Local government cuts are hitting the poorest areas hardest
Back in 2010, the Spending Review announced that funding for local authorities, fire and police services would be cut by more than a quarter by April 2015. The same day, Eric Pickles wrote to local authority leaders, promising them
Local finance reform which protects the vulnerable
So how has that worked out? Well, the cuts have certainly been delivered. Last month, The Cost of the Cuts, a new report from the Joseph Rowntree Foundation reported that the scale of the cuts has been exactly as George Osborne planned, with a 27% real terms cut in the “spending resources” of English local authorities between 2010/11 and 2014/15. These cuts will continue through to next year, by when the cumulative cut for London boroughs and metropolitan authorities will have reached over 30 per cent.
Local authorities responded by cutting jobs faster than other parts of the public sector – local government employment shrank by nearly 300,000 jobs in the first two years after the 2010 election (some of this will have been due to schools becoming academies, which are classified as part of central government).
But the impact has certainly not been fairly distributed. In December, the Chartered Institute for Public Finance and Accountancy (the professional body for public finance accountants) worried that
… while council spending power per head remains higher in more-deprived parts of the country, the gap continues to narrow as funding cuts are falling most heavily upon areas of the greatest need. At a regional level, spending power in London is set to fall by 8.0% and in the North East it is set to fall by 7.8%.
In contrast councils in the South East will see their spending power reduce by only 3.4% based upon CIPFA’s spending power measure. Under DCLG’s spending power figures councils in the South East will actually see a rise of 0.5% in 2014/15.
The Rowntree report indicated that the most deprived English unitary councils have seen reductions in non-education spending of £182 more per head than the most affluent:
Real budget changes for all services except education, for English unitary authorities by deprivation band – 2010/11 to 2014/15
Source: page 7 of the JRF summary report
There is a similar pattern for London boroughs, metropolitan districts and other districts (see page 12 of the JRF full report). Councils have made heroic efforts to shelter the services the poorest rely on. Even so, social care spending per head has been cut by 14 per cent in real terms (£65) in the most deprived English authorities, compared with an 8 per cent increase (£28) in the least deprived.
And Councillors’ ability to shift resources in this way is limited. Last November, I reported the National Audit Office’s worries that Councils’ resilience (their ability to shelter services the most vulnerable rely on, like social care by concentrating cuts in other areas) was eroding fast. Reductions in spending on adult social care and housing services each represented 15 per cent of total cuts in 2010-11 but 40 and 22 per cent respectively in 2014-15. The NAO added a clear indication that, under current plans, things are likely to get much worse post election:
HM Treasury forecasts that government resource budgets (less depreciation) will fall by £10.9 billion (3.8%) from 2015-16 to 2016-17, and by a further £11.4 billion (4.1%) by 2017-18. If the government maintains protections for education and health funding, local authorities need to make savings well above these rates.
We need to notice two developments, one that has been happening for five years, the other which may be about to happen. Firstly, the cuts have hit the poorest authorities, the authorities with the highest proportion of poor and vulnerable hardest and been easiest to bear for the least deprived areas. But now, local authorities’ ability to protect the services that the poor and vulnerable need most is creaking and splintering.
Council employees have faced massive redundancies and, of course, a deeply unfair pay freeze; at the same time, the cuts threaten misery for the citizens least able to bear it. The interests of workers and service users are clearly linked, both point towards opposing austerity.
Update, 10 April: making sure the poorest areas are properly funded is especially important because the income and wealth gaps between the richer and poorer parts of the UK are especially large. A new “Inequality Briefing“, published today, reveals that the gap in GDP-per-head between the richest and poorest region in the UK is the biggest in Western Europe. GDP per capita in the UK’s richest region is about five times as big as in the poorest; in France and Germany, this ratio is about two and a half to one – and in Denmark it is less than two to one.