Most people will have heard the phrase ‘There are three kinds of lies: Lies, damn lies, and statistics’. It’s ironic the quote is typically attributed to Benjamin Disraeli, as that itself has no basis in fact. Yet, the point remains a good one: just because someone uses numbers to back up their argument, doesn’t mean that it’s true.
Over the last ten years, councils have lost their entire grant from government, had their ability to raise money from council tax capped, and faced significant rising costs. To balance budgets, local government has been increasingly forced to rely upon the money it can raise from its services and investments. While there are bad examples of this, by-and-large this has enabled councils to survive a decade of austerity.
With the lockdown, this came to a screeching halt. Suddenly, councils were required to shut down the profit-generating parts of their operations (the expense-incurring parts have been up-and-running throughout), while generating new costs tackling COVID-19 from the frontline. Even when the pandemic is over, economic damage in the form of empty business units and unemployment mean that council finances will take a hit for years to come in the form of lower retained business rates and a smaller council tax base.
So, why, in the midst of councils going under, do I have people telling me that the council has ‘extra’ money to spend. Well, it all comes down to a matter of presentation. Take the answer to this written question for instance.
£1.9m for Crawley Borough Council plus these other pots of money, sounds good right? Well, as I’ve already covered, the council has taken a significant financial hit in various areas, so to know if £1.9m is good, you need to know how badly the borough has been hit (the government knows this, as every council has had to submit forms detailing it on a monthly basis since the pandemic began). Fortunately, this is easy to find, as Crawley Borough Council produces a quarterly report monitoring the local authority’s actual expenditure against it’s planned budgetary expenditure.
As the table shows, the council has actually received more than the government has set out, £2.4m in total, but between increased expenditure and lost income the council is £4.8m worse off. The only reason why the council is not at risk of bankruptcy right now is the action taken by the council to find £1.8m of in-year savings, but that still leaves a £900k deficit before the second lockdown began.
What about the other figures in the answer? Those figures are grants the council was given to support local businesses. While it seems like a lot of money, again that all depends upon the number of businesses needing support. Now, a sensible approach for working out how much to give councils would have been to roughly gauge the number of local businesses and allocate funding on that basis. There’s plenty of data for this, not least councils’ business rates records. Instead, the government allocated funding on the basis of the size of an authority’s population, which in West Sussex has had a predictable impact.
Before the first lockdown, Crawley had the second highest jobs density in the country outside of London. Despite forming 2% of the landmass of West Sussex, Crawley was responsible for 25% of the economic activity in the county and yet we are receiving just 12% of the grant funding for keeping local businesses afloat while our neighbours have money to spare. Given that two-thirds of jobs in the town are taken up by people commuting into Crawley on a daily basis, this isn’t even a good deal for the many residents in those neighbouring councils whose jobs are now at risk due to this incomprehensible approach to grants.
Which brings us on to question number two.
When a council receives only a fraction of the money necessary for supporting local businesses, logically lots of companies will not be able to qualify for funding. That isn’t the local council being cruel or inept, it’s just basic maths. To be fair, while the items raised in the bullet points do all have their own issues, there’s no reason to get bogged down in the minor detail and –while insufficient–they are valuable forms of support in their own ways.
I have written about the Towns Fund previously. Before the General Election, the government committed to give a range of towns–mostly in constituencies considered to be marginal at the time–up to £25m to improve their areas. The funding has no direct connection to COVID-19, yet despite Crawley being the hardest hit economy in the UK it remains the only funding which has so far been committed for our area…fourteen months after it was first announced we still have yet to see a penny of the funding or any idea when some of the investment might head our way.
To be clear, even if we were to get the full £25m tomorrow, the impact would still be extremely limited. During the peak of the first lockdown Gatwick Airport were running at a deficit of £1m per day, in the grand scheme of things the Towns Fund is a drop in the ocean when it comes to the support Crawley now needs.
Last, but not least, we have an issue which is very close to my heart: homelessness.
To address this question and where it’s misleading, we need to bring back the table from the council’s quarterly monitoring report, I’ll highlight the relevant lines.
Over the course of the pandemic, the council has spent £707k tackling homelessness and rough sleeping, some of which was paid for out of the ‘Additional funding – Covid-19 grant’. However, throughout the pandemic, at each point financial support for addressing homelessness has arrived, the council’s costs in tackling it were already significantly higher than the grant we were receiving. £297k is a lot of money, but if £707k has already been spent on this through the pandemic, does anyone really believe that less than half of what the council has already had to spend is going to be enough to help these residents off the street permanently?
So, that’s the full picture of what is actually going on with government funding for Crawley: the government still hasn’t lived up to their promise to compensate councils for their costs involved tackling COVID-19 in the first lockdown, the grant formulas they are using mean there isn’t enough money to support our local businesses while neighbouring councils have money to spare, despite being the hardest hit economy in the country we have yet to receive any significant government support, and government grants are far too small to make any lasting impact on rough sleeping.
No doubt, all the claims of government generosity towards Crawley will continue to be repeated every time the council has to take a tough decision or when we call on the government to act to save local jobs and deal with the consequences of mass-unemployment, but for anyone who takes the time to go through the numbers the truth isn’t hard to find.