Harsh but fair? The impact of local government cuts
Authors: The Work Foundation
Dr David Chapman
24 January 2011
Big Government and the Big Society have dominated Left-Right political debates over the past year, but it is the fate of local government that most directly impacts on people’s lives. Councils provide most of the day-to-day services we rely upon: refuse collection and recycling; libraries; parks; and clean streets. And it is local government who provide for some of the most vulnerable in society, through child and adult social services; social housing; and disability support.
This makes local government finance of vital importance. So when, just before Christmas, the Local Government Finance Settlement was announced it seemed an ideal opportunity to test the bigger political themes. And the big question was progressivity: Is the settlement fair? Is it a blow to the disadvantaged areas of the country, or a genuinely positive move for councils and their residents, directing what money there is to the most deserving, while promoting local democracy?
The Government has claimed that its new system of local finance is 'fair and sustainable' and will give councils 'the freedom and responsibility to concentrate on what residents want: protecting front-line services'.
Others however have claimed that the Settlement unfairly penalises poorer local authorities, and is highly regressive. Service cuts and job losses have already been announced, and more are likely to follow in the near future. My colleague Jonathan Wright published a blog last week discussing these and the longer-term, indirect negative effects of reduced local spending.
I’ve looked into this in more detail in this briefing note. In it, I set out an evidence-based analysis of the Finance Settlement. It demonstrates that the Coalition’s reforms to the way councils’ money is allocated are more progressive than many experts had been predicting, but that they could have been significantly more progressive.
In particular the Transition Grant, intended to 'protect [councils] from unmanageable reductions in their budgets', seems to have been poorly targeted. And further government proposals for council financing reform run the risk of creating large-scale polarisation between richer and poorer areas of the country: a highly undesirable situation.
Local authorities face a highly trying time in the coming years, attempting to reconcile the needs of their residents and businesses with the demands of their accountants. All local authorities are unique, and some will inevitably succeed at this more than others. Continued study and scrutiny of their efforts will be needed to allow this best-practice to be adopted across as many councils as possible. Maybe in this way the pain of what will inevitably be a painful few years can be mitigated.
Dr David Chapman, Ideopolis programme
All blog posts for this author