Death by a thousand cuts, and charging
Never have we as a nation been so captivated by the public finances as in recent weeks Messrs Osborne, Darling and Mandelson built anticipation around the vexed question of bringing under control our towering budget deficits (this year’s will be in excess of £175bn). And now Gordon Brown has finally gone and done it, letting the word ‘cuts’ pass his lips. An honourable mention goes to Vince Cable who has detailed (note the use of the word) £14 billion worth of cuts today. A snap reminder of the rhetoric and political positioning…
In the negative corner, the Conservatives stand for drastic, rapidly implemented cuts with far reaching consequences; Labour’s detractors say they will continue to keep their head in the sand as public borrowing spirals further out of control.
In the positive corner, Labour will make hard choices and cut responsibly so that a fragile recovery is not put at risk; the Conservatives stand for genuine front-line innovation and an honest approach to putting the public finances back on track at the first opportunity.
So cuts there will be, with the certainty that expenditure on local government will fall by at least 10 percent in the next two years. Remember Roadrunner’s sparring partner, Wiley Coyote, and his knowing gulp as he runs out over a cliff to find nothing but thin air below him? Well this is local government’s Wiley Coyote moment.
Councils must comprehend the cuts coming their way because their very depth raises the fundamental question about what local government should and should not be doing. Brutal salami slicing won’t do so orthodoxies around the relationship between citizen and state will be challenged in Easycouncil situations.
I want to focus here on charging. How and what to charge for is far from a sterile question meant only for consultants and accountants; rather, it is a high stakes quandary with a sharp political dimension. Charging by councils for statutory and non-statutory services provides £11bn income a year to local government. Cut the wrong discretionary services and the balance sheet moves still further into the red. Ending subsidy and introducing new charges brings a significant political communications challenge with a taxpayer already under pressure.
The future challenge to councillors is to ensure that the business case works (the Audit Commission’s Positively Charged report states that half have no agreed policy to guide their decisions), that what their authority wishes to achieve and what higher objectives they are supporting through charging are clear. Today’s dose of honesty is welcomed. Growing pressure ahead of the next Comprehensive Spending Review is a certainty. Councils cannot be rash and allow themselves to be blown off course, but in each council an honest appraisal of charging and statutory and non-statutory obligations needs to start now.