It's make or break, says Merrick Cockell. During the next couple of years – the crunch comes in 2015-16 – councils have to make the rest of the savings forced on them when Eric Pickles volunteered them to go first over the top in the 2010 spending plan.
The Local Government Association fears the forthcoming autumn statement could even foist further cuts on local budgets, amid jiggery-pokery on public health and social care spending shared with the NHS. So Cockell, normally mild and unthreatening, now says some councils will not be able to afford to carry out statutory obligations. They will go bust.
Is the LGA bluffing? The government is already in election mode, battening down the hatches, delaying politically embarrassing closures and decisions so it may think ‘Armageddon' talk could persuade George Osborne to cut councils some slack.
But threats need corroboration and the way things are now configured, the LGA is alarmingly on its own.
Before 2010, local government would have looked to the Communities Department for back up, for a friendly voice to argue its corner in Whitehall. Now, it's an enemy, with Pickles and his special advisers seizing every opportunity to denounce councils as bloated bureaucracies that ought to focus on weekly bin collections.
As for the Treasury, which once might have kept a strategic eye on the balance of council revenue and spending commitments, it has retreated into a hard shell. Its job is controlling spending. It no longer takes an interest in detail, in sustainability, in long-term value for money – there would be no point in the LGA appealing there for validation of its prediction that default looms.
Where, then, might councils look for a referee or appeal court? In a new book David Heald, the distinguished Aberdeen University accountancy professor, notes how crowded what he calls ‘the arena of fiscal surveillance has become' – internationally. The IMF, OECD, credit ratings agencies, G20, European Central Bank queue up to inspect the balance of spending and revenues.
Fiscal sustainability embraces, he says, ‘the timely and systematic disclosure of policies and transactions related to revenues, spending and borrowing'. So who is keeping an eye on things at home, and specifically at the capacity of councils to balance grants and taxes (and parking charges) while maintaining services, including those for which demand is rocketing?
Is this a job for Robert Chote and the Office of Budget Responsibility? If his wife (Sharon White, newly promoted second permanent secretary at the Treasury) won't protect local fiscal sustainability, might he? The OBR does do longer run projections of revenue and spending, but it sticks to the aggregates, not breaking them down into central and local components.
How about the National Audit Office, which looks out for efficiency and effectiveness in spending? Here's the rub. Under the bill abolishing the Audit Commission, the NAO is acquiring powers to conduct value for money studieson councils. And that may well mean (says the House of Commons Public Accounts Committee, for which the NAO works) council leaders and chief executives being summoned before MPs.
In other words, the price of having an authoritative and expert body overseeing fiscal sustainability for councils could be further intrusion into their affairs.
Far be it from me to point out that one of the tasks undertaken by the Audit Commission was precisely this: to look across the fiscal landscape of local government and sound warning bells that – because of its status – were attended to. The Audit Commission fell out of favour. We don't need no supervision, the LGA said in 2010, applauding Pickles as he wielded the axe.
And now? As the audit bill drags its weary way through parliament, snags and complications arising from the botched abolition of the Audit Commission start to appear. It seems the private auditors are intent on hiking fee levels, but not so keen on ensuring the audit service is extended across England to include far-flung, inconveniently located authorities.
Will private auditors stand up and be counted, adding their voice and judgement to Merrick Cockell's predictions of looming financial breakdown? Some might even welcome crisis, if it offers a chance to levy extra fees.
David Walker is a freelance journalist and former director of public reporting at the Audit Commission
