This week, within hours of each
other, two very different local authorities announced causes for concern about their future financial viability.
West Somerset (know to
many from childhood holidays at Minehead) is the smallest District in England in terms of budget and population. This week the Council published an
LGA report that showed that its unavoidable annual budget growth bill of £150,000
dwarfs the maximum it can raise by increasing Council Tax in line with the 2% cap, which is just shy of £40,000. With grants shrinking this is an arithmetical bind
from which there is no escape and all the Council can do, the report
acknowledges, is seek to put off the day when it holds up its hands and tells
the world it can no longer meet its statutory obligations.
Birmingham, on the
other hand, is England’s largest unitary authority, with a population about 30
times larger than West Somerset.
Its problem is that it has to set aside at least half a billion pounds –
and probably more- to cover equal pay claims from some of its women workers,
backdated for several years.
Arguably the scale of Birmingham’s operations have contributed to the
extent it unwittingly breached the Equal Pay Act. There is much more Birmingham can
do to balance the books than West Somerset can, but unless it is allowed to
capitalise current these liabilities , it will have to find considerable
additional savings this year on top of those brought about through austerity.
As readers will know, Chubby Cat frowns upon public sector bodies putting off for tomorrow what it
should really be paying for today (or yesterday), but in this case the effect
on current service users of mistakes made in the past would be very unfair
unless the cost is managed over a longer period.
Part of the problem,
of course, is the local government finance system does not deal very well with authorities at the
extremes, It is difficult to
devise a system that doesn’t result in outlier authorities ending up with either too little or too
much. When the pieces of the
system are being thrown up into the air, as they
are at the moment, the risks for organisations multiply. From next year, market factors will decide some of the distribution of funding between local authorities and the system will become less easy to manage.
Only the week before
last an elected Member expressed to me his concern that more than one
local authority would go bust as a result of austerity, I intend to return to this issue in the
future, in particular the question
of what happens next if such an eventuality arises.
In the meantime it is
enough to note that perhaps at the moment it is best to be medium sized.
No comments:
Post a Comment