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Updated: Cuts disparity favours two-tier areas

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Spending by councils in two-tier areas has fallen by significantly less since the start of the decade than it has in unitary authorities, Institute for Fiscal Studies analysis shows.

Across England council spending fell by 23% in real terms between 2009-10 and 2016-17, a reduction of £11.5bn. However, while metropolitan authorities and London boroughs saw net spending reduce by around 30%, in shire areas spending reduced by just 15%.

While local government in Hampshire and Surrey reduced spending by 5% and 6% respectively, at the other end of the scale Westminster has made reductions of 46% and Salford of 45%.

Of the seven councils that have reduced spending by more than 40%, five were metropolitan districts in the north east or north west of England.

Of the nine councils, excluding Isles of Scilly and City of London, that saw spending fall by less than 10% over the period, four were two-tier county areas and three were county unitaries – Wiltshire, East Riding of Yorkshire and Rutland. The other two were Bracknell Forest and Central Bedfordshire. All were amongst the fifth of council least dependent on grant.

There were also big differences in reductions between regions, ranging from £393 per head in London to just £96 in the south east.

The IFS said in general councils which received the largest share of their funding from government grants in 2009-10 had seen the largest cuts to service spending. The 10% of authorities most dependent on grants in 2009-10 received an average cut of 33%, compared to 12% for the 10% of authorities least dependent on grants.


The IFS has used revenue outturn data submitted by councils to the Department for Communities & Local Government for 2009-10 to 2015-16 and forecasts for 2016-17. The institute looked at spending on services, net of any income from fees or charges or specific grants. Spending on areas which have seen changes in responsibilities over the period, such as education, public health and some aspects of social care, have been excluded as far as possible. Police and fire spending is also excluded.

In shire county areas, spending by districts has been combined with the upper-tier counties. Spending by the Greater London Authority and combined authorities, including transport and waste authorities, has been allocated to the constituent principal authority or county area, in proportion to their contributions or population, where the authorities are not funded by levies on councils. Figures have been adjusted to account for inflation.

Graham Chapman (Lab), deputy leader of Nottingham City Council, which saw spending fall by 23%, told LGC the spending reductions reflected the higher cuts to budgets of councils serving poorer areas.

“The whole of this decade they have been taking money from the poor to give to the rich and from the north to give to the south. It’s just one great big political fix.

“It’s an overt abuse of power and the public accounts committee should be looking at it.”

The county areas with the largest reductions in spending were Northamptonshire (24%), Cumbria (23%) and Gloucestershire (22%). At 10% each, Sheffield and Walsall were the metropolitan authority areas that saw the smallest reductions in spending.

The figures for county areas include spending by both district and county councils. In its submission to last year’s spending review the County Councils Network calculated counties’ total expenditure had reduced by 28%, suggesting much of the difference may be accounted for by district councils. Districts do not provide social care services, which account for a large amount of the pressure on upper-tier budgets, while many have also been big beneficiaries of the new homes bonus and the move to allow local government to retain 50% of business rates growth.

A CCN spokesman said combining county and district spending figures masked the impact of low per head funding for county councils and did not account for the “unrelenting demand led pressures in delivering major services which drive up expenditure”.

He added: “While county councils have seen similar reductions in funding to London and metropolitan boroughs during the last parliament, counties will see their revenue support grant reduce 93% by 2020, higher than the national average.

“These figures also dilute the imbalance in two-tier funding. County councils only receive 20% of new homes bonus payments and retained business rates, which increases the financial challenge for these authorities at a time when government resource is decreasing for all upper tier councils.”

District Councils’ Network lead member for finance, Sharon Taylor (Lab) said the IFS figures restated the “by now familiar trajectory of local government spending since the 2010 spending review”.

She added: “Set against this challenging financial environment, district councils recognise the importance of facilitating local economic growth and identifying commercial opportunities so as to become self-sufficient, ahead of moves to full business rates retention.”

A spokesman for the Department for Communities & Local Government said the four-year local government finance settlement that runs to 2020 was “fair and ensures local authorities facing the highest demand for services continue to receive more funding”.

The settlement introduced a new method for applying cuts which took into account a council’s total income, rather than salami slicing grant as happened in the last parliament.

The spokesman added: “Councils in England will have almost £200bn to spend on local services over the lifetime of this parliament. This should allow them to prioritise services local people and community groups really value.”

 *This story was updated on 4 January to reflect amendments made by the IFS to their figures for county councils. This has led to larger reductions in spending in some county areas than originally stated but has not altered the overall pattern of spending reductions.



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