Thread by @Gareth_Davies09

THREAD: Yesterday two at-risk local authorities were told to sell off publicly-owned assets - such as leisure centres and libraries - to balance their books in the latest short-sighted (and, in this case, ironic) government response to #councilsincrisis

Peterborough and Wirral councils have been told to take urgent action to plug gaps in their budgets following the publication of reviews into their finances. For a summary, see @patrickjbutler's story from yesterday theguardian.com/society/2021/n…

Key to the measures recommended by public finance body @CIPFA is the sale of publicly-owned land and buildings. While not the first crisis-hit councils expected to do this, such advice flies against the Gov's own rules and will be particularly hard to swallow in Peterborough

First, a bit of background. Prior to 2016, councils could only use money made from selling assets to fund the cost of buying new ones. In April of that year the rules were changed to provide an alternative source of income amid swingeing government cuts

The revised rules allowed for the proceeds - known as capital receipts - to support council's revenue budgets as long as they were only used to fund cost-cutting measures (effectively any reform which has an upfront cost but reduces spending on an ongoing basis)

Councils across England and Wales made use of these new powers. As a direct result, thousands of public spaces - including libraries, community centres and playgrounds - were sold off to fund further cuts. Here's the @TBIJ investigation from the time thebureauinvestigates.com/stories/2019-0…

In a double blow to communities, some councils - among the biggest local employers - used the money to fund hundreds of redundancies. In the three years after the rule change, the average number of redundancies was 75% higher at councils which used the new powers

At least job cuts produced recurring savings and made further sales less of a necessity. In some areas the money was used in lump sums to plug budget gaps - squandering the assets and producing little in the way of long-term savings.

Peterborough was perhaps the worst offender.

Over the space of four years, Peterborough council used £24m from the widespread sale of public land and buildings to fill holes in its budget (specifically, it used capital receipts to cover the amount councils are required to set aside each year to repay money they borrow)

This reduced the pressure on the council's finances but also made it *dependent on selling assets to break even* - a position even the council itself recognised as being unsustainable

In total, Peterborough Council sold around 50 assets - including pubs, petrol stations, a college and farmland - between July 2014 and July 2018. At the time one Labour councillor described it as a "fire sale". A Tory cabinet member dismissed the issue as "fake news"

After an investigation by @TBIJ uncovered what the council was doing, a formal investigation was launched. Correspondence later showed the government telling Peterborough that selling its assets in this way was not within the rules. But when it came to it, no action was taken

Professor Tony Travers, an expert in local government warned that such inaction put public spaces at greater risk of being sold off for short-term gain.

When it comes to councils in the most dire financial situations, such an approach now appears to be government policy

CIPFA’s report into Peterborough’s finances, published yesterday, says the council holds “substantial” assets – specifically rural land and a portfolio of office and retail space – which could be sold in order to balance the council’s 2022-23 budget

There is no mention in the report of using the proceeds to fund cost-cutting measures, as per the rules. While that may reflect the severity of Peterborough’s financial position, balancing books through asset sales squanders the assets and has little long-term financial benefit

So here is a council being told that to solve the crisis it is facing it must continue to do the key thing that caused the problem in the first place.

And, yet again, local communities will ultimately lose out.

It recalls that time in 2013, when Eric Pickles claimed councils were complaining about funding cuts while "hoarding billions in their piggy banks". Many then proceeded to use their reserves to avoid or reduce cuts, only to be accused of being irresponsible for doing so

There isn't an easy answer to the council funding crisis. But we've reached a point where the government so few ideas - so little vision - that the best it can do is tell councils to sell what little assets they have left in order to stave off disaster for a few more years

At some point, many years too late, they're going to realise that cut, cut, cut (or, in this case, sell sell sell) is an unsustainable way to fund services that form the backbone of society, and a safety net for the most vulnerable