£8.9bn drop in funding for neighbourhood services

Resources devoted to neighbourhood services across Britain have fallen by 27 per cent since 2010.

Representing a total of £8.9 billion in 2017/18 prices, the new report published by the Association for Public Service Excellence the New Policy Institute stresses that the funding drop is against the background of a real fall in total UK local government spending over the same period of 19 per cent-  demonstrating that neighbourhood services have taken a bigger share of austerity than other council services.

Given the importance of these services to local communities and local businesses, the report creates an argument for a sustained increase in local government spending on neighbourhood services, supported by an analysis of how increases might be distributed across the 70 or so individual services.

Combining quantitative and qualitative evidence to highlight that reductions in local government spending have gone too far, the report finds that the impact of spending cuts has hit the poorest areas hardest. When compared on a per head basis, spending on neighbourhood services by the one third of authorities with the lowest spending in 2017/18 has fallen further since 2009/10 than spending by authorities with higher levels.

Therefore, restoring local government spending as a share of GDP, even to the old low point of 6.2 per cent, would still provide a welcome step-up in local government spending on neighbourhood services in England, Wales and Scotland of some £3.2 billion. On average, this would represent a 12 per cent increase in neighbourhood services budgets.

Peter Kenway, lead author of the report, said: “From an economic point of view, the parlous state of local government finance reflects the fact that its spending as a share of GDP is at its lowest level for 50 years. It dropped below the old record (6.2 per cent) in 2016/17 and is still heading on down.”

Paul O’Brien, APSE’s chief executive added: “It is now clear that reductions in local government spending has gone too far. In spite of well-intentioned announcements by the Chancellor to allow public spending to grow in real terms at 1.2 per cent a year from 2020/21 this is not enough to prevent the share of local government spending in the whole economy from continuing to slide. “To address these deepening concerns local government spending must, as a matter of urgency, be restored to a minimum sustainable level after which its growth must be linked to the growth rate of the economy. Only when that has happened will austerity for local government truly be over."