Council spending cuts: the north loses out to the south

Ministers say local authority funding allocations are fair to all. But data prepared by Newcastle suggests the Tory-voting south is getting a better deal than the Labour voting north
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Every council in England faces substantial spending cuts. But urban councils in the north of England believe local authority funding allocation has been deliberately hijacked by ministers to favour Tory-voting areas in the leafy south.

The claim is rejected by communities secretary Eric Pickles: he insists the way spending cuts are dealt out is fair to everyone, north and south, town and country.

Labour-run Newcastle City council has analysed the way cuts in local government are distributed to show how the Coalition has skewed the impact of the cuts. The findings underpin its call for an independent body to be set up to create instead a “fairer”, more transparent and objective funding local authority allocation system.

It produced the heat map below to back its claim. It shows changes in revenue spending power from 2010-11 through to 2014-15, measuring the extent to which English council areas have lost – and will continue to lose – resources since the coalition took power, measured in pounds per head of population.

The council drily notes:

The similarity between the map of party political control and the map of relative cuts is remarkable

This finding would appear to be backed up by a study published by the Audit Commission in November. This says (page 16) that while per capita funding in poorer areas was still higher than in affluent parts, deprived councils

…have seen substantially greater reductions in government funding as a share of revenue expenditure than councils in less deprived areas.

Newcastle has produced the following graph to show how funding has been redistributed regionally, taking £374m out of the three northern regions (North West, Yorkshire and Humberside, and the North East), a sum it says is broadly equivalent to the cash funnelled into the South east and Eastern England.

Breaking the spending figures down to council level, this time calculated on a per dwelling basis and using Department for Communities and Local Government estimates for 2012-13 to 2014-15, Newcastle has compared itself with Wokingham borough council in Berkshire.

Wokingham was chosen because Pickles, has explicitly compared it with Newcastle to claim that the former council has not lost out. He says, correctly, that Newcastle’s total spending power in 2013-14 will be £2,522, or £708 per higher than Wokingham’s £1,814.

The communities secretary told the Commons in December:

Concerns that the poorest councils or those in the north would suffer disproportionately are well wide of the mark. The spending power for places in the north compares well to those in the south.

Newcastle, however, points out that its cash cut is almost three times higher, and its percentage cut is more than twice as high as Wokingham’s. Over the two years from April, it calculates that in spending power terms it will lose £174 per dwelling, more than the national average of £125, and far higher than the £59 faced by Wokingham.

Newcastle faces severe cuts in services from April: libraries and swimming pools will be closed, and arts and youth services hit badly. It believes that if its budget cut was in line with the national average, it would have £22m extra to spend in the financial year 2013-14 alone – a sum it says would protect almost all those services at risk

It accepts it gets more cash than Wokingham in absolute terms, but claims that the difference in absolute spending power between it and Wokingham reflects (but does not properly cover) higher levels of social need and more expensive public services.

In children’s social care, for example, Newcastle has twice the level of funding as Wokingham, but has four times the number of children in care. Newcastle receives four times what Wokingham gets for concessionary travel fares; yet because pensioners in the north east are less likely to own a car, and therefore use public transport more, its costs are nine times greater.

By 2014-15, the crucial year before the next general election, Newcastle calculates that all but two of the top 25 “losers”, in terms of per capita council spending cuts per person, are (currently) Labour-controlled. Of the 25 “winners,” 24 are Tory-controlled (the Isles of Scilly is politically controlled by independent councillors).

Newcastle’s leader Nick Forbes says Labour, in common with previous governments, funded local authorities in the context of what he says was an accepted cross-party consensus that allocations should reflect levels of social need.

That consensus, he argues, is now under threat. A paper published by Newcastle this week declares (agenda item seven):

There are clearly disproportionate differences in the cuts around the country, which the government deny or deflect by pointing to the absolute differences in spending power.
The differences in spending power reflect historic differences in assessed need, which were accepted and funded under previous Conservative and Labour governments.
The approach of the current government is to ignore differences in need which is resulting in damaging additional cuts and economic pressures on northern regions and a redistribution of government funding.

Is the manipulation of the local government allocation system anything new? Interestingly, while he was in opposition, Pickles was in favour of a non-political independent body to oversee funding distribution, declaring in a Guardian interview that “both parties… have used the system to their perceived political benefit, tweaking formulas to aid councils of a particular persuasion.”

He added:

I want to remove this business where you reward friends and punish enemies

Curiously, in opposition his enthusiasm has waned.

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