Tag: Age of Austerity

The Consequences of Conservative Extremism, 2010-24

Havering is bankrupt.

Ray Morgon, HRA Leader of Council, is outraged because Havering is a victim. The Conservatives destroyed local government between 2010 and 2024. Ray Morgon and the new Labour government are victims. They’re making decisions they hate and despise.

There has been 51.4% of inflation since 2010.1 In 2010, Band D Council Tax was £1505.2 This increased to £2208 in 2024,3 up 46.7%. Council tax has therefore, more-or-less, increased with general inflation.

Bankruptcy is a direct result of government policy.

In 2010, Havering was centrally funded with £70m annually. In 2024, this had fallen to less than £2m. A 97% decrease. Conservative governments introduced funding based on specific criteria. The baseline for grants was 2010. The world changed but the baseline remained inflexible.

The demography of Havering shows startling changes.4 Havering has more young and old people than in 2010. Both groups are heavy consumers of council services. The inflexible baseline has damaging outcomes with Adult and Children’s Services budgets out of control. There isn’t any *control* because they’re demand led and can increase in a moment.

Havering isn’t alone. The spectre of bankruptcy is haunting local authorities. The consequences of Conservative government policies are lethal.5 Ray Morgon has an £88m problem. Rachel Reeves’s problem is a gigantic £7.8bn. She has to fill the national funding gap. Her challenges are dominated by the NHS, Education and Defence. The Conservative legacy is catastrophic.

Ray Morgon’s decision to borrow £88m to meet current revenue expenditure was the result of force majeure. Both he and Rachel Reeves are victims of chronic economic mismanagement.

Notes

1 Inflation calculator | Bank of England

2 110209agenda_feb.pdf

3 Council Tax bands and bills | London Borough of Havering

4 JSNA Demography Chapter 2023 v0.3A.pdf esp. pp6-7

5 Fair funding review modelling tools | Local Government Association

Havering’s Impending Bankruptcy: The Road to Disaster (part one)

Havering’s Strategy Director Kathy Freeman stated: “We are very close to issuing a section 114, [bankruptcy] even six months away from this happening. Our average resources cannot meet the financial requirements.1

In 2010 Conservative chancellor, George Osborne,2 (see addendum) began his attack  on local government. Without profiling the financial needs of local government, he capped Council Tax increases to zero%.

Instantly, he demonstrated he didn’t understand two fundamental fiscal principles;

  • The corrosive impact of inflation
  • The corrosive impact of the compounding of inflation.

Osborne’s decision was based on ‘something for nothing’.4 He talked of ‘waste’ and ‘inefficiencies’ to confuse the electorate. Simultaneously, additional duties and responsibilities were imposed on councils.

Since 2010, British inflation has been 46.88%.5 Havering’s stand still council tax should have increased at the same pace. In 2010-11 a band D was £1,505. This year, 2023-4, it’s £2,088.13. Inflation linked council tax would have brought the figure to £2,210.56. Havering is minus £122.43 per band D house. There are 107,798 houses in Havering and band D is the average. Osborne’s misunderstanding about inflation has cost Havering approximately £14 million annually.

But the Conservative chancellors weren’t finished with their attack on local government. They reduced government funding. In 2010, Havering received £70 million. In 2023-4, it was £2.9 million. A real reduction of £100 million per year.

The cost of Conservative policies, 2010-23, for Havering is £119 million per year. This is why Havering will probably go bankrupt.

Addendum: Conservative chancellors 2010-23 (their university degree in brackets)

  • George Osborne (History)
  • Philip Hammond (Philosophy, politics and economics)
  • Sajid Javid (Economics and politics)
  • Rishi Sunak (Philosophy, politics and economics)
  • Nadhim Zahawi (Chemical engineering)
  • Kwasi Kwartang (Classics and history)
  • Jeremy Hunt (Philosophy, politics and economics)

Notes

1 Havering Council balancing on the brink of bankruptcy-A ‘114’ could be issued within months. – The Havering Daily

2 Osborne was educated at private schools: George Osborne – Wikipedia

3 Council funding for taxi trips for Havering school children with special needs to cease (taxi-point.co.uk) “….reimbursement for fuel or a trip via ride-hailing service Uber would cost approximately £30 per day….disabled children will experience changes, ‘appropriate measures’ will be taken to ensure their needs are appropriately addressed.” The human cost of bankruptcy. The weakest and most vulnerable suffer first

4 The 2016 Brexit referendum ‘battle-bus’ is identical with the false claim that leaving the EU would ‘free up’ £350m a week for the NHS.

5 Inflation calculator | Bank of England