William Eichler 28 January 2019

British cities bear the brunt of austerity, think tank reveals

A think tank has called for an end to local government austerity as it reveals that Whitehall cuts have hit cities twice as hard as the rest of Britain.

A new report from Centre for Cities has found that cities have borne nearly three-quarters (74%) of all real-terms local government funding cuts in the last decade despite being home to just 54% of the population.

The think tank calculated that this is equivalent to a reduction of £386 per city dweller since 2009/10, compared to £172 per person living elsewhere.

The Cities Outlook 2019 report - the Centre for Cities’ annual health check on UK city economies - also revealed that the budgets of northern cities have faced the biggest cuts.

Cities in the North of England on average saw their spending reduced by 20% compared to 9% for those cities in the South West, East of England and South East, excluding London.

The top five cities most affected by austerity are Barnsley, Liverpool, Doncaster, Wakefield, and Blackburn. The least affected are Luton, Oxford, Aberdeen, Bournemouth, and Dundee.

The think tank also warned that social care, which faces a £3.6bn funding gap by 2025, has added to the burden on cities’ finances.

Ten years ago just four cities out of the 62 spent the majority of their budget on social care, now half of them do.

‘Cities drive our national economy and, while austerity has improved local government efficiency, its sheer scale has placed public services in many of our most populated cities under huge pressure,’ said the Centre for Cities chief executive Andrew Carter.

‘Cities Outlook 2019 shows that the cities most affected are economically weaker and have been less able to absorb the loss of central government funding.

‘Councils have managed as best they can but the continued singling-out of local government for cuts cannot continue. There is a very real risk that many of our largest councils will in the near future become little more than social care providers. Fairer funding must mean more funding for cities.’

In response to the think tank’s findings, the Mayor of Liverpool Joe Anderson called on the Government to ‘urgently review’ its funding formula for local authorities.

Liverpool has lost £441m since 2009/10, equivalent to £816 less for every resident. This puts cuts to local government services in Liverpool 18% higher than the national average in real terms.

‘This report confirms what I’ve been saying for years,’ said Mayor Anderson.

‘We’ve not been asking for special treatment - just fairness. If we’d have had the average cut of other councils we’d be £80m better off.’

‘Government urgently needs to revisit its plans for the funding formula and try and come up with one that is genuinely fair to everybody across the country,’ he continued.

‘Only by doing so can places like Liverpool actually meets its needs and requirements to help those most in need.’

Simon Edwards, director of the County Councils Network, acknowledged that all councils have experienced ‘unprecedented’ financial pressures over the last decade and endorsed the Centre for Cities’ call for an end to austerity.

However, he questioned the Centre for Cities’ methodology, arguing that looking solely at past expenditure ‘does not tell the complete story on where financial pressures are most acute.’

‘It is a combination of funding reductions alongside an exponential increase in demand for services which is a more clear illustrator of how bleak the future looks,’ he said.

‘County areas have been particularly affected by this perfect storm and are facing a £3.2bn black hole by 2020, largely due to costs outside of their control, and face a 43% reduction in Government funding in the period 2016-2020 - far higher than anywhere else.’

Mr Edwards said that counties contain the largest and fastest growing elderly populations, which places a lot of pressure on social care services. He also noted they have seen referrals to children’s services rise by 106% in the last decade.

‘Unlike other parts of the local government sector, counties have not benefitted from higher levels of business rate income, revenue from housing growth, and much higher per-person funding for public services,’ he added.

In another response to the Cities Outlook 2019 report, Dr Jack Brown, senior researcher at the think tank Centre for London, called for more devolution, arguing that Brexit has stalled the debate about devolving power to local areas.

‘The UK remains highly centralised, with power and resources concentrated in Westminster and Whitehall. This means that distinct localities are not able to shape policy to suit their own particular needs, while creating a sense that regions are competing for one ‘pot’ of funding,’ he said.

‘Despite the limited but positive progress towards a more devolved United Kingdom, the devolution debate now seems to be stuck.

‘As Government grapples to deliver Brexit, they must continue to push power to a more accountable, local level, with decisions taken as close as possible to those who they affect.

‘Only this will allow places to tackle their distinct challenges - and build on their unique strengths.’

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