Here’s why councils should get a share of the government’s NHS “birthday present”

Happy birthday? What exactly is so happy about it? Image: Getty.

Every day, a new story emerges about the spiralling financial crisis in local government. If it isn’t a new council announcing mammoth cuts to simply stay afloat, it’s new data revealing how a vital local service is facing meltdown.

The government, however, seems uninterested. Extra funding is going in only one direction – towards the NHS in the form of the £20.5bn “birthday present” announced by the Prime Minister in June.

One day, students of public finance will study this as an example of policy-making at its most irrational. The £20.5bn was announced as a response to the rapidly rising demand, which is stretching NHS services to snapping point. But if councils are left to fall apart that demand will only rise further and faster.

This is because councils do the things that keep people from bothering the NHS in the first place. They make sure the elderly and people with disabilities are cared for. Councils keep roads, town centres and businesses safe and clean. Their public health teams educate local communities about how to stay well. They expend a great effort on steering troubled children away from drugs, self-harm and mental illness.

Maybe more fundamentally, councils are tasked with providing the housing and local business investment that gives people the decent homes and jobs that all research shows is vital to better physical and mental health.


So far, the government has avoided confrontation with the absurdity of its position by claiming that the problems facing councils are all the result of local mismanagement. Northamptonshire, the first council to effectively declare bankruptcy in decades, has been subjected to a convoluted inquiry and structural re-organisation in an effort to pin the blame on local leaders.

But as the number of councils declaring themselves to be in severe financial straits has grown over the last few weeks, the government’s line is looking increasingly detached from reality. The conclusion that the real cause of the crisis is the 50 per cent cut in government funding councils have endured since 2010 is becoming unavoidable.

No doubt the Treasury’s next move will be to shift money around within the overall budget for councils to bail out those facing immediate difficulties. There is an obvious opportunity to do this given a review on how council funding is allocated will report very soon.

The government may buy some short-term respite by shifting funds to struggling councils. But if that comes at the expense of withdrawing even more funds from other councils then the problems will only re-emerge elsewhere.

The chancellor could avoid these undignified and self-defeating manoeuvres easily: spread the £20.5bn of love directed at the NHS more widely. If that money is genuinely to be used as a response to rising demand then sharing it with local government makes far greater sense than blowing it all on the health service.

How much would need to be shared? The Local Government Association has estimated that councils need an extra £7.8bn just to keep services at their current rather threadbare level over coming years. But there is more to it than that.

Such significant funding shared between the NHS and councils could, if positioned right, enable a major shift towards a system built around preventing people getting ill in the first place rather than being treated once they do. A great partnership between the two biggest providers of public services in the country to keep people healthy and out of hospital: the benefits to the economy, the public finances and simple well-being could be huge.

Adam Lent is director of the New Local Government Network. This article previously appeared on our sister site, the New Statesman

 
 
 
 

Uber has introduced a levy to fund electric vehicles in London. But who exactly is benefiting?

Bleurgh. Image: Getty.

Uber is introducing a levy of 15p per mile on London users to help fund a transition to electric vehicles and help tackle air pollution. Its goal is to encourage half its drivers to go electric by 2021 and to go fully electric by 2025.

There are a number of benefits to the idea. Moving to cleaner transportation is an important public good with a myriad of general health benefits. It should be an urgent priority for all UK cities. But the question of who pays for this transition is fundamental to whether it is done fairly. As a process, change needs be done in partnership with people, not to them.

So who is actually being asked to foot the bill for this much needed transition? Fresh analysis by the New Economics Foundation shows that while the PR benefits are likely to accrue to Uber, its consumers and drivers will foot the bill in its entirety, while also taking on much of the risk.

Uber estimate that drivers will be eligible for £4,500 in funds to purchase a new electric vehicle after three years of service – the maximum period of time for which drivers can accrue credit. By comparison, the cost of a cheap second-hand electric car meeting Uber’s requirements for UberX costs in excess of £12,000, while a second hand vehicle suitable for UberLux would set drivers back around £45,000.

For those drivers receiving around £4,500, this would still imply the need to contribute thousands of pounds, if not tens of thousands, in personal funds. Even after allowing for a fall in prices for electric vehicles, drivers are being asked to make a minimum contribution of between 55 per cent and 85 per cent towards the total cost of electrification. The remainder of the cost will be met indirectly by consumers – either in the form of higher charges or else being priced out Uber’s services altogether.


Where drivers don’t have access to this sort of cash, the expectation will be that they borrow – which means taking on the risk of debt repayments while earning close to minimum wage. Being able to keep the 15p levy once driving an electric vehicle is unlikely to cover the cost of new interest payments. But failure to use the scheme at all could mean unemployment after 2025.

While drivers are forced into arrears to consolidate their jobs, Uber may also find itself with a considerable surplus from the scheme, as a result of drivers leaving the platform early or choosing not to apply for the grant. Uber has suggested that any surplus will be reinvested into supporting facilities, such as charge points for electric cars. But this means that the cost of moving to green infrastructure is coming at the expense of extra private debt for drivers (which could otherwise have been funded out of the levy). Such a trade-off is simply incompatible with a green transition that is morally just.

The shift in strategy from Uber towards more renewable transport technology is clearly welcome on environmental grounds. Doing so solely at the expense of consumers drivers is not. For any transition to be fair, Uber needs to meet its share of the costs.

Duncan McCann is a Researcher at the New Economics Foundation. He tweets @DuncanEMcCann. You can find NEF’s work on transport here.