The coalition government has made great play of the fact that we are ‘all in this together’. Pain will be shared so that the burden of deficit reduction is imposed fairly.
There was certainly a lot of pain late last year when Communities Secretary Eric Pickles announced the local government settlement – with councils in England facing an average cut of 1.7% in 2013/14.
But some authorities face much bigger reductions, and the worst affected appear to be cities in the North and Midlands. As Peter Hetherington’s cover feature shows, there has been vocal opposition to the apparent return of this North-South divide.
Liverpool has been particularly affected and now has to axe £32m from next year’s budget. Mayor Joe Anderson has gone on the offensive, criticising Pickles for an ‘ivory tower mentality’ and for ‘living in an M25 bubble’.
This could be seen as an arcane debate about the pros and cons of grant formulas, but the consequences are deadly serious. If our cities can’t prosper then the UK economy won’t grow and the chancellor can forget about hitting his deficit targets.
Anderson has suggested that civil disorder is also possible, while Bishop of Liverpool James Jones warned at a ‘cuts summit’ of the dangers of ‘urban diabetes’, with wealth not flowing across the country. The bishop added that the end result for certain cities could be ‘atrophy and death’.
Many urban councils believe that rural authorities, particularly in the South, are given an easier ride. In turn, southern councils complain that their northern counterparts spend excessively and fail to save in the good times.
One way to take the politics out of these fraught debates would be to create an independent commission to advise the government on grant formulas and distribution arrangements.
This model was proposed last year by CIPFA chief executive Steve Freer. It would bring more transparency to ministers’ decisions and give reassurance that resources are allocated in an objective and politically impartial way.
An even bigger question, of course, is how to boost economic prospects in the most deprived regions of the country – the issue that underlies all the local discontent.
In theory, the Treasury is meant to be acting on Lord Heseltine’s recommendations to devolve more funding powers to city-regions and boost growth.
But the detail is, as yet, unclear. And, meanwhile, the rows about disparities rage. It’s rapidly turning into a winter of northern discontent.
This article first appeared in the January/February edition of Public Finance
