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Fair's fair

Mark Easton | 17:29 UK time, Wednesday, 9 February 2011

As MPs debate the fairness of the government's cuts to local authority budgets in England, an interesting conversation with a ministerial source reveals something of the political thinking behind the settlement.

I was trying to understand how the government could regard it as fair that every voter in Labour-controlled Hackney should lose £210.19 in "spending power" as a result of the cuts (8.8% reduction), while their equivalent in Conservative-controlled East Dorset is losing £2.86 (roughly 2%).

The upshot of this settlement is that the council in one of the most deprived neighbourhoods in the country is making £44m worth of cuts in the coming year, while the district council in one of the least deprived is making no cuts at all.

My ministerial source explained that, during the Labour years, extra grants were given to poor areas - money, he said, "they were not due". His point was that the Formula Grant councils receive from central taxation already includes additional funds taking account of the level of deprivation in an area. The new settlement, he explained, was simply "unwinding that process".

This argument about the fairness of the local government funding cuts is one which Eric Pickles, the secretary of state for communities and local government is happy to debate. He argues that there is far more scope for savings in authorities that have been receiving more money.

However, the effect of the settlement is that poor neighbourhoods are taking a bigger hit than rich ones.

Research by interest group Core Cities using Mr Pickles' own figures, shows how, generally, the more deprived an area, the bigger the proportionate cut in its budget.

So, while urban areas with high levels of poverty, unemployment and health pressures are losing almost 9% of their spending power as a result of the cuts, less deprived districts such as Wokingham in Berkshire are losing less than 1%. Mr Pickles, however, argues that this is because poorer areas have been receiving far more money from central government and therefore have more scope for efficiency savings.

In East Dorset, for example, roughly 75% of council income is from local taxes with just 25% from general taxation. In Hackney, it is pretty much the other way around. The consequence is that, even after the cuts, East Dorset voters will each have about £900 spent on them while in Hackney it is over £2,000.

The leader of East Dorset District Council, Conservative councillor Spencer Flower uses such figures to argue the fairness point in reverse.

"How fair is that then? How fair has it been in the past that that weight of government funding has not been in Dorset, it has been elsewhere. We have had to live by our own means."

The elected mayor of Hackney, Labour's Jules Pipe, takes a different view.

"Hackney gets more because it has a greater need. We have got higher unemployment, more children on free school meals, greater number of people with chronic health conditions. It is unfair that we are seeing bigger cuts than affluent areas."

"Fairness" is in the eye of the beholder.


Comments

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  • 1. At 5:54pm on 09 Feb 2011, John Ellis wrote:

    a sub story on cuts that will be very damaging the council did vote to sell of the 8 community centres
    http://www.thecowanreport.com/2011/02/will-camerons-favourite-council-kill.html

    I will be using the crime maps on this one to see how the ward changes with these losses to community and community groups

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  • 2. At 6:14pm on 09 Feb 2011, Neil Watson wrote:

    Mark. It would be interesting to see by how much was added over and above the Formula Grant during the last ten years, using East Dorset and Hackney as the examples. Is that information available?

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  • 3. At 6:29pm on 09 Feb 2011, Have your say Rejected wrote:

    This whole argument is being played out under the shadow of bankers bonuses. How can anyone argue fairness in cuts when the people who helped caused all this misery will allegedly receive billions in bonuses. How can the millionaires in Gov. argue fairness when they wont be affected.

    btw my personal definition of fair is equal. One town receiving roughly 100 times the cuts as other towns is not fair in my books.

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  • 4. At 6:32pm on 09 Feb 2011, watriler wrote:

    Where would you as an average resident prefer to live - Hackney? I dont think so. Foe the phrase "efficiency savings" read job and service cuts. Even if there are reductions available they will certainly not compensate for the dramatic loss of income for many of the poorest areas and dont forget the government have front loaded the cuts (at least I hope they are front loaded and not the norm for the next four years!) Furthermore cuts can only be achieved through redundancies and severance costs may not be recouped for several years for long serving staff thus requiring the council to 'overshoot' its cuts haul. Pickles is in the same mould as Thatcher - vengeance on the feckless working class and their representatives.

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  • 5. At 6:58pm on 09 Feb 2011, _Ewan_ wrote:

    "btw my personal definition of fair is equal."

    So, both authorities should get the same amount of money per person then?

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  • 6. At 7:55pm on 09 Feb 2011, supersocrates wrote:

    Surely if FAIRNESS is to be the issue, then the whole concept of Local Authorities becomes questionable. Surely it is time to apply some systems thinking here and consider how the Well Being of the whole of the UK can be better served and perhaps the radical approach of 'The Happiness Formula' applied to remove the 'competitive nature' of the Local Authorities. With all these league tables they now seem to be more like the Premier Leaague and Football League!!

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  • 7. At 8:12pm on 09 Feb 2011, Giselle wrote:

    5. At 6:58pm on 09 Feb 2011, _Ewan_ wrote:
    "btw my personal definition of fair is equal."

    So, both authorities should get the same amount of money per person then?
    ------

    Yes, that would seem to be fair. Although this word is becoming much more like another filthy four lettered word in the mouths of CamClegg, so I actually think it should be removed from the english language until they are both dead and buried - politically speaking (I suppose I have to add!).

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  • 8. At 8:16pm on 09 Feb 2011, Have your say Rejected wrote:

    ewan, why not, its a good starting ground. How would you define fairness. If I see a better definition then I'm open to changing my opinion on fairness.

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  • 9. At 8:45pm on 09 Feb 2011, RichardLeon wrote:

    Apparently "fair" now means anything that makes rich people richer, and poor people poorer, more ill, more stressed, more hopeless, and less able to survive without resorting to crime.

    I suppose the Tories are nothing if not historically consistent in their relentless drive to push the UK back to the 19th century.

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  • 10. At 9:30pm on 09 Feb 2011, SuperSonic4 wrote:

    Fair to me means ensuring that everyone is given equal opportunity to progress in life. Children in Hackney shouldn't be written off because they were born there and since they have fewer opportunities then more money needs to be spent to ensure that they do. Conversely, a child born to rich parents shouldn't get a freebie (and become a top ranking politician - has Cameron done anything resembling minimum wage work?)

    Councils need to be able to spend the grants they get themselves without interference and conditions but still accountable. Outsourcing should stop since private companies are not accountable to the electorate - if I don't like my Councillor I can vote them out.

    If this sounds socialist then it probably is (does helping the poor sound familiar Clegg?)

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  • 11. At 9:49pm on 09 Feb 2011, Whistling Neil wrote:

    It is an interesting and easily proven point that the ministerial source makes - if they publish the figures showing how the previous government provide excessive increases in fund to its safe Labour councils then the removal of that unfairness becomes factual.

    It is also not clear from the figures if the 900 quid in Dorset and 2k in Hackney are just the government grants (excluding council tax paid locally) or the overall figure, which it looks like it should be.
    Also to be considered would be are the East Dorset figure including expenditure from Dorset county council - or just the district council? Since Hackney provides education services and East Dorset does not nor social services etc.
    Nor does it identify if the fact Hackney has nearly 2.5-3 times the population make a difference.

    It has long been a political point that Labour governments feed Labour councils and vice versa - yet I noticed my own managed to stuff itself with high paid middle management more than most and it has never been anything else but solid blue. So I find it difficult to accept it really is that simple.

    I am not however surprised with Wokingham - if you provide nothing there is really nothing to cut without front line services going. John Redwood is enough of a pain in the side of the PM without providing further grist to his mill.

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  • 12. At 10:12pm on 09 Feb 2011, John Ellis wrote:

    There is no such thing as sociaty.

    The words of Dave's idol M Thatcher

    So were does Dave get a big socity from? by doing away with the
    little bits of sociaty so you are only left with the bif fish in society.

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  • 13. At 10:19pm on 09 Feb 2011, Mike wrote:

    Whistling Neil at no 11 is quite right.

    Is this supposed to be a blog about stats ? so where is the info to allow an informed judgement to be made ? what was the level of funding to hackney in 1997? and how much to East Dorset ? and by how much in % terms did each go up from 1997-2010? if the Hackney % is greater than that for Dorset then it can be seen that it benefitted from a labour govt giving more money to a labour council, and that what you are pointing out now is merely a start on redressing the balance.

    Of course the figures for 1997-2010 may show hackney didn't receive excessive funds from central govt compared to east dorset, but given the amount of comment in that period about how the labour govt was increasing funding to labour councils disproportionately it seems unlikely that would be the case.

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  • 14. At 10:21pm on 09 Feb 2011, mothymar wrote:

    So Giselle (7) and Have your say Rejected (8); what you're saying is that Hackney should be cut by about 60% overall instead of 8.9%? Because that would then mean that people in Hackney had about £900 each spent on them, like people in Dorset?

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  • 15. At 10:39pm on 09 Feb 2011, Have your say Rejected wrote:

    mothymar. If all towns were equal in wealth then yes, Hackney and East Dorset are not. I imagine Hackney has more unemployment, more single parent families and more deprivation so would require more funding to put it on an equal footing. I'm still trying to figure out what fairness is.

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  • 16. At 11:03pm on 09 Feb 2011, Mike wrote:

    another issue this highlights is the corrosive effect of giving higher funding to councils with "more deprivation" as no 15 puts it. does this not encourage councils to compete to show how "deprived" their areas are? where is the incentive to improve the lot of their population, if they will only lose funding if they do so ? less money for the council to spend = less power and patronage for the councillors.

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  • 17. At 11:42pm on 09 Feb 2011, dave wrote:

    If I am given £0.00 because I earn more than enough to live on and my neighbour is given £500 whilst only needing £400 to live on he can afford a cut of £100 whilst I have no cuts.

    Of course such an analogy would be more relevant if you gave us the full figures, naturally you don't as they might spoil the picture of you 'thinking'.

    Whilst you're thinking think about this, also from 'Core Cities'....1 million jobs in the private sector....

    Oxford Economics also outlined the critical role of these cities in driving the nation’s growth. The Local Enterprise Partnership areas that will surround the Core Cities are already responsible for around a quarter of the country’s economic output, but could produce more. Over the next ten years these areas could create an astounding 1 million extra jobs and £44 billion more of economic output.

    Chris Murray, Director Core Cities, said: “These figures speak for themselves and we must empower our cities to deliver jobs and growth. There is compelling evidence that the cities that have greater local control over their finances have the best chance of economic success.”

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  • 18. At 11:49pm on 09 Feb 2011, dave wrote:

    Core Cities.....1 Tory, 2 Liberals, 5 Labour. How fair is that?

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  • 19. At 11:52pm on 09 Feb 2011, tarquin wrote:

    'Fairness' is always a tricky one to pin down

    From what I can tell, wealthier areas get less of a cut because they are funded by local taxation, whereas deprived areas get a deeper cut because they rely on national spending, which is where we need the savings, so an equal cut makes more of an impact on them

    Turn the question around, would it be 'fair' to cut more from wealthier districts so that overall everyone got equal amounts of cuts?

    I would echo the calls for Mark to look into the rise in funding between 1997 and 2010, would certainly be interesting

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  • 20. At 01:24am on 10 Feb 2011, magnificentpolarbear wrote:

    It is not fair to compare the per head spend of Hackney with the per head spend of East Dorset for the simple reason they are different types of council.

    Hackney is a unitary council that provides the full range of local government services such as social services and education whereas East Dorset is a district council that does NOT provide these services (plus several others) as these are provided by the County Council

    To compare the two areas and the level of grant / per head spend you need to compare Hackney to East Dorset PLUS Dorset County Council

    But I would guess that the cuts to the Hackney Budget are still larger even when comparing like with like.

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  • 21. At 09:04am on 10 Feb 2011, Extranea wrote:

    The government has a major problem - they have taken up the mantle of "fairness", but fairness means different things to different people.

    To those on the right - fairness would be a flat rate of tax no matter how much they earn. For those on the left, people should be taxed more if they earn more. Both can be argued to be fair.

    The problem with the council funding that the coalition must understand is that the most deprived areas of the country have more public spending - this is because the private sector has not provided the jobs and investment. Now the government is cutting disproportionately the poorest areas funding and expect the private sector to magic new jobs. The chances are this won't happen and any new jobs will go to affluent areas, mostly the south east and the rest will just suffer.

    The government is also taking a political calculation - no doubt many of these areas affected will be Labour councils. They will be blamed for cutting services - so far though the mud is sticking to the government and not to the councils.

    http://extranea.wordpress.com/

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  • 22. At 10:34am on 10 Feb 2011, MaggieL wrote:

    To make any sense these percentages should be shown as government grants per head. For example, Richmond on Thames receives £157 per head which is very low. Some other Councils receive up to £900 per head. If you take 5% off Richmond and 10% off, say, Lambeth, you will find that Lambeth still gets an enormous grant compared to Richmond even thought their cut is bigger. - So tell us the amounts not the percentages which tend to get manipulated to give a false impression of who is worst off.

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  • 23. At 11:52am on 10 Feb 2011, Alex wrote:

    @Mark "Fairnes" is in the eye of the beholder.

    I'm afraid that fairness doesn't come into it at all. Wealthy boroughs (i.e. Tory or maybe Lib Dem boroughs) get protected from the cuts. Poorer boroughs (which have the temerity not to vote Tory), get slammed.

    It's a disgrace and it's a disgrace that it is not getting more prominence in the media (with some exeptions...Mark).

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  • 24. At 12:22pm on 10 Feb 2011, newshounduk wrote:

    The problem with deciding fairness is that we do not start with a level playing field because each council has a different population, different local resources etc as well as making different decisions.

    It would be fairly simple to say that each individual within every council area in the country could be allocated the same amount annually, however given that the demographics vary widely between council areas it could well be that what works well in one council area could be devastatingly bad in another.

    It's also possible that individuals could be typed according to a variety of criteria and the amounts could be weighted to reflect the financial to provide for such individuals e.g. people with special needs but that could cause problems too, particularly if you have an excess or a shortage of people in a particular category.

    Given that the situation in any council area or indeed in the country is dynamic it is extremely difficult to plan for your local population or indeed your national population because all the time you are limited by the finance available which has to stretch to cover the services required against a backdrop which changes from hour to hour.

    To suddenly have massive cuts to this finance without adequate warning creates major problems and the perhaps planned minor descrepancies in fairness are then magnified to unacceptable levels.Councils are now back to square one trying to meet their local needs fairly but with a lot less money. Not an easy task.

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  • 25. At 2:45pm on 10 Feb 2011, Julia wrote:

    Thank you for this posting Mark. There's a big story to tell re the level of unfairness. I'm just not sure you have fully exposed the level of difference between Councils. Hull's budget is apparently being cut by 25% in just one year.

    The government simply say that voters should demand that local government cut back room posts and be more efficient. But 25%? How would they cut that much without impacting essential services?

    Perhaps the BBC could set them the challenge to see what magic trick they have but are not giving away?

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  • 26. At 3:37pm on 10 Feb 2011, newshounduk wrote:

    The government is forcing councils to make the actual cuts which puts them in the firing line for blame while arguing that councils which make frontline service cuts are doing so for political reasons, because in the government's view they are deemed unnecessary.

    However, what the government is not doing is actually giving councils practical costed examples of how it could be done or giving them alternative solutions.Councils which are suffering are in a no-win situation being criticised if they make necessary cuts and being accused of playing politics if the cuts affect frontline services.

    Invariably, the cuts will be hardest hit in Labour authorities and especially in deprived areas as they rely more on government funds to offset social deprivation.

    It is a cowardly strategy and seems to be revenge for the last Labour government doing the same to Conservative run councils.

    Unfortunately, the government seems to forget the fact that people living in those areas are being made to suffer from this political in-fighting through no fault of their own.

    Some will pay the price by losing their public service job, while others will be forced to pay higher charges for less services and possibly some people with be made to suffer by both losing their jobs and possibly their home in an environment of rapidly rising costs.

    It makes a mockery of the assertion that we are all in this together when clearly living in a Conservative run area has more benefits than living in a Labour run one under this government.

    One does get the feeling that the government have looked at Labour council spending and have come up with a strategy to cause them the most political embarrassment.Grant Shapps hints on North West Tonight that Manchester ought to cut the salary of Richard Leese, the leader of the City Council but forgets that MPs themselves could cut their salaries more than the token 5% cut by cabinet ministers.Indeed though he hints at that cut he is less forthcoming about practical council cuts or strategies for dealing with the reduced funds.

    This policy smacks more of malice than fairness and the government would do well to remember that we have an election at the end of their 5 year term and it's doubtful if those suffering unnecessarily now will be forgiving or forgetting.

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  • 27. At 4:16pm on 10 Feb 2011, jon112dk wrote:

    Tory burough: 0% cut

    Labour burough: 25% cut

    Reminds me a bit of Mugabe: any area that voted MDC got no food.

    OOPS! Now there is an idea, I hope Pickles is not reading this.

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  • 28. At 06:54am on 11 Feb 2011, Stokkevn wrote:

    The other question should be is why is each Hackney voter ( using the figures above )costing the tax payer £2388 per year and East Dorset only £143. That sound unfair to me.

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  • 29. At 10:10am on 11 Feb 2011, kaybraes wrote:

    It's strange that in Tory /Lib dem councils the emphasis is on maintaining services by reducing costs, getting rid of the unnecessary etc. In Labour councils the emphasis is on cutting essential services to those who will make the most noise and create the most outrage, while maintaining non essential services ,keeping staff levels high, and keeping themselves in power. Don't sack your voters !

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  • 30. At 2:25pm on 11 Feb 2011, John Ellis wrote:

    in this story of fair with regards to the sell off of the olympic stadium I do hope that as it was paid for by the public through the national lottery will the money raised on this be returned to the national lottery funding pot or will the government pocket it for itself.

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  • 31. At 6:20pm on 12 Feb 2011, TruthAboutExmouthEstate wrote:

    In terms of disposing of assets it seems there is a mixed report. Many local authority estates have been sold off, to varying degrees of success.

    For example, on my estate (the Exmouth Estate, owned by Swan Housing) we've seen an influx of cash that has markedly improved living conditions and the overall quality of life, as the formerly heavily vandalised buildings have been extensively renovated, inside and out. There are some videos here

    http://www.youtube.com/watch?v=wF51xSjW-70

    that show the standard of work - it is very high. There used to be lots of pictures of the estate as Swan Housing "inherited" it (i.e., acquired) and it was indeed grim.

    But this is by no means the experience of ALL ex Local Authority properties; we've seen other estates in The East End where the new landlord doesn't do much other than collect rent and services charges. I believe that one has even been returned to Tower Hamlets, so bad was the experience of residents and leaseholders.

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