Cash-starved local councils in England turn to cuts and outsourcing

Some local authorities in England fear extinction.

A few months ago, swimmers gathered in the water at the Bramley Baths, a fine Edwardian building in Leeds that has been in use since 1904, to watch the 1970s cult movie Jaws as one "has never seen it before".

On Sunday, they will hold a more prosaic fund-raiser, urging members to bring along cakes for afternoon teas in the bath’s gardens. Recently, they urged parents to bring along their babies for a photoshoot.

Bramley has to spend a lot of time thinking about fund-raising since its transfer into community ownership last year on a 25-year lease after Leeds City Council decided that it no longer wanted to pay for it.

In Newcastle, however, the famous City Pool, which was the first training ground for three British Olympians, has already closed – following cost-cutting by Newcastle City Council as it seeks to cut £100 million off its spending.

Funding problems are not going away. On Wednesday, UK chancellor of the exchequer George Osborne announced that councils in England will get 10 per cent less in 2015/16, on top of the 33 per cent fall in state grants that has occurred since 2010.

Frivolous spending
In some cases, the cutbacks have prompted much-needed reform: layers of management have been removed in some places; some councils have combined to share services, while frivolous spending by councillors is coming under the microscope as never before.

The figures are startling: In 2010, Whitehall funding for local government (excluding education, police and fire) stood at £29.7 billion. By 2014/15, that contribution will have dropped to £22.1 billion.

The freeze on council tax rises that has been in place since the Conservatives/Liberal Democrats coalition came to power will continue for a further two years, though councils can over-ride that by having a local referendum.

So far, councils have done remarkably well, according to the London School of Economics’ Tony Travers, though even he points out that they have managed to make half of the savings that will be needed to be racked up by March 2015.

Even Tory MPs are worried. Last month, the Commons’ Public Accounts Committee, which has eight Tory members, warned that the Department of Communities and Local Government “does not properly understand the impact” of cuts on local services.

The Local Government Association complains that the latest cuts will “stretch essential services to breaking point in many areas”, warning that one council in Somerset in the West Country is unviable, while one-in-eight will fail to balance their budgets.

“It’s disappointing that a feudal approach still exists in relation to local government funding. Vital services are being damaged because councils do not have a seat at the table to negotiate a fair deal for local communities,” said Sir Mervyn Cockell.

However, necessity can be the mother of invention: £3.8 billion worth of social care funding is being transferred from the National Health Service to councils to pay for elderly care – an example of “joined-up thinking”, Cockell concedes.

“This will help older and vulnerable people to stay healthy and remain at home thereby avoiding unnecessary hospital admissions or emergency visits to A&E,” says communities secretary Eric Pickles. For some, the bluff and rotund Yorkshireman – “the model of lean government”, Osborne told MPs jokingly on Wednesday as he announced spending plans for 2015/16 – is the villain of the piece.

Most, if not all of his department’s statisticians have been fired, but his officials are unable to monitor how much of the savings he is demanding are coming from genuine efficiencies, or coming from cutting into the bone of vital services, MPs grumble.

Legacy of poverty
Councils most dependent on Whitehall grants have lost out most, even though they – because of a legacy of poverty and social problems – are also the ones that need the money most.

Under changes, councils will be able to keep a share of business rates revenue, rather than having to send it on directly to London, though business fears that this will just encourage them to increase it.

Pickles, however, is no mood to listen to complaints, saying council tax arrears ran to £691 million in March this year, though he is less likely to point out that this means that over 97 per cent of people are paying up.

For him, the model to be followed is the “tri-borough” co-operation agreement provisionally reached in London this year between Westminster City Council, Hammersmith & Fulham and Kensington and Chelsea.

Five hundred staff will go – nearly 40 per cent of them middle and senior managers.

Meanwhile, the 2,000 buildings run by the three councils will be managed by an outside contractor, which has been given a 10-year, £150 million deal.

The leader in this field is Barnet in north London – the so-called EasyJet Council because it wants to contract hundreds of millions worth of services to private industry – has fended off local opposition in a High Court battle in April.

Nearly 800 jobs would be hived off, including planners, road maintenance, food and restaurant inspectors and the staff who tend to the council’s cemeteries. For Pickles, Barnet is the future. For others it is the nightmare.