A £10 billion financial black hole faces councils, according to a Labour Party report. The Covid-19 pandemic has caused a big rise in the demands on social care – for which local authorities are responsible. This, a decade of unchallenged austerity, and a big drop in revenue have created a perfect storm.
To avoid whole swathes of councils going effectively bankrupt, the chancellor, Rishi Sunak, has promised £3.2 billion in coronavirus assistance. This is not enough. Even the skeleton services which local authorities currently provide entail spending of around £100 billion a year!
Ten years of austerity – dictated by national government but dutifully carried out locally – have left services decimated. Having not fought the enormous cuts to the central grant, councils are increasingly reliant on raising their own income.
But lockdown has caused big reductions in councils’ revenues. They have been unable to generate income from parking, leisure centres and so on.
And councils face even bigger problems longer term. The recession will reduce their income from business rates, and rising unemployment will reduce their income from council tax. The risky investments some local authorities have made in commercial property are likely to lose value too.
So far, council leaders have responded by saying they will be forced to stop all services but social care. That means the wholesale closure of libraries, leisure centres, community centres, Sure Start centres and more. There has been an avalanche of stories in the local press as authorities detail the depths of their deficits.
We say to Labour councils: you have to fight!
Most councils have hundreds of millions of pounds in reserves, and they all have the power to borrow huge amounts on top. All of these resources should be used to save jobs and services – but not as a mere accounting measure. This spending should be used to mobilise a campaign to win funding from government and to fully fund local services.
Faced with a proposed pay freeze for public sector workers, and potentially thousands of job losses, council workers’ trade unions – Unison, Unite, GMB, NEU and others – have a huge role to play. A campaign in the workplace, with support from local communities, is the way the government can be forced to pay up.
Such a campaign can stop councils going bust and save our jobs and services. It should be linked to socialist policies to take social care and all outsourced services back in-house under democratic local authority control, and to fight to reverse all the cuts of the last ten years.
Labour councils should be leading this fight. But Keir Starmer’s feeble opposition to Johnson shows this campaign needs to be built from below by working-class fighters in local communities and unions.
We say union and community activists should prepare to stand candidates in next May’s elections against any councillors of any party refusing to carry out the necessary struggle, to offer an alternative to the failed policies of the Tories and right-wing Labour. The Socialist Party will be at the forefront of that fight.