Thursday, October 14, 2010

Paying for Local Government

A few days ago we got a magazine from Kent County Council called Around Kent. Presumably it has been delivered to every house in the county. It contained a lot of jolly useful information, all of which could have been available on the council's website, thus saving tens of thousands of pounds in production costs. It did contain two adverts - from Saga and Manston Airport - but I doubt whether they covered a quarter of the printing costs. Anyway, that whinge isn't really my main point.

The document gave figures for the amounts of money KCC spent on different things last year. Here's the breakdown...

£982 million - schools
£609 million - social care for families and children
£461 million - adult social care
£361 million - everything else inc transport, libraries, museums, env protection, waste disposal & youth services

So, KCC has a total budget of nearly £2.5 billion for a population of 1.4 million. 75% of the money comes from centrall government out of central taxation.

Surely if localism is to mean anything, that ratio has got to change. But it will be a brave politician who opens the hornet's nest of local government finance.

One other point. More than two thirds of the entire KCC budget is spent on children related services. I must admit that's a figure I hadn't been aware of. Indeed, from the breakdown provided, only about 10% of the budget is spent on services for people who don't have children in state education or relations in social care.

I think these figures goes a long way to explaining why much of the electorate feels very remote from local government sometimes.


Old BE said...

What a strange coincidence, I have done a blog on exactly the same thing!

Anonymous said...

As you say Iain, its' a brave politician that grasps the nettle of LG finance in a big way.

Basing the funding (whether 25% or all of) of local government on a property based tax is never going to be a satisfactory solution when most council services are driven by factors that have little to do with how much your house is worth (or was worth in 1991).

I still think the poll tax was a better system than what we have today. Hey ho.

Neil Reddin (Resources Cabinet Member, LB Bromley)

DespairingLiberal said...

With all the talk of school cuts coming up, it was nice watching BBC News this morning, which discussed cuts to school trips, clubs for the kids, removal of school books and writing materials, breakfast clubs and extra tuition. All very much in the public interest, I'm sure.

Going over to the public school websites, I see that Harrow and Marlbrough now provide helicopter access for parents requiring that service, Eton has laid out an £11m boating lake and Rugby provides massage and beauty services for it's 6th formers.

I find it comforting that in this age of austerity, the bankers' bonuses we all provided (without being asked) are being used so well.

Unknown said...

For info the magazine also arrived in Folkestone so it must have been county wide.

I do think those figures highlight the need for Central and local Govt to be a bit more transparent about how things are paid for in the UK.

Adult social care for example is largely paid by central govt but distributed through the L.As but what does our council tax actually pay for?

As you point out about 25% of LA spending is funded by council tax but only 10% spent on services for those not in social services or education.

We are facing cuts in Council spending - for example Folkestone is losing its museum in favour of a 'heritage centre' because it will be cheaper to hide away many of the artefacts of Folkestones history rather than go to the trouble of the red tape of having a museum.

Lets have more transparency and more power to local people in judging how their money should be spent

JMB said...

I can imagine national government being happy to stop payments to local government but would we trust them to reduce national taxation by an equivalent amount?

Gordon Brown said...

I live in an apartment block of 100 flats in South East London. We get a magazine from Southwark on a regular basis. I have never seen anyone read this magazine and tens of copies are left lying around in the hallway after they are delivered. It is a complete and utter waste of money to publish a magazine that noone is even vaguely interested in reading.

It's good to know that our council tax is being spent so wisely.

Unknown said...

I live in Horsham District. We have received virtually no funding from central government for our district council in recent years.

However, we have low council tax, low year on year increases and excellent services.

I think this proves that good quality services can be provided locally and funded locally on a reduced budget.

bewick said...

I'm totally with neilreddin.
Poll tax WAS the answer to local funding with the advantage of making the electorate actually have the financial interest to actually bother voting.
The proposal was defeated by protesters most of whom would have been unaffected since they didn't actually work.
I say that as an ex very senior Local Govt employee in an area where, at the time, more than 50% of housing was council owned and many were on benefits.

Unknown said...

Wouldn't it make more sense for central government to pay for those services that are supposed to be immune from the "post code lottery". That would immediately bring local revenues and expenditure into line.

Libertarian said...

I got the mag too.

strangely it doesn't mention the failed TV Station, the aborted attempt at starting a charter airline, the coach company, employment agency, landscape gardening company, building consultancy that they run using tax payers money. It doesn't mention the £300k payoff to a senior exec who after a few months in the job found the commute too much and left. It doesn't talk about the £160k in senior management bonuses paid out despite Carter promising they wouldn't be. It doesn't mention the jaunt to Boston USA to hire 3 social workers to work in Thanet ( that's the Thanet were some areas have 82% unemployment). It certainly doesn't mention the £50 million "invested" despite repeated warnings not to in a now failed Icelandic Bank.

Oh and it doesn't mention the fact finding trip for senior managers to the Golf Open at St Andrews, or the "team building exercises" at Brands Hatch. Or the KCC Office in Brussels.

Libertarian said...

@Despairing Liberal

Deepest sympathy to you. I understand now why you despair.

You clearly have no connection with reality.

You try to build a political argument by making the most tenuous of links about a group of private charities spending their Trust Fund money on infrastructure projects ( which of course don't employ anyone to build or put in place) to the fact that POSSIBLY but based on no knowledge or evidence some of the parents of pupils that attend these schools, may be bankers, who may work for one of the 4 banks that were part nationalised, may have earned a bonus by generating business, income and profit that will make a return to the taxpayer, who if they did all that might be using their bonus to pay the school fees. But then as school fees are paid in advance any fees involved in these projects if they occured at all would have been paid a few years ago in order for the work to be happening now.

Blimey you must have gone to the same sh*t heap school that I did 1/10 must try harder

Demetrius said...

For Localism to function there has to be a reliable and effective tax base, open dealing, localised adminstration etc. For local government to depend on local money this means a well worked out and thorough system of taxing all property with very few exceptions. This is how it works in other places where real localism can be found. However, it is this that all our politicians and political commentators run away from.

Unknown said...

The pattern is the same everywhere, only the intensity varies. In these budgets can be seen the real cost of a broken society. Unless repaired, that cost can never decrease.

Unknown said...

Just saw despairnig liberal's post. So, do we turn to a command economy and society to 'ecrasser l'infame'?

Wealth creation is the answer. Closing public schools will lose jobs, destroy a valuable resource, and lose lots of foreign currency from China and elsewhere.

And no, I did not go to one.

JudyK said...

Please remember that most of the adults receiving care services are part of the electorate too, not just someone else's relatives. You've promulgated a fine political equivalent of the "does he take sugar?" gambit.

And--even more shocking--you might yourself find you need those services one day-- or is that something you feel totally remote from, too?

Or, like a young man I am considering letting accommodation to, you might find yourself one day after an accident needing those services like he does because he is paraplegic after being mashed up in a road accident. I hope it never happens to you or me, but it could happen tomorrow.

DespairingLiberal said...

Libertarian, is it really such a leap that the elite public schools are stock full with the kids of bonus-rich city traders? Hmmm.... Thinks.... Er.... Well....

And what about those "public" schools charitable handouts from the taxpayer? Strangely, we've not yet heard anything from the Coalition about cuts to that particular handout.

As for the "few" banks who received government handouts - actually, the current round of City bonuses have been earned on the backs of the flood of cheap cash the B of E released to "pump prime" the economy. It literally was legalised theft and it was so easy for city traders to make money from it that they could just relax and leave it to the computers.

Again, no word on the above from the Coalition. And they claim the cuts are not "ideologically driven"!

Phil Taylor said...


Local government finance is, as you say, a tough nut to crack. That said the bits of local government that most residents appreciate and recognise are easily covered by council tax, ie bin collections, parks, libraries, streets, etc.

Maybe in a distant future councils might have an education planning role but schools would get their grants directly from government with a strong relation to the pupil. That takes out half the spending and puts parents in charge.

Then you have to work out how to manage social care (for adults and children). This will consume a greater proportion of councils' spending each year with ageing populations and more children needing long term care due to women having children later and improvements in our ability to save children with significant problems at birth. If you leave it in the hands of councils and make care a legal duty and not parks, libraries, etc you will end up with councils becoming pure care agencies and everything else will going to hell.

If we leave local government finance for too much longer we will not recognise councils.

Lord Blagger said...

So, KCC has a total budget of nearly £2.5 billion for a population of 1.4 million. 75% of the money comes from centrall government out of central taxation.


Why? You've made no case for any change.

However, here's a case for doing the opposite of what you think.

Make 100% of local government funding come from a central source.

ie. Abolish council tax.

Then local government gets a percentage of central taxation. Say 50%. If tax take goes down, they get less, if it goes up they get some more. All allocated on a per head basis. That way, rich areas subsidise poor areas because their tax levels is higher, but they get the same amount.

So no Barnett formula. No hoards of people collecting or not collecting council tax. Very simple. A couple of civil servants sending out a cheque every month.

Now for councils, what do they do? They have to make the most use of the money. They can't raise taxes. If you want to do more, become more efficient.

Nice, simple and uncomplicated.

It also avoids the Derrick Hatton scenario. A council can't raise taxes and screw people over. After all you can't move houses without taking a huge hit on stamp duty. You're locked in, and will get screwed over.


FF said...

Lord Blagger, what you have described is the Barnett Formula effectively.

Osama the Nazarene said...

Iain says More than two thirds of the entire KCC budget is spent on children related services....only about 10% of the budget is spent on services for people who don't have children in state education or relations in social care.

Firstly I'm sure that even people without children have relations in social care. So adding this is a red herring.

As for the two thirds of the budget being spent on children's services perhaps this is because a majority of people have children and would prioritise any available spending on their children or children's children. Democracy surely.

Those who dleiberatley choose not to have children are in a minority.

Pat said...

A full voucher scheme for education would remove the education grant from the equation, and thus render local government more accountable to its electorate rather than to Whitehall, solving more than half the problem. Perhaps there are other areas where currently money is channeled via local authorities for the benefit of people where the money could be given directly to those needing the help, further bringing local government income in line with its expenditure.
As to whether a poll tax or a property tax is the best way to fund local government- why not allow both and let each local authority decide their own mix?