The Cash crunch
Last February, Northamptonshire County Council became the first – and thankfully so far only – local authority to hit the financial wall and effectively go bankrupt. In 2019 the financial challenges facing local government show no sign of going away, and in fact are likely to get worse. Nearly a decade of falling Central Government grants coupled with rising demands for statutory services such as social care has created a widening financial hole that even the best run councils will struggle to fill without more funding and more fiscal freedoms.
Despite greater reforms and savings by local government than any other area of public spending, Government has been forced to follow its cuts with bailouts over recent years, throwing emergency life rings to keep services such as social care (and soon policing) from going under. This cannot continue indefinitely, and the strains are becoming more evident. More potholes (which also received a bailout in the Budget), reduced bus services and fewer planners are inevitabilities when budgets are so tight.
Through the upcoming Spending Review, 2019 should be the year that central government gives local government the breathing room, with appropriate funding and fiscal tools, to deliver the public services and support the economic growth that their places and people need. As well as ensuring that local government is funded adequately, reforming Council Tax and Business Rates to reflect land values more closely, devolving portions of national taxes such as income tax and VAT – as is happening in Scotland – and allowing councils to introduce new taxes and levies, should all be on the table.
Hell on the high street
The collapse of HMV meant that the festive break saw no respite for any city hoping that 2018 would prove to be the low watermark for retail. Famous names such as Toys R Us, Evans and Maplin all closed their doors for the final time.
In 2019 more bricks-and-mortar retailers will go under as their business models continue to prove less attractive to shoppers compared to the almost infinite choice, lower prices and near instant delivery of e-commerce. Cities should avoid the temptation of swimming too hard against this tide, and instead should focus on interventions to make their city centres more attractive to non-retail businesses and activity.
Evidence from our Building Blocks report showed that cities with successful economies have more city centre office space and healthier retail offers too. Increasing the number of people living and working in city centres seven days a week with more money in their pocket is the most sustainable strategy to keep tills ringing, not cutting business rates or offering more free parking.
Many city leaders have already woken up to this. Andy Burnham and Andy Street have both launched local high street plans, focused on developing more dense housing around better transport links. And the £675m Future High Streets Fund announced in the Budget largely picked up on our recommendations, moving away from the retail-focus of the Portas review.
In 2019, city leaders and Central Government should focus on addressing the underlying challenges that leave weaker city centres and high streets vulnerable to the changing pattern of retail: too few skilled workers, too much retail, inadequate workspaces, poor public transport and highly dispersed activity across the city.