Councils & the crisis

The local government world has, perhaps understandably, been pretty quiet about the joint cost of living and energy crisis; neither energy supply not meeting basic food needs is a core part of their service delivery,and rents are out of their control, so they may wel lfeel as powerless as the rest of us.

But they don’t have to be powerless, and the new interest-free loan scheme announced by Iceland offers an example of how they might, with a bit of creativity, get involved in the resistance against central government’s negligence, in a way which meets the immediate needs of their citizens [1]

The approach might look something like this.

First, a council (hopefully coordinated with others) offer simply to buy the ‘loan book’ being built up by Iceland in the council area, or more likely by the non-profit lender, Fair For You, partnering with Iceland and cashflowed by it.

Officially, these loans become debts in the accounts of the local authority, perhaps even with a small percentage interest rate set out in the council’s medium term projections, but the political narrative is that the council will seek funding from central government to write-off most or all of these loans as and when the government adopts a policy of actually bothering to ensure people have enough to eat, or a new government that does bother is installed.

Second, and alongside preparations for the loan book acquisition, the council (again, in coordination with others) exercise its right set out in the Sustainable Communities Act 2007 (amended 2010) to apply to central government for the additional powers it needs to ensure the sustainability of the community it serves.

There’s not space here to set out fully how such an application might be set out, but the central demands might be:

a) that the government remove, until such time as the crisis is deemed to be over, the duty imposed in section 114 , para 3 of the Local Government Finance Act 1988 on a Council’s Chief Financial Officer to report to central goverment any concenrs s/he has about the council not setting a balanced budget;

b) that for the period of the crisis, the goverment offer instruction to audit firms that they disregard any loan book arrangement such as the Iceland one as a significant risk to the council;

c) that debts under the loan book held may not be used by consumer credit agencies as part of its scoring processes.

Now, in an ideal world, the government would accede to these or similar demands, such that councils could take on the loan books without fear of legal consequence. In such an event, we would quite quickly see other retail businesses following suit, given that such arrangements improve their trading at no risk, and councils would benefit from the fact that the actual administration of the loan service is largely done for them by retail firms with existing capacity.

More likely, of course, would be a current government refusal to have anything to do with such proposals, which it would try to portray as irresponsible and politicized,

But times are changed. Such a government narrative may have worked a year ago but now councils stand a good chance of portraying what they are doing as the only reasonable response to these extraordinary times. Moreover, the legal obligation imposed in the Sustainable Communities Act 2010 on government to try to come to agreement with council applicants in the form of appeal process made available under the Act, allows councils to keep their demands in the public eye.

That leaves, of course, the question of whether councils, faced by government refusal to play ball, will have the political courage to shift some of its reserves from, say, lower deposit accounts into these loan holdings, and thereby incur the ‘displeasure’ of auditors and even polite confrontation with their own Chief Finance Officer, who may well understand the policy imperative to feed people, but still be bound by Thatcher era law.

Again, a year ago, I think the chances would have been slim of councils taking this step, but things are different now. This is about large scale hunger in the places they serve, and all old bets are off, especially if a growing citzend movement demands that their local elected representatives protect them from the centrally elected mob of grifters.

And what starts with an Iceland loan book might grow into more meaningful community wealth-style creativity, beyond the immediate crisis, as the idea of social ownership really takes off. Apply for details of progress.

Note

[1] I have restricted myself here to council actions, but of course NHS Trusts might also follow suit, as well as other community wealth ‘anchor’ bodies such as universities.