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Jonathan Wright
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Jonathan  Wright

Nation united? The cuts hit Manchester

Authors: Jonathan Wright Jonathan Wright

14 January 2011

Last month I blogged about the Coalition’s new Localism Bill and the Financial Settlement that went alongside it. The £29 billion a year Formula Grant is to be cut by 27% over the next four years. This will have profound implications for cities.

The impact of the cuts is starting to be more acutely felt and this is set to worsen. Manchester City Council yesterday announced that it would need to cut 2,000 jobs; 17% of its workforce. Manchester has received an 8.9% reduction in its ‘spending power’ (the highest level in the country) but its budget has been cut by more than 20%. The Council leader, Sir Richard Lees, has accused the government of being ‘unfair’.

Most agree that cuts are necessary. But the way they are made is very important. Local ‘spending power’ (a financial measure which includes most council income streams) has been reduced most in the most disadvantaged places, sparking debate about whether the cuts are progressive or regressive. We will be releasing a briefing on this early next week.  Despite warnings from local authorities up and down the country, these cuts have been front loaded. Across the country, 113,000 jobs have now been declared ‘at risk’.

We’ve written before that they may exacerbate existing disparities in income. Given that some places are more reliant on the public sector for jobs and growth than others (generally those places outside of the greater South East), public sector cuts will have a disproportionate effect on the fate of many local economies. Cuts to local government budgets will have profound implications for the quality of the services and amenities that they can provide.

But other consequences are only just becoming apparent. The cuts may have longer term implications for people, where they choose to live and patterns of migration. In some northern towns and cities nearly 30% of young graduates are public sector employees. The cuts have important implications for these people. Yet this is not an issue which has been thought through - we’ll be releasing new research on this issue next month.

One thing is for sure: the nation is not united over the Financial Settlement. We await the full implications for cities over the coming months - and years.