Councils will pay the price for Tory tax cuts

Where do you think the Chancellor is going to find the money for the so-called “tax cuts” announced in his Autumn Statement? The “tax cuts”, which are much smaller than the huge tax rises already announced, cannot be funded by economic growth – there isn’t any. Nor can they be financed by more borrowing, the government having sworn to bring down borrowing,
even though it is currently rising.

No, the money will come from further huge cuts to the spending budgets of government departments and local government. Now, you might have thought that after 13 years of austerity the civil service had been cut to the bone, was a lean, mean fighting machine, with minimal staff and a laser-eyed focus on saving every penny.

But apparently not. After 13 years of ruthless Tory efficiency it is a bloated, wasteful, over-financed drag on the taxpayer and there are still huge savings just waiting to be made. Savings which will not damage the courts, the police, the NHS, the Army, the Navy, the care system or the Department for Administrative Affairs.

We all know this is, of course, a lie. The government is so far behind in the polls that it will do almost anything to win, and if that means eviscerating the state so that it can claim to be cutting taxes, then so be it.

For example, look at the funding deal that local councils are going to get. Their general-purpose funding will increase by £3.9 billion next year, an increase of 6.5%.

Sounds good, doesn’t it, even generous? But remember these councils have just lived through a period of high inflation, their costs, especially wage costs, are on the rise, and therefore this 6.5% rise in funding is, according to the Institute for Fiscal Studies, in real terms a cut of 4%. They will have to find the money to do everything they do from a budget which is 4% smaller than they expected.

This is also not a one-off event as Kate Ogden, senior research economist at the IFS, says: “This is still a more generous cash increase than most public services will see… based on spending totals pencilled in at the Autumn Statement last month, 2025–26 and beyond looks to be even tougher for councils.”

So, there you have it, massive cuts to council spending next year and increasingly large cuts in the years to come. The real pain is yet to start.

We already have a rapidly increasing list of councils which have gone bust, and this financial settlement makes it clear that many more are due to go the same way. For the government this is a truly cynical move because they can just blame the councils for going bust and for the increases in council tax which they will have to introduce in a desperate attempt to keep their heads above water.

All so the government can go into the forthcoming general election and claim, falsely, to be cutting taxes.

You can read more from Jonty on Substack at Jonty’s Jottings