The Guardian view on local government finance: a growing crisis with deep roots

Logo The GuardianThe Guardian
2023-09-06 17:30:03  • 3 mins

Birmingham city council has followed to the letter Ernest Hemingways famous two-speed formula for bankruptcy gradually, then suddenly. A funding crisis has been looming for years as shrinking government grants combined with rising costs. But there have also been recent demands on the budget that speak to a record of poor judgment by local leaders, notably a 760m bill to settle historic equal pay claims and vast cost overruns in implementing a new IT system.

Downing Street has tried to score party political points from Birminghams woes by suggesting that fiscal deficiency is intrinsic to the Labour party, which controls the council. It is a lazy attack line that fails to explain why several councils currently or recently run by Conservatives have also issued section 114 notices the mechanism for seeking emergency help from central government when there is no money left locally.

Earlier this year it happened in Woking. The Surrey town is now run by Liberal Democrats, but it was under Tory leadership when risky property investments were made that later turned sour, effectively bankrupting the council. Thurrock, Slough, Croydon and Northamptonshire under a mix of Labour and Conservative leadership have hit financial buffers in recent years. Many others are struggling to contain deficits and teetering on the brink of insolvency. The problem is not party-specific, at least not at a local level.

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