Labour under pressure to fix local services in budget as councils insist there is no more ‘fat to cut’
Folkestone has been drawing in crowds in recent years with regeneration and private developments transforming parts of this port town on the Kent coast.
But many residents will tell you that the fabric of this community is being torn apart. Local services are deteriorating and have been for some time.
Leisure centres have shut down and Kent County Council recently closed most of its 50 youth clubs.
The local library has been closed for two years because it has fallen into disrepair and the local council says it can’t afford to repair it. Instead, a makeshift library has been set up across the road, in what was once a youth centre.
It’s not a unique story. Across the country, local authorities have seen their budgets slashed over the past decade.
Since 2010, central government has cut its grants, forcing local councils to raise more council tax. That hasn’t been enough to make up the shortfall, with total spending power plummeting by 26% over the past decade.
At the same time demand for core services, mainly adult social care, has soared, meaning councils are trying to deliver more for less.
Unsurprisingly, non-critical services have been the first to go.
Residents of Folkestone say they’ve had enough and expect the new Labour government to make good on its promise to fix their local services.
In Folkestone, volunteers are helping keep the town centre tidy because the local council does not have the resources.
Matthew Jones, a local campaigner, said: “Libraries are not just a place where you borrow books. It’s the centre of a community… where people come, people who are not only unemployed but students too, a place where they can actually find somewhere warm and safe to study with people around them who can help them.”
Kent County Council had to make £90m of savings last year and is now looking to make another £85m.
Along with closing down services, the council is selling its headquarters, a listed building it has called home for more than 100 years because it can no longer afford to maintain it.
Peter Oakford, the council’s deputy leader, said there was no more “fat to cut”.
“We feel for the residents… because of the position we are in we are asking people to pay more for less services. Until the government fully fund social care so the council can fund other areas of non-discretionary business that we support residents with, we’re going to be in this same position.”
Peter Oakford, Kent County Council’s deputy leader, says there is no more “fat to cut” from their budget.
Local authorities, along with other unprotected budgets such as courts and prisons, have borne the brunt of cuts since 2010 as central government sought to prioritise funding for the NHS and schools.
The problems have reached breaking point at a number of local authorities and one in four councils in England say they are likely to have to apply for emergency government bailout agreements to stave off bankruptcy in the next two financial years, according to a new survey by the Local Government Association (LGA).
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A separate report by the union Unison found that local authorities are grappling with a £4.3bn black hole in their budgets next year, which will rise to £8.5bn the following year.
The chancellor is under pressure to find extra money for local councils in her budget next week but she is grappling with spending demands across the public sector.
Rachel Reeves maintains that this type of day-to-day spending can only be covered through taxation, but the government has promised it will not raise income tax, national insurance or VAT.
This means the chancellor has a difficult balance to strike.
The UK’s benchmark stock index has reached another record high.
The FTSE 100 index of most valuable companies on the London Stock Exchange closed at 8,505.69, breaking the record set last May.
It had already broken its intraday high at 8532.58 on Friday afternoon, meaning it reached a high not seen before during trading hours.
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The weakened pound has boosted many of the 100 companies forming the top-flight index.
Why is this happening?
Most are not based in the UK, so a less valuable pound means their sterling-priced shares are cheaper to buy for people using other currencies, typically US dollars.
This makes the shares better value, prompting more to be bought. This greater demand has brought up the prices and the FTSE 100.
The pound has been hovering below $1.22 for much of Friday. It’s steadily fallen from being worth $1.34 in late September.
Also spurring the new record are market expectations for more interest rate cuts in 2025, something which would make borrowing cheaper and likely kickstart spending.
What is the FTSE 100?
The index is made up of many mining and international oil and gas companies, as well as household name UK banks and supermarkets.
Familiar to a UK audience are lenders such as Barclays, Natwest, HSBC and Lloyds and supermarket chains Tesco, Marks & Spencer and Sainsbury’s.
Other well-known names include Rolls-Royce, Unilever, easyJet, BT Group and Next.
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FTSE stands for Financial Times Stock Exchange.
If a company’s share price drops significantly it can slip outside of the FTSE 100 and into the larger and more UK-based FTSE 250 index.
The inverse works for the FTSE 250 companies, the 101st to 250th most valuable firms on the London Stock Exchange. If their share price rises significantly they could move into the FTSE 100.
A good close for markets
It’s a good end of the week for markets, entirely reversing the rise in borrowing costs that plagued Chancellor Rachel Reeves for the past ten days.
Fears of long-lasting high borrowing costs drove speculation she would have to cut spending to meet self-imposed fiscal rules to balance the budget and bring down debt by 2030.
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They Treasury tries to calm market nerves late last week
Long-term government borrowing had reached a high not seen since 1998 while the benchmark 10-year cost of government borrowing, as measured by 10-year gilt yields, was at levels last seen around the 2008 financial crisis.
The gilt yield is effectively the interest rate investors demand to lend money to the UK government.
Only the pound has yet to recover the losses incurred during the market turbulence. Without that dropped price, however, the FTSE 100 record may not have happened.
Also acting to reduce sterling value is the chance of more interest rates. Currencies tend to weaken when interest rates are cut.
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