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8 September 2023

The ghosts of austerity are returning to haunt Rishi Sunak

As the last of the Osbornites, the Prime Minister is more culpable than most as the country crumbles around him.

By Lewis Goodall

This has been a week of ghosts of politics past. It found its best expression in an unlikely place – in the grand temple of Joseph Chamberlain; the Victorian corridors of Birmingham City Council. The council of my home city has had a chequered history. Its children services department was once deemed a “national disgrace”, and let down vulnerable kids in the area. Its leadership hasn’t shown the dynamism or strategic intent of those elsewhere in the country, such as Manchester or Liverpool. Unemployment, which is nearly absent in many other parts of the UK, remains relatively high. The city contains some of the most deprived areas of Western Europe.

All this makes the tragedy of what has happened this week all the more sad: Birmingham City Council, the largest local authority in Europe, has become the latest council to effectively declare bankruptcy. I’ve seen internal documents that show for this year alone the council is nearly £90m in debt. It has no hope of meeting its liabilities. A council area serving more than a million people now cannot function.

The government cries that the council has been mismanaged. And there seems to be evidence of that, going back decades. There was an IT system which came in five times over budget. And a 2012 equal pay court case has devastated the city’s finances, after it paid £1.1bn to settle the claims. Yet there’s also a far bigger story here.

The net result of austerity has always been to slowly degrade the resilience of the institution to which it is applied. Local government was the project’s ground zero. In the early days of these long Conservative administrations, even politicians such as George Osborne were eager that the axe should fall somewhere else, somewhere far away and on places of which they knew nothing. Central government grants to local authorities fell by 40 per cent in real terms between 2009/10 and 2019/20, which is far beyond any spending cuts that Whitehall had to endure. All that time, pressures and demands on local government – including those caused by austerity itself – intensified year after year. The net result is that local authorities are now shells: denuded of political power by the Conservative governments of the 1980s, and denuded of spending power by their successors of the 2010s. 

It is within this context that the failure of Birmingham must be understood. Local authorities, like many public services, can no longer cope with the unexpected. They are one life from game over. And although we’ve already seen senior Conservative politicians try and draw a link between the Labour-run Birmingham City Council and what a Labour government might do to the country, it rings hollow. Birmingham wasn’t the first council to declare bankruptcy (Conservative Northamptonshire and Thurrock came before) and it won’t be the last. Birmingham’s failure should worry anyone who cares about their village, town or city – or the quality of life of where they live. If mighty Birmingham, a centre of municipal power, cannot cope with one unanticipated disaster – then what hope is there for anywhere else? 

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[See also: Have the Tories learned anything from Liz Truss]

The government’s response is to say it isn’t its job to deal with local failure; as if it does, there’s no disincentive for feckless management by local councils. Whitehall’s private belief is that local government is riddled with a deeply poor management culture. There’s some truth in that. But then, as with England in general, all roads ultimately lead back SW1. Birmingham is not the master of its own fate. Whitehall doesn’t give it the powers to levy new taxes, nor does it let it retain much of the taxes it does raise. Whitehall says it doesn’t want councils to visit with a begging bowl when they make mistakes – but it forgets that the begging bowl is all they’re allowed to have. And we wonder why we have a productivity crisis, driven by a deeply poor English periphery. 

It’ll be the residents of Birmingham who suffer; local services stopped again and assets sold. And there is no sense of any imagination, or urgency from the British political class to deal with any of it. This week’s PMQs, the first of the new political term, was hardly electric – but it was revealing. It was a 30 minute display of the importance of political narrative, funnelling and channelling everything Westminster does.

Sunak increasingly resembles a youngish soldier, fighting an old war, the bodies of past battles all around him. He picked up any weapon he could find, scrabbling around for something, anything to deploy against his opponents: the Liam Byrne note, the coalition of chaos, “Captain Hindsight”, criticism of lockdowns. Each, in its own way, devastating in its day. But now each is, at best, blunt. Sunak has no narrative, no adhesive to bind his thoughts about him and his government, or his attacks on the opposition, Starmer does, but only because they’ve been gifted to him. The crumbling Britain he talks about is being realised with almost every day that passes, often in a literal fashion. In a single week, we saw decaying schools, failing cities, and an escaped prisoner. 

Right now Starmer can only diagnose: he is a doctor who recognises the disease but is unwilling to commit to treat it via increased public spending and imaginative ways of raising public finances. But for now, diagnosis is enough. Sunak meanwhile, flounders – he doesn’t diagnose let alone prescribe. One could almost feel for sorry for Sunak. He is the man who arrives to the party just as everyone has left. He is the Alanis Morissette of politics. 

Yet in so many ways this was Sunak’s party. He remained the last Osbornite in the cabinet when Boris Johnson and others realised it was all coming to an end, for the country and the Conservatives. Johnson’s administration, as untrustworthy as it was, could not fulfil its potential of reinventing Conservatism and thus achieve a genuinely post-Thatcherite turn in their thinking. Politics for the next year is simple enough: Sunak will keep playing the same old tunes. Few will be listening.

[See also: The great crack-up

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