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A race to the bottom in local government

Guest post by Heather Wakefield
(Cross-posted from Public Finance)

In the male-dominated world of local government, competition for the largest is currently focused firmly on council tax cuts. This macho race to the bottom is as true in the capital as elsewhere. While Labour councils in London celebrate a freeze and Hammersmith & Fulham a cut, mayor Boris Johnson is planning to opt for a second year of ‘no council tax growth’, despite promising to re-allocate ‘spending to areas of greatest need, like the police force’. Sadly, he’s not alone.

Promises to freeze council tax are generally accompanied by claims that front-line services will be protected, the ‘business process’ re-engineered or that savings can be made in the so-called ‘back office’. Hitting the ’back office’ is a crude mechanism that conveniently overlooks the fact that well functioning administration and technical support behind the screen are critical to effective and efficient front-line services. That’s why teachers were provided with more administrative support – so that they could get on and teach. That’s why so many housing benefit services hit a crisis when the back office was privatised, creating a gulf between our members facing clients and those dealing with their claims – often many miles, or countries, away.

Last weekend I was in Southsea at Unison’s south-east regional annual policy seminar for our local government activists. It is a true blue region littered with experiments in privatisation, shared service pathfinders and joint chief executives, ‘lean management’, ‘service transformation’ in all its glory and – of course – council tax freezes and cuts. Indeed, the seminar came at the end of a month in which the Royal Borough of Windsor & Maidenhead trumpeted its intention to cut council tax by 4%, reportedly the biggest reduction ever. Close scrutiny of committee papers outlining the budget-making process to date has proved to be very interesting indeed…

First of all, nearly 75% of the Royal Borough’s gross budget requirement is derived from council tax, compared to an average of 48.5% across other unitary councils. Inevitably then, any cut in council tax will have a dramatic impact on jobs and services. The preliminary 2011/11 revenue budget report on 22 October 2009 identified budgetary pressures of £2.168m and initial savings proposals of £6.267m. In November 2009, £569,000 worth of cuts in adult social care were added to the £993,000 already agreed in October – a £1.5m reduction not mentioned in the Daily Telegraph’s glowing report of 21 January 2010.

All of this means that Supporting People, continuing adult social care and services for those with learning difficulties will be particularly badly hit – including a lost day centre. Three posts will go from learning disability services, while homecare management and adult social care assessment (which will undergo front-end redesign!) will also lose jobs. Perhaps not surprisingly then, the minutes of the 22 October 2009 Cabinet meeting noted that ‘there had been a lot of disquiet from members of the (scrutiny) panel at the lack of detail, which had made it difficult to properly scrutinise the report’.

Council budgets were not always my cup of tea, but this one has certainly whetted the appetite. Other interesting features include the transfer to reserves of the £389,000 in the budget for a pay increase for Unison members this year and no allocation for one in 2010-2011 either. Perhaps not surprisingly, this coincides with Windsor & Maidenhead’s decision to withdraw from sectoral pay bargaining through the National Joint Council and go it alone.

The November 2009 budget report had much of interest to say about child protection services too: apparently 12 out of 50 social worker posts were vacant, leading to the recruitment of 17 agency social workers. While noting that ‘the caseloads of our social workers are relatively high’, the report goes on to say that “Because the RBWM salary offer to social workers has been less than competitive in recent years, we have become increasingly reliant on temporary agency staff. Each agency social worker costs about £20k per annum more than directly employed staff.No false economy there then. And how exactly will a pay freeze help the child protection recruitment crisis, with pressure on social workers apparently greater than elsewhere?

What this all means for Windsor & Maidenhead’s vulnerable elderly and children is clear to see. But will it mean much for the good council taxpayers of the Royal Borough? First of all, less than 25% of them fall into the lowest three bands – A, B and C, with only 2.4% in Band A. They will save 53p, 62p and 71p a week respectively from the 4% cut in council tax. Those in Band D will save 80p and residents of Band H homes, £1.60. It’s hard to see how such paltry financial gains can possibly compensate for such dramatic cuts in services and a pay freeze for our members. Remember, it was shadow chancellor George Osborne himself who said that those earning less than £18,000 would not suffer his promised pay freeze.

Windsor & Maidenhead is also pioneering another gimmick trumpeted by David Cameron himself. Every item of expenditure over £500 is being posted online – a measure heralded as a much desired move towards transparency and prudence. What bare figures tell you about the reason for employing agency social workers or the loss of expenditure in the local economy by council staff deprived of inflation-proofed wages will remain a mystery, of course. What is very clear though is that no such transparency operates in the budget-setting process in the Royal Borough. If so, the less well-heeled residents who will now be deprived of essential services or have to pay more for them would have been given a choice over a council tax cut or preservation of the things that keep them going. ‘The rich man in his castle, the poor man at the gate’ springs to mind.

Meanwhile back in the capital we can see what a council tax freeze means – another unnecessary hole in the budget. London’s Mayor raises £923m from council taxpayers, so a 1% increase generates an extra £9.23m, while adding only 6p a week to a Band D taxpayer’s bill. The economic crisis means that in 2010-2011 the Metropolitan Police Authority starts with £12.9m less. The bulk of this, £8.2m, is the consequence of lost interest, compared to the £9m anticipated in last year’s budget, and capital financing costs are up from £19m to £23.7m.

Fortunately for the mayor, the government is increasing public spending and the Met will get £34.6m more in grant this year than was assumed in last year’s budget. Sadly however, Mayor Johnson has decided that some of the government’s generous grant will not be passed on to the police, but instead will be used to fund a council tax freeze. This means the Met will get £22.5m less this year, with a further £27m cut next – despite a predicted extra £14m in government grants. For Londoners this means that the promised increase of 25 police officers in the three years to 2011-12 will become a scandalous decrease of 455.

Up and down the country councils are creating holes in their budgets that didn’t need to be there – holes which put very little back into the pockets of the poorest taxpayers, who suffer most. But while David Cameron seems to have realised rather late in the day that savage cuts are bad economics, the race for the council tax freeze or the largest cut is well and truly underway across all three main parties. Of course, it’s election year, and council tax cuts are superficially attractive to voters, but let’s see if they stay that way. They might soon be calling for some front-end redesign of their own.

• Heather Wakefield is head of Unison’s local government service group.

Posted by Other TPA at 01:57am on 15 February 2010
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