THE CONSERVATIVE GOVERNMENT seems to have discovered Schrodinger’s money tree. When there are lucrative contracts to be awarded, often to party donors or highly paid consultants, the supply of money seems limitless.
When it comes to funding the unglamorous but essential services which make for a healthy society, money is still hard to come by. For local authorities, which provide many of those services, austerity and inequality have been deliberately, as a matter of policy, baked into the system.
The Local Government Finance Settlement for councils in England, announced just before Christmas, was yet one more example of smoke and mirrors, with a headline figures concealing a worrying reality. Analysis of this Settlement by the Institute for Fiscal Studies found that Councils’ core funding per resident will be lower this year than it was in 2015-16. And in 2016, funding had already been cut in real terms by 37 per cent since 2010.
In the context of trying to recover from Covid-19, this is truly grim. It doesn’t take much imagination to realise that the demand for council services and support will have been greatly increased by the pandemic. Whether it’s people with Long Covid who need social care, adults and children struggling due to job losses and the impact of lockdown, or key workers desperately needing a pay rise, the demands will be many and justified. And as we have seen, Covid hit deprived areas much harder in both health and economic terms, so the need will rise even more in those areas. Yet in the face of this need, the government seems to be continuing with a long-established political strategy which will not only leave some Councils in desperate straits, but will also increase inequality.
The Conservative’s strategy, as it has been for over a decade, is to force Councils to rely more and more on whatever funds they can raise locally, through Business Rates and Council Tax. So, the headline announcement of a £2.2 billion increase in funding might have looked good, but as the IFS states: “less than £0.3 billion is from the government. The other £1.9 billion is from increases in council tax bills of up to five per cent. It assumes councils make full use of the allowable increases.”
In disadvantaged areas already hit hardest by the pandemic, the government is continuing to put local authorities in the position where they must either raise Council Tax or cut services. For residents in those areas, it means pain is unavoidable – if it isn’t inflicted in one way, then it will be in another.
As if this wasn’t bad enough, the government must also be well aware that Council Tax is probably the most regressive tax we have in the UK, taking most, as a proportion of income, from those who have least. As Laura Gardiner of the Resolution Foundation said, when calling for it to be abolished and replaced with something fairer: “The council tax you pay is meant to be tied to the value of the property you live in, but when someone living in a property worth £100,000 pays a tax rate five times higher than someone living in a property worth £1 million, something has gone seriously wrong.” This unfairness is in itself a symptom of inequality. Councils in poorer areas where property values are low still need to fund their services, so are forced to charge residents a similar amount as other councils in much more wealthy communities, where property values are far higher.
Prior to 2010, when central government took more responsibility for funding local authorities, there was a potential for wealth redistribution, with disadvantaged areas getting more funding in recognition of their needs. But over the past decade, Conservative governments have increasingly absolved themselves of this responsibility, with savage cuts. And these cuts were undoubtedly politically targeted. Analysis last year revealed that, “poorer, largely Labour-held areas of England had their funding slashed on average by at least a third, while more affluent, largely Conservative areas received greater protection.”
Far from paying a political price for this injustice, Conservatives, with the help of a largely a supportive media, have managed to perform an astounding trick. Local politicians have been blamed for local cuts, even when they have been imposed from central government. At the last election, on our regional news programmes, people in northern constituencies said they had voted Conservative for the first time because Labour had ‘been in power’ for years and things had got worse, so they were voting Conservative in the hope of a change. They blamed their Labour council for cuts, and didn’t associate austerity with central government. Incredibly, the government seems to have been granted a free hand to starve local authorities of cash, making people’s lives significantly worse, without paying a price – indeed even profiting politically.
And now, sadly, the entirely predictable is happening. The IFS reports that the impact of Covid: “has affected some households’ ability to pay major bills such as council tax. As a result, councils expect to collect £1.3 billion less council tax in 2020–21 than they forecast before the COVID-19 crisis.” And of course, this fall in revenue was biggest in the most deprived areas.
It seems glaringly obvious that the approach of successive Conservative governments to local government funding almost guarantees that poor and disadvantaged areas will stay poor and disadvantaged. As long as this approach remains unchanged, any talk of levelling up or tackling inequality will remain firmly in the realm of rhetoric. The system as it now stands is injustice heaped upon injustice.
© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. Her latest book is Illness, Disability and Caring: A Bible study for individuals and groups (DLT, 2020). Her latest articles can be found here. Past columns (up to 2020) are archived here. You can follow Bernadette on Twitter: @BernaMeaden