Mark Whitehead 21 December 2018

2018 - the year things began to change

2018 - the year things began to change image

Geed up by a spirit of entrepreneurialism, councils up and down the land were busy exploring new ways to respond to their communities in 2018.

But it was a year of increasing anxiety as the official policy of austerity began to threaten the very foundations of local government itself.

As the new year dawned a warning by local government leaders echoed in town halls up and down the country that that they faced a 'cliff edge' with some services disappearing altogether unless they were given urgent extra cash.

The Local Government Association said councils had already experienced unprecedented cuts since 2010 and now faced £2.7bn reductions in central Government funding – 54% over the following two years. Almost half of all councils would no longer receive any central Government money by 2019/20.

If that were not serious enough, another bombshell was descending which, according to some experts, threatened to put more than two thirds of the companies that provide adult health care services for councils out of business.

A tribunal had ruled that overnight support workers should be paid the hourly minimum wage for periods they were asleep, backdated six years.

Huge sighs of relief could almost be heard coming from council offices, however, when in July the Court of Appeal quashed the ruling.

But the increasingly close relationship between councils and the commercial world had already suffered a blow when giant construction outsourcer Carillion went bust early in the year, leaving taxpayers with a huge bill and forcing many local authorities to find alternative providers.

Several other outsourced companies wobbled in the face of increasingly fragile market conditions as the year went on. The Care Quality Commission warned that home care provider Allied Healthcare was likely to go bust at the end of November because it had failed to sign up a new bank lender. The crisis was only resolved when its parent company sold up and pulled out of the market altogether – blaming the CQC's public warning for its demise.

The ripple effects of the Carillion collapse were felt as other companies providing outsourced services to local government – Capita, Interserve, Kier – faced uncertainty in the market place.

A more general change of direction was signalled when north London council Barnet – dubbed 'easyCouncil' by it critics for its policy of maximum outsourcing – pulled services back in-house following a massive fraud by an employee of its private-sector-friendly joint venture.

Nevertheless, increasing commercialisation of local government continued as councils went on a spending spree, dishing out record amounts to buy up supermarkets and commercial property. Some, it seemed, were not just attempting to rejuvenate town centres but making speculative investments to create income.

But this, finance experts warned, was a risky business and not what councils were intended for, and by the end of the year the Government was sufficiently concerned at the rising tide of risky speculation that it was threatening to rein it in.

A series of councils announced they were so short of cash they would have to strip back services to the bare legal minimum. But while the trailblazer, Northamptonshire, was accused of having managed its finances recklessly, others including East Sussex were judged to have been simply been the victim of dwindling Government support and rising demand for services, particularly adult care required by an ageing population.

The idea of councils stripping back services to the bare legal minimum appeared, for a moment, to have become acceptable in polite society. In the House of Commons a senior civil servant announced that 'we believe the sector as a whole is sustainable if the amount of resources available to it can deliver the statutory services that it is required to deliver'. The comment caused uproar, however, and was swiftly 'clarified'.

But there was a change of climate as the problems created by austerity, outsourcing and commercialisation became clearer. At the Conservative Party conference in the autumn it was announced that austerity would come to an end. Outsourcing giants were ordered to draw up 'living wills' setting out how services would continue to be provided if they collapsed. The Government said it was going to crack down on councils making purely commercial investments.

Local government reorganisation, another way – at least in part – of cutting costs by reducing the number of councils and creating new unitaries, continued apace, though it was far from plain sailing in many places.

Christchurch council on the south coast, for example, rejected a plan for it to merge with neighbouring Bournemouth and Poole to form a single authority for the west of Dorset. But its legal challenge failed, and the reorganisation is set to go ahead next year, saving £108m over six years according to its supporters. On the other side of the county the creation of another unitary authority appeared less optimistic, as officers warned it could cost £1m in redundancy payouts for four chief executives and at least £400,000 to pay for the staff needed to carry out the transformation.

Nottinghamshire decided to drop its plan to create a single authority for the county which financial experts Deloitte described as ‘robust’ and reckoned would save £27m a year. The county council's leader defended the plan but accepted it was 'not universally supported' and warned that to deliver the required savings ‘we will need to consider radical solutions’.

Meanwhile long-suffering council employees seemed resigned to accepting two-year pay deals that, their unions warned, would not keep pace with rising inflation. But the union leaders were unable to rouse them to industrial action as in days of yore. The fight seemed to have gone out of their collective belly.

With one notable exception. When unions accused Glasgow City Council of failing to pursue talks on solving a 12-year-old argument over equal pay for women, all hell broke loose. As the strike began 8,500 women walked out and took to the streets. It didn't last long and, in what looked very much like a climbdown by the council in the face of powerful and united industrial action, talks resumed and hopes rose of a settlement in the new year.

As Christmas and the New Year loomed, it was hard to detect much seasonal joy in the local government world. Few will look back on 2018 with fond memories. Nevertheless, many will have felt some sense of hope as they noted the small but fundamental changes in official thinking taking place as the year went on. It became increasingly apparent during the year that some of the more radical strategies being pursued were simply not working and new ideas were needed. And the spirit of local government entrepreneurialism seems likely to continue.

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