speri.comment: the political economy blog

Local government cuts and the unequal social, geographical and political impact of austerity

Cuts to local government have disproportionately affected the North, deprived areas and Labour councils

Craig Berry, Deputy Director at SPERI

Craig BerryAll of the mainstream political parties in the UK are currently engaging in a slightly farcical competition over how many billions of pounds in public expenditure they intend to devolve from Whitehall to the local level. Such devolution may be welcome, but the very big numbers being bandied aren’t really very big numbers at all in the context of overall spending, and will do relatively little to undo decades of centralisation. That so little attention is being paid to the actual institutional forms that will deliver local investment is testament to the shallow nature of this debate.

It remains, therefore, that the only significant change in local government funding to have taken place in recent years is the massive withdrawal of this funding orchestrated by the coalition government. This has not, however, been a one-cut-fits-all trend: the complex structure of local authority finance means different types of spending reductions have affected different councils in a variety of ways.

The latest SPERI British Political Economy Brief, published today, therefore considers whether there are any patterns to the differential impact of cuts on local authorities in England, measured in terms of the reduction of the overall ‘spending power’ of each local authority, per resident of the local authority area, between 2010/11 and 2014/15. It draws primarily on an outstanding data set developed by Newcastle Council, and published by The Guardian.

The evidence contained in the Brief is somewhat predictable, given what we already know about the regressive nature of the coalition’s austerity agenda, but startling nonetheless. In terms of region, councils in the North-West have been most affected by reductions in local authority spending power, with an average cut of £234.76 per person. This region is closely followed by Yorkshire and Humberside (£197.24) and the North-East (£189.16). This compared to an average cut across England of £130.06 per person. The South-West (£108.08), the East of England (£85.40) and particularly the South-East (£74.08) have all seen local authority cuts significantly below the average for England.

In terms of deprivation, councils in the most deprived areas have been most affected by reductions in local authority spending power, with an average cut of £228.23 per person across the top 10 per cent most deprived local authority areas. Disturbingly, the reduction in spending power falls significantly across the distribution of local authorities according to levels of deprivation. Councils in the 10 per cent least deprived local authority areas have seen cuts of only £44.91 per person, just over a third of the average cut across England.

At the national level, the Labour opposition appears to have put up very little protest to these trends, trapped by accepting the broad parameters of the austerity agenda.  This is despite the fact that councils controlled by the Labour Party have been most affected by reductions in local authority spending power, with an average cut of £160.08 per person. Councils controlled by the Conservative Party (£68.95) and the Liberal Democrats (£75.91), in contrast, have experienced much lower cuts.

Of course, there is a significant overlap between these three categories: councils controlled by Labour are concentrated in the more deprived areas of the North, and vice versa. This is the political and economic geography of austerity, writ large.

The Brief also considers how the recent local elections in England, which saw losses for the Conservatives in terms of councils controlled and strong gains for UKIP in terms of seat won,  might have been affected by these trends.

It shows that the councils lost by the Conservatives have experienced an average cut of £93.13; this is significantly above the pre-election average for Conservative councils. Only three of the eleven councils lost by the Conservatives have experienced a cut below this pre-election average.

The councils where UKIP made significant gains (that is, gaining five or more seats) have experienced an average cut of £106.45; this is below the average for England in general. However, it is interesting that two-thirds of UKIP’s successes in this regard came in councils controlled by Labour, albeit atypical Labour councils. These specific councils, where UKIP gained at Labour’s expense, have seen an average cut (£128.30) which is lower than the average cut experienced by Labour councils.

UKIP is therefore more likely to have been successful in Labour councils which are not among the most deprived areas, and have not experienced the most severe spending cuts.

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