Unfortunately the report in the Advertiser (“Calls for £100 million of council house debt to be scrapped”) managed to exclude the main point of Swindon Tenants Campaign Group’s media release, that we are supporting a national campaign for the cancellation of all local authority debt held by the Public Works Loans Board. Not just Swindon’s and certainly not just the Housing Revenue Account debt. This proposal would be an emergency measure to deal with an unprecedented financial crisis faced by all councils owing to their extra spending to deal with the pandemic and the steep fall in revenue resulting from the lock-down (e.g. parking and leisure).
The government told councils to “do whatever is necessary” and they would be compensated. Yet, according to the Local Government Association (of which David Renard is an officer) councils will need an extra £6 billion more than the government funding given so far for dealing with the pandemic, just to get by this year. We haven’t heard yet what the gap is between the £11 million funding that Swindon council has received and their extra expenditure and loss of income. It’s certain that it will be nowhere near enough.
Since councils have a legal obligation to set balanced budgets, if the government does not fund them fully to deal with the impact of the pandemic then the result would be deep cuts to jobs and services, possibly even worse than Osborne’s. Some of the ‘key workers’, much praised for their critical work during the pandemic, could be thanked with redundancy notices and services which are crucial for the lives of many people will be lost.
Cancelling local authority debt held by the PWLB would provide councils with an extra £4.5 billion spending power a year, which would stabilise their finances, whilst a discussion takes place about “sustainable funding” which Robert Jenrick has spoken of. What is required is what one supporter of debt cancellation, Preston Council Leader Matthew Brown, has called “a new financial settlement” based on an annual assessment of social needs in each locality. The coalition government abandoned these assessments in 2013.
So cancellation of local authority debt would mean writing off £308 million held by the PWLB for Swindon (according to the draft accounts for 2019-20). We don’t have a figure for the cost of servicing that debt but the draft accounts show more than £17 million in interest charges. Cancellation would provide a financial lifeline for Swindon council and its services.
The debt cancellation campaign (see cancel-local-authority-debt.org ) has been supported by 15 council leaders nationally, including big authorities like Birmingham and Liverpool. 28 cross party MPs, led by Claudia Webbe, have written to Chancellor Rishi Sunak calling on him to cancel this debt. The government itself has set a precedent by writing off NHS debt.
There is no doubt that the impact of the pandemic will not be short-term. Revenue is unlikely to return to pre-covid levels. We face mass unemployment which will impoverish many people. There is likely to be be a big increase in rent and council tax arrears. If the government does not extend the moratorium on evictions then councils could face the prospect of a spike in homelessness, without the resources to deal with it. So long as there is no vaccine people will not return to the lives they led before.
Cancellation of the debt held by the PWLB is a simple measure which would help stave off the collapse of council services. A couple of months ago such action would have been unthinkable. Yet the dynamic of the current situation has driven the government to do many things which they would never have contemplated a matter of weeks ago. It is a government of u-turns, as Marcus Rashford so brilliantly demonstrated recently. Every pressure needs to be brought to bear to prevent another round of austerity for local government.
What is clear is that without emergency action, including debt cancellation, councils will implement cuts which will have an even worse effect than the 10 years of austerity, because they will be superimposed on a society and economy which has suffered a financial and social shock greater than anything we have ever seen.
Swindon Council should add its voice to those other councils t are demanding debt cancellation and funding which is based on social needs. This is the only way to avoid a new austerity which would have drastic social consequences.
Secretary, Swindon Tenants Campaign Group
This is a letter to the Swindon Advertiser