Cities shoulder the burden of austerity

A near decade of austerity measures has hit cities hard, according to a new research paper. Cities Outlook 2019 highlights how cities have had to deal with 74% of all real-terms local government funding cuts in the last decade, despite being home to just 54% of the population.

The Centre for Cities’ annual report – the annual health check on UK city economies says this is an equivalent to a reduction of £386 per city dweller since 2009/10. Those living outside cities have been subject to a £172 per person reduction.

The report has also highlighted a definitive geographical divide – the five most affected cities are all located in the North of England. Cities in the North of England on average saw their spending cut by 20% compared to 9% for those cities in the South West, East of England and South East, excluding London. 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.

Further key findings outlined in the report include:

• London saw huge reductions in its spending, accounting for 30 per cent of the total cut to local government day-to-day spending since 2009/10, despite being home to 16% of the population.
• Southern English cities (except London), were relatively less badly hit – and were more likely to find ways to replace lost government grants, such as setting charges for services.
• Cities experienced an increase in demand for services like social care, more than half of cities spend most of their budgets on social care – in 2009/10, only four cities were in that position.

Social care squeeze

The growing demand for social care has added to the squeeze on cities’ finances.  A decade ago, just four cities out of the 62 spent the majority of their budget on social care, now half of them do. If this pattern continues, the only role for many councils will be to provide social care.

Cities have been able to make do with less by becoming more efficient, but reductions in funding and the increase in demand for social care have meant cuts to other services, with planning and development spending falling by 41% across all cities.

Cities Outlook 2019 urges the Government to use the Spending Review to ensure that its promise to end austerity fully applies to local government, and in particular to cities.

Andrew Carter, Centre for Cities Chief Executive, said: “Cities drive our national economy and, while austerity has improved local government efficiency, its sheer scale has placed public services in many of our most populated cities under huge pressure. Cities Outlook 2019 shows that the cities most affected are economically weaker and have been less able to absorb the loss of central government funding.

“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. But this does not just mean more money. Giving 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 also need to be urgently introduced.”

The full report is available for download here.

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