Tip for Labour frontbenchers: next time you’re looking for a quote, ditch the Mao for a splash of Lenin. Specifically, this bit: “There are decades where nothing happens; and there are weeks where decades happen.” This week, George Osborne made a decade happen in local government. As a result of his spending review, independent economists predict a “genuine revolution” will sweep England’s town halls. It may not be as eye-catching as a quick U-turn on tax credits – but it will mark a permanent and drastic change in how local councils fund the provision of core services. It will certainly prompt the scrapping of many of those. And it will also lead to something that governments of all stripes have tried to avoid for decades: a postcode lottery, in which where you live determines how frequently your bins are collected, whether your streets and parks are kept clean, whether street lights go on after dark – even whether your mum or sister can count on a decent level of care.
David Cameron came to power promising localism – then promptly stripped out the cash that might have made that transition a smooth one. By the end of this decade of cuts, the department for local government will have had the biggest cuts of all, with a total of 79% lopped off its day-to-day spending since 2010. Money from Whitehall is not the only thing that counts for town halls, but it’s still a major component of council budgets. Mr Osborne’s clear calculation was that cuts to local government services would largely be blamed by voters on their councillors, not Downing Street. It was a shrewd political calculation that has had disastrous effects on some of the poorest places in England. As the Institute for Fiscal Studies points out, those councils most reliant on central government grants have already suffered a near 40% drop in their spending power. That is twice as big a hit as those at the opposite end of the scale – and it is compounded by the way the welfare reforms introduced by the coalition government have, in the words of economists Steve Fothergill and Christina Beatty, hit “the poorest places hardest”. Put those two forces together, and a leafy shire such as Mr Cameron’s west Oxfordshire has got off relatively lightly, even while deprived places such as Blackpool have been kicked to the floor.
By the end of this decade, the chancellor plans to reduce grant funding of local authorities further, while allowing them to jack up council tax and keep all of the rise in business rates made off new enterprises. This sounds good – haven’t local councils long complained about those purse strings held by Westminster? But consider the situation of an inner-city council for a deprived conurbation. Doncaster, say, or Liverpool. Such places have cheap residential properties, which will not yield much council tax, and where getting new businesses to set up is often a struggle. In such places, councils will simply not be able to raise the money to fund their leisure centres and social care. In places such as Westminster and Windsor the opposite logic will apply.
This, then, is a charter to exacerbate the historic regional inequalities between the affluent south-east and the rest of the country. Forget the chancellor’s rhetoric about the northern powerhouse: in reality he is creating something like a northern poorhouse. This is certainly what the IFS describes as a “revolution” – and in revolutions, a lot of people often get hurt.
