The Week

The Week 23 February 2024

Patrick King
Senior Researcher

This week opposition amendments on the Israel-Palestine conflict, and the parliamentary wrangling that followed, have dominated journalists’ filings. Away from the front pages, however, the risk of severe financial crisis in local government has gathered pace.

On Saturday, Andy Haldane, Chair of the Levelling Up Advisory Council, warned that without a “root and branch” rethink of how local authorities are funded, “even deeper cuts” to local services will have to be made.

Only on Monday it was reported that Birmingham City Council, perhaps the most high-profile victim of the crisis so far, is raising council tax by 21% in two years, selling assets worth £750 million, and making cuts to services of £300 million, to meet its legal duty to balance the books. Some of these cuts, including to children’s social care, it has requested “exceptional authorisation” for; not least, because they are likely to lead to much greater long-run costs for the Council.

Back to Andy Haldane’s argument, then, that efforts to pare back local government spending are self-defeating if they are made in a way that reduces the ability of local government to “grow out of the hole” they find themselves in. We are kicking the can down the road, without answering the fundamental question of how to build a more financially sustainable future for local government.

In many authorities, while one hand is distributing grants from the Levelling Up fund, and other central pots, the other is making decisions which undermine the core capitals — human capital, social capital, physical capital — the White Paper identified only two years ago as being the “key drivers” of local prosperity. “Is this affecting levelling up?” “Yes, without question”, Haldane writes.

With local authorities facing a funding gap of £4 billion, and one in five expected to issue a Section 144 (bankruptcy) notice in the coming year, it is right to ask whether the current approach to economic rebalancing is coherent without directly addressing the financial insecurity of local authorities — a topic Reform will soon explore.

Likewise, Haldane argues that assets like green spaces and libraries are often seen as the “icing on the cake”, and are “always the first casualty of cuts by local government” — but they are in fact the very essence of what it means to “level up” the most deprived parts of the UK.

Onto the read...

This week’s read, from The Economist, looks at a town putting into practice a sharp focus on the reasons why people want to live, work in and visit a place. Blackpool, sometimes used as a byword for a town that’s been ‘left behind’, has in fact experience faster productivity growth in the decade to 2021 than the rest of the UK — despite the toll COVID-19 took on local tourism — supported by genuine partnership between local government, communities and industry.

For example, its Pride of Place partnership, created back in 2017, takes a hyper-local view of the town’s health. After identifying that one in ten residents in the Claremont district had an unplanned hospital admission in 2022, and that the most common cause of these admissions was asthma, the partnership used street-level data to pre-emptively visit those at risk and intervene. The initiative was backed by Merlin Entertainments, which employs 500 people locally.

Other projects include a £300 million leisure complex, part-funded by the local authority but designed to ‘crowd in’ private investment, and Blackpool’s first museum. There is also a new further education college planned, that seeks to combine “cognitive and technical skills”, based on the vision of a more multi-disciplinary model of education, the “multiversity”, touted by Andy Haldane in 2018. A read full of compelling examples of why social infrastructure must be a priority when it comes to the future of levelling up.