The BBC has been leading with the story that 25,000 jobs are to go this coming year in English local government. Not unexpectedly, the biggest losses are in Birmingham, the biggest council in the country.
Job losses are common across authorities of all political persuasions. The main reason is simply that there is less money in the coming year for local government to spend. The biggest drop in income is due to the government reducing what is given to councils to spend. Given that for every four pounds spent by councils, three come from central government, any cut by ministers to the overall level of grants awarded to councils will have serious consequences.
Secondly, the income councils receive from other sources have been hit by the recession. Most have capital reserves that previously paid good interest. Nearly every council earned interest on their revenue balances. But interest rates are now next to nothing. Income from commercial property has also gone down. There has, after all, been a recession. So cash sources have been drying up.
The other main source is council tax. Given that central government will only allow limited rises, and council tax payers can stand only so much in terms of tax demands, council tax alone cannot take the strain caused by the loss of other revenue.
So, budgets have to be cut. Labour postures that spending will not be cut yet to protect the recovery. Their posturing is of course completely artificial. They have already started the cuts. They may not be as bad as what is to come, but they are still happening. There needs to be a bit of honesty from Labour about that.
Sent via BlackBerry