Analysis: The grim plight of austerity in Moray Council could be just the start unless big change comes to Local Government soon

Ben Wray

Moray Council’s long list of services to be cut this year is a grim tale of woe – but it could be just the start of the pain for places like Moray where demographics are changing but local funding isn’t

SNP-RUN Moray Council is facing a financial crisis, and has turned to the answer locals fear most: cuts. Big cuts. 

Council leader Graham Leadbitter has said £7.3 million in savings needs to be found if it’s 2019-20 budget is going to be legally eligible. If it doesn’t make the cuts, the Council claims it will have to declare itself bankrupt. 

Unlike the UK Government, local authorities can’t pass deficit budgets. To spend more than they raise from Scottish Government funding and local tax, they have to increase their level of indebtedness to private banks or the UK Government. 

In Moray, with debt interest up by £1 million in 2018, the Council say it would be unsustainable to take on more debt. 

The Council had £21 million in reserves last year, but having tapped into much of that for the 2018-19 Budget, it says the only reserves it has left is ones it has to keep for emergencies.

Hence, the Council has said, cuts are its only viable option to stay afloat.

The planned austerity measures agreed on 23 January is a list of woe.

Even more grimly, this still only amounts to £2 million in savings: another £5 million needs to be found before 27 February for the Council to be able to pass a Budget.

Chief Executive of the Council Roddy Burns has admitted that the level of service delivery in 2019-20 will be inadequate.

Burns said: “There should be no doubt that most of the proposals are made on purely financial grounds.

“In the main they are not efficiency savings and do not represent levels of service that would be ordinarily suggested.”

The Council’s document explaining how it has come to such drastic austerity, ‘The Story so Far’, explains some of the thinking behind where they have decided to drop the axe: wherever non-essential service provision exists.

For instance, the document states: “There is an obligation on local authorities to maintain a school library service, however there is no obligation to provide professional librarians to run the service.”

Further down, the document adds: “We increased charges for services where it was allowed, and are looking at generating income by selling advertising space from other assets such as roundabouts, vehicles and buildings.”

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It concludes with a deeply depressing appeal to what David Cameron had called The Big Society: austerity delivered by the community.

“As we’ve stated in the opening paragraphs, with the reducing level of money available to us we will only be able to focus on the essential services,” the document reads. “We need your help in establishing what those essential services are. This means that you may lose the level of service which you have become accustomed to. Or individuals/communities may be asked to help by taking on tasks which have till now been done by the council.”

How did it come to this in Moray? A narrow frame would look at the Scottish Government’s draft budget settlement for 2019-20 and see that, once areas of spending of ring-fenced spending are accounted for, Councils are once again facing a real terms cut.

That’s why the Scottish Government are struggling to pass their Budget this Thursday, with the Scottish Greens saying they will vote against the Budget as it stands unless more Local Government money and tax reform is agreed to.

While that is rightly at the centre of the current debate, a wider frame shows that this crisis has long been in the making for councils like Moray, with flatlining funding and demographic changes creating a toxic financial mix.

Over 65’s have increased by 45 per cent in Moray between 1981 to 2010, while they are projected to increase by another 73 per cent over the next 30 years.

The population of Moray as a whole has increased by 15 per cent since 1981, so the dependency ratio – the number of children and pensioners versus those of working-age – has already risen markedly, and is set to rise even more.

As a report by the Accounts Commission into local government funding found: “Working age people generate more money for public spending through taxation, while older people and children generally use more public services such as social care and education.”

Social care and education are now the two main areas of funding for local authorities, making up 76 per cent of all council budgets in 2017-18, and projected to rise to 80 per cent by 2025-26. Statutory government targets in these two areas means they are more financially protected than the rest of the budget, where the axe continues to fall remorselessly.

It’s not just about ageing population – traffic congestion has increased in Moray by 37 per cent since 2000, significantly increasing the cost of road repairs. A lack of quality local public transport, with buses long since privatised, pushes up the cost of budgets in other areas. 

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While demographics change and behavioural patterns change, the local government funding regime has remained frozen in time. 

The Tories created the Council Tax in 1991 as an alternative to the hated poll tax. We are still basing that tax on 1991 housing valuations, when properties in Band H were worth 8 times as much as Band A. Today, they are worth at least 15 times as much. The Scottish Government has kept in place a Tory tax that is twice as regressive as when the Tories introduced, using a system which calculates 57 per cent of homes in the wrong band because the system is so old.

For the first 10 years of the SNP Government, the Council Tax was frozen, increasing local authorities reliance on funding from the Scottish Government. Now, councils can raise it by three per cent, with the tax tweaked to slightly increase its progressivity.

But these changes, after a 10 year freeze, are a totally inadequate response to what is a massive challenge: how to provide a funding formula for local authorities which addresses the twinned issues of an ageing population and growing inequality, in the broader context of UK Government austerity.

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No tweaks to Council Tax – a tax levied on the property user (renters, the unemployed), rather than the property owners (landlords) – will come close to stopping a huge decline in service quality in places like Moray, with a 73 per cent rise in its elderly population expected. 

The really worrying thing is that Moray’s cuts may just be the beginning, rather than the end, of the Council’s problems, unless a major change occurs in the nature of local government and local taxation. And Moray is clearly not an isolated case. 

Addressing this will be impossible unless big structural problems in the Scottish economy are seriously grappled with. Tweaks will only bring a future of more grim tales like that of Moray Council and its cuts.

Picture courtesy of Tom Parnell