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The Public Sector Executive Podcast is the new podcast bringing you closer to the public sector leaders in the UK. Covering everything from the environment to the economy to transport, our podcast will bring you the latest news, views and insight from the people responsible for shaping the country's future.
Some councils have just run out of money or are running out of money to be able to deliver it. Councils are already only dealing with children with exceptional and high level needs and, unfortunately, again, the money just runs out. And in the case of sed, actually the money has run out. As, the conservative leader of Surrey recently said, in the short term, for many other of those councils, it will mean absolute sort of stringent decisions on how they spend their money and, to keep their head above water.
This is the public sector executive podcast bringing you views, insight and conversation from leaders across the public sector, presented by Dan Ben.
Today I am joined by councillor Pete Marlon, who is the leader of Milton Keynes Council, as well as being the chair of the local government association's economy and resources board. So thank you for joining me. The first thing I kind of want to touch on is what financial challenges are local, councils facing right now?
What a question to start with. So obviously just roll right back to 2010 and the start of austerity is that, none of the public sector, has suffered quite as much of austerity as the local government, since 2010. And all the austerity packages that were put in place, the Department of leveling up as it is now, previously, Department of Local, government has lost around 40% of its funding. No other, bit of the public sector has had to put up with that level of reduction. it's a real terms loss. my own council has lost something like 70% of its revenue support grant. Some councils have lost 95% of the revenue support grant. So all in all, could you imagine if we are sitting in 2024 that where the NHS or defense, or education has been faced with 40% cuts when they've had real terms increases? I think mostly in local government. The fact that we've only had one, ten section 1114 notices in that period is actually not a bad thing in many ways. It actually shows the resilience of local government. It shows we are the most, value, for money sector. In the public sector, we use taxpayers money widely. so there's just the total quantum of cuts. But then, on the other hand, if people know the Barnett graph of doom, which is sort of like a crocodile jaw, one line goes up and the other line goes down. The downline is why I've just been talking about funding. The upline is pressures. Now, we actually go back before austerity for that Barnett graph of doom. and that upward line is basically around social care pressures. But since then, it's not just adult social care. We've seen a massive rise in temporary accommodation, particularly, in cities in London and in the southeast. some m district councils now spend atp in every pound that they collect in on temporary accommodation. So that is a huge rise, particularly in the past two or three years. And in the past year we've seen huge rises in just contract inflation, but mainly unplanned, cost rises in children's social care provision, particularly send and looked after children. And so many councils, particularly county councils and uteries like mine, they've seen massive rises in home to school transport bills. Actually a little bit linked to the fact that there is a lot of temporary accommodation. So if you have to put people out of area, or far away from the school and then you have to transfer, particularly people with special needs to the school that they go to, that obviously has a massive impact on cost. But children's, looked after children's places also. Massive rise in those costs in some places where we're talking about 300% rise just in year. so I think some councils were saying we've now reached a million pound a year placements, 2 million pound a year placements, and that could come through your door tomorrow. You can build in some of it you can look at and say, actually we project this growth. And that's particularly true within adult social care. You can sort of predict how many older people are going to be. You sort of know the percentage of population, are going to have certain needs and you can sort of plan that out. But the explosion that we've seen, in protecting children from harm, the level of children that are coming through our social services, that's exponentially risen in the past twelve, to 18 months. And that is a huge pressure on our budgets. So it is a factor of reducing central government funding and massive increases in our statutory services alongside all the other things that councils do like fixing potholes, paying our staff has just led to really a toxic situation.
And obviously you mentioned things like there is a massive boom in the need and the demand for things like adult and children's social care. How does that then have a knock on effect on other public services that aren't related to social care or send children, but other things that are vital services but don't get as much attention.
Yeah. and I can give you a very clear example that, in Bradford, for instance, where I, think it's 80% or 86%, I can't remember exactly off the top of her head which way around they are, of the properties are, ah, band a and b in council tax. So if they put council tax up they don't get a whole lot of money for doing so. But again it's more or less for every ten pounds they collect, they now spend eight pounds on children's social care and adult social care. And obviously what that means is then there's only two pounds left for everything else that councils do. they do, whether that is fixing potholes. When you walk, people talk about fixing potholes and cutting grass and delivering libraries and things like they're a nice to have. We still have as local authorities statutory obligations around fixing potholes. You can't just leave a big pothole in the road. So there's still statutory obligations around that. But it just means that some councils have just run out of money to be able to, or are running out of money to be able to deliver it. And many councils for the past, year, two years have effectively just been functioning on fumes. They've been using reserves because they wanted to get to a position where maybe they could reduce some of the costs. Like I say earlier about home to school transport, we still have to provide it, but maybe we can do it in a cheaper way. Some councils have just run out of money of, ah, being able to do that. And then Bradford is a helpful example. Their children's, services are in a trust. They get very little say over how much those services cost and they've ended up with a bill. That means, I think their spending has gone up, from something like 60 million pounds four years ago or three years ago to 120,000,000 pounds this year. And that's just not sustainable. and there comes a point where no matter how well run your council is, the money will just run out.
Absolutely. And like you say, no matter how well run the council can be, the money will just stop coming in. But rather than kind of sitting on it and accepting that there is a problem and just talking about it, there is a lot that people can do well, council and leaders can do. In terms of yourself as a council leader, how do you work to try and ease those challenges and overcome those bumps in the road?
In Milton Keynes? I'm really lucky because if people don't know the history of Milton Keynes, it's a new town, granted city status, two years ago now. but we are very lucky because we've got what's called council tax base. We've got a very wide council tax base. So it's quite evenly spread, particularly above what they call the band d average. Lots, of places don't have that. So in Milton Keynes, what we've always tried to do is get ahead of that curve because we've just got that little bit of extra time. So we're able to, perhaps change the way that we've been doing, our adult social care, to make it more cost effective, to offer people personal budgets to change the way that we do children's social care. We put a lot of money into prevention, but we've been able to do that because financially we're not in a position, or haven't been in the past in a position where we're trying to address existing demand whilst also cutting money for that existing demand. So where councils have been able to get ahead, they've been able to make that investment to change services. Unfortunately, some councils either don't have the money, to be able to do that because their council tax base is smaller. Or again, there comes a point where there's only so much you can do, there's only a bar above which you can set, expectations or you can set eligibility where it just becomes unsustainable. And actually, we've seen that in send, we've seen that in special education or disability needs. Most councils have a huge threshold. I think we've seen in reports that's been coming out over the past couple of weeks, the number of children that are waiting for what used to be called statements, the number of children waiting to be placed, all of these things. You cannot set the bar any high where councils are already only dealing with children with exceptional and high level. And, unfortunately, again, the money just runs out. And in the case of Send, actually the money has run out. The government has basically said it's the one area of local government where I think all but about five councils now are, now running a deficit on send, but they've been licensed to do so by the government. But in 2026, that sort of overdraft, as you will, will run out and councils will either be expected to pay it back or project safety valve will have to be extended or budgets will have to be brought back into balance without any real understanding of how that's going to happen. So what the LGA, the local government association, also council leaders are trying to do is obviously just draw attention that these are long term structural problems with the way that local government is financed basically around need and particularly making sure that, where there is a statutory obligation, central government is obviously funding that statutory obligation because it's central government that ultimately has responsibility for setting what is a statutory obligation. And so if they're going to set a statutory obligation and councils are very clear that there is nowhere else to go, then it will be up to central government to fund that.
Yeah, and you talk about central government there. I do want to come on to central government, in just a second. But one thing that yourself and the local government association have spoken about, especially in the last few months, is the Household support fund. How important is the Household support fund to communities and helping communities?
Well, I think when it was introduced, it overlapped, and was a replacement for, if people will remember, the 20 pound uplift in, I think it was universal credit. so it was rather than giving direct support to everybody, it was a discretionary scheme, for local authorities to take forward. And, it's been extremely welcome and, ah, it has saved a lot of cost, actually. It's a really good example and, ah, the Department of Work and Pension select committee did some good work on it, I think, relatively recently, and recommended that it should be taken forward and actually allowing more flexibility around how we spend that money. Because what the need is in Milton Keynes might be very different to what the need is in Liverpool, but actually where councils can save cost, where it can save families having to take out payday loans, where it can stop families losing, maybe a tenancy, where it can save, families having to go to food banks, to me it has a higher return on people not losing their jobs, not having to move all that sort of thing. And allowing it to be flexible as the household support fund is, means that it can be targeted across different needs. and local councils can decide where it's best spent. And like I say, it's been really welcome and would be a real loss, I think, if it's not continued in.
Some way, that much is clear to see. And the attention is being brought to it so much by the LGA, it's obvious that there is a need for it to continue. But in terms of going forward, not just with the household support fund and what the local councils want from the government.
In the longer term, obviously what the local government association, I think all councils want, is a return to long term funding settlements. I think there is a danger in one respect that local government sets the boss so low that they're happy just to say, oh yeah, give us three year funding settlements that allow certainty. So obviously three year funding settlements at least, is the most basic ask and then obviously it's around, fairer funding, making sure, particularly around those statutory services, that, funding is based on need. I think that is a huge ask and then it is just around understanding we will be in a position, whether it be may or November, with a new government. I think it's about having an open conversation, an honest conversation. And the local government are working on a local government act, for the new government, about what the role of local authorities and local government will be in delivering the priorities of the next government. Because I think from the Labour party, I think they've much becoming clearer with what Angela Rayner has been saying over the past few weeks. Around it will be seen as an equal partnership, around more devolution, not just to memorial combined authorities or combined authorities, but also to local places to get on and deliver those missions. I'm not overly clear, what the conservative promises are going to be or even, what any other iteration of government might be. But I do think, local government needs that will be able to see in the manifestos when they're published what the aims and objectives of the particularly I think the two main parties are going to be over the next five years, what their program for government is and where they see local government fitting into that and being very clear that if austerity two comes along and the same funding, settlements are placed on local government as over the past 15 years, personally, and I think we're all very clear that there probably won't be very much local government around after 24 months time. M so it's about having that honest conversation 100%.
it does seem like a massive potential turning point for local government with, the election more than likely coming this year. So you kind of touched on it a little bit there, but I want to touch on it properly with a flat out question. If the government, doesn't increase support to adequate levels, if long term funding plans aren't provided by whatever kind of government we could get, come the end of the general election. In the short term and the long term, where does this leave councils and where does this leave the communities that they represent?
Well, in the short term, I think you will see a number of councils, maybe up to 20, maybe a few more, basically going bankrupt overnight. They may be able to survive for maybe six months to a year with a capitalization directive and some flexibilities around how they can spend capital. But I imagine we would see very quickly, a flurry of 1114 notices, effective bankruptcies, and then I think as the conservative leader of Surrey recently said, in the short term, for many other of those councils, it will mean absolute sort of stringent decisions on how they spend their money and to keep their head above water in the medium to long term, if there's no funding settlement, if there's no solution to adult social care, if there's no proper funding, for, send or no solution to temporary accommodation. My line has always been, I think, borrowing a handful of councils that are relatively okay. I think it will not be a matter of if, but when 90% of councils will end up having to declare bankruptcy if the current trajectory is followed. That, I think is just the reality of the situation for most councils. It's a matter of what's going to happen to things like business rates, business rate retention, all of those things. But I think this is probably, a more specialist podcast, I think. But the reality is not what happens to councils, but what happens to the services. If there was no need for us to deliver the services, councils wouldn't exist. Councils grew and corporations grew out of public health emergencies in the 1840s, and the need to correct market failures. But whether it's about delivering parks or family centers or potholes or even things like social care, the ultimate impact is going to be, on our communities, on our ability as local authorities to be able to change things locally and, to add a local flavor and a local democracy to the difference between Milton Keynes and Liverpool and Buckinghamshire. And there comes a point where, if it is just about delivering statutory services as an agency for government, central government, well, they should get on and do it themselves. Ultimately, I think, in my view, there becomes a fundamental question about, what the point of local government is. If you end up just delivering statutory services set from the middle and not having any local flavor to it. What's the point in local elections if all a local leader has to do every morning is get up and deliver statutory children's co and not concentrate on delivering what's right for Manchester, or delivering on what's right for Lincolnshire or wherever it may be. And that's the most depressing point. That council tax will continue to go up and people are seeing less and less for it. And unless we're very careful, I mean, council tax is not a great system, but if you break that link between what people can see and what people pay for, you undermine democracy itself. And I think that is very, very dangerous.
I think you summed it up perfectly with some of what you just said, wink, kind of saying, what is the point in local government if they're not going to have the ability to deliver what's right for their. Like you said, what's right for Manchester. Something that I've spoken a lot about in these podcasts is giving local leaders the freedom and the capacity to deliver what is right for that local area. I did an episode recently with, Liam Robinson in know about transport decisions being made by local leaders. Because that's the most important thing.
You just have to look at the difference. My family from Liverpool, so it pains me to say, people will say sort of Liverpool is 15 years behind Manchester in its sort of renaissance. I mean, I always say Liverpool dipped a lot further than Manchester, unfortunately, but that was just a managed declare of the 1980s. But that leadership shown by Sir Richard Lees in Manchester and obviously now Bev Craig, has, absolutely changed the face of Manchester. When I was growing up 30 years ago, you did not go into Manchester city center. You went into Manchester city center. If there was no other choice but to go into the city center, you'd go to the surrounding towns of Rochdale or Oldham or bury. If you stand on Deansgate now, I think you feel you could be in any leading world city. And it's the same if you stand on Liverpool waterfront and the renaissance that's been led over since actually capital of culture. Two, thousand and eight now, wasn't it a long time ago? but you see what strong local leadership does for places. Manchester didn't happen by accident. Manchester, it was very clear that Richard and the administration that set a very clear message for what it wanted Manchester to be. And it did it. And it went out. And I was once overheard a conversation because I was stood next to him in a queue somewhere and somebody said to Sir Richard Lees, Manchester must be Britain's second economy now. Must have overtaken Birmingham as Britain's second. Richard said, you know, Birmingham wants to argue that it's second, that's fine. But Manchester is Manchester and Liverpool is Liverpool and Milton Keynes is m. Milton Keynes and Bristol is Bristol. And good local leadership should be rewarded and Manchester has been rewarded for good local leadership. That's not to say there are not the problems and that, there's not been a donor effect created in some respects, but there is something to build on. And I do fear that if we were to reverse the situation to that awful bomb in 1997, that sort of spurred some of the renaissance of Manchester. If something similar was to happen in the city today, or there was the same sort of point of reference, would local leaders have the same ability to regenerate a place in the same way that Manchester has been regenerated over the past 30 years. And sadly, I think the answer is probably no. And, my feeling is we're getting into more sort of philosophical conversation as opposed to local government now. But if you look at either the Brexit vote or why people are so angry with politics, if you're in Burnley or Hartleypool and you've not seen the same level of change that Manchester has had or Newcastle has had, it's no wonder people are frustrated with politics, because no matter what lever they pull, nationally or locally, they're not able to see change. And again, I think that is a very dark road in general for politics.
Yeah. And we've touched on some very serious topics, and obviously everyone across local leadership knows how serious the situation is right now. But I think the last couple of minutes of what we've spoken about is a good testament to local leadership. And it's as good a reason as any to bring the change and the stability and the funding that is required to keep it going, because, like you said, without the strong local leadership, that growth and that redevelopment wouldn't have happened. So I think that's a really good place to end as well. thank you, for joining me.
Great. Thank you.
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