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It’s time for an honest conversation about tax in the UK. Successive Governments have pledged not to increase the tax burden on the public in their manifestos and then once in power they put in place policies that do the opposite.

Just look at the shift that has taken place in tax revenues since austerity started. In 2010, local government’s core spending power of £50B was around 80% funded from local tax yield with a further 20% subsidy from direct taxation. Fast forward to 2019 and the £46B or so that local government will receive in core spending power in the coming year, is outstripped by the £52B that will be raised in local taxation. Local taxation is now clearly subsidising national spending. 

Local people and local businesses are now paying significantly more in council tax and business rates for the services they receive at a time when many of the neighbourhood services, that determine the look and the feel of the place, are being decimated. Add to this the fact that fees and charges have also either been introduced or increased, in order to try and hold local services together and we really are testing people’s patience.
 

Reading the recent announcements from Public Health Minister, Steve Brine, about the new trailblazer programme to tackle childhood obesity I couldn’t help but wonder whether there is any joined up policy thinking taking place on domestic matters whilst the shadow of Brexit remains looming large over the country.

Whilst any new money is welcomed by local government, alongside the ambition to halve childhood obesity by 2030, a competition where local authorities can bid to be one of five winners who will receive £100k a year for three years to come up with innovative ideas around active lifestyles and healthy eating, isn’t going to push back the tide on the problem when a tsunami of cuts is coming in the other direction and overwhelming public health initiatives; closing parks; forcing greenspace sell offs; and causing significant reductions in accessible sports and leisure facilities.     

Many ingredients go into making a community a place where people are proud to live and work, so is there a danger of eroding local government’s ability to place-shape effectively as a result of a series of policy decisions and funding cuts?

Previous governments’ strategies for neighbourhood renewal seem a distant memory, alongside the levels of accessible funding that went alongside them. Whilst criticism existed of approaches being overly centralist, ‘funding with strings attached’, local government remains at the mercy of central government policy decisions and delivering budget cuts is the only thing in which it seems to have more freedom.

It’s the infrastructure and facilities, it’s the look and the feel, it’s the local environment and how safe and secure the area is. At a time when we are trying to attract people to our localities and communities, are we cutting back on the very things that make places habitable, those very highly visible and publically recognised neighbourhood services?

We know that local authority expenditure in the UK will be 30% less by 2020, than it was in 2010, we also know that in England local government finance will have moved to a much more local financing model by that point. Under current Government plans most councils will be almost fully dependant on a mixture of council tax and business rates revenue, alongside a small amount of other grants and income generated through commercial activity.
 

With the spending review completed and the annual financial settlements for local government across the UK done and dusted, we now know where budgets broadly stand, between now and 2020 and it’s taking local government expenditure to its lowest percentage of GDP since 1948.

The move to four year budgets in England will see significant further pain, on top of that already experienced, over the next couple of years, before a stabilisation in the latter years of that settlement. This of course optimistically assumes that there will not be a further recession during this period, high levels of house building will be achieved and the move to localise business rates will run smoothly and fairly.