Today we want to explore the possibility of bankrupt local councils being taken out of public control and run privately.
The pandemic has affected us all. Wherever you are in the world and whatever you do for a living, you'll have felt the knock-on effects of the virus on the world around us: lockdowns, the race to create vaccines and then to get them into people's arms, and jobs disappearing in some industries while new ones spring up in others. Few could have predicted the situation we'd find ourselves in when the bells rang in 2020.
But here we are, and for some the situation is worse than for others. Governments around the world have borrowed huge sums of money to prop up society as it lurches from one lockdown to the next. In the UK, the rules differ between England, Scotland and Wales. In England, so-called Freedom Day finally arrived on 19 July - yet few of us would say things have gone back to normal. Pre-Covid normal still seems some way off.
Financial ruin
And then there's the money. Many people have seen their finances wrecked by redundancy, or by their job or entire industry disappearing. Businesses going bust have hit the headlines with alarming regularity over the last 18 months. But when it comes to bankruptcy, would you put English councils on that list?
You should, because news reports of exactly that are easy to find. Croydon Council effectively declared itself bankrupt towards the end of 2020, when it issued a Section 114 notice confirming its dire financial position. It wasn't the first council to do so - Northamptonshire County Council had done the same before the pandemic began. Research has shown that Croydon was already in financial trouble several years before the notice. Covid-19 certainly didn't help - in fact, it was the final push that left the council unable to balance its budget.
In March 2021, the Government agreed to lend the council a total of £120 million to resolve its difficulties: £70 million for the 2020-21 financial year, followed by a further £50 million for 2021-22. The loan will be repaid over at least 20 years. It didn't come without conditions, though, and residents will see further cuts to services as a result.
Slough follows in July 2021
The stark news of a bankrupt council grabbed the headlines, but Croydon is not alone. On Friday 2 July 2021, it was reported that Slough Borough Council had issued a Section 114 notice of its own, after those in charge discovered a £100 million hole in its budget. Once again, the council has not gone bust purely because of Covid-19, but the pandemic has again proved to be the final push over the edge.
And it's only the beginning…
On 23 June 2020, The Guardian reported that eight out of ten English councils were at risk of being unable to balance their books. Then, in January 2021, the BBC wrote that English councils were "battling financial ruin" because Covid-19 was piling extra pressure on already cash-strapped services.
Could we see more English councils go under? As Croydon shows, in some cases the problem won't get better without financial help.
What about privatisation?
Is this something we could see in the future? Could entire councils be run by private companies?
No council has been privatised yet, although many have outsourced certain services to private companies. Refuse collection is a common example, with councils paying private businesses to collect rubbish rather than doing it in-house.
It isn't the only service councils have farmed out, either. Cleaning and residential care have been outsourced in the same way. Some believe outsourcing lowers costs, yet there have been cases of private businesses being paid well over the odds for their services.
So, with bankruptcy a real threat to many English councils, could this be the moment privatisation comes into play?
Solution… or complication?
It might look like a way to solve the money problems, especially in the current climate. A solvent private company steps in to run the council: it is financially sound and willing to provide the council's services to local residents. But while it sounds good in theory, there is the small matter of profit to consider.
In other industries, suppliers have creamed off huge profits for their shareholders. A company can carry plenty of debt, pay its investors handsomely and still cut back the services it is supposed to provide.
There is no clear answer. All we know is that the pandemic has made life far harder for many English councils - and looks set to keep doing so. Like many people living across England, we're curious to see what the outcome, and the fallout, will be.