Local councils, already desperately short of funds, are now facing financial ruin because of the government’s response to the pandemic. Ten years of austerity, which saw council budgets shrink by an average of 77%, have left councils stripped to the bone. Often they are unable to carry out even some of the most basic services.
Councils had been approaching a cliff-edge situation even prior to the global pandemic and crisis. Already over half-a-million council workers have lost their jobs since 2010. Libraries, special educational needs services, and Sure Start centres have all been closed. And last year, more than a quarter of all councils said they expected to be unable to meet their legal obligation to deliver statutory services by 2022.
Central government funding to councils has been cut by 60% since 2010. Councils have therefore been forced to lean on other sources of revenue such as council tax, parking fees, and in some cases, museums and galleries.
Austerity means the working class being made to pay for the crisis of the rich, with increases in council tax hitting the poorest hardest. Yet even these measures have still not closed the financial gap.
The situation has now worsened dramatically, as councils have had to bear the brunt of dealing with the social crisis caused by the pandemic. This includes essential tasks such as delivering food parcels to the vulnerable, funding care homes, and finding housing for rough sleepers and those fleeing domestic abuse.
For example, Birmingham City Council purchased two week’s of supermarket vouchers for 61,000 children eligible for free school meals at the start of the lockdown. But because of a delay in government funding for a national scheme, it appears not to have been compensated by the government.
Liverpool Council is on the verge of bankruptcy. It has reportedly been forced to hold an emergency budget meeting following a 32% cut in its funding allocated by the government to tackle COVID-19. Windsor Council are also expected to declare bankruptcy due to a lack of tourism.
This is grim news.— Peter Moss (@501mossy) April 30, 2020
Yesterday it was Windsor, today it is Liverpool Council warning of bankruptcy. Central Government MUST go further and better support local authorities.#councilscan @prestonlabour @LGA_Labour https://t.co/5fdO8Seh5o
They will not be the last. In addition to carrying the weight of the current social emergency, most councils are facing a dramatic decline in revenue. Even council tax revenues will be hit, as hard-up families who have been made redundant or furloughed find themselves unable to pay their bills.
Councils are legally obliged to cut whatever is necessary in order to run a balanced budget. If they can’t do this, they must effectively declare themselves bankrupt.
We saw this in 2018, with the Tory-run Northamptonshire County Council. Sajid Javid, the Chancellor at the time, imposed a strict ban on any new spending, with the exception of the bare minimum required to meet their statutory obligations. Council tax was also hiked by 2%. But even this was not enough to meet the rising cost of social care.
The £3.2 billion bailout for councils that was announced on 18 April is nowhere near enough to even cover the anticipated cost of effectively dealing with the pandemic itself. It’s also a pittance compared to the almost £16 billion in central government funding that’s been cut since 2010.
James Jamieson - Chairman of the Local Government Association and Conservative leader of Bedfordshire Council - told MPs in April that the funding that is needed "could very well be three or even four times that amount".
Meanwhile, £330 billion was set aside to provide loans for businesses, in order to shield them from the economic impact of the crisis.
Only a system as barbaric as capitalism would allow for such a glaring contradiction between the enormous amount of wealth that’s been amassed by a few, and the cruel cuts that have been imposed on the majority over the last decade.
Make the bosses pay
The answer is to nationalise the banks, insurance companies and the rest of the key levers of the economy - without compensation - and to utilise the wealth that’s been hoarded.
A planned socialist economy could not only meet the financial cost of the global pandemic, but also invest in public services that are fit for purpose. This wealth exists. It’s time to put it to good use.
Finally, outsourced services must be brought back again into public hands. There’s absolutely no reason for us to pay exorbitant fees for capitalists to profit from our basic services.
As the crisis develops, more and more council workers will be forced to take action to defend their jobs and our services. We need to link up this fight back in every council across the country into a generalised struggle against the Tories and their rotten system.
We must put pressure on the many Labour-held councils to refuse to implement any further cuts, and on the Labour Party nationally to fight for these demands.