The cuts contagion: will Northamptonshire’s collapsing council hit the rest of Britain?

Other councils fear the same fate as Northamptonshire County Council, the Ground Zero of local government breakdown.

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Northamptonshire County Council has declared itself effectively bankrupt. Twice. In one year.

In February, the Tory-run council became the first local authority in two decades to issue a Section 114 notice – an official admission that it doesn’t have the resources to meet its expenditure, ie. it can’t balance its budget.

This has played out in the decline of services – vanishing libraries, bus route cuts, a chronic shortage in social workers, a rise in potholes.

At an emergency meeting of the council yesterday, opposition councillors warned that further cuts would endanger vulnerable residents to the point where there could be legal challenges (the council’s decision to close 21 of the county’s 36 libraries has already faced two legal challenges, and has now been paused).

Councils have a statutory duty to carry out certain functions, from protecting listed buildings to child welfare provision.

Northamptonshire – which will decide where £70m worth of cuts will fall over the next few weeks – will be looking to reduce its “core offer” to merely aiming to “fulfil our [legal] duties”, according to council leader Matt Golby.

But with services already stretched so dramatically, local charities warn that any further cuts to children’s services will mean the council failing to protect vulnerable young people.

Northamptonshire’s Tories have been – fairly – accused by their political opponents of ideologically-driven foolish economics: rabidly outsourcing and stubbornly freezing council tax for years. Their appalling management has long been clear to those working with the council.

But many of Northamptonshire’s problems aren’t unique to that council. As one source close to the scandal puts it, “looking past the mismanagement and spin-outs, the underlying issue is funding cuts”.

Indeed, since David Cameron became prime minister and imposed his austerity agenda in 2010, councils have lost 49 per cent of real-terms funding. And Northamptonshire is being dubbed the “canary in the coal mine” of local government crisis by the Labour party. Shadow communities and local government secretary Andrew Gwynne has warned: “Northamptonshire will not be the last council in crisis, and the people of Northants will not be the last to have to bear the burden for Tory neglect.”

I’ve spoken recently to local politicians in solidly Conservative areas, from Somerset to the Cotswolds, who describe their councils as under impossible strain.

Beneath county council level, local government structures are already in turmoil. Mergers of district councils all over the country, including Dorset, Somerset, Suffolk, Buckinghamshire and Sussex, are now occurring at twice the rate they were in 2010. While saving money on sharing services, these are truly cost-saving exercises that unsettle (and often unseat) local councillors – many of whom view these deals as chipping away at public services and community identity.

This doesn’t mean the county councils above them are about to collapse, but it does demonstrate how unsustainable the structures that provide local services are in the age of austerity.

The National Audit Office revealed that one in ten local authorities could run out of reserves (or “rainy day funds”, as Public Accounts Committee chair Meg Hillier puts it) within the next three years, after dipping into these funds to cover spending.

Research for our sister publication, CityMetric, found huge funding gaps in cities across the UK, with Manchester City Council due to eliminate a £60m gap by reducing its adult social care budget, Liverpool identifying a £90.3m gap that has to be filled with more cuts, and Birmingham looking to cost-cut by the tune of £123m by 2022 (its financial report warned that the “Birmingham City Council of the future will look very different from the one we had before austerity began”).

Last July, Leeds City Council (which projects a £30.5m spending gap between 2019 and 2021) ominously stated: “At this stage it has not been possible to identify sufficient savings or income generation opportunities with which to entirely close the gap in the Council’s finances over the next three years.”

According to the County Councils Network, county councils face funding pressures amounting to £3.2bn over the next two years alone. Just one-third of council leaders surveyed by the organisation are confident they will be able to deliver a balanced budget in the year 2020/21, without an extra cash injection from the government.

“The scope for making deliverable savings has dramatically reduced and decisions for next year will be truly unpalatable if we are to fulfil our statutory duties,” said leader of Kent County Council Paul Carter. “Without additional resource, the worst is yet to come.”

Anoosh Chakelian is senior writer at the New Statesman.