The government’s top levelling-up adviser has warned ministers that failure to tackle the funding crisis for councils across England is threatening one of the Conservatives’ flagship 2019 election promises.
Andy Haldane, the chair of the government’s levelling-up advisory council, said a “root and branch rethink” of local authority funding was urgently required to prevent a fresh round of ever-deeper cuts to local services.
Blaming austerity as the “root cause” behind growing numbers of council bankruptcies, he told the Guardian: “The surprising thing about this is that any of us are surprised – given the extent of the paring back over the past 15 years in local government funding, on to which you layer a dose of cost increases and inflation across the piece.”
The former Bank of England chief economist, who was hired by Boris Johnson to mastermind the government’s levelling-up plans, said the crisis in town hall funding was forcing councils to slash the types of activities that could help power-up economic growth.
“What gets cut is often the investment needed to grow out of a hole. So the hole kind of gets ever deeper, as you haven’t got the resources to invest to grow the local economy tomorrow,” he said. “Is this affecting levelling up? Yes, without question.”
Increasing numbers of councils in England are warning they in effect face bankruptcy. Despite ministers taking evasive action with an extra £600m to top up funding plans for next year, MPs and council leaders from across the political divide say local authorities are still £4bn short in an “out of control” financial crisis.
It comes amid a sharp rise in costs and growing demand on services, made worse by austerity-driven cuts and local missteps. Among the biggest casualties so far are Birmingham and Nottingham, as well as Woking in Surrey and Thurrock in Essex.