Paying the price for destroying local democracy

destroying local democracy
Viking Bay, Broadstairs: Thanet is a popular destination for holidaymakers and day trippers. But its council, like its economy, is under attack.

Thanet District Council is hardly a well-loved local authority. At best, it is viewed with some suspicion across its four towns of Margate, Ramsgate, Broadstairs and Birchington on Kent’s north-east coast.

When Thanet’s former Tory leader Sandy Ezekiel was jailed on four counts of misconduct in public office four years ago, it merely confirmed the jaundiced belief that their local council was uniquely corrupt – as well as incompetent.

Now, ‘TDC’ looks likely to disappear completely in a merger with three other districts – Canterbury, Shepway and Dover – to form a shiny new east Kent ‘super-district’.

With it will go any remaining semblance of local democracy for the Isle. And Thanet isn’t alone. Local councils up and down the country – like much of the public sector – face an existential crisis.

Democracy versus efficiency

In keeping with the remarkably little national debate on this issue, Thanet’s proposed merger is framed as being all about efficiency.

But thanks to seven years of Westminster’s savage cost-cutting, there are few if any efficiency savings still to be had.

Thanet has lost half of its central government grant since 2010, and the rest is set to disappear by 2021, when all councils are expected to become ‘self-sufficient’.

Consequently, TDC faces a hopeless budget crisis that doesn’t leave it with much choice but to merge.

But democracy and efficiency are two different things, and the wider question about effective representation of local communities has barely been articulated.

Potential partners

Thanet’s three suitors are large, mainly rural districts. All have been held by the Conservatives for time immemorial. All face widening budget deficits over the next few years.

Being smaller, Thanet lacks its neighbours’ economies of scale and so has a particular financial incentive to opt for a merger.

Today, it’s Britain’s only UKIP-controlled council, but it has also been led by Tory and Labour administrations in recent years.

Merger supporters, like Thanet’s UKIP leader Chris Wells, see it as an opportunity, even though it would likely consign Thanet to perpetual Conservative rule.

He said: “The business case clearly identifies that the creation of a single east Kent council is an ambitious but logical next step.

“With greater scale and resources, it could transform services at a higher quality and lower cost to residents, and strengthen our position economically.”

Financial deficit

But in order to understand Thanet’s financial problems, one has to look at how central government – and especially the Conservatives in government – has treated its town hall brethren.

The four east Kent councils are set to collectively lose £60m in central government funding between now and the end of the 2020/21 financial year.

The merger is projected to create collective savings of £40m. So for all the talk of efficiencies, the super-district will not protect services from further cuts.

And the local authority budget crisis is already having a real impact on the quality of people’s lives. Just look at what’s happening to the social care sector.

Democratic deficit

Demarcated by the coast and the river Wantsum, Thanet has a distinct identity and a particular set of social and economic needs.

Some believe that, like many of Kent’s towns, it suffers from being part of a largely rural, Conservative-dominated county council. Subsuming it into a largely rural super-district can surely only reinforce this. After all, Thanet struggles to get its voice heard as it is without dilution within a larger authority.

Ultimately, though, one has to accept that democracy doesn’t come cheap. The prospect of future savings cannot disguise the fact that Thanet is being turned into an administrative unit for central government – and a chronically underfunded one at that.

Despite their rhetoric, the Conservatives’ have been keen to centralise power in Westminster and have shown themselves to be deeply hostile to local democracy.

Guardian columnist and economics commentator Will Hutton described the national picture five years ago when he wrote: “Local government minister Eric Pickles has cheerfully colluded with George Osborne to knock local government back to being no more than rat-catchers and managers of street lighting.

“Indeed, they scarcely give them the funds to carry out even these activities.”

Austerity pincer movement

Without adequate central government funding, councils like Thanet inevitably become victim to the mismatch between the need for local services and the local economy’s ability to fund them.

This was less of an issue before the Tory-led coalition came to power in 2010 because the council tax provided just 20% of a local authority’s revenue.

Central government grants provided around 60% of town hall income, with the remainder covered by a range of revenue streams, such as fees charged for leisure services and the return on investments.

That all changed when George Osborne became chancellor and launched an austerity pincer movement on local councils.

On the one hand, central funding was aggressively cut year-on-year – by around 45% between 2010 and 2016.

Localism, my arse!

On the other, town halls’ ability to raise council tax to compensate for the cuts was severely curtailed. Under the 2011 Localism Act, town halls were required to put any proposed council tax increases that exceeded the secretary of state’s predetermined limit to a local referendum.

Unsurprisingly, town halls quietly got on with the job of cutting services rather than imposing unpopular council tax hikes to fund their deteriorating services.

Eric Pickles sold the localism agenda as giving town hall power back to local communities. What it actually did was use funding cuts and mandatory referenda to set towns halls and communities against each other.

It was a stroke of genius. Because, before this, capping was imposed by central government. Now it was increasingly-powerless local councillors who would face the heat.

Penalising poorer communities

But that wasn’t all. The government’s drive to make councils self-sufficient is just another means of distributing the costs of austerity. And – surprise, surprise – those costs are not shared equally.

Wealthy communities in the Tories’ southern shire heartlands have been spared the deepest cuts. Instead, local government austerity was forced on communities in poorer areas, as well as those in the Midlands and North.

Labour MP Gisela Stuart hit the nail on the head when she addressed the House of Commons on 7 January 2014:

“Those areas in the greatest need are being cut most. In Birmingham in 2014-15, using the Government’s preferred measure – that of spending power – we will lose £145.59 per dwelling, a cut of 5.3%. The national average is £71.58. Leafy Wokingham … gets an increase in funding of £5.20, or 0.3%.”

Revenue-spending mismatch

‘Need’ is the critical word, here. Because need is no longer used as a funding criteria. This is significant because of how the current funding system emasculates local democracy.

In short, councils serving poorer communities have less scope to raise revenue locally than their wealthier compatriots. This is partly because of how the council tax is structured and partly because of the local taxbase.

Council tax is levied on residents according to the value of their homes as defined in 1991, and the tax bands are structured so the tax-to-value ratio falls for larger properties.

As a result, poorer people pay a higher proportion of their outgoings on council tax than their wealthier neighbours. In this way, council tax is deeply regressive.

This regressive quality is especially apparent for residents served by poorer local authorities whose taxbase is dominated by properties in the lower tax bands.

Poorer authorities cannot increase their council tax revenue without imposing penal hikes on their residents. And even if they did, it would still only generate a modest increase in revenue.

On top of this, poorer economies offer their councils fewer alternative means of raising revenue. So, while richer councils can charge service fees in a buoyant economy without inflicting pain on their residents, poorer councils cannot.

Yet it’s the poorer areas which, by definition, have the greatest need. Without some form of funding redistribution, poorer councils are stuck with a low-yield taxbase and local economy that cannot easily meet the greater demand for services.

Like the accident of birth, the structural mismatch between need and the taxbase lands councils with a set of fixed conditions from which they cannot escape.

‘Equalisation’ equals redistribution

In recognising this fact, governments had for decades provided around 60% of each councils’ revenue and distributed it according to a ‘formula’ that included a needs assessment. Hence it was known as the ‘formula grant’.

An element of redistribution from richer to poorer councils was inherent in the system, so the latter were not hamstrung by their residents’ poverty.

That all changed when George Osborne became chancellor. In 2013, the formula grant was replaced by the Settlement Funding Assessment, which does not include a needs assessment. This on its own put poorer councils at a disadvantage.

But that wasn’t enough. By protecting wealthy Tory shires, Osborne effectively reversed the ‘equalisation’ of funding between local authorities to favour the wealthy.

Surrey gets the hump

Since then, it’s been all quiet on the western front as far as the war on local democracy funding went. Until, that is, true-blue Surrey County Council threatened a referendum on a proposed 15% council tax hike to fund its hard-pressed social care services.

Councils may not always be terribly sexy or dynamic, but they perform services that local people need. None can survive an indefinite campaign of savage cost-cutting. This crisis has not only been a long time in the making. It was entirely predictable and inevitable.

Nationally, social care has been squeezed to the point where it is almost unsustainable. This made-in-Westminster crisis has knock-on effects on the NHS, and on vulnerable people and their families.

Surrey and the government resolved their disagreement with some discreet negotiations. The last thing either party wants is to expose how the Conservatives have deconstructed local democracy in a spat with one of its own.

What is local democracy?

But the real issue is that the government has supplanted any sense of what local democracy actually means with a narrow definition of efficiency. Far from handing power back to communities, the Tories have used the language of efficiency to impose an administrative monoculture.

Any service that falls outside the Tory model of a leafy, affluent district or economically-vibrant regional city has been comprehensively undermined. Services designed to mitigate market failures have lost their funding – the cuts to non-statutory social services and youth provision are a prime example.

In some regions – especially the large northern conurbations – the search for efficiencies has been rewarding, and has not impinged on local democracy and civic pride. The combined authority of Greater Manchester, which harnesses the power of ten urban unitary authorities in one strategic body, is probably the most impressive example.

Such combinations are encouraged under the northern powerhouse strategy, keenly promoted by George Osborne, as outlined in the 2016 Cities & Local Government Devolution Act.

But where districts with very different characteristics are forced together, efficiency negates any sense of local democracy.

Suffolk Coastal and Waveney district councils have decided to merge after a nine-year courtship. Provided their plan receives government approval, it will create Britain’s largest district council by area and population in 2019.

Polling research suggests residents in both districts are generally supportive. But that isn’t enough for some, who bemoan insufficient consultation about creating a ‘monster authority’ stretching from Lowestoft to Felixstowe.

Back in Thanet

This is the strategy that Thanet and its suitors are following. But Thanet is a very different place to the largely rural wilds of Canterbury, Dover and Shepway districts.

And the fact that their respective authorities have failed to lift Dover or Folkestone from long-term economic doldrums should throw doubt on the wisdom of handing their stewardship to an even larger, rural-dominated district council.

Speaking to his local newspaper, academic and business consultant Professor Richard Scase was probably nearer the mark when he said: “The needs of Dover are very different to Thanet, which are in turn very different to Canterbury. To bring this all together in terms of a coherent strategy would be a mammoth task.

“Local government in Kent is a mess. Someone should break up Kent County Council and in its place have four unitary councils.”

On the face of it, this sounds a sensible approach. But without an equitable funding system in place, even unitary authorities would be unfit for purpose.

Claims that the country cannot afford such luxuries ignores the fact that we incur costs in misery, lost jobs and missed economic opportunities if we reduce local democracy to a powerless rump. This, among other things, surely contributes to the sense of dispossession in Britain’s former industrial heartlands – as well as in places like Thanet.

Advertisements

peterbatt

Peter a journalist with 30 years experience of freelance writing, UK national newspaper and magazine production roles, and business development. In 2007, he developed and launched a mainstream-style green consumer magazine in the UK, called GreenerLiving, as a means of promoting sustainable change ‘within the system’. GreenerLiving closed during the post-crash recession, but Peter went on to become managing editor of the international ethical business title, Ethical Performance. However, Peter felt that the CSR sector has not succeeded in changing corporate priorities anywhere near fast enough, and so I decided to leave the treadmill of corporate employment and debt accumulation to focus on my own projects. Now poorer but a billion million times happier, he writes on political, economic and social issues – usually seriously, but sometimes as satire. He's currently writing Psychopath Economics, a book about the logic of social and economic power, belief systems, and the rise and fall of societies. Peter is convinced that ordinary people must educate themselves and exercise their economic leverage if we are to avoid social and environmental destruction.

peterbatt has 165 posts and counting.See all posts by peterbatt

%d bloggers like this: