Deprived areas benefit least from efforts to soften cuts says IFS
0A new study from the IFS says that the extra money made available by central government to help deal with funding cuts has benefited better-off areas more than poorer ones.
The study says the least deprived councils have seen a small real-terms increase of 0.3% in funding since 2015-16, compared to a cut of 2.8% for the most deprived areas.
This follows on top of the earlier period from 2009-10 to 2015-16 when councils’ spending on services fell around 18% in real terms with cuts to central government grants, and at the same time councils being encouraged to freeze council tax.
The IFS says: “The spending cuts were significantly larger in more-deprived than more-affluent areas of the country, reflecting the way the government chose to cut grant-funding.”
In December 2015 the new Conservative government introduced a four-year settlement covering 2016-17 to 2019-20.
This comprised further large cuts in grant-funding but allowed councils to increase council tax by up to 4% per year.
In addition, the way grants were allocated was changed so that they would not lead to disproportionate effects on the core spending power – the government’s measure of overall funding – on deprived councils.
In each subsequent year additional money has been found for councils, reducing the scale of the cuts, in part by allowing bigger council tax increases, and in part by increasing grant funding.
Thus yesterday’s provisional local authority settlement confirmed Budget plans for £650m of grant funding for social care, and abandoned negative rate support grants.
The IFS says that over the period “it has always been the case that councils serving more deprived areas would continue to face slightly larger cuts, on average,than those serving richer areas.”
The study also says: “…the extra funding has benefited the richer, less grant-dependent councils more, on average, than the poorer councils with high grant-dependency.”
This is because councils relying more on council tax and less on central government grant can raise more money from the ability to increase council tax by 3% in 2018-19 and 2019-20 for services other than social care, as opposed to the originally stipulated 2%.
These councils, the IFS says, will also benefit the most from the cancellation grants.
