Conservative Party manifesto proposals would not meet rising costs faced by councils, while Labour Party policies would meet demand even with a council tax freeze, according to the Institute for Fiscal Studies.
The institute this week published an analysis of the impact of the three main political parties’ manifesto proposals on local government.
SAVE THE DATE – LATIF NORTH
March 25th, 2020, Manchester
Council treasury investment & borrowing
It concluded that the future financial health of local authorities will differ vastly, depending on which party wins next week’s general election.
A briefing note published yesterday says: “Taken together, the differences between what the parties propose for local government funding are stark.
“This reflects manifestos that more generally set out vastly different futures for the country.”
However, it said that all three main parties have unfunded commitments on adult social care spending, “suggesting this will be an important and potentially problematic issue whoever forms the next government”.
IFS analysis of each of the parties’ manifesto commitments
Conservative Party
The Tories’ manifesto promises to maintain the £1bn increase in grant funding for 2020/21 for the duration of the next Parliament. However, the IFS said, the party has announced no additional funding other than £500m a year for potholes. The briefing note said that revenues from local taxes are unlikely to keep pace with the costs of increasing demand, meaning more cuts might be needed. More deprived parts of the country with smaller council tax bases would be hit the hardest, the IFS said.
The money allocated by the Conservatives would not be sufficient to meet rising costs and demands over the next parliament even if council tax were increased by 4% a year, necessitating a further retrenchment in services or unfunded top-ups to the plans set out.
IFS
Labour Party
Labour’s manifesto proposes to use national taxes to provide £13bn of additional funding for existing local government services including £5bn in revenue support grant and £1.1bn un-ringfenced funding ostensibly to tackle homelessness; £3.5bn in ring-fenced funding for adult social care; £1.1bn for public health; £1.1bn for youth services; and £1.1bn for Sure Start. In addition, they propose £7bn to provide free personal care for over-65s, although the IFS questioned whether this would be enough, given plans to increase the National Living Wage and make changes to the social care supplier and labour markets.
The Labour Party has allocated more than enough money to meet rising costs and demands, allowing increases in service provision and quality, although not enough to restore them to 2010 levels. That is true even if council tax were frozen – although Labour has no plans for such a freeze.
IFS
Liberal Democrats
The Liberal Democrats also propose national tax rises to fund increases in public spending but on a smaller scale than Labour. Manifesto commitments include £2.2bn for adult social care; £1.3bn for local buses; £1bn for Sure Start; £0.5bn for youth services; and £0.6bn for other areas including homelessness and the environment.
The Liberal Democrats have allocated enough money to meet rising costs and demands if council tax is increased by 2% a year – although only if some the funding earmarked for bus services, youth services or homelessness is used to meet these pressures.
IFS
However, the IFS said that local government funding is rarely a major battleground in national elections.
It said: “This ‘rule’ appears to be holding in the current campaign, despite evident pressures in areas like adults’ and children’s social care services, following a decade of cuts to councils’ funding.”
Room 151’s summary of the main parties’ election manifestos
The Room151 Weekly Newsletter covers local government treasury and pension investment, funding, development, resources and technical finance. Register here.
The LGPS Quarterly Briefing focuses purely on pension fund investment. Register here.
