The Resolution Foundation has issued a new report on working-age household income in the age of stagflation and the little progress on living standards. When we think about living standards, we usually think about income tax and benefits, but there are other pressures, from energy to housing costs – rent or mortgages. This article looks at another angle: the role of local government in building support for the radical agenda of Reform UK.
Local tax payments, council tax – or rates – have risen sharply for the very poorest, reaching nearly 5% of their gross income over the last 25 years. However, the impact of local government is more significant than its cost. It is the most visible part of government in people’s lives – the state of the roads, the fabric of schools, and the shabby hollowed-out high streets, as retail businesses buckle under business taxes while more spending goes online. Besides the NHS, local governments touch directly more lives than most other parts of government.
Local government also distorts people’s governance experience, as it bears two heavy burdens of the state’s ‘social contract’ with citizens. First, it is the front line for how the state provides services for children, from libraries to schools. In addition to capital expenditures for the reinforced autoclaved aerated concrete (RAAC) repairs to schools, the scope includes budget-sapping costs of Special Educational Needs and Disabilities (SEND) provision.
SEND impact
The demand for this provision is increasing, particularly as a whole cohort of children was impacted by the Covid-19 lockdowns, and our increasingly complex world is making more children anxious and needing more support. SEND covers everything, from communication and interaction, cognition and learning, social, emotional, mental health, and sensory and/or physical needs.
Many children fall into this category, and their needs often remain unmet. As demand grows, the impact on council budgets is devastating. In 2023/24, Norfolk Country Council allocated around £36m for SEND, an overspend of more than £12m. In Suffolk County Council, the budget is £66m. Despite the already elevated costs, there are still several unanswered needs out there.
Social care
The other major challenge is social care, as councils deliver and fund services, including paying for residential facilities and nursing care. In 2022/23, local authorities spent similar amounts of money on both long-term support for working-age adults (£9.1bn) and older people (£9.3bn). Yet year-on-year expenditure on older people rises as society ages, and this filters down to council budgets.
Councils pay for social care through rates offset by the central government’s Social Care Grant. The government is making available up to £3.7 billion of additional funding for social care authorities in 2025 and 2026, including an £880m increase in the Social Care Grant. The long-term trend however is upwards; in 2022/23, total expenditure was £2.7bn more in real terms, adjusted for inflation, than in 2010/11.
A greater proportion of local income is diverted into social care, which distorts the provision. How does that impact other age groups? This means that other services are being cut to try to keep council taxes as low as possible. Councils must make heart-breaking decisions such as cancelling music education services or closing local cultural services such as theatres. Suffolk County Council was planning to cut its entire core arts funding after the 2024/25 budget year, until a huge outcry caused a U-turn and the offer of an arts ‘funding pot’.
Further, the model has changed to grant-funding for PE and sport. Schools must bid for central government funding or from other agencies like Sports England. The local government also uses funds to distribute the available monies. The allocation of funds ends up feeling random and it heavily depends on the commitment of school and PTA personnel.
So, how does this feel as a ratepayer? My Council Tax rises yearly, but the services I see continue to deteriorate. Does that make me feel good about the country? Do I blame the local council and the party that runs it? Or do I blame the government and moan that nothing works?
Role of migration
Increasingly, the narrative is about migration being the source of all the nation’s troubles, but is this true for our region? The picture is one of rising migration, but it varies widely across the region, from university towns to rural areas, where migrant workers are essential to farming. In 2011, 11% of East of England residents were born outside the UK. This represents an increase of 70% in the foreign-born population of the region since 2001.
Luton has the highest number of migrants, attracted by airport work and existing communities. Where are the migrants coming from? Those born in Poland represent the most numerous non-UK-born group in the East of England (62,100 residents), followed by residents born in India, Ireland, the United States and Pakistan. Most of those people are of working age. The largest share of foreign passport holders unsurprisingly, is in the region’s tech hub, Cambridge. The lowest share is Essex.
‘Fix the system’ cries
For many of the Reform Party strongholds, it is not migration that is driving support for the party. What is the other cause? Poverty and decline. Reform won three seats in the East of England, Clacton, Great Yarmouth, and South Basildon & East Thurrock. These were taken from the Conservatives, who paid the price for national decline. None of these areas have high levels of migration.
Reform came second in 98 constituencies nationwide; in 89, it was second to Labour. 60 were in the North of England, and 13 were in Wales. Most of these were in areas of economic decline and continued austerity. Recent polling by Hope not Hate found that many voters from across the political spectrum, held together by frustration with mainstream politics, are attracted to Reform UK’s promises to “fix the system.”
I argue that fixing the system must include local government funding. Too many of us are paying into a system that does not meet our needs, where money is diverted into key services like social care and schools, which the central government itself should fund. Reorganisation of the statutory responsibilities of local authorities is now required.
Who pays for local government failure?
There are major inter-generational forces at work here; young families should not go without services like music education and sports centres to fund their grandparents’ social care. Young people need social housing and training. Driving along roads littered with potholes, where even street lighting might not make it past the next budget revision, does not inspire confidence in the state. Starmer’s government must realise that fixing trust in the government starts locally, which means changing the funding sources and responsibilities of local government.
