The size of cuts does matter, Minister

Ministers dismissed evidence that the most deprived areas have been hardest hit by cuts, but they themselves were wrong to do so, writes Professor Glen Bramley

Professor Glen Bramley
Professor Glen Bramley

Ahead of the Autumn Statement there has been a flurry of reports published on the financial position facing local authorities in England, including a Joseph Rowntree Foundation report Coping with Cuts? Local government and poorer communities and a parallel Audit Commission study, Tough Times.

The minister for local government, Brandon Lewis (Con), appeared unconvinced, responding to these reports by stating that councils are successfully managing their budgets, there is greater public satisfaction with council services, and council tax bills are falling in real terms. He went on to say that “This government’s carefully-considered reforms have delivered a fair deal to councils helping them achieve greater financial independence so they can deliver sensible savings while protecting front-line services”.

He was also quoted as saying that the JRF report was “wrong”, citing in support for this claim a House of Commons library report. This report states that funding per household remains higher in deprived areas than in other parts of the country. But appealing to this source is rather to ignore the substance of argument.

The House of Commons statement was about the level of funding received; while the JRF study looks at the reductions in funding brought about by the government’s austerity policies and the way they are being implemented in local government finance settlements. So the data in the former in no way invalidates JRF’s conclusions on the relative scale of cuts between deprived and affluent areas, which were based on some very detailed analysis of all the changes between 2010 and 2014, and are substantively correct. We found the most deprived fifth of authorities were seeing cuts that were greater by £100 per head of population, or 5.6 percentage points, than those in the most affluent fifth.

Furthermore, although the focus of the Audit Commission report is a bit different from the JRF study, it exactly concurs with the JRF conclusions on some key points, notably that “councils serving the most deprived areas have seen the largest reductions in funding since 2010-11”.

However the disagreement does raise some interesting questions. There is the suggestion that the very fact of deprived local authorities spending more and receiving more grant aid is dubious, and that the reduction of their relative funding is an objective of government. However, deprived areas have much greater needs for local services, have to deal with more difficult problems, and have less local wealth to pay for them from council tax or other local sources. That is why, since the end of World War Two, the principle of ‘equalisation’ has been enshrined in our local finance systems.

There is substantial research evidence which shows that, if an aim of policy is to achieve (more) equal outcomes, or a certain minimum standard everywhere, whether for example in school attainment or street cleanliness, such an aim can only be achieved by allocating a lot more money to the most difficult areas.*

And although this question of what is the right level of extra resources to give to deprived areas was beyond the scope of this particular report, the ministerial response suggests there is a need for an open and honest debate on the subject. In particular, if the government really thinks deprived areas are too well funded, they should be prepared to say what policy outcomes they expect from reduced allocations, and what evidence they draw on in arriving at this view.

The minister’s remarks suggest that fairness, financial independence and protection of front-line services remain important concerns. Our findings on the deprived-affluent differences in impact raise questions about fairness.

Our findings on how councils are coping suggests that they have very little real financial independence left, squeezed between falling grants, frozen council tax, uncertaint business rates and the rising cost of statutory social care services. They also show that, after the first couple of years, the scope for back office efficiency savings drops away and the predominant picture will be one of real reductions in front line services.

Glen Bramley is professor of Urban Studies at Edinburgh’s Heriot-Watt University and co-author of the Joseph Rowntree Foundation report, Coping with Cuts? This article was also published by the Local Government Chronicle here. He has written a previous blog about this research, which can be found here.

* Bramley, G. (1990) Equalization Grants and Local Expenditure Needs: the price of equality. Aldershot: Amesbury.
Bramley, G., Evans, M., Noble, M. (2005) Mainstream Public Services and their Impact on Neighbourhood Deprivation. Neighbourhood Renewal Unit, Office of the Deputy Prime Minister.
Bramley, G., Watkins, D. (2008) The Public Service Costs of Child Poverty. York: Joseph Rowntree Foundation
Bramley, G., Karley, N.K., Watkins D. (2011) ‘An outcome-based resource allocation model for local education services in Wales’,Environment & Planning C: Government and Policy, 29:5, 848-871.
Bramley, G., Bailey, N., Hastings, A., Watkins, D. & Crowdace, R. (2012) ‘Environmental justice in the city? : Challenges for policy and resource allocation in keeping the streets clean’ Environment & Planning A, 44:3, 741-761.