Observer column 15 September 2023
Tough times ahead for local government
While I was away last week, Birmingham Council hit the national headlines when they issued a Section 114 notice, recognising publicly that they could not continue to balance their books. They are the largest council in the country, and that means they have an enormous annual expenditure. But that doesn't seem to have been their main problem: they found that a new IT system was over budget by many millions, and they accepted a legal responsibility to pay women who had worked for them the equal pay they should have had. This bill will cost them £1billion.
So that's an extreme example but since then the media have been listing many other councils who are saying they too may not be able to balance their books, either this year or next. In many cases this is caused by the additional costs of social care, something that will impact top tier authorities including big cities and counties.
Hastings was listed too. And the reason for that is the dramatic increase in demand for, and the cost of, temporary accommodation. This has gone up in three years from £730k a year to more than £5m. Other councils are experiencing similar rises but there are reasons why it's so bad here. We are unusual in having such a high proportion of people renting, and these costs have gone up far more than in most areas. Rents were modest here for years but post COVID-19 have increased more than anywhere else. Partly because of demand as more people want to come and live here. Partly because landlords are not making so much as a result of changes to tax rules, and so are selling up.
And then there is the cost of living. A terrible issue for the whole country and causing the most distress in towns like Hastings where poverty has been a real issue for years. Leaving more people unable to afford their increased rent.
We are doing lots of things to try and change this housing crisis here. We are buying homes, so we don't need so many private landlords for temporary accommodation. We are encouraging more affordable homes to be built and these will go to people on the local housing register. But as fast as we save money, landlords increase rents further, and we cannot afford to keep this level of spending going.
We have a statutory duty to house people who become homeless. So to avoid a Birmingham here, we have to find other savings. And as the council has been making cuts for more than ten years already, new savings will mean losing some services, not just trimming them.
My team are still determined to protect those who most need support. And so to enable wider consultation on the options, I have decided to bring forward the timetable for these decisions, so we will debate budget proposals in December.
If we do this well, the council will survive. But we will become smaller.
Making cuts is not why I came into politics but I will not shirk from whatever decisions are needed to ensure that Hastings still has local decision making rather than be run by government officials.
Do contact me with your views so that I can take these into account before we publish a budget report in November.
Council Leader's column