Councils are going broke – but is it really because they went woke?

Good morning. One feature of Jeremy Hunt’s budget yesterday was an effort to present the government as ruthlessly focused on reducing the state’s profligacy, in order to leave more money in people’s pockets. (See below for highlights of the Guardian’s coverage.) To that end, a line was briefed out ahead of the speech that will have prompted groans in town halls across the country: an attempt to put the blame for the financial crisis so many of them are facing on waste.

The culprit, Hunt was expected to say, was “unnecessary” council spending on consultants and diversity projects. He told the Sunday Telegraph that he found public money being spent on “woke” initiatives very hard to defend.

Mysteriously, the line went missing from the budget itself. But the Conservatives say this stuff all the time. In January, the levelling up secretary, Michael Gove, said that local authorities should ask if “discredited equality, diversity and inclusion programmes” would really “improve service performance and reduce wasteful expenditure”. In 2022, a group of backbenchers – including Esther McVey, now the “commonsense tsar” – wrote that “We will have a much better chance of cutting taxes or spending more on frontline public services if we end this sort of waste.”

All this is obviously catnip to the anti-woke warriors. The only other question is whether it’s remotely true. Today’s newsletter, with Ross Mudie, senior research analyst at the Centre for Progressive Policy, explains why it definitely isn’t. Here are the headlines.

Five big stories

In depth: ‘It’s really pennies against the scale of council budgets’

Consultants and diversity programmes are natural targets for political attacks: they’re broadly defined, much less tangible that bin collections and libraries, and to most people utterly mysterious.

But the boring reality is that any claim that they are the reason so many councils are in dire financial straits is a fantasy. Here’s why.

What do consultants do, and what do they cost?

Most of the time, consultants are hired when a council lacks the in-house expertise to get a job done. They might work on a long-term economic strategy, cover a role until a permanent hire can be made, or give advice on a bid for a pot of central government cash.

Local newspapers are full of stories about local authorities spending a lot on consultants: £14m in Sheffield over five years, £3.3m in Shropshire over three years, £13m in Cardiff (above) over the last decade. There’s no up-to-date overall figure for this kind of spending across the country, but in 2023 NationalWorld reported that consultancy fees on bids for levelling up money across England amounted to £26m since 2019. And a Times article in 2019 reported that local councils across the UK had spent £400m on consultants in the previous year – a rise of more than a fifth since 2014.

What’s driving the use of consultants?

In some cases, this spending is probably inevitable, whatever the state of council finances. “There is often an argument that it doesn’t make sense to have these resources in-house,” said Mudie. “A big city area might have a wide supply of labour, and it’ll make sense. But a more rural area or a town – it will be difficult to have that talent available to you full-time. And if you only need them for a few months, that’ll be more sensible than having someone on staff.”

Often, the need for consultants is beyond a council’s control. “The simple fact is that local government has been forced to make massive staff cuts by a reduction in funding,” Mudie said. “There were 2.2 million people employed by local government, and there are 1.5 million now – and at the same time the proportion working on statutory services has increased because there is higher demand.”

Meanwhile, the government only tells councils about their funding for a year at a time, making long-term planning very difficult. “The incentives of that system are to have a few people in for a couple of months instead of a permanent team working on economic strategy.”

Any minister criticising councils for overuse of consultants might be asked why central government works in a very similar way. Only last year, the government’s in-house consultancy service shut down because departments preferred to use major outside firms; partly because of the need for expertise during the pandemic, consultant contracts quadrupled from £700m in 2016 to £2.8bn in 2022. “There are circumstances when drawing on expertise from the private sector can help support the delivery of effective and efficient public services,” a spokesman said. Someone tell Hunt and Gove.

Is it fair to say councils are wasting money in other cases?

It’s not clear that they have much choice. “Take a bid for central government money,” said Mudie. “It may be that because of the cuts to staff numbers and resources in local government since 2010, you simply don’t have the personnel to compile a bid. You may calculate that a consultant who works on this stuff all the time can make yours sharper and more likely to impress someone in Whitehall.”

On the levelling up grants, only 111 of 529 second-round bids were successful. That’s a lot of money spent on fruitless bids, but it’s not obvious that it’s the councils’ fault when the rewards are so significant. On Tuesday, Burnham (above) characterised the approach as “making councils bow down and bid on bended knee … having to employ those same consultants because the government has effectively required them to do so”. Last year, a Conservative mayor, Andy Street in the West Midlands, called it a “begging bowl culture”.

It’s not only about major funding pools like the levelling up money: Mudie points to a government scheme inviting bids to receive £2,500 for chess tables in parks. “When I speak to people in local government, they say they feel they are not trusted – they have to put these bids together for projects that might not align with the specific problems they see day to day.”

What about diversity schemes?

There are arguments to be made about consultant fees, but this is just a bit ridiculous. No exact overall figure is available, but in 2022 the Conservative Way Forward group asked councils for their expenditure on jobs relating to equality and diversity, and came up with a figure of £30m across 397 councils. That’s about £75,000 each. “It’s really pennies against the scale of council budgets,” Mudie said.

A similar exercise in 2023 suggested £18m across 498 employees at 247 councils. In Birmingham, which just approved the biggest cuts in the council’s history because of its financial crisis, about £450,000 was spent on diversity staffing in 2022-23 – or about 0.02% of its total spend on services of over £2bn, the BBC calculated.

The Local Government Association points out that some of these roles aren’t about “woke culture” but essential services like helping profoundly disabled or blind people with applications for housing or care. “I haven’t seen much research on this,” Mudie said. “But there will be cases where it’s helpful to improving delivery of services to particular groups, or retaining people and reducing the drain on resources of staff turnover. Those things can save you money in the long term.”

There are, meanwhile, also claims of extravagant expenditure on courses to address unconscious bias or microaggressions. But a cursory look at some examples suggests how trivial these sums are: whatever you think of City of London council spending £12,420 on four sessions involving a diversity board game for 68 workers – £45 per session per worker, since you ask – it’s hard to see junking it as a path to putting councils back on a solid financial footing.

So, are consultants and diversity schemes to blame for the state of council budgets?

Apologies if you were hoping for a twist, but no, definitely not, Mudie said. “The big things that have happened since 2010 are a decline in councils’ spending power, because of massive decreases in central government grants – and an increase in the statutory services they’re expected to offer, with more people needing them.”

As an example, he points to homelessness, and the duty imposed on councils by the government in 2018 to prevent it from happening and relieve it when it does. That is a laudable ambition, and exactly the kind of thing a council should do – “But there are a higher number of people at risk of homelessness now, which is mostly because of the extortionate price of housing. That’s not the council’s fault.”

Meanwhile, local authorities are stuck with a badly outdated council tax system and huge decreases in the money they get from general taxation. If more councils have gone bust in the last three years than in the previous 30, that seems a more likely culprit than consultants and diversity schemes – which are, of course, among the first things to go in a time of crisis. “Ultimately, they just need more money,” Mudie said. “It’s hard to get away from that.”

Read more on the budget

Alex Lawson and Peter Walker have a broken-up guide to the key points of the budget at a glance.

Use this calculator to work out if the budget has left you better or worse off.

A panel of writers analyse the budget’s implications: “This was not the tax-slashing bonanza many MPs had dreamed for,” says Katy Balls, while Mariana Mazzucatosays that Hunt’s giveaways “will decrease government fiscal space without driving growth opportunities”.

Pippa Crerar hears a lukewarm response from Tory MPs: “It’s not as sexy as I would’ve wanted but it gives us leeway to go further before the next election,” one says.

“It’s just a shame that for such an elaborate fiction, we have in Jezza such a piss-poor storyteller,” John Crace writes in his sketch. “He rambled his way unconvincingly through a screed of numbers that turned out to be entirely imaginary.”

What else we’ve been reading

Giles Yeo points out the flaws in the ultra-processed food furore – why should oat milk and vegan burgers avoid the criticism levelled at white bread or cereals when they all contain a host of additives? His worry is that the UPF concept is “currently being used as another cudgel to food-shame others”. Toby Moses, head of newsletters

David Runciman’s magisterial long read about “political long Covid“ is an alarming description of the ways the pandemic changed the world – and failed to. “The immediacy of the threat has passed,” he writes, “but the lingering signs of the damage it did to the body politic are everywhere.” Archie

Germany is often presented as the model of efficiency, but with the Euro 2024 championships 100 days away, Jonathan Liew paints a rather different picture of a country riven with doubt and unprepared for the football jamboree about to arrive. Toby

The photos are enough to give you nightmares as Emma Beddington guides us through the history of dolls – from the definitely haunted Nuremberg jointed doll to the frankly grotesque Cabbage Patch dolls I remember from my youth. Toby

A weird one, this: Road and Track magazine commissioned journalist Kate Wagner to attend a grand prix in Texas last year, and write 5,000 words about it. The result was a truly brilliant observational piece about the excesses and absurdities of the Formula One circus– but the magazine mysteriously pulled it an hour later, apparently because it “didn’t fit with the site’s editorial goals”. Luckily, it’s still online here. Archie

Sport

Football | Manchester City continued their pursuit of back-to-back Champions League titles by advancing to the quarter-finals of European club soccer’s elite competition with a 3-1 win over FC Copenhagen, 6-2 on aggregate. Real Madrid drew 1-1 with Leipzig to advance to the quarter-finals for a fourth straight season with a 2-1 aggregate win.

Cricket | England reached 101-2 at lunch on the first day of the final Test in their series against India. Zak Crawley rode his luck to anchor the innings with 61 not out, but two wickets for Kuldeep Yadav pegged England back after Ben Stokes won the toss and chose to bat. Follow the latest on the live blog here.

Olympics | IOC president Thomas Bach has directly criticised Russia’s leaders – and told them that their “blatant violation” of the Olympic charter is the reason their country has been banned from the Paris Games. In strong language that illustrates growing tensions with Moscow, Bach also attacked Russia for its “scandalous manipulation” of the anti-doping system at the 2014 Sochi Winter Olympics.

The front pages

“A last desperate act” – the words of Sir Keir Starmer headline our budget coverage on page one of the Guardian. “We deserve better”, says the Daily Mirror, calling everything about Jeremy Hunt’s statement “stagnant”. Not so, says the Daily Express: “Britain ready for take off!” – which will resonate with anyone who’s been kept waiting on the tarmac with a budget airline. “‘We’re turning the corner’” says the Times, while the Daily Telegraph has “Hunt signals the end of NI”. The i leads with “Labour rules out taxing wealthy to avoid £20bn cuts”, and “Cut and run” – that’s the Metro. “Will it be enough to see off Labour?” – good question, Daily Mail. We end on a cliffhanger with the Financial Times: “Hunt leaves door open to more tax cuts”. Here’s a full guide to the newspapers’ budget coverage.

Today in Focus

Cartoon of the day | Martin Rowson

The Upside

A bit of good news to remind you that the world’s not all bad

Will North admits the experimental Gloucestershire restaurant he manages, the Long Table, is taking a risk. There’s no prixfixe here – instead patrons are encouraged to pay what they can. A welcome venture in a year when eight million adults and three million children in the UK face food insecurity. Perhaps even more unusual, though, is that the Long Table pays staff a real living wage – no volunteers in the kitchen or front of house – and chooses suppliers who, in North’s words, “not only prioritise [the] planet, but people as well”. Over the last year, it has fed roughly 20,000 people and saved 3.4 tonnes of food destined for the bin.
Patrons sit at canteen-style tables – North calls this “radical hospitality” – and a typical lunch service feeds as many as 250 people. Menus, meanwhile, are based on what ingredients are available, and suppliers include the national charity Fareshares, which redistributes surplus food. Speaking to the Guardian’s Damien Gayle, who chronicles the Long Table and its mission, North says: “We hold a space where we are all collectively trying to answer a question: what if everyone in our community had access to great food and people to eat it with?”

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