Council spending cuts twice as deep in England as rest of UK

Council spending cuts or ‘austerity cuts’ were twice as deep in England as in the rest of the United Kingdom. University of Cambridge researchers found significant inequalities in council spending cuts across the UK. The largest cuts since 2010 occurred in London and the north of England.

The study covered council spending in England, Wales, and Scotland. Northern Ireland was not included due to a lack of data.

Mia Gray and Anna Barford wrote about their study and findings in the Cambridge Journal of Regions, Economy and Society (citation below).

Gray is a University Senior Lecturer in labour, economic and urban geography, and a Fellow of Girton College. Prof. May is also an Editor of the Cambridge Journal of Regions, Economy and Society.

Barford is a Researcher, College Lecturer in youth employment, austerity, and socio-economic inequality, and a Fellow of Girton College. Prof. Barford is also a Bye Fellow of Murray Edwards College.

Austerity

Austerity is an economic policy that reduces government spending. Often, austerity also includes the raising of taxes. Austerity is a government response to an economic crisis or overspending.

During the Global Financial Crisis of 2007/8 and the Great Recession that followed, governments globally had to tighten their belts.

Council Spending Cuts UK
In an Abstract that precedes the main article, the authors argue that council spending cuts have: “Actively reshaped the relationship between central and local government in Britain, shrinking the capacity of the local state, increasing inequality between local governments and exacerbating territorial injustice.”

Deep spending cuts in England

Spending cuts of at least 30% occurred in forty-six English councils. These councils, which have fewer additional funding resources, tend to rely more on central government. They also have lower property values and are less able to generate income through taxes.

The north of England experienced the deepest spending cuts, followed by parts of London. South Tyneside, Wigan, and Salford were among the worst affected councils in the north. In London, Fulham, Hammersmith, and Camden experienced significant cuts in local spending.

Service spending in Westminster declined by forty-six percent – the UK’s biggest spending cut.

The home counties, on the other hand, suffered relatively minor local spending cuts. The home counties are those that surround London – some of them do not border the capital. Essex, Buckinghamshire, Sussex, Surrey, and Kent are home counties. Sussex, Hertfordshire, and Berkshire are also home counties.

The home counties have relatively low levels of reliance on local government.

Government initiative to ameliorate austerity

The authors say their study shows that austerity “has been pushed down to a local level, ‘intensifying territorial injustice’ between areas.”

Government initiatives to ameliorate austerity will only fuel unfair competition and further inequality between regions, say the researchers. Local retention of business taxes, for example, is a government initiative to ameliorate austerity.

Local authorities will turn to ‘beggar thy neighbour’ policies in an effort to raise tax bases and combat austerity.

Austerity doesn’t hit all areas equally

Regarding claims that council spending cuts affect all areas equally, Prof. Barford said: “The idea that austerity has hit all areas equally is nonsense.”

Prof. Grey said:

“Local councils rely to varying degrees on the central government, and we have found a clear relationship between grant dependence and cuts in service spending.”

“The average cuts to local services have been twice as deep in England compared to Scotland and Wales. Cities have suffered the most, particularly in the old industrial centres of the north but also much of London.”

“Wealthier areas can generate revenues from business tax, while others sell off buildings such as former back offices to plug gaping holes in council budgets.”

“The councils in greatest need have the weakest local economies. Many areas with populations that are ageing or struggling to find employment have very little in the way of a public safety net.”

“The government needs to decide whether it is content for more local authorities to essentially go bust, in the way we have already seen in Northamptonshire this year.”

Spending cuts affected many services

The researchers gathered and analyzed data from the Institute of Fiscal Studies. They conducted a spatial analysis of the UK’s local authority funding system.

Prof. Gray and Prof. Barford mapped central grant dependence levels across England’s councils. They also mapped council spending cuts (percentages) across England, Wales, and Scotland. The study covered two periods – 2009-2010 and 2016-2017.

Such services as highways and transport, adult social care, and environmental services suffered significantly. Children and young people’s services and environmental services also suffered considerably.

The Department of Communities and Local Government suffered an overall budget cut of 53% between 2010 and 2016. That Department has become the Ministry of Housing, Communities and Local Government.

‘Mandatory’ vs. ‘discretionary’ services

Mandatory services are vital services. In other words, councils cannot reduce them. Discretionary services are the first to suffer in times of austerity because councils can impose cuts.

The researchers, however, said that they found the boundaries separating mandatory and discretionary to be blurry.

Prof. Gray said:

“Taking care of ‘at risk’ children is a mandatory concern. However, youth centres and outreach services are considered unessential and have been cut to the bone. Yet these are services that help prevent children becoming ‘at risk’ in the first place.”

“There is a narrative at national and local levels that the hands of politicians are tied, but many of these funding decisions are highly political. Public finance is politics hidden in accounting columns.”

Spending cuts when local councils ‘go bust’

Prof. Gray points out that as soon as a council ‘goes bust,’ it issues a Section 114 notice. When Northamptonshire Council went bust, administrators subsequently came in and took financial decisions that superseded all democratic processes.

Prof. Gray said:

“Ever since vast sums of public money were used to bail out the banks a decade ago, the British people have been told that there is no other choice, but austerity imposed at a fierce and relentless rate.”

“We are now seeing austerity policies turn into a downward spiral of disinvestment in certain people and places. Local councils in some communities are shrunk to the most basic of services. This could affect the life chances of entire generations born in the wrong part of the country.”

Citation

The depths of the cuts: the uneven geography of local government austerity,” Mia Gray and Anna Barford. Cambridge Journal of Regions, Economy and Society, rsy019. https://doi.org/10.1093/cjres/rsy019. Published: 09 October 2018.