MP says councils could go close to being bankrupt
GREATER Manchester’s councils could be ‘close to bankruptcy within four years’ if government cuts continue at the same rate, leaders have warned.
New figures show our ten town halls will have £689m less to spend this year than they did in 2010/11 – before the Conservatives came to power.
What’s worse, an increasing amount of the money councils have to spend comes directly from taxpayers’ pockets – nearly 60 per cent of all the money councils spend, compared to 42pc seven years ago.
Every council in Greater Manchester is increasing council tax this year by at least 3pc (4.99pc in Stockport).
The financial strain hits as the region suffers a rough-sleeping crisis, plunging police staffing and a growing demand on services which care for the elderly, young and vulnerable.
And as local decisionmakers are forced to plough the lion’s share of cash into vital adult social care and children’s services, critics say it’s the basics – road repairs, parks, libraries, waste collection and street lights – that fall by the wayside.
Andrew Gwynne, Hazel Grove MP and shadow secretary of state for communities, said: “It’s shocking – the blunt truth is in places like Greater Manchester we can’t make up the reduction in government funding with council tax raises because our tax base doesn’t make enough money.”
He said the government needed to ‘cough up’ – especially in areas with greater levels of deprivation, poverty and health inequality.
He said councils were ‘edging ever closer to the financial cliff edge’, adding: “If the cuts continue at the same rate, some Greater Manchester councils could be close to bankruptcy within three or four years.”
Although a council cannot technically go bankrupt, it can issue a ‘section 114’. This is, effectively, an admission that the town hall does not have the resources to meet current expenditure, that its financial reserves are depleted and that it’s unlikely to bring spending under control in the near future.
A section 114 may force central government to intervene to ensure that local services are sustainable. It is understood Northamptonshire is the first local authority to issue a section 114 notice for two decades.
The government revealed this month the total ‘spending power’, which is all the money a council has to spend during the year from grants and taxes. The 10 authorities in our region will get a total of £2.12bn.
That compares with £2.81bn in 2010/11 – a reduction of 24pc.
Manchester will have the biggest reduction in ‘spending power’ in our region – down by £189.7m compared to 2010/11.
Andy Burnham, Greater Manchester Mayor, said: “All of our ten councils have faced bigger cuts than the Tory shires, which undermines their claims to be building a Northern Powerhouse.”
But Sajid Javid, the communities secretary, insisted the financial settlement for councils for 2018/19 ‘strikes a balance between relieving growing pressure on local government, while ensuring that hardpressed taxpayers do not face excessive bills’.
Sean Anstee, Tory Trafford council leader, accepted local government had ‘played its part’ in reducing the deficit over the past eight years – but that without austerity there would be ‘no money left for public services’.
He added: “I think it’s for individual local authorities to manage their budgets.”