Since 2010-11, councils have made cuts to local services of a huge £24.5 billion. They spent 42% less on services in 2022-23 than if spending had kept pace with cost and demand pressures since 2010-11.
Most cuts have come from Labour councils passing on Tory austerity without a serious challenge. Without an organised trade-union and community-based resistance, Starmer’s government brings no hope of the trend being reversed. Things are about to get far worse.
A new report by the County Councils Network, The Financial Outlook for Councils this Parliament, claims councils are “staring down the barrel of a £54 billion funding black hole” over the next five years alone. To meet service pressures, under current projections, councils will have to divert even more funding to care and less to other services. Unless funding is greatly increased, only yearly rises in council tax of 3% could reduce this deficit… and it would still be £38 billion over the next five years.
Tory councillors have begun to opportunistically position themselves against Labour’s cuts. But that doesn’t detract from the ticking bomb that local government finance has become.
Despite council tax rises over the past decade, local authorities have had to prioritise funding to high-demand services where they have a legal responsibility to deliver, such as special educational needs, children’s services, and adult social care. Expenditure on other vital services such as libraries, roads and children’s centres has been reduced.
All of this comes at a cost. Youth clubs have been badly hit with almost a third in London closing between 2010 and 2019. Research from the Institute for Fiscal Studies shows teenagers who lost this access did 4% worse in their exams (those receiving free school meals in this cohort fared even more badly with a 12% drop) and were 14% more likely to offend in the following six years, with particularly large increases in theft, drug offences and violent crimes. For every pound saved from closing the facilities, three were lost as a result of the impact on educational attainment and crime rates.
Social care reform was one of Labour’s key manifesto commitments. Already, this appears less a promise and more a distant hope. A BBC website article stated “the Treasury is deeply nervous about the cost…Talks have so far failed to decide even whether to hold another review of the system. ‘Dither, dither, dither’, said one insider involved in the discussions”.
It continued, “Don’t expect a sudden revelation or a shiny new plan. One source [said] the trio (prime minister, chancellor and health secretary) might ‘decide to decide, decide to delay deciding, or…decide not to decide’”!
With an ever-increasing amount of local government finance being spent on delivering social care, continuing failure to address the crisis is storing up further problems. Local authorities are finding it difficult even now to deliver the services because of staff shortfalls.
A Local Government Association capacity survey in adult social care declared a vacancy rate of 16% with over 10,000 unfilled posts – 55% of councils reported low wages were the main reason.
Social care departments are increasingly reliant on agency workers, spending an estimated £292 million on agency staff in 2023-24, up from £277 million the year before. The increased cost of the total council workers’ pay settlement for 2024 was just £730 million.
Reeves’ budget included a £600 million ‘boost’ for social care, but the new money will be swallowed up by increases in the national living wage and employers’ national insurance contributions (NICs).
The Socialist Party supports increases in the minimum wage. Indeed, it should be immediately raised to £15 an hour without exemptions. But while much social care delivery is kept in the hands of big business, wage increases will be offset by worst conditions, for staff and service users, to maintain profits.
Very recently, Labour announced a ‘crackdown’ on privately run children’s homes profiteering. More than 80% of children’s homes are run by for-profit companies, a rise of 20% since 2010. A large proportion are owned by private equity groups with profit margins of some reaching almost 30%. However, the ‘crackdown’ will only force companies to share ‘financial metrics’ with the government, and Ofsted will be given powers to investigate multiple homes being run by the same company. Big business may not be quaking in its boots at such measures.
Labour’s claims the NICs increase is for employers and not workers is itself a sleight of hand. In the long run, whilst the accumulation of private profit remains predominant in the sector, attempts will be made to pass on the rise in employer NICs to workers in the form of lower wages – which anyway, if not resisted, will in turn mean lower income tax generation.
Nearly four-fifths of councils have said services for disabled adults and/or older people will probably be cut, and two-thirds said the same of parks and green spaces, alongside sport services (62%) and support for children, young people and families (63% of relevant councils).
Newham council in east London estimates the housing crisis will push its temporary accommodation bill by 2027-28 to £145 million – a 936% increase from the £14 million Newham spent just two years ago in 2022-23 – owing to rising homelessness and rocketing accommodation prices.
According to the latest data from the Ministry of Housing, Communities and Local Government, 151,630 dependent children were living in temporary accommodation in March 2024, up 15% on last year. 117,450 households were in temporary housing, an increase of 12.3% on twelve months ago.
So, what can be done? Ultimately, only a planned, socialist economy will suffice. But, in the meantime, the unions must move into collective action, not just to protect individual jobs, but to maintain resources and services from further threat and to push for social care and other services currently provided privately to be brought under democratic local authority control .
This must include an electoral challenge to all those refusing to fight cuts or whose answer is simply ‘there’s nothing we can do’. We must demand and fight for no-cuts ‘needs based’ budgets and fully funded local authority services, as the Trade Unionist and Socialist Coalition (TUSC) has been doing for several years. The difference now is the changed political landscape. Labour is in ‘power’ and already letting millions down.
Workers are looking for an alternative and the unions have a duty to ensure the vacuum isn’t filled by Reform, or worse. That means fighting to build a new, mass party of the working class which can challenge a society based on private profits for the few.
Dave Gorton