Ever rising council tax means London boroughs are better funded, yet they continue to spend beyond their means, with a £500m shortfall expected this year, says Shimeon Lee
London is a city steeped in history. The governance of London is equally ancient, with the City of London dating back to medieval times. Yet while the City has modernised, much of London local government remains stuck in the past.
Despite more funding from government and ever rising council tax, London’s boroughs continue to spend beyond their means, with a £500m funding shortfall expected in the upcoming year. Part of this is due to rising demand for statutory services like social care which councils are now expected to provide, even as they continue to operate within the confines of structures created six decades ago.
The Taxpayers’ Alliance latest research takes a look at how the increasingly anachronistic structure of London local government constrains boroughs, and the opportunities that can be unlocked through reform.
London has more councillors then any other city
Take political representation for example. There are more than 1,800 councillors across the 32 London boroughs, a higher concentration than any other urban area in the UK and higher than comparable cities overseas like Sydney, Melbourne and Montreal. This costs a pretty penny. While councillors’ basic allowances are relatively modest, after multiplying by the large number of councillors and adding various special responsibility allowances they end up costing over £32m a year. There is no doubt that some councillors deserve every penny, but Londoners will rightly wonder if we really need so many of them. So many roles makes it harder to attract talent too.
The oversupply of councillors is replicated in the local bureaucracy. London boroughs have at least 31 chief executives, 26 directors of children services, 24 directors of housing, 23 directors of adult services, 20 directors of public health and many other variations of such titles.
While there has been progress in moving towards shared staffing, notably in the case of Richmond and Wandsworth, most boroughs still have their own separate bureaucracy resulting in unnecessary duplication. This contributes to the growing number of high paid staff in local government, something that we at the Taxpayers’ Alliance highlight each year in our annual Town Hall Rich List. Last year, we found at least 662 council employees receiving over £100,000 in London, costing £90m. For the third year in a row, Westminster topped the national list.
There are at least 62 council employees receiving over £100,000 in London, costing £90m and Westminster tops the list
Having 32 politically separate boroughs also undermines attempts to realise efficiencies. For example, the tri-borough arrangement between Westminster, Hammersmith and Fulham, and Kensington and Chelsea, aimed at saving money through shared services fell apart in 2017 due to political differences between the councils.
The current configuration of London local government is based on assumptions from a bygone era, where the size of boroughs was thought to be limited by the need for face-to-face communication. Modern technology has rendered distance less relevant and allowed services to be delivered at scale. Political and administrative consolidation of boroughs should follow to deliver efficiencies, drive down the funding shortfall and avoid council tax hikes.
A serious reform agenda should consider merging smaller boroughs, streamlining leadership roles and expanding shared services. In addition to saving money for taxpayers, merged boroughs could also unlock new opportunities by amplifying an area’s voice at the national level and giving them greater bandwidth to experiment and specialise. The City of London corporation is a great example of how local authorities can go beyond just delivering basic services. It represents and champions the financial services industry – influencing public policy in the UK and globally.
As with any reform, there are certainly risks involved, the most significant of which is that poorly managed reorganisation could eat up any long run savings. The only thing stopping London from being brought into the 21st century is bureaucratic inertia. Taxpayers shouldn’t have to foot the bill for that.
Shimeon Lee is a policy analyst at the Taxpayers’ Alliance