Councils started 2017 with increasing costs and diminishing funding and ended it with worse pressures and no financial relief.
The year was overshadowed by two events: Brexit and Grenfell Tower. But there were plenty of other issues keeping councils busy too, including business rates devolution, pensions pooling, MiFID II, social care overspending, STP’s, and investment in shopping centres to mention but a few.
Brexit was a source of worry for councils. Indeed, that was its main impact in 2017: causing worries about lots of things councils couldn’t do anything about. Councils worried about the potential impact of a hard Brexit.
No-one could really quantify what this meant, which made it even more worrying. What would Brexit mean for devolution, for local investment, and for the legal framework?
No answers here either, and consequently another set of worries to add to the first. Were there no answers because no-one knew, or because the government didn’t want to give away our negotiating strategy to the EU by saying too much? We don’t know.
A further impact for councils to fret about was that Brexit quickly became the ultimate excuse for the civil service to lighten its load. Can’t respond to an issue on time — or at all? Sorry, all our people are working on Brexit.
Explanations & Inquiry
MiFID II threatened to spoil the fun of local authority treasurers by relegating councils to the status of retail investors unless they could meet qualitative and quantitative tests and be accepted as professional clients by the end of 2017, and a race against the clock ensued.
No-one has yet managed to successfully explain why this European Directive was at all necessary, and at least one treasurer was overheard muttering something about Brexit couldn’t come quickly enough.
There is nothing at all amusing to say about the Grenfell Tower fire on 14 June 2017. A tragedy of national importance, it has led to a long overdue focus on fire safety in tower blocks, major change at the Royal Borough of Kensington & Chelsea, and an inquiry that may take years to conclude.
The names of all those lost in the fire may never be known. Many of the grieving survivors are still not in a permanent replacement home. There is so much left to do. Agent 151 doffs his cap in respect and sympathy to all those affected, and in pride to those in local government and the emergency services who stepped up when they were needed.
No show bill
The Queen’s Speech on 21st June set out 27 bills, of which eight related to Brexit, but there was little or nothing for local government. The promised Local Government Finance Bill, which was needed to implement 100% retention of business rates, did not feature, presumably because people would be too busy writing Brexit legislation.
This restricted the scope for business rates retention to an expansion of the number of pilots. Council treasurers, who had seen business rates retention as a welcome patch of blue sky in an otherwise stormy firmament, went back to grumbling into their favourite beverage.
There was no suggestion in the Queen’s Speech of any additional cash to help with social care overspending. The fact that it had emerged as the largest single pressure for councils proved not to be news to anyone, as it had also been the single biggest pressure in 2016 and for a while before that, and so the government was able to avoid committing to anything more than a green paper.
Property
As the year wore on, councils like Eastleigh, Kettering and Maidstone were accused of playing Monopoly with taxpayers’ money and operating in a market they didn’t fully understand because they had invested general fund resources in commercial property, seeking a return with which to prop up ailing revenue budgets.
There was a suspicion that the figures championing this anti-investment line had been lobbied by property investors who were miffed at councils being able to borrow cheap PWLB funding in order to invest; this being perceived as unfair competition.
It was not long before DCLG launched a consultation entitled ‘Proposed changes to the prudential framework of capital finance’.
By the time we got to the budget, which was in November for the first time, because the new spring report replaced the budget and the budget replaced the autumn statement, the green paper had been pushed back to the summer of 2018.
Indeed, there was almost nothing of interest for councils in the budget, other than some tinkering with business rates and council tax. The really bad news was that economic forecasts had been revised downwards, requiring more borrowing and ensuring that austerity would have to continue for much longer than anyone could possibly bear.
We have yet to see what the local government settlement will bring. Let’s hope against hope that it’s some Xmas gifts from the Chancellor. Merry Xmas everyone.
Agent151 is a senior local authority finance director and s151 officer writing exclusively for Room151.
