Steve Reed: Osborne’s cynical Budget delivered back-door local government cuts

When it comes to local government, the Government says one thing but does another. They talk localist and acts centralist. They promise to keep council taxes low then put them up. They say they are protecting communities then slash community services.

George Osborne’s Budget was no different.

Oversight of nearly 20,000 schools will be centralised in Whitehall with no say for parents or accountability to local communities; a strange way to show commitment to devolution.  By removing the vital role that local authorities play in holding schools to account the Chancellor is increasing the risk of more school failures going unnoticed until crisis point is reached. 

The funding settlement announced in January left councils with a £1bn black hole in paying for older people’s care.  Councils were told to clobber local residents with a 4 per cent council tax rise every year for the next five years.  The Tory-led Local Government Association has warned even this only partially makes up for the scale of Government cuts, so local people will pay more but get less in return.

The depth of the Chancellor’s cynicism in claiming to support devolution was exposed by a further back-door cut in council funding.  Last year, the Government announced that from 2020 councils will keep the revenue from businesses rates to make up for losing central government funding. For months, ministers have failed to explain how this will be done fairly; now we know it won’t be.

A centrally imposed cut in business rate shows how firmly the Chancellor holds onto power over local services.  His decision to cut this source of funding before handing it over leaves council services facing even more uncertain futures, at greater risk of an economic downturn, and the Government preparing to stand back and let the worst happen. This decision will mean even harsher cuts in street sweeping, street lighting, children’s centres, youth activities, parks, libraries, museums, support for abused children and caring for older and disabled people. 

Last year the Institute for Fiscal Studies warned that forcing councils to become reliant on business rate income “will benefit faster growing authorities and hurt slower growing ones”. That means councils like Tory-run Westminster, covering central London – which accounts for 8 per cent of all England’s business rates – will gain massively, while councils that have already suffered the biggest cuts like Manchester, Newcastle, Birmingham and Liverpool, will lose even more. 

The Chancellor talks blithely about devolution but he is keeping power over council funding firmly in his own hands.  The cuts he announced in this week’s Budget stem from his own failure.  First he missed his own deadline for eliminating the deficit caused by the banking crash.  Second he stalled the recovery by refusing to invest early enough in infrastructure projects that create jobs.  Third he’s been forced to downgrade the forecasts for economic growth he announced just four months ago in the Autumn Statement. 

George Osborne has consistently got the big decisions wrong and he refuses to hand decision-making to local people despite all his rhetoric about devolution.  This is a Chancellor who can’t be trusted and who cannot trust others.  The only thing Osborne is interested in devolving is the blame for his economic failure and the cuts that follow. 

Steve Reed MP is shadow minister for Local Government