Dear Chancellor – Thoughts ahead of the budget settlement

CHRISTMAS is coming, shops are getting busier, thoughts are turning to gift-buying and snowfall – and we’re all hoping for a bumper season to help lift our economy.

Here at Oldham Council we’re preparing for an early christmas ‘present’ of our own in the form of our next budget settlement from Government. 

It’s fair to say that although we hope for a positive outcome – and perhaps even a little acknowledgement that Local Government has been one of the hardest hit by recent settlements – we are preparing for the worst.

Local Government is seen as an easy target.

Residents are quick to lay blame at the local town hall and Central Government knows the tough decisions about where savings must come will be made locally: meaning their hands are clean of any frontline pain.

Last weekend we got more direction from Government warning about councils ‘stockpiling’ of reserves – or what you and I might call “the rainy day money”.

It seems attractive doesn’t it? If a council has money in savings why not use it now to support frontline services rather than cutting them?

But there are two clear reasons why this is wrong.

Firstly, that money is in savings – not a recurring source of cash. It can only be spent once and then it is gone forever.

Secondly, the ‘rainy day’ shouldn’t be the ongoing cuts to council budgets. It should be there for genuine emergencies like a school burning down, for example, flooding, or –  more recently in Oldham – the aftermath of the Shaw gas explosion which saw significant costs in staffing, security, immediate repair and safety works which cannot be recouped. Those things do fall into the category of being a ‘rainy day’.

When Government takes money out of a council’s budget it’s not a one-off measure: it takes it out every year.

As an example, let’s say you have outgoings of £1,000 a month at home. Your wages are covering that until your employer cuts your salary. Now you only have enough money to cover £800 a month.

If you use the Government’s logic on the use of reserves as the answer to your household budget woes you could use £400 you have to hand in savings to make up the difference. But once the £200 a month shortfall is paid for the first two months, what do you then do to cover it?

Using reserves to make up cuts to council funding is short-term, misjudged and doesn’t address or reduce the pain being felt in communities across the country.

Councils deliver services that people rely on. In Oldham we have taken £100 million of cuts already. We are in the process of cutting another £31 million over the next two years – and that’s without added pain to come from the December settlement.

It’s hard enough to manage that pain without dealing with nonsensical and ill-informed direction like this from Government.

You might think that is a political point, but as far as I’m concerned it’s not. This is about being honest about the challenges we face and the views I have outlined here are shared by many council leaders nationwide, regardless of their political affiliation.

Councils also need to start being honest. The days of making savings have gone – we are just making cuts now.

The easy pickings of cutting management and procurement etc have long gone and we are at the bone. After years of ‘protecting frontline services’ there won’t be a council anywhere now that won’t be making cuts to those services.

When Lambeth Council first began their consultation on budget cuts they lead with the line “The Government has cut our budget so we are forced to cut services”, much to the annoyance of Eric Pickles. But at least it was honest and explained the situation in plain language without smoke and mirrors.

My only ‘ask’ from the Chancellor is simple: Be honest and be fair.

Be honest and clear about the total reductions upfront. Don’t hide figures or drip-feed cuts or introduce back door technical changes which combine to wipe out our budget.

One recent example of this has been in the plans for Council Tax Benefit localisation. It was said that this would ‘only’ be a 10 per cent reduction in the overall grant. That was true.

But what you didn’t say was that low-income working people and those on benefits would pay for all pensioners regardless of income (Yes, Sir Alan Sugar would also benefit under this scheme!) meaning the REAL reduction in benefit for everyone else was nearer to 25 per cent, which is both unfair and hits those who can least afford it most.

And be fair, Mr Chancellor…

Local Government has taken more than its fair share of cuts and done so whilst protecting – as much as possible – vital services that people reply on. But we cannot continue to do that and expect no one will notice the difference.

Not least of all that’s because as a council we are also a major local employer. When we make people redundant we’re simply adding to our own unemployment numbers. That isn’t good for Government and it is bad for Oldham.

The price of failure might be embarrassment at the growing cost of unemployment and slow economic growth.

But the cost of failure for town like Oldham is a generation left behind and that is a cost too high.

Thanks for listening,

Jim

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