Downloading PDF. Please wait... Issue 2491

New killer cuts hit councils – and help give businesses more power

This article is over 8 years, 4 months old
The Tories are licking their lips as more savage cuts to local services start to bite. Raymie Kiernan looks at what’s at stake
Issue 2491
Portsmouth protest at cuts to domestic violence services last week
Portsmouth protest at cuts to domestic violence services last week (Pic: Les Crompton)

The Tories have unveiled plans to slash council funding to the bone. The cuts will make life unbearable for the most vulnerable ­people—and hurt millions more.

Children’s centres will go. Libraries will close. Older people who can’t feed or wash themselves properly will be left without care workers to help them.

People with mental health problems or who are homeless will find it harder to get help. Victims of violence will be left without support (see below).

In Oxfordshire the council has even put HIV prevention services in the firing line to cut costs.

But this ideological project isn’t just about money. It’s about getting businesses to run council services and hollowing out local democracy.

The Tory minister for Communities and Local Government, Greg Clark, boasted last week, “The devolution of power and resources from Whitehall is gathering momentum.”

He was announcing the latest local government funding settlement for councils in England this year. Clark admitted that central government grants to councils “will disappear altogether”. Yet in 2010 these grants represented nearly 80 percent of council spending.

The Tories want councils to make up the shortfall by funding more of their spending using business rates. This is the most sinister development.

Since 2013 councils keep half the business rates collected locally.

The Tories want these to make up a bigger proportion of council spending with plans for local authorities to keep 100 percent of business rates.

A government document makes clear what this would mean. Businesses “will have more influence on council’s decisions, including their budget as the council’s income is directly linked to the success of businesses in its areas”.


It added that this would create “a more conducive atmosphere” for developers. The shift would make it much easier for businesses to influence policy. Competing councils would be pushed to adopt pro-business policies to attract firms to their areas.

The Tories have already manoeuvred to get more business involvement in council services. Funding cuts have created financial crises in councils and forced them to seek “alternative delivery models” for services.

This has meant even more outsourcing—leading to worse services and attacks on workers. Without serious resistance nationally, this is now set to get much worse. Labour Party shadow chancellor John McDonnell pledged to “launch a national campaign over council cuts and mobilise communities” last November.

It was a refreshing change from previous Labour leaderships who, at best, pitched austerity-lite.

Many hoped that Labour councils would actively resist Tory austerity and refuse to pass cuts budgets.

But within a month McDonnell and Labour leader Jeremy Corbyn wrote to Labour councils urging them not to set “no cuts budgets”.

cuts in numbers

They claimed that failure to set balanced budgets would be illegal.

They warned that Tory ministers would then be able to make decisions on spending. They added, “Their priorities would certainly not meet the needs of the communities that elected us.”

Yet people didn’t elect Labour councils to see their services slashed. There are legal ways of stopping the cuts that could be pursued now to defend services.

The local government executive of the Unison union recently called on councils not to implement the cuts.

Its motion called on “Labour, Plaid Cymru and SNP councils to set legal no-cuts budgets, use reserves, capitalise eligible general fund expenditure and borrow prudentially to generate resources so that no council need make cuts.”

It emphasised that “these are short-term measures”. It said, “The financial measures must be combined with a national campaign, linking councils, trade unions and communities in a fight against the Tories’ austerity programme.”

Every local government union branch should take up the “no cuts budget” demand. It must be raised with the Labour Party, Momentum groups and in every campaign.

Winning this would be a basis for the all-out resistance we need.

Nothing left to cut? Then charge more

Even top Tories admit that the latest cuts to council funding will be devastating. Tory Lord Porter, chair of the Local Government Association, said many councils would have to make “significant reductions to local services to plug funding gaps”.

This would mean “asking residents to pay more council tax while possibly offering fewer services”.

The situation is already dire.

Over 500,000 council jobs have gone since 2010. Those remaining face wage cuts, attacks on sick leave, holidays and more.

The Tories have imposed a 1 percent pay cap in the public sector. It’s predicted to bring public sector wages to their lowest level relative to the private sector in over 25 years by 2020.

The Institute of Fiscal Studies said this year’s 1.4 percent rise in national insurance contributions will cut take-home pay by up to £480 a year.

There have been petty attacks too. Some councils have started charging for things like staff car parking.

According to the Local Government Association this is because “efficiency savings”—cuts to services—have been exhausted.

Now councils plan to increase fees and charges, and sell off public assets to meet the “challenge” of funding cuts.

They could also raise council tax. Meanwhile the government has gifted tax cuts worth

£4 billion a year to top rate taxpayers and £5 billion a year to large company shareholders.

Cuts put women in danger

Tory-led Portsmouth City Council plans to slash £130,000 from domestic abuse services from next year as council funding cuts bite. This is the bleak reality of what Tory austerity will mean.

Reports of domestic violence are rising. Recorded cases in England and Wales rose by 31 percent between 2013 and 2015, according to Her Majesty’s Inspectorate of Constabulary.

Around 500 domestic violence victims are currently supported in Portsmouth. One council worker said the real figure could be much bigger—and that staff are already finding it hard to cope.

“We could be looking at deaths and murders in Portsmouth for lack of support,” they said.

Protesters against the cut invaded a council meeting and forced it to stop for ten minutes.

Councillors have cynically portrayed protesters as violent.

Tory council leader Donna Jones claimed, “I have never been so frightened and targeted in all my life.” In reality it is vulnerable women in the city who are being put in danger by Jones’ cuts. The council also plans to make cuts to the fire service, for good measure.

Private sector vampires are licking their lips

Councils are plundering their reserves. Some 40 percent are using them to fund “smarter service delivery” projects.

In reality this is outsourcing. Councils tender out services and invite private sector bids. Firms win if they can deliver a cheap service—regardless of the quality. This gives the green light for companies to attack pay, as their main cost is workers’ wages.

The outsourced market for public services has an annual turnover of £82 billion. This is growing as austerity fuels more outsourcing.

The value of contracts signed by councils rose by nearly a quarter between 2014 and 2015.

Local government spent £756 million on outsourcing in 2015. This made up 13 percent of the total value of all outsourcing agreements signed in Britain.

The privatisation is accelerating. New agreements accounted for 55 percent of all deals signed last year. That compares to 38 percent in 2014.

The length of the contracts has also grown.

Arvato is one of the private vulture firms profiting from services by punting “customer relationship management” (CRM) systems to councils. Apparently these “help clients identify additional commercial opportunities to maximise revenue per customer”.

Bosses are licking their lips at the prospect of making even more money.

Arvato boss Debra Maxwell declared that “councils need to fundamentally rethink the way they work” in the wake of the Tories’ Spending Review last November.

She looked forward to “new approaches to transformation in 2016, such as moving services entirely online, sharing services virtually, and introducing robotic process automation”.

The Tories and their boss friends claim that outsourcing delivers services more “efficiently”. This really means services on the cheap and even more attacks on local government workers.

The Tories want to see commercial councils across England. Unions should use their collective power to stop them—before it’s too late.


Sign up for our daily email update ‘Breakfast in Red’

Latest News

Make a donation to Socialist Worker

Help fund the resistance