Category: Local Government Finance

The Lessons of Carillion and what it means for Nottingham

We have just witnessed the collapse of a major outsourcing firm, Carillion, leaving behind it a train of debtors, shareholders with major losses, unfinished projects, employees without jobs, a pensions deficit and a scandal of directors who had rewarded themselves before the firm went bust.

In regards to Nottingham City Council, Carillion was indirectly involved with us in several projects, including the management of a set of local schools, the services provided by LIFT and restoration work at Highfields Park. It must be stressed that work on these projects will continue as planned, and that there contingency plans in place to ensure that there are no disruptions.

In terms of the wider Nottingham economy, we do not know what the implications are but should there be any serious threats then we will work with Nottingham Jobs and the Growth Hub in conjunction with employees and businesses to provide practical support.

What this crisis has done, however, is bring into question the concept of outsourcing. Some will say that there is no role for the private sector in delivery of public services but this is clearly not the case. It has a vital role in tram construction, major projects such as the reconstruction of Broadmarsh car park and specialist work. Clearly, it is not as simple as public sector good/private sector bad.

However, I believe it shouldn’t be more than marginally involved in people-based services such as probation, specialist care or core services such as waste disposal and public transport; anywhere where long-term investment and commitment is required. The private sector, when operating public contracts, does not have the motivation to direct profits back into the services they provide nor has it the motivation in the long run to put the individuals and clients first who are often the most vulnerable.

Corillian is a microcosm of the problem. Once it moved away from its role as a constructor and attempted to manage public services, it struggled. Corillian is yet another example of a private business which has underestimated how complicated running the public sector is; they go into areas with insufficient experience and are expected to pay its shareholders and reward bonuses, both of which are promises they cannot fulfill but do so anyway at the expense of the stability of the firm. Often everyone loses – both public and private sector alike. And certainly everyone, apart from a few cynical board members, have lost in this case. It is for all these reasons that Nottingham has been so sceptical about outsourcing and either kept services in house or brought them back under public control, NCT being but one example.

One of the reasons some Conservative councils are so financially fragile, despite being better funded than their Labour counterparts, is that they have outsourced heavily. Indeed, one of the reasons we have been so financially resilient is that we keep so many services under council control. But before we get complacent, the above only works with good management and motivated staff. It only works if there is capacity to invest. And that is becoming a real problem at the moment with incessant cuts made by the Conservative government.

Privatisation is beginning to fall apart and if the Conservative government wants decent public services then it needs to do one thing: fund it properly. It can start by increasing corporation tax to the sensible level that it was under the last Labour Government.


Conservatives force Nottingham people to pay more money while receiving less

Since the Conservatives came to power in 2010, they have taken £230 million from Nottingham City Council and offered no answers or additional money to help with the growing pressure of care for the elderly. This leaves Nottingham residents paying more money but receiving less as underfunded council services are pushed to their tipping point.

Nottingham Labour has sought to protect frontline services from Conservative cuts as best it can. Over the past seven years we have prioritised key areas such as children’s centres, tackling crime and anti-social behaviour, keeping Nottingham as the UK’s cleanest city and protecting children and supporting vulnerable elderly people. This is becoming harder though as the government takes money away from Nottingham and the costs of care for the elderly rises. Despite lots of chances to offer a solution, the Conservative only have one answer; pass the bill onto local people.

This year the Conservatives will take another £9.5 million from Nottingham’s government support grant while the cost of social care budget in Nottingham is expected to rise by £10 million. Instead of the Conservative government taking responsibility to deal with this issue and offer help through fair local government funding, they are expecting Nottingham residents to plug the gap by paying more in their Council tax. If the Government does not offer local authorities funding for social care then it will come at the expense of other local servicers that we all use and rely on.

The government has shown consistently it can give local authorities money when they want. In February of 2017, the Conservatives gave the much more affluent Surrey County Council a sweetheart deal following concerns about its financial position. Similarly, though Nottingham has lost £71 per household more affluent neighbours such as Rutland have actually gained £44 per household. Finally, 80% of a £300 million transition grant that was made available went to more affluent southern authorities that are Conservative controlled.

If they are able to find money for these areas, they should be able to find money for areas like Nottingham where levels of deprivation are greater. Until the Government produces a settlement which is based on level of need, they are just forcing Nottingham people to pay for more while receiving less.

Autumn statement gives nothing for Nottingham’s schools or social care sector

An autumn statement that says nothing on schools or social care is not an autumn statement preparing Nottingham for the future but one that is ignoring the real problems cities like ours face.

The Chancellor has missed the chance to invest in the skills and potential of Nottingham’s young people and has shown no vision to deal with the rising level of demand in adult and child social care that is pushing the City Councils finances to the limit.

The Government’s education funding formula this summer would see Nottingham’s schools lose £22 million in real terms, which is over £500 per pupil. Taking this amount of money away from Nottingham’s schools will result in overcrowded classrooms that are not properly equipped, damaging the life chances of Nottingham’s young people. An autumn statement that was serious about preparing Britain for the future would be giving schools in Nottingham more money so that we can give our young people the skills need in the future job market.

In social care the government has revealed how unaware it is of the biggest challenge Britain is going to face. There is currently a £2 billion funding gap in social care and by not committing any extra funding in the Autumn Statement the Chancellor is making that gap worse. Demand is rising as we become and older population. In 2039, the number of people aged 75 and over will be 9.9 million. A Government preparing for the future should be making the proper funding of social care its number one priority.

Along with this, there is no relief for Council budgets. Since 2010, the Government has taken £200 million from Nottingham, which has resulted in Nottingham people paying more for fewer services. Seven years of cuts to councils like Nottingham has not helped pay down Britain’s debt either, as the Government is set to add an extra £90 billion worth of debt over the life of this Parliament. To add to this the Conservatives are damaging Britain’s economic success and growth is revised down.  

The Conservatives simply have no vision for the country or for Nottingham,  and are not prepared to face the economic challenges that we face.


Nottingham Labour approves fire sprinkler works despite governments broken promise on funding

We have approved £8.4 million worth of sprinkler installations and other safety measures in 13 high rise blocks in Nottingham City, despite the government breaking its promise to properly fund “whatever the experts tell us to make people safe”.

Following the tragic events in Grenfell earlier this year, Nottingham City Council worked with Nottingham City Homes, Nottinghamshire Fire and Rescue and local tenants to review all of the high rise blocks in Nottingham. All the blocks have current fire risk assessments and are fully compliant with current regulations. To reassure tenants that all was being done to make their buildings safe though, we took the decision to install sprinklers within the high rise blocks along with improvements to other safety measures.

Council leaders welcomed the promise by Communities Secretary, Sajid Javid, who committed the government to doing all that was necessary to make people safe. As Housing Portfolio Holder, I wrote to the government asking for the funding for these safety improvements, and was dismayed when the government responded with a categorical no, describing the installation of sprinklers as “additional rather than essential”.

It is simply unbelievable that the Government has backtracked on its commitment to provide support to councils. In the same week as describing fire safety improvements for high rise blocks in Nottingham as additional, the government managed to find £100 million for the installation of sprinklers in the Houses of Parliament. The government again shows it simply has the wrong priorities.

We will go ahead despite the government breaking its promise to provide the funding. They are too important not to go ahead and we have taken the decision to use money from our capital budget. This however, will mean fewer new homes being built in Nottingham, despite the government saying it wants Councils building more and less money available to keep our existing 26,000 homes in good repair.

These are the consequences when government does not fairly fund local authorities.

Councillor Jane Urquhart,
Portfolio Holder for Planning, Housing and Heritage.

Conservatives Broke Their Promise on Rail Electrification and Instead Gave a £30 Billion Cheque To London

In the same week the Conservatives broke their promise  by cancelling the electrification of the Midland Mainline, they wrote a £30 billion cheque for Crossrail 2 which will primarily benefit London and the South East.

The government is already unfair in the way it spends money on transport infrastructure. London receives £2,592.68 per head compared to the East Midlands which only receives £218.94 per head. It is clear that their priority is London and not Nottingham. The cost of the electrification of the Midlands Mainline is £700 million. Instead the Conservatives spent £30 billion on the region that already gets the most spent on transport.

This shows the warped priorities the Conservatives have when it comes to spending and the extent to which they not care about the well-being of Nottingham. We will be demanding that the Government changes this unfair situation alongside other Core Cities by lobbying Parliament on Tuesday 12th September.

Conservatives Gave £1 billion To the DUP Instead of Nottingham.

The Conservatives have taken £200 million from Nottingham since 2010. Instead of that money being spent here in Nottingham to create jobs, upgrade our infrastructure and build better communities, the Conservatives have instead used it to ensure the votes of two DUP MPs.

This £1 billion given to the DUP could reinstate every penny of the £200 million that the Conservatives have cut from Nottingham City Council since 2010. This would allow us to build more affordable homes, hire more social workers , repave more roads and increase the number of street  cleaning teams around the City. Instead that money has been used as a political bribe to allow Theresa May to cling onto power.

This shows the warped priorities the Conservatives have when it comes to spending and the extent to which they do not care about the well-being of Nottingham. We will be demanding that the Government changes this unfair situation alongside other Core Cities by lobbying Parliament on Tuesday 12th September.

The £9m Gap

Let us start by defining the problem and with three very significant facts.

First, there have been weekly declarations of black alerts at Nottingham University Hospitals. A black alert is when there are no spare beds at the hospital for incoming emergency cases.

Second, nationally there has been a 40% increase in bed blocking, when people can’t leave hospital for want of care at home, which for the most part is provided by councils.

Third, it costs £2500 to keep a patient in a hospital bed on average, and £450 to care for the same patient at home.

So the logical and practical thing to do would be to increase the amount of cash available to councils. This would allow councils to relieve the pressure on hospitals and effectively to save money.

But this has not happened. Indeed the opposite has been the case. Councils, including Nottingham, have not only had to cater for an ever increasing number of elderly and disabled. They have not only had to find additional money for the minimum wage. But the very budgets we use to pay for services like adult care have been substantially reduced by the very government which is expecting us to do more. So, this year in Nottingham, there is a £10m gap, and this is simply to keep the service going.

This is not just a Nottingham phenomenon, it is happening across England. The Government’s response has been belated this year, as it was last year, and it has been to try and bridge some of the gap by requesting an increase of 3% in the council tax.

I have two things to say about this.

First, this 3% levy will still leave a £7m gap so is inadequate. Second, resorting to council tax rises is unsustainable, especially in poorer areas. Poorer areas have a lower council tax base but a higher demand for adult care. So the council tax rises are far more punitive and far less able to cover the costs than in better off areas.

This means that councils all over the country are left with a problem:  do is they increase the council tax knowing it is unfair, regressive and not fit for purpose and should be funded centrally: or are they  prepared to see a service for the most vulnerable elderly and disabled deteriorate, and bed blocking in hospitals increase further still.

The whole situation reveals a real failure of planning and coordination by central Government.

It took until the last minute for government to realise the problem in 2016 and announce the 2% council tax – a levy which given the magnitude of the problem, is nothing more than a sticking plaster. Far from tackling the problem with a longer term solution, it has simply repeated the exercise with yet another 3% plaster in 2017. This tells me they have no plan. To have no plan when the NHS is in crisis and the crisis was so predictable and when it actually costs more not to provide for council adult service, is a dereliction of duty.

All I can say at this stage is that we in this council will do our utmost to keep the service going. It will be a priority; but will be at the expense of other services and, if we can come to arrangements with the Local Clinical Commissioning group which we will have to, it will be at the expense of other parts the NHS.

But in the end, there has to be a long term solution and that solution has to include more money; and more money means more tax to pay for it. I would start with corporation tax but that is my view.

What is clear is that we can’t go on as a nation with the immature approach we have; that decent key public services can be provided on the back of ever increasing number of efficiencies and we do not have to pay.

In my view we are past the point of relying on efficiencies some time ago. It’s just that government hasn’t realised it and virtually every council, every hospital and thousands of patients are now seeing the consequences.


Cllr Graham Chapman

Deputy Leader, Nottingham City Council