Council cuts broke historic link between funding and need, says JRF

11 Mar 15
The most deprived areas of England have suffered the deepest cuts in government funding during this Parliament, which has broken the historic link between local deprivation levels and spending, an analysis by the Joseph Rowntree Foundation has concluded.

The group’s latest The cost of the cuts report found that the average cut in English local authority spending power between 2010/11 and 2014/15 was 27% in real terms. However, it found the poorest authorities saw greater reductions – the most deprived fifth of authorities have seen reductions of £182 more per head than the most affluent.

As a result, the most deprived areas have seen a reduction in the amount of funding that they have to cope with additional needs – in 2010/11, they had an extra 45% of expenditure per head, but by 2014/15, this had been reduced to 17%.

Councils have so far been able to protect front line services by finding new and imaginative strategies to balance budgets, minimising impacts on front-line services to date, the report stated. Services such as housing and planning have been worst affected across the country, seeing cuts of around 40%, it said.

However, the need for cuts to continue to at least 2018/19 means there will inevitably be greater retrenchment in the coming years.

JRF policy and research manager Josh Stott said cuts had forced the pace of local service reform but reductions were now beginning to filter through on to the quality of local services.

‘There is a general consensus that we are only half way through the cuts and, if we continue on this course, it seems inevitable that the poorest people and places will be even harder hit,’ he said.

‘We need to rethink the pace of the cuts to allow local government the time and capacity to develop long term solutions geared towards supporting people out of poverty and reducing demand on their services.’

As well as urging the government to slow the pace of cuts to allow local authorities to implement public service reforms and invest in prevention measures that would reduce demand in a sustainable way, the report called for further devolution of fiscal responsibility to councils. This could help ensure protect poorer areas from central government cuts.

Additionally, multi-year funding settlements for councils from central government would also provide the security to manage reductions more effectively, it stated.

These recommendations come after the Independent Commission on Local Government Finance called for councils to be given greater control of local taxes as part of a ‘decade of devolution’.

Responding to the JRF report, a spokesman for the Local Government Association, said the next government would need to revisit the way councils are funded.

‘If services like libraries, road maintenance and care for the elderly are to survive the next few years, the next parliament must deliver fair funding for local government and give local authorities the freedom required to pay for the things local residents and businesses want,’ he said.

‘No part of the public sector has faced bigger cuts to funding than councils during this Parliament. This has put many of the local services people value in a fragile financial position. Local government has worked hard to protect residents from the impact of cuts, but the efficiency savings councils have made since 2010 cannot be made again.’

  • Judith Ugwumadu

    Judith Ugwumadu joined Public Finance International and Public Finance online as a reporter after stints at Financial Adviser, Global Security Finance and The Sunday Express. Currently, she writes about public finance, public services and economics.

    Follow her on @JudithUgwumadu_

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