Keir Starmer needs to find a new way of funding councils as taxpayers are squeezed dry: Jayne Dowle

Already, more English councils have declared themselves effectively bankrupt in the last 18 months than in the last 30 years. In 2018, Northamptonshire County Council issued a section 114 bankruptcy notice, the first local authority to do so for 20 years. Since then, Slough, Croydon, Thurrock, Woking, Birmingham City and Nottingham City have followed.

Countless other councils are teetering on the brink. That is still going to be the case despite Westminster’s unprecedented intervention with £600m of additional funding just before this year’s council budgets were due to be made public.

According to a Local Government Association survey published in December, nearly one in five council bosses believe it is “fairly or very likely” that their authority will also go bust in the next 15 months. This is because central government funding is failing to keep pace with inflationary costs and exploding demand for child protection, adult social care and homelessness services.

In our region, Kirklees Council, which published its draft budget last week, warns that it faces a £47m shortfall. To cope with soaring costs and increased demand on services, particularly those for vulnerable residents that the council is legally required to provide, Kirklees says it needs to streamline some services, and increase its income through avenues such as parking charges. However, like so many other councils, it’s obvious that Kirklees residents will also bear much of the burden, in the form of higher council tax bills.

How much longer can this inequitable situation continue? We council taxpayers are being squeezed until we can’t be squeezed any more, especially as the cost of living crisis shows no sign of abating.

Sir Stephen Houghton, leader of Barnsley Metropolitan Borough Council, wrote in this paper recently that the government needs to reform business rates, a key tranche of the local government funding mechanism.

He’s right. What’s called ‘Government grant’ to councils is funded through business rates, collected by local authorities, but amassed into a national pot. The grant is supposed to be then redistributed on a needs basis. Under the Conservatives, however, we’ve ended up with a situation that has allowed councils to keep the real-terms business rates growth in their local area.

Therefore, affluent areas of the country with thriving local economies – and guess what, most of these are in the south of England - have been able to receive more funding than would be allocated on a needs basis.

What this means is a growing gap between the richest and poorest areas; indeed, the rich get richer and the poor, and we’re seeing the result with councils going under. The added irony is that the areas which become ever more deprived attract fewer businesses, so less income is raised this way.

Put simply, this means that along with cutting services, from libraries and leisure centres to adult social care and making council employees redundant, the onus increasingly falls on us as individuals to make up the shortfall.

The other day, looking in my office files for an identity document, I came across a council tax bill from 2014, a decade ago. At £90 a month for my then Band D property, it was way less than half of what I pay now.

Although I’ve since moved to a smaller house, which perplexingly finds itself in Band E, a casualty of the unjust method of calculating council tax we’ve been stuck with since the system was introduced more than 20 years ago, I pay more, much more.

Increasing the financial burden yet further on hard-pressed families is becoming an unfeasible option. At the lower end of the income scale it’s going to be simply impossible to ask households to pay more.

Even many middle and higher income families are struggling with the increased cost of living, especially higher mortgage payments.

What is needed is a total root and branch reform of funding for local councils.

If the results of last week’s local by-elections are anything to go by, this time next year we may well have a Labour government attempting to balance the books.

Surely, Sir Keir Starmer acknowledges that local councils cannot be held out to dry for any longer, nor can voters be constantly expected to pick up the fiscal slack. No writing endless cheques or tinkering at the edges. Labour should put its finest brains to work devising a new system that definitely takes into account a fairer system of business rates, but most importantly does not put us all into financial jeopardy.​​​​​​​