Electoral Dysfunction: Budget did little to defuse ticking time bomb for local councils
All my bandwidth this week has been given over to the spring budget, the moment of the year when Chancellor Jeremy Hunt tells us his plans for the economy – how he’s going to cut our taxes, or increase and set out where he’s going to spend some of our money.
But this week was a tale of two budgets: the one obsessed over in Westminster and then the budget of Birmingham Council, which has huge repercussions for the city’s one million plus population.
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I didn’t think much about the Birmingham story over the past few days as I joined the rest of the Westminster village in obsessing about whether the chancellor was going to cut national insurance or income tax, administer further public spending cuts to boost tax giveaways (and give a future Labour government a headache) or nick the opposition’s plan to abolish tax breaks for so-called wealthy “non-doms” who live in the UK with a permanent home overseas (FYI: Hunt didn’t shave more off future spending plans but they did nick Labour’s plan to scrap non-dom plan to raise £2.7bn for tax cuts).
But the dire situation of many councils across England is perhaps what is closer to the hearts of our Electoral Dysfunction listeners.
Sure the national budget matters hugely in setting the economic direction of our country and deciding on what public services with prioritise.
But local council budgets service much of our daily bread and butter: Our bin collections, childcare services, adult social care, leisure centres, parks and libraries, our carparks and road maintenance.
Between 2010 and 2020, local government fund suffered a 40% real terms cut in grants from central government.
In December nearly one in five council bosses said they thought it “fairly or very likely” they will go bust in the next 15 months as funding fails to keep pace with inflationary costs, and rising demand for a raft of services – be in child protection or adult social care.
And it was Hayley’s email that landed in our Electoral Dysfunction inbox that pulled my attention out of Westminster.
Hayley, who has been an officer in local government for the last 20 years, emailed in to talk about how “the last few years have been difficult”.
“In a district council setting, that I have always been incredibly proud to work in, I’m now left feeling like I might need to move on – mentally exhausted, emotionally drained,” she said.
“It’s impossible to feel like you are delivering anything meaningful because of reducing finance and increasing demand.
Listen to Beth Rigby, Jess Phillips and Ruth Davidson as they unravel the spin in a new weekly podcast from Sky News
Good people are leaving and the public perception is at an all low – and I have a huge amount of sympathy for that.”
She added: “I’d love to know Jess and Ruth’s view on the present state of local government, what they think the future holds – and what they think the current government’s intentions for local government are.”
It’s so pertinent this week, because this was the moment, away from Westminster, that Birmingham City Council – the city in which Electoral Dysfunction’s Jess Phillips is an MP, signed off £300m in cuts ahead of a 21% rise in council tax over two years, after declaring itself effectively bankrupt.
Financial measures described as “devastating” to people living in the city, Europe’s largest local authority could not afford to meet its financial obligations – after facing equal pay claims of up to £760m, and an £80m overspend on an under-fire IT system.
Jess, who knows the Birmingham situation all too well, talks about how councils – and this is not politically party specific – have been “massively defunded” but also says “as somebody who lives in Birmingham”, the [Labour-run] council has not been well managed.
Ruth says local government is the “bit of politics that affects people’s lives 100 per cent” and thinks the largest council in all of Europe going bust “should have been a bigger story”.
Read More:
Why are councils going bankrupt?
Budget 2024: The key announcements of Chancellor Jeremy Hunt’s speech
She also points out that Scotland’s local government is funded by Holyrood, where the row between central and local government over funding is very much live.
We are, says Jess, “sitting on a time bomb” with vulnerable children and adults struggling to access services now, that will only service to build up a bigger bill later.
Communities secretary Michael Gove last month announced a 6.5% increase in funding for local councils in England, but the £64bn settlement is unlikely to quell fears of a wave of de facto town hall bankruptcies, with the Local Government Association saying it was not enough to meet “severe pressures”.
The budget in Westminster did little to defuse this ticking time bomb on Wednesday.
The Institute for Government concluded in its budget wash up that the Conservative administration would “bequeath a dismal public services legacy to whoever wins the general election”, adding “it is also likely that more local authorities could issue section 114 [bankruptcy] notices, necessitating further painful cuts to services.”
Problems likely to be passed to Labour should they win the next general election.
But it’s going to get much harder for Westminster to ignore the continued problems of local government budgets if more council dominos continue to fall, especially in an election year.
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Homelessness charities have warned that ministers are “falling short of what is desperately needed to end Britain’s homelessness crisis”.
It comes as the government published its new plan to tackle rough sleeping in Britain, which pledges £3.5bn of funding to crackdown on the issue.
But charities have said Labour’s National Plan to End Homelessness “falls short” and contains “important gaps”, meaning the party will not be able to achieve their stated goal of halving the number of homeless people by 2029/30.
Crisis, an organisation that supports the homeless, also argues that only £100m of the funding announced in the strategy is new.
Meanwhile, Labour MP Paula Barker, who co-chairs the All-Party Parliamentary Group (APPG) for ending homelessness, has told Sky News that the strategy has a “depressing lack of meat on the bone”, looks like it has been “rushed out”, and has left her “disappointed”.
It comes as Shelter warns that 382,618 people in England – including a record 175,025 children – will be homeless this Christmas, equivalent to one in every 153 people.
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Working but homeless: Daniel’s story
What does the government’s plan to reduce rough sleeping involve?
The government has made three key pledges in its new plan, unveiled on Wednesday evening.
It says that it is aiming to halve the number of long-term rough sleepers by the end of the parliament, reduce the time families spend living in bed and breakfasts (B&Bs), and prevent more people from becoming homeless in the first place.
To achieve this, the party has set out numerous new measures, schemes and extra funding.
A new £124m supported housing scheme is also being established, and the government hopes that it will help get 2,500 people in England off the streets.
Housing Secretary Steve Reed said homelessness is “one of the most profound challenges we face”, and suggested that the strategy will build “a future where homelessness is rare, brief, and not repeated”.
How has the plan been received?
Ms Barker told Sky News she welcomes “the scale of investment”, but is “disappointed by what I have seen”.
The Labour MP explained: “From what I have seen so far, it leaves more questions than it answers – where are the clear measures around prevention? Where is the accommodation for people sleeping rough coming from – has it already been built? What about specialised provision for those fleeing domestic abuse?
“We needed this strategy to be bold.”
MP Paula Barker is ‘disappointed’ by what she has seen
Meanwhile, organisations working to support those on the streets have welcomed the plan for its focus on the issue, but warn it leaves it “almost impossible” for many families to avoid homelessness.
Matt Downie, the chief executive of Crisis, said: “Housing benefit remains frozen until at least 2030; there is no coherent approach for supporting refugees and stopping them becoming homeless; and we hear no assurances that the new homes government has pledged to build will be allocated to households experiencing homelessness at the scale required.
“There is a long way to go. Ministers are taking steps in the right direction, but falling short of what’s desperately needed to end Britain’s homelessness crisis.”
An exhibit organised to highlight the contrast between the Christmas period and an estimated 23,500 young people who will homeless. Pic: PA
Sarah Elliott, head of Shelter, also warned the proposals do not go far enough, saying: “Until a lot more of these social homes are built, one of the only ways to escape homelessness is if you can afford to pay a private rent.
“We know from our frontline services this is almost impossible to do when housing benefit remains frozen, and that is where the homelessness strategy falls short.”
Centrepoint, a charity that supports young people facing homelessness, said that the strategy is “an important step”, and could be “transformative”. But it added that “gaps in the government’s approach remain”, and said increases in funding “don’t face up to the scale of homelessness”.
The Conservatives have said that the strategy means Labour “has completely failed on homelessness”.
Paul Holmes, shadow housing minister, said the number of households and children in temporary accommodation has risen to “record levels”, and pointed to the government’s “abysmal record on house-building” and tackling immigration.
Australia’s securities regulator has finalized exemptions that will make it easier for businesses to distribute stablecoins and wrapped tokens.
The Australian Securities and Investments Commission (ASIC) on Tuesday announced the new measures, aimed at fostering innovation and growth in the digital assets and payment sectors.
It stated that it was “granting class relief” for intermediaries engaging in the secondary distribution of certain stablecoins and wrapped tokens.
This means that companies no longer need separate, and often expensive, licenses to act as intermediaries in these markets, and they can now use “omnibus accounts” with proper record-keeping.
The new exemptions extend the earlier stablecoin relief by removing the requirement for intermediaries to hold separate Australian Financial Services (AFS) licenses when providing services related to stablecoins or wrapped tokens.
Leveling the playing field for stablecoin issuers
The regulator stated that these omnibus structures were widely used in the industry, offering efficiencies in speed and transaction costs, and helping some entities manage risk and cybersecurity.
“ASIC’s announcement helps level the playing field for stablecoin innovation in Australia,” said Drew Bradford, CEO of Australian stablecoin issuer Macropod.
“By giving both new and established players a clearer, more flexible framework, particularly around reserve and asset-management requirements, it removes friction and gives the sector confidence to build,” he continued.
Related: Australia risks ‘missed opportunity’ by shirking tokenization: top regulator
The old licensing requirements were costly and created compliance headaches, particularly for an industry awaiting broader digital asset reforms.
“This kind of measured clarity is essential for scaling real-world use cases, payments, treasury management, cross-border flows, and onchain settlement,” added Bradford.
“It signals that Australia intends to be competitive globally, while still maintaining the regulatory guardrails that institutions and consumers expect.”
Angela Ang, head of policy and strategic partnerships at TRM Labs, also welcomed the development, stating, “Things are looking up for Australia, and we look forward to digital assets regulation crystallizing further in the coming year — bringing greater clarity to the sector and driving growth and innovation.”
Global stablecoin growth surges
Total stablecoin market capitalization is at a record high of just over $300 billion, according to RWA.xyz.
It has grown by 48% since the beginning of this year, and Tether remains the dominant issuer with a 63% market share.
Magazine: XRP’s ‘now or never’ moment, Kalshi taps Solana: Hodler’s Digest
A group of Republicans has called foul after the US House passed a massive defense spending bill on Wednesday that omitted a ban on central bank digital currencies despite promises it would be included.
“Conservatives were promised — explicitly — that strong anti-Central Bank Digital Currency (CBDC) language would be included in the National Defense Authorization Act (NDAA). That promise was broken,” GOP Representative Keith Self wrote to X on Wednesday.
The House voted 312-112 to pass the NDAA on Wednesday, sending the $900 billion annual military funding bill to the Senate in a bid to have it passed before the end of the year.
Self had filed an amendment on Tuesday to include a CBDC ban, which had been removed from the bill, but it failed to advance and did not see a vote on the House floor.
Self said a group of Republicans was “assured that anti-CBDC language would be included. Instead, we have been forced into a take-it-or-leave-it bill that breaks that promise. Without that language, I’m inclined to leave it.”
The more than 3,000-page bill is considered must-pass legislation and typically sees non-defense-related amendments that could otherwise be stalled or heavily revised if passed as standalone bills.
In July, House Republican leaders cut a deal with a group of party hardliners to put a CBDC ban in the defense spending bill after the group refused to move forward with three crypto bills unless a CBDC ban was guaranteed.
The bills had been held up in a record-long nine-hour procedural vote and included the stablecoin-regulating GENIUS Act, which President Donald Trump had pressured the GOP to quickly pass.
Related: Does GENIUS turn stablecoin issuers into stealth buyers of US debt?
GOP Representative Marjorie Taylor Greene slammed Speaker Mike Johnson on Monday for not keeping his promise of a CBDC ban, adding she supports crypto but “will never support giving the government the ability to turn off your ability to have full control of your money and to buy and sell.”
An early House version of the bill shared in August had included a CBDC ban, before it was subjected to amendments via multiple markups and committees.
The language of the provision banned the Federal Reserve from testing, studying, developing or issuing any digital currency or asset. It would have also stopped the central bank from offering financial products or services directly to individuals.
In July, the House passed a bill banning CBDCs, the Anti-CBDC Surveillance State Act, with a slim vote of 219-210, which has stalled in the Senate.
Self said he would “fight on in the next must-pass bill to ensure a CBDC never sees the light of day. Financial freedom isn’t negotiable.”
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