Council finance… welcome to the twilight zone

One day when I finally retire from local government I have promised myself that I will really enjoy December, a time that should be of good cheer, chestnut roasting by an open fire etc.

Instead, in our authority it is a time of austere examining of the budgets and a descent into the strange twilight world of local government. In most organisations when people go on strike it is at least partially the fault of the organisation and they are set to lose money. In local government, thanks to the blundering of central government, we have an unnecessary strike which our treasurer thinks will help us balance the budget.

In most organisations the fact that a service is popular and heavily used is automatically a good thing and generates income, but in local government it increases costs and is a source of worry for the finance officers. In most organisations the revenue you receive is not dependent upon the political whim of a government many miles away.

The sense of unreality has been increased as a result of some research by Newcastle City Council. What it has shown is that government has redistributed resources in local government away from the poor towards richer authorities, a sort of ‘robin hood’ tax in reverse.

Most people when dealing with the technicalities of local government finance lose the will to live, so I will try to keep this as straightforward as possible, but essentially there are two parts to the money that council’s have to spend. One is the council tax income and the other is a grant received from central government.

Even I can work out that the product of the council tax in Salford per head is a fraction of what for example Surrey Council receives and in order to compensate us more humble councils we receive a higher proportion of grant. The government has announced a cut on average of 7% per annum in the normal grant over four years payable to local government.

At the same time over the last two years it has paid a special grant to local authorities equivalent to a 2.5% uplift in their council tax base provided they freeze their council tax. It took us about 30 seconds to realise if you are Surrey you can expect millions more than Salford. At the same time we have been asked to cut millions more than Surrey.

Mr Pickles’ manipulation of finance can only be compared to those people who used to operate at fairs and markets with cups and balls. Of course in any organisation there are savings to be made as a result of change and evolution, for example we are introducing new LED light fittings to save hundreds of thousands of pounds per year and changes that we have administered in the council have also yielded savings. However, the reality of the immediate cuts required will mean that we will be providing a worse service, whether it is in adult social care or collecting the bins.

The hundreds of jobs we will be shedding will inevitably depress the private sector as people have less money to spend, a situation which is replicating itself across the country. No wonder Mr Cameron thinks the deficit has been harder to crack than he expected and while at this seasonal time I wish goodwill to all, I fear for the long-term future of public services in those areas with greatest need.