Governments can fund spending on services in a range of ways. They can raise taxes, sell assets, borrow, even print new money. Each approach has its own pros and cons and due to the scale of Government spending in a modern mixed economy, the implications don’t just affect the public sector but the entire economy. So too do Government cuts, which can have a major supressing effect upon economic growth, that’s why austerity during a recession is always madness, it simply makes the problem worse.
Councils are far more limited. We can’t print new money, council tax increases are essentially capped at inflation and we don’t set business rates, we aren’t allowed to borrow to fund services, and even if we sell off assets, they can only be used to fund capital expenditure, not services.
Unlike central government, we’re also legally required to run a balanced budget every year, that means stating in our annual budget where every pound of revenue will come from to fund every pound of expenditure. If we fail to do so or if the assumptions we make are unreasonable the council’s Section 151 officer is legally required to inform the Government, who appoint commissioners to make the necessary cuts.
In February, when after a decade of austerity in which the council lost two-thirds of its revenue in real terms, due to the impact of the pandemic on the council’s income Crawley was forced to make its first cuts of my time as Leader.
We are the only council in the country which managed to avoid making any cuts over the previous seven years, due largely to Crawley Labour’s approach of generating commercial income to pay for services.
Unfortunately, the scale of the loss of income combined with our ways of generating new revenue all being suppressed at the same time made cuts unavoidable. Following the council’s largest consultation ever which determined what would be cut, the Budget was passed with cross-party support. None of us came into politics to make cuts, but for once it is genuinely true to say that there was no alternative.
Cllr Peter Lamb
Leader, Crawley Borough Council