The government’s so-called shit-list—a term coined, allegedly, by Keir Starmer’s now former chief of staff Sue Gray—has occupied significant bandwidth in Whitehall over the past 100 or so days. The famed inventory of the government’s most urgent crises includes overcrowded prisons, the future of the NHS, the collapse of Thames Water, and the universities and local authorities at risk amid budget cuts and rising costs. Since Labour was elected, far-right riots and dangerous cladding have moved up the political agenda, too—the latter due to the Grenfell Tower Inquiry publishing its 1,700-page report and a fire breaking out in one of London’s most disadvantaged boroughs.
Local authorities, on the other hand, have priorities of their own beyond potential bankruptcy. If Sue Gray had been a local authority bigwig, what would be on the local government “shit list”?
Hackers and spies
While local authorities are busy with “bins, bogs and burials”, a network of criminal or state-sponsored actors seems to have other plans. According to the director general of MI5, China has an interest in “cultivating assets” that includes elected politicians in local authorities. In 2021, the Foreign and Commonwealth Affairs Select Committee recommended that CCTV equipment manufactured by the Chinese surveillance firm Hikvision, which is used by dozens of local authorities, should be prohibited in the UK. The company has been accused of participating in “technology-enabled human rights abuses” against Uyghurs in China’s Xinjiang province, and it has also been accused by the US government of facilitating Chinese espionage. Hikvision has denied these claims.
Meanwhile, authorities are increasingly at risk of cyber-attacks, potentially with the involvement of nefarious foreign interests. Hackney Council was a victim in 2020 after cyber-attackers accessed 440,000 files, including personal and sensitive data on people living in the London borough. The local authority is still recovering from the impacts of the attack, which has made it more difficult for Hackney to deliver services ever since. The Information Commissioner’s Office ruled in July that it was a “clear and avoidable error”, while the council acknowledged that the attack posed “a meaningful risk of harm” to 230 “data subjects”—that is, Hackney residents.
This is a common problem. Bolton, Manchester, Leicester, Salford, Canterbury, Dover, Thanet and Gloucester have all been victims of cyber-attacks over the past 12 months.
Care and conflicts of interest
While hackers are blackmailing authorities for taxpayers’ cash, some companies are profiting from the council crisis. The new financialised world of local government, featuring joint ventures with the private sector and trading companies wholly owned by authorities providing services, has arguably become problematic. Supporters take the view that these organisations give authorities the freedom to finance services and deliver on their priorities. Detractors say such arrangements leave authorities less accountable. Further, some argue, profit-sharing agreements—such as those common in parking enforcement—pose a conflict of interest because authorities have a perverse incentive to enforce parking rules more strictly in order to increase their revenue, rather than to uphold public order and safety.
This is particularly problematic in publicly funded social care, for which councils have a responsibility, and from which private equity is maximising profits. Currently, 863 registered care homes that look after vulnerable children are controlled by private interests. While authorities are struggling to afford placements, in 2022 the Competition and Markets Authority ruled that the 15 largest care providers had a profit margin of 22.6 per cent on average. Plymouth City Council, for instance, spends an average of £6,182 per week per childcare placement. In some cases that figure has risen to £40,000, depending on the circumstances. While councils are trying to place vulnerable residents, these companies turn a handsome profit.
Ofsted is now seeking new statutory powers to regulate the care market, and in the meantime various councils are looking for solutions, not all of them welcome. One worrying option that has been under consideration at Derbyshire County Council is a proposal to “recover contributions” from “children who are at risk of significant harm” when those children turn 16, in order to safeguard against the council issuing a bankruptcy notice in the near future.
Last month, children’s minister Janet Daby said in response to a written question from Labour MP Helen Hayes that “profiteering from vulnerable children in care is unacceptable”. She added that the Children’s Wellbeing Bill, announced in the King’s Speech in July, would take action to “strengthen the regulation of the sector to return children’s social care to delivering high quality outcomes for looked-after children at a sustainable cost to the taxpayer”.
Authorities will be watching closely to see if the legislation has the teeth it needs.
The Send crisis
A major cause of council bankruptcies is the chaos in special educational needs and disabilities (Send) support. Many children and young people with Send diagnoses languish in mainstream schools for years without the support they are entitled to from local authorities. This is because of rising costs and an increase in Send referrals, alongside the long-term trend of real-terms budget cuts for local government. According to Schools Week, since 2021 some 38 councils with large Send deficits have entered arrangements with Whitehall for additional financial resources.
Send provision is inconsistent. For some young people, support can include transport to get to and from school. But with authorities struggling to manage demand, transport has become unreliable. The children’s commissioner for England, Rachel de Souza, has raised concerns about the thousands of children with additional needs that are absent from school. In new analysis published last month, the commissioner revealed that children in England missing from the education system are 1.4 times more likely to have a special educational need.
In 2022-23 there were 13,658 tribunal appeals against English local authorities for a lack of Send provision. Though the former education secretary Gillian Keegan accused parents of gaming the system in order to enrol their children in “very expensive independent schools”, authorities have lost 98.3 per cent of appeals when they went to hearing. Only 136 appeals out of 7,968 that year were upheld in authorities’ favour, meaning that in those cases children were indeed entitled to support.
Currently, the Send provision deficit in English councils is just over £3bn. To address the crisis, authorities are asking the government to wipe off their debt, which is expected to increase to £5bn by 2025-26 and threatens to make more authorities bankrupt. Some are unable to meet their statutory obligations as demand increases, which puts them at risk of legal action.
There are, of course, many other problems for local authorities. And given the way that local government in this country is organised, with funding from Whitehall and little control beyond that, councils have few options to choose from. From bankruptcy to homelessness, the rising cost of living and families falling into debt, authorities are trapped between the devil and the deep blue sea. The council finance crisis has led authorities to cut public services that local residents rely on, including libraries and leisure facilities. Enfield, for instance, is considering the closure of eight of the borough’s libraries, causing fury among locals. Meanwhile, Newham is taking to its cabinet next week proposals to increase the cost of some services by up 20 per cent from January.
The Budget is just around the corner. What will the Labour government do to stop councils from drowning?
