. And it could only manage that legal requirement with a £42.2 million loan facility from central government.
Stoke-on-Trent was one of 19 councils in a Department of Levelling-up, Housing and Communities’ bailout announced last week. Stung into action in an election year, after a string of councils issued dreaded section 114 notices effectively declaring bankruptcy, ministers belatedly felt they had to act. But a loan via the Exceptional Financial Support framework is not a grant. What are the costs of paying it back?
“£8 million in cuts is not as bad as some areas and the council doesn’t have the debt pile others do,” Philip Catney, senior lecturer in politics at Keele University told The Stoke-on-Trent Lead.
“Stoke isn’t Slough, Stoke isn’t Woking, Stoke isn’t Birmingham. But it is like every other council in this country which is struggling badly because national government is asking them to do more than they can with their locally raised revenue while the national government grant is being cut. And what happens next year?”
Catney’s not alone in having warned of the dangers of the cuts to local government spending since the austerity policies of the coalition government beginning in 2010. In 2012 Birmingham Council leader Sir Albert Bore presented the “Jaws of Doom” graph, in which the diverging lines of grant reductions and budget pressures suggested a gaping mouth that meant “the end of local government as we know it” by 2017.
“Councils have managed to keep going miraculously,” said Catney. “They’ve staggered through and they’ve managed to survive, just about.”
Birmingham had its own unique problems of massive equal pay claims and IT failures but in Stoke-on-Trent the damage is simple to grasp. In 2010 it had central government funding of £95 million a year. That’s now £27 million. It lost £270 million as a result.
Labour took control of the council last year after a Conservative minority administration had run it since 2015.
“Given the legacy left by the previous Conservative administration, this budget does the best we can to protect services while stabilising the city’s finances,” Labour leader Ashworth told the council chamber on Tuesday.
Speaking to The Stoke-on-Trent Lead following the budget vote, she said the council started speaking to the government “very early” when Labour took control, because it realised “we were heading for a massive in-year hole and the following year was an absolute disaster”.
She added: “Yes, there were budget gaps to fill but the key purpose was to sort out children’s services.”
The falsest of false economies
At 1,200 young people, Stoke-on-Trent has one of the highest proportions of children in care in the country, a 76 per cent rise since 2016 that Ashworth blames on relentless cuts in Early Years services, which support families from pregnancy through to pre-school – including provision for education and health – and are seen as important in preventing family breakdown. Cutting Early Years was the “falsest of false economies”, she says; her new alternative is “invest to save”.
The council spends £62 million annually on the children in care – its largest cost – and, like other local authorities, can be charged up to £5,000 a week for their accommodation in an unregulated system of providers.
The new approach will involve reinforcing early intervention, said Ashworth. “The point is we have to keep children safe at home with their families, because it’s good for the family if we can keep it together safely, and it’s good for the kid and it’s good for the budget.”
The government brought in Family Hubs, a diluted version of the successful Sure Start children’s centres it had scrapped.
“But we want a broader catch-all so that people know where to go when they need some advice. We will also increase the intensity of work to get children out of care and prevent those who are on the edge of care getting into care."
It’s been tried in other places, added Ashworth. “Experts share the common sense view that it makes sense to get in early. It’s almost like no one’s disagreeing really - it’s just that they won’t fund it.”
£8 million per year of cuts
Admittedly much larger, Birmingham has been forced to agree cuts of £300 million a year and a rise in council tax of 21 per cent, dwarfing Stoke-on-Trent’s figures of £8 million and 4.99 per cent. They will still hurt residents though, struggling through the cost-of-living crisis.
Conservative opposition councillors criticised the introduction of a £40 a year charge for collecting green waste, warning it would lead to an increase in fly-tipping. They warned that reduced library opening hours and stopping recruitment to fill youth officer vacancies would harm young people, single mothers and others in their wards.
The community development team is to be cut. The council’s general fund will no longer offer grants to cultural organisations such as Claybody Theatre, whose artistic director is former Coronation Street star Bev McAndrew – although this is to be replaced by money from the government’s Shared Prosperity Fund, at least in the short to medium term.
There was criticism too that important regeneration schemes had stalled.
Opposition councillors also moved an amendment urging the council to review the terms and conditions of council staff such as care workers, but this was angrily denounced by Ashworth, who interpreted it as a “disingenuous” attempt to cut their pay.
“We will not take money out of the hands of people who do a vital job for us, many of whom are struggling,” she said. The amendment was voted down.
Fenton Library closed in 2012 as the council was forced to make cuts
Reduced library hours and green waste charges are the sort of cuts that might not need a bandage – but they can still sting. More serious perhaps is the £850,000 to be saved by cutting long-term domiciliary care for people needing care after discharge from hospital.
“This is a country which is exhausted, demoralised,” said Catney. “It’s punch drunk. This is more poking in the chest while you’re punch-drunk.
“The green waste charge has been introduced elsewhere in local authorities much sooner than Stoke-on-Trent but it does feel like after all the services have been cut, all the leisure centres have been run down, it’s never going to end.”
Polling, he added, shows that “more tax cuts, more austerity is not what people want”.
How does a government loan get paid back?
The £42.2 million loan, over two years, has to be paid back over a much longer period. “It’s absolutely vital that we do not pass that on to the next generations,” warned Dan Jellyman, leader of the opposition.
Payback is based on the sale of council assets – primarily land and buildings. According to a BBC Local Democracy Reporter, the council has declared 11 buildings and sites surplus to requirements, including the Etruscan Square development site in Hanley, the former Fenton Library, Stoke-on-Trent Gymnastics Centre and land next to the former Edensor High School, Longton.
In 2022, two years after the council sold the Grade II-listed Portland House in Burslem, police found a cannabis farm within – not the sort of growth any council would want.
Ashworth told The Stoke-on-Trent Lead the council is to bring forward an “ethical” disposal framework, which will include “matters like how quickly will the land be developed, what it will be developed for – which obviously ties in with planning. We can’t just chuck some of our assets to the wind.”
But asset sales can only go so far, warned Catney. “Selling off assets is perhaps not a great thing if those assets are actually going to generate an income. You’re losing another income stream in the future. And also you run out of road with this, where you cannot keep on selling off the assets. You run out of things to sell eventually.”
That will only pile on the pressure in coming years. In Stoke-on-Trent demand for services will continue to grow as a result of its particular characteristics. With many of its older people having worked in the potteries and pits, health problems will require more adult care.
Its borders with more affluent neighbouring areas are tight, making it harder to draw in more council taxpayers – even if they wanted to come to somewhere where career options are limited and educational outcomes aren’t great.
There was nothing in yesterday’s budget to address local government’s plight, save a warning from Jeremy Hunt that they should not indulge in wasteful spending.
“One for cloud cuckoo land, that is,” retorted Ashworth. “We have regulations on how much staff can spend – they are highly regulated, highly controlled. Spend above a certain level has to be signed off by very senior people. We are in a lockdown on spending.”
For her, ultimately, it’s about getting a new, fair funding formula from ministers.
“If you’ve got a dislocation as we have at the current time between need and investment it’s not going to go well, and that’s what we’re enduring as we speak. A change of central government policy is required.”
Or a change of government.
But is Ashworth convinced Rachel Reeves would loosen her notoriously tight fiscal pursestrings if Labour wins a general election?
“I’m sure that the strategy of Labour to grow the economy will make life easier for local government.”
Catney is less sure. “What we really need is a royal commission into government funding and that we have a cross-party consensus about how we have a fair, sustainable long-term funding model for public services.”
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