- The money allocated by the Conservatives would not be sufficient to meet rising costs and demands over the next parliament even if council tax were increased by 4% a year, necessitating a further retrenchment in services or unfunded top-ups to the plans set out.
That’s according to the analysis of the party’s election Manifesto by the Institute for Fiscal Studies.
They looked at the spending plans of all three mayor parties and found that The Labour Party has allocated more than enough money to meet rising costs and demands, allowing increases in service provision and quality, although not enough to restore them to 2010 levels.
That is true even if council tax were frozen – although Labour has no plans for such a freeze.
The Liberal Democrats have allocated enough money to meet rising costs and demands if council tax is increased by 2% a year – although only if some the funding earmarked for bus services, youth services or homelessness is used to meet these pressures.
Each party proposes reforms of adult social care services, including unfunded commitments to relax means-testing and/or introduce caps to costs. Funding these pledges could require tax rises beyond those announced, or risk breaking parties’ fiscal rules says the Institute.
The Conservatives have confirmed they would maintain the £1 billion increase in grant funding announced for 2020–21 for the duration of the next parliament, but have announced no additional funding other than a £500 million a year fund for potholes.
This means councils would have to rely overwhelmingly on increases in council tax revenues and business rates revenues to meet the rising demands for and costs of local public services. Revenues from these taxes is unlikely to keep pace with these demands and costs, even if council tax is increased by 4% a year – double the rate of inflation – every year. Therefore, unless councils’ productivity improves by more than has historically been the case, either further cutbacks to service provision would be likely, or funding would need to be topped up.
Labour’s proposals are strikingly different.They propose £13 billion of additional funding for existing local government services, which would be more than sufficient to meet rising costs and demands even if council tax were not increased. This means it would allow increases in service provision and quality, although the funding would not be sufficient to return services to their pre-2010 levels.
They would be paid for by higher taxes, and not just on the top 5% of the population. A key choice facing voters is therefore whether they are willing to see taxes go up to pay for more spending on public services – including council services.
The Liberal Democrats also propose tax rises to fund increases in public spending – albeit not on the same scale as Labour.
Taken together, this money would be enough to meet demands and costs if council tax increased by 2% a year, in line with inflation – but only if part of the funding earmarked for particular services is actually spent on meeting these pressures.