A Christmas Carol or Bleak House for local councils?

When Mr Scrooge became Father Christmas

The significance of the Autumn Statement and Spending Review delivered by the chancellor at the end of last month has been lost on no-one in our local town halls

The season to be jolly this may be. But it is also the time of year when our local authorities face the decidedly less festive challenges of outlining their budgets for the coming year.

And that's why the significance of the Autumn Statement and Spending Review delivered by the chancellor at the end of last month has been lost on no-one in our local town halls and council houses.

He had spent five-and-a-half years playing Ebenezer Scrooge. So it came as a genuine surprise when George Osborne cloaked himself in the regalia of an early Father Christmas and presented us with what looked like a gift-wrapped offering calculated to herald the season of festive cheer. The police, the arts and of course, the embryonic English devolved authorities were all beneficiaries of the chancellor's unexpected generosity.

But the flip side of the coin leaves local authorities viewing Mr Osborne as just as much of a Scrooge as ever.

The newly-elected Labour leader of Europe's biggest local authority, John Clancy of Birmingham, spoke for most councils when he pointed out that by the time he has finished implementing £90m savings during the coming financial year, his authority will have reduced its workforce by almost half over five years.

He also acknowledged the ways in which councils deliver local services will be permanently changed by all this. Many of my previous blog posts have talked about the emphasis on 'smart' partnerships, pooling resources across council demarcations and generally delivering new efficient ways of working to serve their residents. The Conservative leader of another very large authority, Philip Atkins of Staffordshire, has emerged as a high priest of business efficiency in local government. He never wastes an opportunity to emphasise that most councils have a way to go yet to deliver best value for money.

'A fundamental redefinition'

Edgbaston Labour MP Gisela Stuart describes Chancellor George Osborne's actions as "a fundamental redefinition of local government"

In common with all the other candidates in Birmingham's recent Labour leadership election, Mr Clancy outlined how, as a matter of force majeure, councils would have to retreat from some of the 'non statutory' local functions which have traditionally been seen as their exclusive preserve. If community-level cultural, social and artistic projects are to survive, there will have to be a much greater, or even an exclusive, role for the so-called third sector voluntary and charitable organisations. Birmingham famously cut its funding for the St Patrick's Day Parade, but the local Irish community rallied round to make sure this annual pageant did not become a thing of the past.

An example of David Cameron's much-maligned Big Society in action perhaps? Equally, Birmingham City Council has a major stake in the Midlands Arts Centre; but plans to make visitors pay parking charges to visit the park in which it stands do not fit that narrative quite so well.

And here's where we arrive at the heart of that George Osborne Santa-or-Scrooge conundrum. It's why the Labour MP for Birmingham Edgbaston Gisela Stuart sees this as "a fundamental redefinition of local government". Because the cumulative pain he is administering to councils with one hand comes at a time when he is also starting to devolve with the other an unprecedented assortment of political and spending powers to those new bodies, including the proposed West Midlands Combined Authority, which have signed up for a powerful elected 'metro mayor'.

That devolution agreement hailed in Coventry last month by Mr Osborne as "the biggest single deal since Scottish devolution" is a billion-pound, 30-year project. In sharp contrast to the squeeze on local councils, the so-called big ticket items like housing, transport, skills and maybe even the police will increasingly be hived-off to this new top-tier of local decision-makers, not just council leaders but also representatives of the business community. That has led the UKIP MEP and Dudley councillor Bill Etheridge to describe this latest version of devolution as "a betrayal of democracy... it devolves power from the people to the political elite". More generally, though, it does command the support of the other main parties, even though local government leaders still question whether the promised gain is anywhere near enough to offset all the pain they have had to endure.

The government's big idea

As Labour frequently remind us, it is far more difficult for councils in relatively deprived areas like Wolverhampton (pictured) to exploit lucrative new revenue streams than it is for those in more affluent places like Wokingham

The answer given by ministers forms another significant element of that "fundamental redefinition". They expect councils to do more to stand on their own feet financially. They want them to become less dependent on the block grants from Whitehall which currently deliver by far the lion's share of councils' funding.

But see what happens when local councils take them at their word? When they sweat the assets of whatever revenue-raising opportunities they can devise? A recent survey by the RAC Foundation found a 12% increase over the past year in the amount raised by local authorities through higher car parking charges. It now stands at £670m. No wonder they were accused by the motoring organisations of hitting drivers' pockets disproportionately hard.

What's more, as Labour frequently remind us, it is far more difficult for councils in relatively deprived areas like Wolverhampton to exploit lucrative new revenue streams than it is for those in more affluent places like Wokingham.

One question remains.

Why are so many councils holding record sums in their reserves? Waiting for a rainy day, perhaps? "This is that rainy day," says the former communities secretary Eric Pickles.

So how much do our local authorities have in reserve, by the way?

We are working on that one and should have some answers for you in the new year.

Meantime, Happy Christmas and very best wishes for 2016.