Austerity has hit cities hardest

In a spending review year, Cities Outlook 2019 explores how local government cuts since 2010 have impacted UK cities, finding that cities have shouldered almost three-quarters of all local government spending cuts.

Not only that, but with an ever-increasing demand for services like social care, cities are dedicating more and more of their spending to these vital services, leaving little room to pursue activity in support of their wider economy.

With the end of austerity in sight, this year’s Cities Outlook looks at how cities have responded to cuts in their spending, and what new avenues for revenue they have been able to explore.

Key findings

• Per head, cities saw a cut in spending of £386 compared to £172 elsewhere in Britain.
• The largest cuts were felt in the north of England, on average seeing 20% reductions in their budgets.
• London also 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.

Implications for local government funding and the spending review

The findings from Cities Outlook 2019 show that cities have borne heavy cuts to their budgets in recent years and need a fairer funding deal from 2020. Doing so will enable them to concentrate on supporting their communities and developing their economies, for the good of the national economy as a whole.

Cities Outlook 2019 makes four recommendations as the government prepares for the upcoming Spending Review.

1. Reform the way social care is funded

The current model of social care funding is unsustainable. Current pressure and the likely growth in demand means that without significant reform, cities will not be able to deliver other services for their area.

2. Give local authorities more freedom to raise money and spend it as they wish

Cities should be able to set and raise council tax rates in line with their needs, as well as introduce other taxes, such as a tourist tax.

3. Set long-term budgets

Longer-term budgets, that span three to five years, should be set in order to give authorities certainty and flexibility in how they manage their spending.

4. Let the sales fees and charges cities raise in one service area, be spent on another

Cities should have the freedom to decide how to allocate the cash they have raised to improve their services.

Take a look at this SlideShare, which provides an in-a-nutshell overview of the report: