It is easy enough to trace the point at which local authorities embarked on the sad, downwards journey which has led to several going bankrupt. It was when they renamed their town clerks ‘chief executives’. In doing so they started posing as private businesses, with salaries and bonuses to match. But their pretensions were not matched by business acumen. Twenty of them are now weighed down with a combined £30 billion of debt. Several councils have got into trouble by entering the commercial property business at a time other investors were starting to flee. Woking is in difficulty after turning property developer, trying to build a posh high-rise hotel in its town centre. Others bought up shopping centres just as retail business was draining away to the internet.
The concept of work of equal value has become a bomb which sits under many councils
No, councils are not businesses. Real businesses, when they get into trouble, do not go to the government pleading to put up their prices, as eight councils are doing, claiming they need to increase council tax by up to 25 per cent. Real businesses don’t have a ‘customer’ base which is forced to pay for their services whether they want to use them or not. They don’t carry on paying fancy salaries when they go bust – they get picked apart by receivers, in many cases resulting in executives losing their share options and pensions.
Councils don’t want to know about this side of capitalism. Rather, they want to be rewarded for their mismanagement of public funds. If they want to pose as private businesses, why doesn’t the government treat them as such? When they go bust they should be abolished, with everyone losing their jobs, and their functions handed to other authorities.
All this said, there are two ways in which councils are being dealt an unfair hand. First is the rapidly accelerating bill for social care. A small council which has the misfortune to have on its books a handful of high-dependency adults can find itself having to fund their needs from an inadequate pool of council tax receipts. No one seems to want to pay for old age care, least of all the people who benefit from it, many of whom seem to think they have the right to pass on their wealth, in full, to their heirs, with the state picking up the tab for their care bills. One of Jeremy Corbyn’s few good ideas was for a national care service, which would manage the cost of social care at a national level, freeing local authorities to concentrate on their central functions like emptying the bins and maintaining the roads.
Secondly, there is onerous legislation on equal pay. Birmingham City Council went bust essentially because for many years it paid its office cleaners less than its dustmen. It wasn’t paying female cleaners less then male ones, or female refuse collectors less than male ones; rather an employment tribunal decided that cleaning offices was work of ‘equal value’ to emptying dustbins, and given that the first occupation was female-dominated and the second one male-dominated this was a case of sex discrimination.
But the concept of equal work is ridiculous. Employers need to set wages at a level which attracts sufficient recruits. If a council has a shortage of dustmen it needs to pay them more, maybe even to entice a few cleaners to retrain working dustcarts. The idea that employers should set wages according to ‘job evaluations’ rather than economic reality undermines the labour market. It is also inflationary. What is to stop dustmen claiming their work is of ‘equal value’ to office managers who in turn claim theirs is of equal value to teachers, and so on all the way up until everyone has to be paid the same as the chief executive?
The concept of work of equal value has become a bomb which sits under many councils – and private businesses for that matter. That is a burden that the government, at least, could free councils from. But of course it won’t, because the unions wouldn’t let it. For Labour, it is politically far easier to pile ever greater employment legislation upon councils – and let residents pick up the tab.
Comments