Financial precarity in English local government

Causes, potential solutions and future challenges Readers of Progressive Review, and particularly those drawn to an issue that sets out the scale of the challenges that face the new Labour government, will be very familiar with the impact that austerity has had on the public realm since 2010. These impacts have been particularly acute at the local level in England, and especially in deprived communities.1 A spate of local authority ‘bankruptcies’ in major cities such as Birmingham and Nottingham, which involve chief financial officers issuing ‘section 114 notices’ to inform ministers that their expenditure will exceed their revenue over the course of a financial year (something that is illegal under the Local Government Finance Act 1988), have only served to illustrate how widespread the problem has become.2 “ministers will have to address concerns about [local authorities’] long-term financial viability before too long” “local government in England operates within a much more constrained financial context than in comparable countries” “the system for funding local government in England requires fundamental reform” “the current system is hugely outdated and inequitable” “The current system for revenue redistribution is also inadequate and outdated” “the system of local public audit needs fundamental reform” Ultimately, questions about local government finance touch on the issue of local government itself: what it is – or should be – for, and how it should relate to the centre of government. To what extent should councils be free to levy taxes, spend money and shape places as they wish? Should they exist primarily as delivery arms for central policies, or do they also have a key role to play in shaping local communities? Ultimately, whom do they exist to represent? Local authorities in the UK are very unlike their counterparts elsewhere, in that they tend to cover large geographical areas and very large populations that do not always correspond to local identities. This is the result of a longstanding belief in the administrative superiority of larger governmental units, rather than any wish to ensure that local government represents identifiable local places.17 Indeed, the previous government's direction of travel continued in this direction, by emphasising the role of large, subregional metro mayors and combined authorities. Starmer and his team appear to have bought into this idea, and have been less forthcoming in setting out their vision for what we might call ‘traditional’ local government. Nonetheless, working on the basis that Starmer's team recognise the key role that councils need to play in addressing challenges such as lacklustre economic growth, climate change and endemic poverty, we could see a revitalisation of subnational government in England in the coming years. The challenge of rebuilding capacity within local authorities – as well as in other public bodies – will be difficult, but is necessary to ensure that the state can deliver on all parts of the government's agenda. Peter Eckersley is an associate professor in public policy and management at Nottingham Trent University and managing editor of Local Government Studies. His research focusses on central-local government relations, local climate policy and public accountability. Before becoming an academic he worked for 10 years at the UK's Chartered Institute for Public Finance and Accountancy.