Bust in the boonies

As central-government finances buckle, local coffers take the strain tooBRITAINS cupboard is looking pretty bare. After a binge of bail-outs, lifelines and fiscal stimuli, public borrowing is soaring. And if things look bad in Westminster, pain will be felt in town halls around the country. Councils get an average of three-quarters of their money from central-government grants, rising to 90% in poor areas. So as national finances go, so go local finances, reckons Adam Marshall of the Centre for Cities, a think-tank. For the past ten years that has been a good deal: grants went up by 39% in real terms in the decade from 1997, though more work came with it. Now, as belts tighten in London, town-hall tums must be sucked in too.Constraints are closing in from four directions. Government grants are agreed in three-year tranches, and the current tranche has just entered its second year. But these settlements, designed to help councils plan for the long term, are gentlemens agreements, not legally binding, and rumours now buzz that the cash-strapped Treasury is contemplating cutting next years grant. Even if it holds off, no one thinks the next three-year deal will be generous: money needs to be saved somewhere, and boring-sounding council grants may be easier prey than health, education and other popular public services. ...