Our public services are looking increasingly broken, and they look more broken in some areas than others. Why should this be? The UK remains one of the most centralised states, yet economic and social challenges play out every day in communities up and down the country. Crucially, local government and its partners are well placed to understand these challenges in their unique context, to implement actions that address this need, and to be a champion for their place. But fundamental constraints limit the ability of public services to do this. How can we create the system conditions which allow the needs of local people to be addressed more effectively than at present? I argue that we can’t achieve this without overcoming these structural constraints, and that the key to unlocking this is to work towards a new settlement between people and the public services they need. What, in other words, should be the point of public services in the 2020s?
It has long been accepted that we live in complex and uncertain times, a sense that has been heightened in post-Brexit Britain as we attempt to navigate our way through a significant period of change and uncertainty. This is compounded by predictions covering all aspects of social, economic and political life, from work (that 20% of jobs will be lost to automation) to aging (that 40% of today’s six-year olds will live to be 100). The impact these trends have on people and places will demand a coherent and systemic response from our public services. But the ability to respond flexibly and with competence is constrained by six structural constraints that are playing out differently across the UK.
The most pertinent are the combination of increasing demand and a sustained reduction in resources, leading to service cuts. These are compounded by the fact that areas of highest need are generally the least able to raise funds to meet that need. Structural change, accelerating in recent years as a result of incremental, opportunistic and ideological action, has resulted in an obfuscation of local government structures and accountability. Finally there is the urban experiment of devolution that side-lines the fifth of the population who live in rural and coastal places as well as those living in cities not covered by devolution.
Together, we have a near perfect storm of conditions. What will be their impact if these constraints continue unchecked? What might we need to think and do differently in order to mitigate them? And to what extent should we need, value and prioritise quality public services?
Demand is increasing at different rates in different areas. We live in a country with increasing numbers of homeless people, where food banks are a staple means of survival for many, where a third of children are living in poverty. For the first time in a generation we are starting to see life expectancy fall in some areas. At the same time, other factors compound this uncertainty: from zero-hours contracts preventing people planning on a stable income to the promise of tech-enabled services that remain inaccessible to many who need them.
Perhaps it should be little wonder that mental health and obesity are two of the major public health concerns of our times. At a time when we need to be investing in prevention, austerity leads us to trim the non-essential – including prevention. Not only do the cost savings accrue across the system and not back to a specific budget-holder, but the payback is also over a timeline that is often generational – and certainly longer than any political cycle. Further, prevention services are often the first to be cut for these very reasons: the impact is not immediately apparent nor salient.
A sustained reduction in resources has meant services have been cut at different rates in different areas. Not only have social needs been increasing, but the resources available to local public services have been severely constrained. Local authorities, for example, have seen their funding from central government halved since 2010. This impacts their ability not only to respond to need but also to invest in prevention, reducing demand in the long-run. Funding for youth services, early years, community health, lifelong learning, and so on has been cut significantly in some areas and completely in others. A recent report shows that by 2017, 14% of Children’s Centres have been closed and 55% have reduced the range of services they delivered; in six local authority areas over 70% have been closed. A reliance on the voluntary and community sector to ’step in’ to areas where services are withdrawn favours areas with high levels of social capital and disadvantages others.
The ability to raise core funding for local government is not related to local need. Despite impacting across the public sector, it is in looking at Local Government budgets that the geographical impact of austerity is clearest. The overarching narrative of declining resources is compounded by national policies that have removed the redistribution mechanisms that helped allocate additional resources to areas of highest deprivation; have reduced councils’ reliance on central government funding and have increased reliance on council tax as the main form of revenue. Taken together, these have widened funding inequalities.
Council tax is based both on house valuations from 1991 and the idea that all wealth is stored in bricks and mortar. Local authorities on average now draw 60% of their funding from Council Tax. But as recent analysis by Dan Bates and Steven Doogue shows, the actual amount can vary between 67% in Wokingham and 24% in Knowsley. Although broadly comparable in terms of number of domestic properties and total population, 28% of Knowsely’s residents are defined as living in deprived circumstances, compared to 5% in Wokingham. And only 9% of Knowsley’s houses are in the more expensive Council Tax bands D-H, compared to 76% of Wokingham’s. Council tax support further reduces Knowsley’s effective taxbase but has no impact on Wokingham’s. The result? Wokingham receives nearly twice as much revenue from Council Tax as Knowsley, and is much less vulnerable to government cuts. The removal of all area-based grants since 2010 further disadvantages areas of disadvantage like Knowsley; this JRF report highlighted in 2015 that the most deprived local authorities have seen cuts of £220 per head, compared to £40 per head in the least deprived. Between 2010-2019, Knowsley’s ‘spending power’ reduced by 27%, compared to an increase in Wokingham of nearly 2%.
Other sources of local government funding are directly linked to the economic growth of an area which further exacerbates this funding inequality. Councils now retain a proportion of business rates raised in their area. Based on anachronistic concepts of ‘high street businesses’, not reflecting online, this favours more prosperous areas or those growing economically. In the same way, the new homes bonus, designed to incentivise local authorities to stimulate house-building, has paid out nearly £7bn between 2011 and 2017 without any consideration being given to whether these homes are built in areas of highest need. The relatively new option of adding a social care precept to the council tax bill doesn’t match demand with the ability to raise revenue – affluent areas with comparatively low demands on publicly-funded social care services are also the areas able to raise the most income. Hopefully the recently-closed consultation on funding closed earlier this year is the start of a process to redress this balance.
Taken together, funding based on the ability of Councils to raise revenue locally through a combination of sources, without a redistributive mechanism, favours less deprived areas with a stable or growing economic base and disadvantages those areas trying to tackle much more complex socio-economic conditions. Little wonder, perhaps, that analysis by the Centre for Economic Performance at LSE found that “local authorities experiencing more fiscal cuts were more likely to vote in favour of leaving the EU. Given the nexus between fiscal cuts and local deprivation, we think that this pattern largely reflects pre-existing deprivation”.
In the next article I will explore the next three reasons we should care.