By Sarah Bates
Downloading PDF. Please wait... Issue 2713

Councils use virus crisis to plan grim new cuts

This article is over 3 years, 10 months old
Issue 2713
Which council services will be cut next?
Which council services will be cut next? (Pic: harrypope/Flickr)

Local councils across England plan swingeing cuts in the wake of the ­coronavirus pandemic.

The plans threaten jobs and vital services—and will mean snatching away support from the most vulnerable people.

Councils are in crisis ­after years of ­underfunding from central government and a drive towards private sector investment.

Data from the Institute for Fiscal Studies show that more than 30 local authorities get at least a quarter of their annual income from ­commercial investments.

This includes financing retail parks, airports and office blocks.

During the pandemic, ­profits from these ­investments have plummeted.


Councils are expected to suffer a shortfall of £642 ­million from ­commercial investment income.

English councils have invested £7.6 billion in the commercial sector in the last four years—in the process handing public money to private firms.

MPs from the public accounts committee said on Monday that a small number of councils had borrowed up to £1 billion each to buy properties. It blasted “many billions of pounds of borrowing and potentially risky investments”.

For instance, Tory-run Spelthorne council has spent £1 billion in four years on buying commercial property.

Tory-run councils in south east England were responsible for over half of similar spending between 2016 and 2019.

Luton borough council, which owns a local airport, is particularly vulnerable. Council bosses say some £30 million in dividends will be lost every year for the next two years.

The Labour-led administration is set to hold an emergency meeting this week to propose £17 million in cuts, including axing 365 jobs. It wants to slash social care day centres, support for parents, improvements to schools and neighbourhood enforcement teams.


Manchester city council is part of a group of ten councils in the region that hold the majority stake in a firm that operates three local airports.

The city council alone will see its revenue drop ­£70 ­million next year from airport dividends.

Richard Watts from the Local Government Association said, “Councils have faced a choice of either accepting funding reductions and cutting services or making investments to try and protect them.

“This was encouraged by government.”

The Tories have pushed councils to rely on business investments. But when profits fall, so do jobs and services.

Their delivery shouldn’t be reliant on enough people buying a cinema ticket or booking a flight.

The crisis should be solved by taxing the rich and investing in public services—not by making workers pay.


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