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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The UK has passed a bill into law that treats digital assets, such as cryptocurrencies and stablecoins, as property, which advocates say will better protect crypto users.
Lord Speaker John McFall announced in the House of Lords on Tuesday that the Property (Digital Assets etc) Bill was given royal assent, meaning King Charles agreed to make the bill into an Act of Parliament and passed it into law.
Freddie New, policy chief at advocacy group Bitcoin Policy UK, said on X that the bill “becoming law is a massive step forward for Bitcoin in the United Kingdom and for everyone who holds and uses it here.”
Common law in the UK, based on judges’ decisions, has established that digital assets are property, but the bill sought to codify a recommendation made by the Law Commission of England and Wales in 2024 that crypto be categorized as a new form of personal property for clarity.
“UK courts have already treated digital assets as property, but that was all through case-by-case judgments,” said the advocacy group CryptoUK. “Parliament has now written this principle into law.”
“This gives digital assets a much clearer legal footing — especially for things like proving ownership, recovering stolen assets, and handling them in insolvency or estate cases,” it added.
Digital “things” now considered personal property
CryptoUK said that the bill confirms “that digital or electronic ‘things’ can be objects of personal property rights.”
UK law categorizes personal property in two ways: a “thing in possession,” which is tangible property such as a car, and and a “thing in action,” intangible property, like the right to enforce a contract.
The bill clarifies that “a thing that is digital or electronic in nature” isn’t outside the realm of personal property rights just because it is neither a “thing in possession” nor a “thing in action.”
The Law Commission argued in its report in 2024 that digital assets can possess both qualities, and said that their unclear fit into property rights laws could hamstring dispute resolutions in court.
Related: Group of EU banks pushes for a euro-pegged stablecoin by 2027
Change gives “greater clarity” to crypto users
CryptoUK said on X that the law gives “greater clarity and protection for consumers and investors” and gives crypto holders “the same confidence and certainty they expect with other forms of property.”
“Digital assets can be clearly owned, recovered in cases of theft or fraud, and included within insolvency and estate processes,” it added.
The group added that the UK now has a “clear legal basis for ownership and transfer” of crypto and the country would now be “better positioned to support the growth of new financial products, tokenised real-world assets, and more secure digital markets.”
The country’s finance authority reported late last year that roughly 12% of UK adults own cryptocurrency, up from 10% in its previous findings.
The UK also revealed plans for a crypto regulatory regime in April that would bring crypto businesses under similar rules to other finance companies, aiming to make the country a global hub for crypto while promoting consumer protections.
Magazine: 2026 is the year of pragmatic privacy in crypto — Canton, Zcash and more
The UK is “really unprepared” to fight a war and has been living on a “mirage” of military strength that was shocking to discover, interviews with almost every defence secretary since the end of the Cold War have revealed.
With Sir Keir Starmer under pressure to accelerate plans to reverse the decline, two new episodes of Sky News and Tortoise’s podcast series The Wargame uncover what happened behind the scenes as Britain switched funding away from warfare and into peacetime priorities such as health and welfare after the Soviet Union collapsed.
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This decades-long saga, spanning multiple Labour, Conservative and coalition governments, includes heated rows between the Ministry of Defence (MoD) and the Treasury, threats to resign, and dire warnings of weakness.
It also exposes a failure by the military and civil service to spend Britain’s still-significant defence budget effectively, further compounding the erosion of fighting power.
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The Wargame: Behind the scenes
‘Russia knew’ about UK’s weaknesses
Now, with the threat from Russia returning, there is a concern the UK has been left to bluff about its ability to respond, rather than pivot decisively back to a war footing.
“We’ve been living on a sort of mirage for so long,” says Sir Ben Wallace, a Conservative defence secretary from 2019 until 2023.
“As long as Trooping the Colour was happening, and the Red Arrows flew, and prime ministers could pose at NATO, everything was fine.
“But it wasn’t fine. And the people who knew it wasn’t fine were actually the Americans, but also the Russians.”
Not enough troops, medics, or ammo
Lord George Robertson, a Labour defence secretary from 1997 to 1999 and the lead author of a major defence review this year, says when he most recently “lifted the bonnet” to look at the state of the Army, Royal Navy and Royal Air Force, he found “we were really unprepared”.
“We don’t have enough ammunition, we don’t have enough logistics, we don’t have enough trained soldiers, the training is not right, and we don’t have enough medics to take the casualties that would be involved in a full-scale war.”
Asked if the situation was worse than he had imagined, Lord Robertson says: “Much worse.”
Robertson meets the PM after last year’s election. Pic: Reuters
‘I was shocked,’ says ex-defence secretary
Sir Gavin Williamson, a former Conservative defence secretary, says he too had been “quite shocked as to how thin things were” when he was in charge at the MoD between 2017 and 2019.
“There was this sort of sense of: ‘Oh, the MoD is always good for a billion [pounds] from Treasury – you can always take a billion out of the MoD and nothing will really change.’
“And maybe that had been the case in the past, but the cupboards were really bare.
“You were just taking the cupboards.”
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Ben Wallace on role as PM in ‘The Wargame’
But Lord Philip Hammond, a Conservative defence secretary from 2011 to 2014 and chancellor from 2016 until 2019, appears less sympathetic to the cries for increased cash.
“Gavin Williamson came in [to the Ministry of Defence], the military polished up their bleeding stumps as best they could and convinced him that the UK’s defence capability was about to collapse,” he says.
“He came scuttling across the road to Downing Street to say, I need billions of pounds more money… To be honest, I didn’t think that he had sufficiently interrogated the military begging bowls that had been presented to him.”
Hammond at a 2014 NATO meeting. Pic: Reuters
What to expect from The Wargame’s return
Episodes one to five of The Wargame simulate a Russian attack on the UK and imagine what might happen, with former politicians and military chiefs back in the hot seat.
The drama reveals how vulnerable the country has really become to an attack on the home front.
The two new episodes seek to find out why.
The story of the UK’s hollowed-out defences starts in a different era when an Iron Curtain divided Europe, Ronald Reagan was president of the US, and an Iron Lady was in power in Britain.
Sir Malcolm Rifkind, who went on to serve as defence secretary between 1992 and 1995 under John Major, recalls his time as minister for state at the Foreign Office in 1984.
In December of that year, then prime minister Margaret Thatcher agreed to host a relatively unknown member of the Soviet Communist Party Politburo called Mikhail Gorbachev, who subsequently became the last leader of the Soviet Union.
Sir Malcolm remembers how Mrs Thatcher emerged from the meeting to say: “I think Mr Gorbachev is a man with whom we can do business.”
Gorbachev was hosted at Chequers in 1984. Pic: Reuters
It was an opinion she shared with her close ally, the US president.
Sir Malcolm says: “Reagan would have said, ‘I’m not going to speak to some unknown communist in the Politburo’. But if the Iron Lady, who Reagan thought very highly of, says he’s worth talking to, he must be worth it. We’d better get in touch with this guy. Which they did.
“And I’m oversimplifying it, but that led to the Cold War ending without a shot being fired.”
Read more from Sky News:
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In the years that followed, the UK and much of the rest of Europe reaped a so-called peace dividend, cutting defence budgets, shrinking militaries and reducing wider readiness for war.
Into this different era stepped Tony Blair as Labour’s first post-Cold War prime minister, with Lord Robertson as his defence secretary.
Robertson and Blair in 1998. Pic: Reuters
Lord Robertson reveals the threat he and his ministerial team secretly made to protect their budget from then chancellor Gordon Brown amid a sweeping review of defence, which was meant to be shaped by foreign policy, not financial envelopes.
“I don’t think I’ve ever said this in public before, but John Reid, who was the minister for the Armed Forces, and John Speller, who was one of the junior ministers in the department, the three of us went to see Tony Blair late at night – he was wearing a tracksuit, we always remember – and we said that if the money was taken out of our budget, the budget that was based on the foreign policy baseline, then we would have to resign,” Lord Robertson says.
“We obviously didn’t resign – but we kept the money.”
The podcast hears from three other Labour defence secretaries: Geoff Hoon, Lord John Hutton and the current incumbent, John Healey.
John Healey, the current defence secretary. Pic: PA
For the Conservatives, as well as Rifkind, Hammond, Williamson and Wallace, there are interviews with Liam Fox, Sir Michael Fallon, Dame Penny Mordaunt and Sir Grant Shapps.
In addition, military commanders have their say, with recollections from Field Marshal Lord David Richards, who was chief of the defence staff from 2010 until 2013, General Sir Nick Carter, who led the armed forces from 2018 until 2021, and Vice Admiral Sir Nick Hine, who was second in charge of the navy from 2019 until 2022.
‘We cut too far’
At one point, Sir Grant, who held a variety of cabinet roles, including defence secretary, is asked whether he regrets the decisions the Conservative government took when in power.
He says: “Yes, I think it did cut defence too far. I mean, I’ll just be completely black and white about it.”
Lord Robertson says Labour too shares some responsibility: “Everyone took the peace dividend right through.”
“Systematic failures” led to the Chinese spy case collapsing – and there’s a risk they could be repeated, a parliamentary inquiry has said.
A report by the Joint Committee on the National Security Strategy (JCNSS) criticised the government and Crown Prosecution Service (CPS) after the case against two British men accused of spying for China collapsed.
Former parliamentary researcher Christopher Cash and teacher Christopher Berry were accused of passing secrets to Beijing between 2021 and 2023. They deny the allegations.
Christopher Cash (L) and Christopher Berry (R). Pics: Reuters
The charges were dropped in September as the CPS said it could not get evidence from the government referring to China as a national security threat, prompting accusations of a “cover-up” by the Conservatives.
The report by the cross-party group of MPS and peers said the case was beset by “confusion and misaligned expectations” and cautioned against dismissing the case as a “one-off” caused by outdated espionage laws – something the government blamed for the case’s collapse.
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Sky questions China on alleged spying
‘Serious systemic failures’
The committee – which launched a highly unusual investigation following the controversy – warned there are parallels in new legislation which must be handled carefully to prevent a similar issue from recurring.
But while “the sequence of some events has raised eyebrows”, it found no evidence of deliberate or co-ordinated attempts to block or collapse the prosecution – including by the prime minister’s national security adviser Jonathan Powell, who met with officials about the case two days before it was dropped.
Jonathan Powell. Pic: PA
However, the committee added: “Overall it is clear that there were serious systemic failures and deficiencies in communications, co-ordination and decision-making.”
It described communications between the government and CPS as “inadequate” and lacking clarity, with an “insufficiently robust” level of senior oversight right from the start of proceedings in 2023 under the Tories.
Read more:
Key witness ‘surprised’ case collapsed
MPs warned of new spying attempts
Matthew Collins
Not enough ‘common sense’?
A statement by deputy national security adviser (DNSA) Matt Collins became the focus after the case’s collapse.
Prosecutors said his refusal to describe Beijing as a “threat” to national security meant the case could not continue.
Mr Collins, the central expert prosecution witness, told the investigation he had provided evidence of a “range of threats” posed by China, but did not describe it as a “generic” threat as that was not the then Tory government’s position.
The committee acknowledged the CPS’s assertion it would have undermined the case at trial if Mr Collins refused to describe China as an active threat, but suggested his statements taken together would have been sufficient.
“We regret that common sense interpretations of the wording provided in the DNSA’s witness statements were apparently not a sufficiently strong basis for meeting the evidential requirements the Crown Prosecution Service considered necessary under the Official Secrets Act 1911,” it said.
It accepted the “root cause” of the problems lay with the Official Secrets Act, which required the term “enemy” to be used of a foreign power, but warned the new National Security Act 2023 doesn’t eliminate “diplomatic sensitivities” around labelling people members of a foreign intelligence service.
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Could a ‘super embassy’ pose a threat?
The committee recommends:
• The Cabinet Office and security services to work with the CPS to formalise principles for handling sensitive cases within the next six months
• Establishing a new rule for a formal case “conference” within 30 days of such charges to avoid a “lack of clarity” over evidence in future.
“We urge the government to avoid characterising the failure of the Cash/Berry case as a one-off peculiarity created solely by outdated legislation: there are structural parallels in the National Security Act 2023 which will require careful handling to avoid comparable issues recurring,” the committee said.
A CPS spokesperson said: “We recognise the strong interest in this case. We will review the recommendations carefully and work with partners to identify where improvements can be made.
“Our decisions are made independently and based on law and evidence, and that principle remains at the heart of our work.”
A government spokesperson said: “We welcome the committee’s report that makes clear that allegations about interference in this case were baseless and untrue.
“The decision to drop the case was taken independently by the Crown Prosecution Service. We remain disappointed that this case did not reach trial.
“Protecting national security is our first duty, and we will never waver from our efforts to keep the British people safe.”
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