England & Wales, Global Finance

What do we talk about when we talk about finance?

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As many readers will be aware, at LGiU we collaborate with The MJ every year on a survey of local government finance. We ask every leader, chief executive, cabinet member for finance and chief finance officer about their budgets, what they are doing with council tax, how services are affected and how confident they do – or more pertinently, do not – feel in the sustainability of the funding system.

You will have read the results of the survey, but the headlines will have come as little surprise: a large majority of councils putting council tax up as far as they can, virtually all of them increasing charging, two-thirds dipping into their reserves (year after year). Eight out of 10 had little or no confidence in the sustainability of the system.

But while this may be a familiar narrative within the sector, the important thing about this work is that it provides a platform for a broader public debate. That is an important strand of our work at LGiU and one we want to have a slightly sharper campaigning edge on this year.

It remains mystifying that there is not more public disquiet about the non-trivial fact we don’t really know how local government will be financed after 2020.

We could not have been happier with the level of coverage, as the survey was featured across all main broadcast and print media, but what matters is not just the quantity of coverage but the nature of it and its focus. So with apologies to Raymond Carver, what do we talk about when we talk about local government finance?

Council tax is obviously a key part of the conversation. Council tax hikes formed several headlines, especially in the tabloid press. It is easy to sneer at the attitude of one rather obtuse radio shock jock who seemed to believe that councils are entirely funded by council tax and do nothing except collecting bins and running swimming pools.

If they are collecting the bins less often and putting up tax, then the money must be being squandered in nefarious ways. But we need to take this view seriously.

Why should the public understand the complexities of how councils are funded and how they spend their money? How can we expect them to if it has never been properly explained?

There does seem to be an appetite to learn. Most of the conversations we had around the survey and most of the media coverage was genuinely trying to get to the bottom of the issues. Why were councils so anxious about the future? Where was the money coming from and where was it going? What would this mean for ordinary people and the services they rely on?

This has also been a feature of media coverage of Northamptonshire issuing its Section 114 notice: a real desire to get under the skin of the issue and understand whether this is about poor local decision-making or is symptomatic of a bigger structural problem?

Our survey demonstrates conclusively that there is indeed a bigger structural problem.

That is the key, because what we talk about when we talk about local government finance is not really money at all. It is value and values. What we value, what sort of communities we want to live in, what sort of society we want to be and how and where we want to pay for that.

Are we finally getting to a point where we can have a bigger, better conversation about those sorts of issues? I don’t want to get carried away but there are some positive signs.

Our survey indicated about 75% of upper-tier authorities would be making use of the full social care precept. Anecdotally, it appears this precept, clearly marked on the bill as being for care of members of the community, inspires very little push-back.

More work needs to be done on public attitudes around this, but we might be seeing the beginning of a slightly different discussion about tax.

This raises questions about what should be paid for locally and nationally and where the balance of political risk should sit and how this relates to governance and accountability.

Fundamentally, these are questions about legitimacy and democracy. Unless we unpick them, then a technical discussion about business rates retention, council tax or tariffs and top-ups will always have limited traction.

If we want to encourage and nurture a better conversation about local resourcing, councils need to take the lead in making that happen. Do we know how to? That’s a whole different question again.

Jonathan Carr-West is the Chief Executive of LGIU. This article was first published in The Municipal Journal.

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