Government Spending Review: Freezing key workers' pay 'does little to thank them'

Philip Glanville, Mayor of Hackney, responds to the Government's Spending Review, announced by the Chancellor in the House of Commons this afternoon.

Philip Glanville, Mayor of Hackney
Today's Spending Review has made clear who is to bear the brunt of the financial cost of meeting the challenge posed by coronavirus, with real terms pay cuts for key workers coupled with potential tax increases for local rate payers.

Teachers and their assistants, care workers, local contact tracers, park keepers and waste collectors are among those who kept Hackney safe and moving over the last year, often putting themselves at personal risk to serve others – just like our NHS heroes. 

Freezing the vast majority of key workers’ pay – and offering a pitiful £20 a month before tax to those on the very lowest incomes – will do little to thank them for their tireless efforts.

While the hard fought for increases in local government funding are welcome, the devil will be in the detail, and yet again, today’s announcement fails to tackle our funding shortfall head-on – instead hiding behind clever language and passing difficult decisions onto local leaders. 

What we needed today was a commitment to meet the black hole in local finances left by the pandemic, giving councils across the country long-term certainty. Without this, they will be forced to make very difficult decisions about essential frontline services – at the time when people most in need are relying on them most. 

Hackney has lost £140m in government funding since 2010 – £1,459 a year per household and the most of any London borough. The Government must take much more concerted action such as committing to extend the Universal Credit uplift, otherwise more people are at risk of being plunged into an underfunded social insecurity system that leads to a pernicious cycle of poverty, debt and homelessness.
Philip Glanville, Mayor of Hackney

Council staff worked hard during the first national lockdown to ensure that those that needed help got it. Between March and July, this included: 

  • 600 volunteers deployed
  • 800,000 items of PPE issued to staff and external providers (including individual items, ie each glove)
  • 14,000 emergency food parcels delivered
  • 7,300 calls made to vulnerable tenants and leaseholders
  • 170 rough sleepers in off the streets
  • £62.5million in government grants paid to nearly 4,300 businesses
  • 7 pavements widened/6 roads closed to aid social distancing
  • over 1,500 laptops sent to students that need them
  • £62,000 in council rent relief for voluntary and community organisations

The Council is currently forecasting a £20.5million shortfall from Council Tax and Business Rates income, which would affect its 2021/22 budget. The Chancellor has only committed to cover 75% of this lost income – leaving the Council with great uncertainty.

Council finances have been cut over a decade of Government-led austerity, and local authorities have already faced difficult decisions about services. Hackney has lost £140m in government funding since 2010 – £1,459 a year per household and the most of any London borough. We’ve addressed this huge challenge by, among other things, reducing management and back office staff, investing in services to reduce costs in the long term, bringing services back in-house and renegotiating contracts. This prudent financial management means the Council is still managing to deliver good services – but the huge impact of coronavirus on already stretched budgets means this won’t be possible in the future.

Ministers have rightly postponed their Fair Funding Review until next year. This review will reset how local government grants are awarded, and analysis has suggested that the process will divert funding away from areas with high deprivation and need – such as Hackney – to areas with ‘remoteness’ and longer travel times, helping county councils. Although the review has been delayed until 2021, it could mean huge long-term cuts to the Council’s budget, making it more difficult to provide essential services. 

Hackney Council believes that local government grants should be awarded based on deprivation and need of communities, not by a one-size-fits-all formula based on population. We will continue to campaign for any review to put this principle at its heart.