Will Northamptonshire be the last council to go bankrupt? We’ve crunched the numbers

Birmingham Town Hall. Image: Very Quiet/Wikipedia Commons.

In two months’ time the UK will hit the 8th anniversary of the Conservative’s austerity programme – an economic strategy that has survived three elections, two Prime Ministers, and several missed deficit elimination deadlines.

Much of that burden has fallen on England’s councils. In early March, the National Audit Office released a report which showed that government funding for local authorities has dropped by 49 per cent in real-terms since 2010, resulting in a 29 per cent drop in spending power.

Since austerity began, councils have been protesting the squeeze in funding from central government – and in February, the first domino finally fell.  By enforcing a section 114 notice, Northamptonshire County Council became the first local authority in over 20 years to effectively declare itself bankrupt, banning all new expenditure in order to hit its legally required balanced budget.  Now, the question may not be if more councils may follow suit, but when.

Austerity may not be on everybody’s lips anymore, but its effects are still rippling throughout the country. Future reductions in funding have led the Local Government Association to project an overall spending gap of over £5bn by 2020, meaning councils will be scrambling to cut costs and generate additional income in order to fulfil their services. Rob Whiteman, chief executive of the Chartered Institute of Public Finance and Accountancy, has given a bleak warning: “Through my own conversations with chief financial officers, I have heard a number of warnings that councils may soon face untenable budget positions…The warning signs have been plain to see for a number of years.”

Future cuts come at a time when council services face enormous demographic pressures resulting in increased demand. There were 1.8m new requests for adult social care in 2015-16. Meanwhile 23.1 per cent of children are expected to be living in absolute poverty by the end of the decade, a rise from 17 per cent in 2009.

Without an increase in funding, it is difficult to see how councils will be able to meet these demands. Both the adult social care and children’s services departments take up huge portions of a council’s yearly budget. Research from the Bureau of Investigative Journalism has found that over 100 councils in England are known to have overspent on their Children’s Services budget this year. Add to the mix the slowdown in projected GDP growth, due to the uncertainty surrounding Brexit, and councils are facing a difficult task to cover financial gaps in their medium term financial planning.

So how big is the gap? The effect on some of England’s cities is as follows:

  • Manchester City Council identified a funding gap of £60m between 2017 and 2020, due to be eliminated through savings, a large part coming out of the adult social care budget.
  • Liverpool has identified a budget gap of £90.3m up to 2020, proposing more cuts which will help bring its overall budget savings to £420m between 2011 and 2020.
  • Bristol has identified a £46.7m gap which will require further savings on top of £33m in cuts this year.
  • Birmingham has already accumulated budget savings of nearly £650m since 2010. and has identified a further £123m in cost-cutting measures needed by 2022. The city’s financial report warned, "Consequently Birmingham City Council of the future will look very different from the one we had before austerity began." Worryingly, the council arrived at this figure after taking into account a plunge into budget reserves by £30m next year, and has admitted that future savings are becoming harder and harder to identify. Most ominously of all, the report announced, "the City Council has also had to consider whether, in some instances, it can no longer afford to provide its current level of service."

The problem is not just isolated to England: the devolved governments also have councils struggling to balance future budgets. Cardiff City Council is facing a £73.5m gap between 2018 and 2021, to be partially offset by £52m in savings. Edinburgh has identified £151m in savings to be found by 2023.

Then we come to Leeds City Council. In July last year the council produced a report projecting a £30.5m spending gap between 2019 and 2021. After planning future council tax increases up to the maximum cap limit, as well as millions in savings, the council stated: “At this stage it has not been possible to identify sufficient savings or income generation opportunities with which to entirely close the gap in the Council’s finances over the next three years.”

Since then, the Council has not come up with any fresh ideas, and the gap has more than doubled. It now stands at £71.9m.  A Leeds Council spokesperson said:

“We are absolutely committed to protecting frontline services, particularly for those who need our support most. To balance those burgeoning costs, we continue to look at ways to make the most of our limited funds and our investment in staff.  

“By targeting resources at preventative services, the council has ensured that the impact of changing demand and demography (which has resulted in significant cost pressures in many other councils) has been contained, for instance within children’s services and adult social care.”

It is worth noting that the council has managed to keep every single children’s centre in Leeds operating, with a commitment to carry on with no closures. That comes in stark contrast to the national picture: over 500 centres have closed in the UK since 2010.


In facing these budget pressures, one alarming trend has emerged: the NAO revealed that one in 10 local authorities could run out of reserves within the next three years, after dipping into their reserves to cover spending. In response, Meg Hillier, MP for Hackney South & Shoreditch and chair of the Public Accounts Committee, said many councils were relying on “rainy day funds” to pay for vital services. The Bureau of Investigative Journalism also found that 22 councils had reduced these reserves by more than 50 per cent in the last five years.

As well as dipping into reserves, councils also have to come up with ways to increase their income. Last month the LGiU found that 95 per cent of councils were hiking council tax, and 93 per cent were raising charges.

Whether these changes will be enough to prove Northamptonshire to be an isolated case remains to be seen. But for now, the warning signs could not be clearer.

Reporting on this story was aided by The Bureau of Investigative Journalism.

Nathan Fogg is a freelance investigative journalist.

 
 
 
 

Here are three ways your smartphone is screwing up the planet

You’re not helping, Macron. Image: Getty.

Nearly five billion people worldwide will use a smartphone by 2020. Each device is made up of numerous precious metals and many of the key technological features wouldn’t be possible without them. Some, like gold, will be familiar. Others, such as terbium, are less well-known.

Mining these metals is a vital activity that underpins the modern global economy. But the environmental cost can be enormous and is probably far greater than you realise. Let’s walk through some of the key metals in smartphones, what they do, and the environmental cost of getting them out of the ground.

Catastrophic mine waste spills

Iron (20 per cent), aluminium (14 per cent) and copper (7 per cent) are the three most common metals by weight in your average smartphone. Iron is used in speakers and microphones and in stainless steel frames. Aluminium is used as a lightweight alternative to stainless steel and also in the manufacture of the strong glass used in smartphone screens. Copper is used in electric wiring.

However, enormous volumes of solid and liquid waste (termed mine “tailings”) are produced when extracting these metals from the earth. Typically, mine tailings are stored in vast impoundment structures that can be several square kilometres in area. Recent catastrophic mine tailings spills highlight the danger of improper construction methods and lax safety monitoring.

The largest spill on record occurred in November 2015 when a dam collapsed at an iron ore mine in Minas Gerais, Brazil, releasing approximately 33m cubic metres (enough to fill 23,000 Olympic swimming pools) of iron-rich waste into the River Doce. The waste inundated local villages killing 19 people and travelled 650km until it reached the Atlantic Ocean 17 days later.

The village of Bento Rodrigues was buried under toxic sludge. Image: Senado Federal/creative commons.

This was just one of 40 mine tailings spills that have occurred in the past decade and the long-term ecological and human health impacts remain largely unknown. One thing is clear though – as our thirst for technology increases, mine tailings dams are increasing in number and size, and so is their risk of failure.

Ecosystem destruction

Gold and tin are common in smartphones. But mining of these metals is responsible for ecological devastation from the Peruvian Amazon to the tropical islands of Indonesia.

Gold in smartphones is used primarily to make connectors and wires but gold mining is a major cause of deforestation in the Amazon. Furthermore, extraction of gold from the earth generates waste rich in cyanide and mercury – two highly toxic substances that can contaminate drinking water and fish, with serious implications for human health.

Illegal gold mining causes deforestation in the Peruvian Amazon. Image: Planet Labs Inc./creative commons.

Tin is used for soldering in electronics. Indium-tin oxide is applied to smartphone screens as a thin, transparent and conductive coating that gives touchscreen functionality. The seas surrounding Indonesia’s Bangka and Belitung Islands supplies about a third of the world’s supply. However, large-scale dredging of the seabed for the tin-rich sand has destroyed the precious coral ecosystem while the decline of the fishing industry has led to economic and social problems.


The most polluted place on the planet?

What makes your smartphone smart? That’ll be the rare earth elements – a group of 17 metals with weird names like praseodymium that are mined mostly in China, Russia and Australia.

Often dubbed “technology metals”, rare earths are fundamental to smartphone design and function. Crystal clear smartphone speakers, microphones and phone vibration are possible due to small yet powerful motors and magnets manufactured using neodymium, dysprosium and praseodymium. Terbium and dysprosium are also used to produce the vibrant colours of a smartphone screen.

Extracting rare earths is a difficult and dirty business, typically involving the use of sulphuric and hydrofluoric acids and the production of vast amounts of highly toxic waste. Perhaps the most disturbing and thought provoking example of the environmental cost of our smartphone thirst is the “world’s tech waste lake” in Baotou, China. Created in 1958, this artificial lake collects the toxic sludge from rare earth processing operations.

The valuable metals used to manufacture smartphones are a finite resource. Recent estimates indicate we will run out of some rare earths in the next 20 to 50 years, which makes you wonder if smartphones will still be around then. Reducing the environmental impact of smartphone use requires manufacturers to increase product lifetimes, make recycling more straightforward and be open about where they source their metals and the environmental impact. Around the world mining companies have made huge strides in practising more sustainable mining. But we as consumers also need to consider smartphones as less of a throwaway item and more of a precious resource that carries an enormous environmental burden.

The Conversation

Patrick Byrne, Senior Lecturer in Geography, Liverpool John Moores University and Karen Hudson-Edwards, Professor in Sustainable Mining, University of Exeter.

This article was originally published on The Conversation. Read the original article.