Latest Public Sector News

04.03.19

Billions of pounds made from selling public assets being spent on council cost-cutting and redundancies, new research reveals

The local government funding crisis has forced councils into selling thousands of public spaces, libraries, and community centres worth a total of £9.1bn in the last five years in order to pay for service cuts and redundancy payments.

New research from the Bureau of Investigative Journalism (BOIJ) has revealed that one in six councils had used sales of buildings and land to pay for cost cutting since April 2014, and almost a third of that – £115m – was spent on pay-offs for redundancies.

The investigation, in collaboration with HuffPost UK, comes amid a backdrop of substantial funding cuts with councils experiencing a 60% reduction in central government funding since 2010 and the BOIJ said the findings “lay bare the spiralling impact of eight successive years of austerity.”

Data was compiled on 12,000 public spaces sold by councils since 2014/15, and Freedom of Information requests found that 64 councils in England have spent a total of £381m made from property sales since 2016.

Khalid Mahmood, MP for Perry Barr in Birmingham, said: “This is an absolutely ridiculous way to do business.

“We should never have been selling the land that we have inherited from our forefathers… It just takes the future away from our children and grandchildren to come and that is really devastating.”

The research identified a clear trend between a relaxation of rules in 2016 allowing councils to spend proceeds from selling publicly-owned assets on cost-cutting measures instead of just purchasing new assets, with redundancies 75% at councils using the new spending powers.

In Bristol, council worker redundancies jumped ten times the previous amount after the rules were introduced – and Birmingham, Haringey, Stoke-on-Trent, Telford and Wrekin, and Wakefield were the five largest spenders on redundancies, all paying out more than £5m.

Simon Edwards, director of the County Councils Network, said: “Councils are facing unprecedented financial reductions whilst having to cope with demand for services hitherto unseen.

“It is therefore inevitable that councils have had to reduce highly-valued services to a minimum, with discretionary services disappearing, and new charges introduced for services ranging from black sacks to parts of social care.

“But without taking truly tough decisions, the outlook would have been even more bleak - today’s research on the usage of capital receipts is indictive of these difficult decisions.  Although some councils dispute the accuracy of the figures, if councils hadn’t used receipts from asset sales to fund statutory redundancies frontline services would have needed to be cut even further.”

Labour deputy leader Tom Watson said the blame should not be laid at the door of local government, as their budgets “have been cut at the bone by almost a decade of Tory austerity.”

Image credit - Ubermenschmatt

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