Deprived areas suffered harshest council cuts, IFS confirms

5 Mar 15

Council spending in England has been cut by almost a quarter on a per person basis since 2009/10, according to an analysis by the Institute for Fiscal Studies.

The IFS also revealed that, while the size of cuts varied across the country, in general more deprived areas and those that had experienced rapid population growth saw the largest cuts. Without a change in policy, this was a pattern likely to be sustained over the next Parliament, the institute warned.

Report author David Innes said: ‘English councils – like many government departments in Whitehall – have experienced sharp cuts to their spending power over the last five years.

‘But the size of spending cuts has varied a lot across England. On the whole, it is more deprived areas, those with lower local revenue-raising capacity, and those that have seen the fastest population growth have seen the largest cuts to spending per person.’

London boroughs, the North East and North West had seen the largest average funding reductions on a per person basis with cuts of 31.4%, 26.5% and 25.7% respectively.

The differential in higher public spending in London compared with the surrounding South East area fell from 80% in 2009/10 to 48% this year.

Central government grants (excluding specific grants for education, public health, police and fire) have been cut by 36.3% and 38.7% per person. While council tax revenues have grown slightly in real-terms (up by 3.2%), this still represented a decline of 0.7% per person, the IFS said.

Cuts to net service spending tended to be higher in areas that were more reliant on central government grants to fund spending, as opposed to locally raised revenue.

However, not all services were cut equally, with social care relatively well protected with reductions of 16.7%. Funding for council planning and development, however, has been cut to less than half of its original level. Regulation and safety, housing and transport have all been cut by at least 30%.

The IFS warned that the areas with the lowest revenue-raising potential would continue to be exposed to the harshest cuts. Population growth would also spread council resources more thinly.

Responding to the IFS’s analysis, local government minister Kris Hopkins said the government had delivered a fair settlement to every part of the country, and councils had continued to balance their budgets.

‘Every bit of the public sector needs to do their bit to pay off deficit left by the last administration, including local government which accounts for a quarter of all public spending. But so far over this Parliament council spending, excluding education, has actually increased in cash terms,’ he said.

‘Every council should therefore be able to deliver sensible savings while protecting frontline services for local taxpayers and keeping council tax down. This could include doing more joint working, getting more for less through smart procurement, tackling local fraud and council tax arrears, or utilising their reserves and surplus property.’

CIPFA chief executive Rob Whiteman said the IFS had highlighted many of the institute’s own concerns.

‘Crucially the report shows the unequal impact of funding allocations by the government across the country and between different types of authority,’ said Whiteman.

‘It shows yet again how significant an impact this has had upon those local authorities with the greatest needs and who have lost the most during this Parliament. This reality and its impact upon real people’s lives should be considered very carefully by policymakers as they approach future decisions on funding.’

He added that there needed to be an urgent change in the local government funding system so it served everyone fairly.


Did you enjoy this article?