‘Least equipped’ northern cities have taken brunt of funding cuts

28 Jan 19

Northern cities have been hit by the biggest budget cuts as a result of austerity, a think-tank has found.

People living in cities have faced £386 worth of cuts per head since 2009-10, compared with £172 per person elsewhere, according to a report out today by Centre for Cities.

Cities have borne nearly three quarters (74%) of all real-terms local government funding cuts in the past decade, despite being home to just 54% of the population, the report said.

Notably, the top five worst affected cities are all located in the North of England: Barnsley (-40% change in local government spending), Liverpool (-32%), Doncaster (-31%), Wakefield (-30%) and Blackburn (-27%).

Cities in the North, on average, saw their spending cut by 20%, compared with 9% for cities in the South West, East of England and South East, excluding London.

The report noted that social care has added to the squeeze on cities’ finances. A decade ago, just four cities out of a total of 62 spent the majority of their budget on social care – compared with 31 today.

Centre for Cities said that the cities “least equipped” to absorb the loss of central government grant have been hit hardest. It claimed that cities in the North of England tend to have weaker economies and are more reliant on central government funding. Therefore, they are less able to raise money locally – for example, through council tax increases.

Andrew Carter, Centre for Cities chief executive, said austerity has put cities under “huge pressure”.

He added: “Councils have managed as best they can, but the continued singling-out of local government for cuts cannot continue. There is a very real risk that many of our largest councils will in the near future become little more than social care providers. Fairer funding must mean more funding for cities.

“If, as the prime minister has said, austerity is coming to an end, then the Spending Review must address the financial challenges facing cities.”

Carter suggested that the government should give local authorities more power to decide how they raise and spend funds, providing more flexible multi-year budgets and reforming the way social care is paid for.

Jo Pitt, local government policy manager at CIPFA, said: “Today’s report lays bare the dire situation of urban authorities, which are grappling with high levels of deprivation, an increase in crime, and climbing social care costs, in a challenging fiscal landscape.

“If authorities are to meet these challenges and drive the economic growth that will benefit not just their region but all of the UK, they will need greater local control of their finances, a well balanced fair funding formula, and an end to financial uncertainty, which is impacting their medium-term and long-term planning.”

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