In 2021, I wrote about the dangerous dowry left to the new Somerset unitary authority by the previous Conservative council. The combination of an unwanted reorganisation and a systematic failure to invest in local services had left Somerset especially vulnerable to financial crisis. The warning of trouble ahead was all too correct.
In November 2023, the council declared a financial emergency. Unless it could find £100m through savings and increased income, it would effectively be bankrupt. In technical terms, it would have to issue a section 114 notice. Somerset is not alone. Major cities including Nottingham and Birmingham have already issued such notices and Kent and Hampshire County Councils along with a dozen others, have indicated that they are likely to do the same.
The consequence of a 114 notice is that democratic local government is suspended. Central government commissioners – in practice financial consultants earning over £1,000 per day – are sent to decide what services will be cut. The impact is well summed up by Ian Liddell-Grainger, Conservative MP for Bridgwater and no special friend of the Lib Dems currently running the council.
“I know it is an absolute disaster,” he said. “If they come into Somerset, I can tell honourable Members exactly what will happen. They will shut the recycling centres, stop the buses and pull back on the funding for roads, for the most vulnerable and for many others. No matter what we do – Parliamentarians, councillors or anyone else; parishes, towns or whatever – it will make no difference at all.”
He has joined with other Conservative MPs serving Somerset to ask for an increase in central government funding.
Aside from the special factors pushing Somerset over the edge, the funding crisis has two major causes. Central government has systematically reduced the funds it provides to councils for the provision of the statutory services they are legally obliged to deliver. According to the Local Government Association, councils have had a real terms cut in spending power of 27 per cent since 2010. At the same time there has been a dramatic escalation of the costs of providing care, both for the elderly and vulnerable young people. This increase, accounting for some £70 million of Somerset’s shortfall, results from the most spectacularly misjudged privatisation of all.
Most people will now be aware of the consequences of handing our water companies to private firms. Debts are piled up to pay dividends while sewage pollutes our rivers. Our bills increase to pay directors’ bonuses and shareholders’ dividends, not to fix leaks. Few people are aware, however, that this toxic model also applies to social care.
Most of the provision of social care is now contracted out, increasingly to large companies linked to the shady world of private equity. Large residential providers are taking profits averaging 22.6 per cent according to a recent report by the Competition and Markets Authority. Private fostering agencies are raking in an average of 20 per cent. As with water, the rocketing costs – an average of £150,000 per place per year and for those with complex needs far, far more – are not matched by any increase in quality.
To compound the problem in Somerset, the government’s “Fair Cost of Care” exercise forced the council to reveal to these large providers that it was paying less for services than average. As a consequence, prices rose by 47 per cent; from £577 to £850 per week.
These costs are inescapable; yet to feed this greed, local government must shred its services and sell off its assets. In Somerset’s case this includes closing all public toilets, slashing support for the arts, reducing recycling centres and abandoning investment in children’s play equipment. Assets acquired by former district councils to provide a source of revenue will be sold at the wrong stage of the property cycle and incur a substantial loss.
Somerset’s situation is symptomatic of our disintegrating democracy. Instead of decisions made by local councillors, elected by, and answerable to their communities we meekly accept edicts from Whitehall, enforced, if necessary, by an army of auditors. Instead of building public assets to benefit everyone, we sell them off cheap for the benefit of bankers and speculators. In place of genuine civic pride, reflected in a flourishing public realm, we are left with mere brexity bombast; “Global Britain” that can’t afford swings for its kids.
