Although it is now nearly a year since I was made redundant, I continue to engage with my UNISON Branch as a volunteer caseworker and I obviously care about the organisation for which I worked for 33 years. I was therefore concerned to see the latest report on Lambeth Council’s finances - which makes clear that the problems facing Lambeth are problems facing the whole of local government.
The Lambeth report states that “the Institute for Fiscal Studies estimates a £7.4 billion shortfall across local government over the lifetime of this Medium-Term Financial Strategy, even accounting for rises in council tax and government funding at inflation levels (which is far from guaranteed). It is clear that the failure to address the long-term needs of local councils is putting sustained pressure on day-to-day budgets.”
The Institute for Fiscal Studies do indeed point out that the Chancellor’s Spending Review, whilst offering some funding now for the response to the pandemic offers only further cuts in future for local government.
The particular problems of the neighbouring borough of Croydon have grabbed much attention, as their Director of Finance (Section 151 Officer) has served a second “Section 114” notice upon the authority - preventing all but the most vital expenditure because that Council cannot see how to balance its budget by the end of the current financial year.
Croydon’s troubles are in part the product of poor governance of their standalone housing company, but what is most interesting about their current predicament is that it shows what would happen if a Council set a (so-called) “illegal budget” rather than agreeing to make cuts. The Director of Finance (acting in accordance with their duties under Section 151 of the 1972 Local Government Act) would serve a notice under Section 114 of the Local Government Finance Act 1988.
The effect of such a notice is that the Council cannot enter into any new expenditure commitments and must hold a meeting within 21 days to set a balanced budget - if (as in Croydon’s case now) it cannot do so, the Section 151 officer serves a new Section 114 notice (for a further 21 days) and so it goes on.
This legislative change was introduced to ensure that there would never again be the possibility of the sort of struggle waged by Lambeth and Liverpool Councils in the mid-1980s. It means that Councillors no longer faced the risk of surcharge which their predecessors had faced, because their power to refuse to set a balanced budget had been taken away.
Section 114 notices have become rarities - and are hence newsworthy - although I seem to remember that they were quite common in Lambeth back in the 90s. Whilst the legislative framework does make a bit of a nonsense of the demand that Labour Councils deliberately set unlawful budgets, it makes a similar nonsense of the draconian disciplinary approach taken within the Party to Councillors who vote against cuts.
More than thirty years after the change in the law we still need to find a new response to Central Government restrictions of local government expenditure - bearing in mind, as Kier Starmer once said “if you are a Council worker with a redundancy notice in your hand, you are unlikely to be inspired to see that at least it was written by a Labour Council official” (see p15 of Socialist Alternatives vol 2 no 2 August/September 1987).
Avoiding compulsory redundancies is a significant and positive achievement, but we do really need local authorities to focus on community wealth building - and building alliances of community activists to defend public services and promote the development of positive alternatives to the failing status quo.
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