British municipalities facing financial collapse

Massive austerity pressure from the government, its own mistakes and inflation have plunged many British cities into massive financial distress. Everywhere is being painted. Even areas of daily life are not spared.

In some cities and towns the lights literally go out. The municipalities have to save money; an alarming number of them are facing financial collapse. Legally speaking, they can’t go bankrupt, but that doesn’t change the bitter reality that the British have to deal with. In Nottingham and Birmingham, city leaders had to decide this week how to save millions more. It’s not just street lighting that is being cut; many areas of daily life are affected.

Years of government austerity policy

David Mellen, City Councilor of Nottingham, lists on the BBC where the red pencil is being applied. Accordingly, libraries and community centers will be cut, nursing homes will be closed, and subsidies for volunteer work and art institutions will be canceled. “I’m sorry, but there are a lot of tough cuts in Nottingham,” says Mellen. He admits that the city administration has made mistakes in the past, but in his view something else is much more serious: the years of austerity policies of the conservative Tories, who have been in power in Great Britain since 2010. “The government has cut our budget by hundreds of millions of pounds every year for the last ten years. That adds up.”

Inflation and social spending are fueling financial distress

While municipalities have less money at their disposal, inflation has driven up costs. Social spending also has an impact, as does the care of children as well as the care of the elderly and the homeless, whose numbers continue to increase. In the meantime, emergency accommodation can no longer be financed in some cases, art galleries and orchestras are worried about their future, swimming pools are being closed, public transport connections are being thinned out, and waste collection and street cleaning are also being cut. Two thirds of municipalities say they have had to cut back on their range of services.

The situation is so precarious that the British government approved £600 million in one-off emergency aid in January, but that is not enough. According to the Local Government Association, which represents local authorities in England and Wales, the local government funding gap will be more than £4 billion over the next two years. The chairman of the Local Government Association, Shaun Davies, is therefore calling for fundamental changes. It’s not about a single financial equalization. Rather, the problem lies in the system and the government must now take care of that.

Higher Municipal taxes

Since 2018, eight local authorities in England have officially declared themselves bankrupt. According to a survey, more than half of the city and municipal administrations surveyed expect a collapse in the next five years. In order to remain able to act, municipalities increase municipal taxes. In Birmingham the increase amounts to a good 20 percent in two years. This causes horror among citizens who are already barely making ends meet. “20 percent will almost kill us,” one woman tells the BBC. She doesn’t know anyone who doesn’t feel that money is running out at the moment. “You can feel your hands around your neck.”