Cities in the north of England have been the biggest losers from government spending cuts, according to “Cities Outlook 2019”, the annual report from the think-tank Centre for Cities.
The report describes how local government as a sector has borne the largest burden of government cuts, with the overall budget falling by over 50% between 2009/10 and 2015/16.
Within local government it is cities which have suffered the most, with an 18% fall in day-to-day spending compared to a 9% decline elsewhere, translating to a per capita fall in cities of nearly £400, compared to £172 in other areas.
Cities began from a higher base of £1,659 per person in 2009/10, against £1,293 elsewhere, but this has now been evened out to £1,273 and £1,121 respectively, despite the greater need for spending in cities.
Measuring the extent of this relative deprivation is hard, the report says, but it points to the much larger number of poorer households living in cities than outside them as one indicator of the greater needs of large urban centres.
The report goes on to state that within cities, it is those in the North which have been hardest hit.
“Seven of the 10 cities with the largest cuts are in the North East, North West or Yorkshire, and on average northern cities saw a cut of 20% to their spending.
“This contrasted to a cut of 9% for cities in the East, South East, and South West (excluding London).”
Barnsley saw the largest percentage fall in day-to-day spending on services with a 40% reduction.
This was a cut of around £145m, equivalent to £816 per resident.
Liverpool suffered the greatest cut in per capita terms of £816, with a total cut of £441m in spending.
London has also been a big loser.
“In terms of absolute cuts, London has been by far the hardest hit.
“The capital has had a total of £3.9bn removed from services spending.
“This meant that London accounted for 30% of all cuts in Britain, despite accounting for 16% cent of the population.”
The English cities most dependent on the revenue support grant have seen the largest cuts in their spending, as a result of their higher spending requirements and their more limited ability to raise money locally through council tax and charging for services locally.
The report says that a change in approach since 2016/17 has partially addressed this and there is now less of a link between government grants and the size of cuts to spending.
“But this has not reversed the unequal cuts applied between 2009/10 and 2014/15”.
The cuts have come mainly to services that councils are not obliged to deliver, such as libraries and cultural activities.
Planning and development have also been hard hit, falling by 41% in urban areas.
Street cleaning and economic development are two areas singled out by the report as having faced particularly large cuts in cities as compared with elsewhere in the country.
As a result, non-discretionary spending on social care has taken up an increasing share of expenditure.
In 2009/10 four cities spent more than half their budgets on social care, but by 2017/18 this figure had risen to half (out of the 62 cities cited in the report).
The rise in spending on social care and the precarious state of local authority budgets means that the prospect has arisen that councils will have very few resources to devote to discretionary areas.
The report says: “This in turn raises important questions about the future role of local authorities in a city.
“Are they primarily to be providers of social care?
“Or are they also to be the shapers and custodians of their place?”
The report recommends that to address these problems, apart from more money, councils need greater freedom in how they raise their revenue, by removing caps on council tax increases, introducing new bands, and allowing councils to raise new taxes, such as a tourist tax.
Many of the restrictions on how revenue is spent, on for example parking charges, should be removed.
Social care needs reform.
“It is clear that the current model of funding social care is unsustainable, given the current pressures on it, the likely growth in demand and its crowding out of spending on other local government responsibilities”.
The report also calls for the setting of multi-year budgets.
The current system of annual budgets and the requirement to balance the books leads to uncertainty, as is happening now with the delays to the local government finance settlement for 2019/20.
Cllr Peter John OBE, chair of London Councils, said in response to the report: “Centre for Cities’ report rightly highlights the grim realities faced by London and cities across the country as they deal with increasing demand for council services after a decade of funding reductions.
“The success of UK cities is underpinned by good quality local public services, but lack of funding, flexibilities and devolved powers is holding back local authorities in every corner of the UK from providing the support their residents and businesses need.
“We agree that central government must use the Spending Review and Fair Funding Review to give local government a long-term funding settlement that equips the sector to deliver for local communities.”
