The most deprived areas have borne the brunt of local government budget cuts

11th Mar 2015

Research published today by the Joseph Rowntree Foundation shows that the most deprived areas of England have seen the largest cuts in funding since 2010.

The ‘The cost of the cuts’ report finds that local authorities have been able to protect front line services by finding new, innovative ways of working, but that capacity for further efficiency savings is fast running out. There is still scope for many councils to save money by redesigning the way services are run or working in partnership with bodies like the NHS. But the current pace of the cuts risks making this more difficult. Many local authorities will struggle to invest in and remodel services to lower costs in the medium term, while still meeting residents’ needs and balancing their budgets. 

Analysis of local government expenditure data reveals that the poorest English authorities have seen reductions of £182 more per head than the most affluent; breaking the historic link between the amount a local authority spends per head and local deprivation levels. In 2010/11, the most deprived councils had an extra 45% of expenditure per head to cope with additional needs. By 2014/15, this had been reduced to 17%.

Services such as housing and planning have been worst affected across the country, seeing cuts of around 40%.  Social care has been relatively protected, but while the most affluent areas have seen a social care spending rise of by £28 per head (8%) spending in the most deprived areas has been cut by £65 per head (14%).    

Alongside this systematic national analysis of local government spending, researchers at the Universities of Glasgow and Heriot Watt have worked, since 2011, with four local authority case studies across England and Scotland.  This in depth case study research analyses how local authorities have dealt with growing budget gaps of between 7% and 11% per year. 

The report highlights an important difference between the situation in England and in Scotland. Direct comparisons are difficult to make, but on one estimate the Scottish reduction is 11% in net terms in contrast to the 27% reduction in England.  The slower pace of cuts in Scotland may have given local authorities more room to invest in preventative measures, which could drive down costs in the medium term by reducing the need for services in future years.

Professor Annette Hastings from the University of Glasgow said:

“Local councils find themselves in an incredibly difficult position. At a time when the agenda is about how to make public services work better, particularly for those that need them the most, councils are being subjected to year on year funding cuts.  Their capacity to deliver positive change is being reduced just when it is needed the most. The cuts are only half way through and it is clear that the cuts to come will have major impacts. Some of these impacts will be very damaging – and this is much more likely when funding cuts are so severe and so rapid.”

Josh Stott, Policy and Research Manager at the JRF said:

“The cuts have forced the pace of local service reform and there have been some positives, in terms of service redesign and new ways of working.  However, we are now beginning to see the impacts of the cuts 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.  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.” 

To maintain effective services in deprived areas, JRF recommends:

  • Extending the timetable of cuts to local authorities to allow them to implement public service reforms and invest in prevention measures, driving down costs over the medium term in a sustainable way.
  • Multi-year funding settlements from central government would provide the security to manage the reductions more effectively and support prevention measures which would deliver cost savings over the extended funding period. 
  • A new framework for the sharing of risks and cost savings between local services would incentivise multi-agency interventions and wider public service reform. 
  • Further devolution of fiscal responsibility to local government needs to take place with a fairer system of funding which makes sure that poorer areas are not disproportionally affected.