Labour councils in England hit harder by austerity than Tory areas

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  • June 21, 2020
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Labour councils have borne the brunt of local government cuts over a decade of austerity, according to an analysis by the Guardian.

It highlights for the first time the extent to which poorer, largely Labour-held areas of England had their funding slashed on average by at least a third, while more affluent, largely Conservative areas received greater protection.

The analysis, published on Monday and carried out with Sigoma, a special interest group for councils in metropolitan areas, comes exactly 10 years since the then Conservative chancellor, George Osborne, announced the deepest period of cuts to public service spending since the second world war.

Graphic showing how many of the 50 worst-hit councils were held by which party

In his budget speech on 22 June, 2010, Osborne said his plans would be fair and would protect “the most vulnerable in society” while eliminating the government’s budget deficit.

But the new analysis reveals that, on average, Labour councils saw their spending power reduced by 34%, while the average Conservative council suffered an equivalent decline of less than a quarter (24%). Of the 50 councils which received the deepest budget cuts, 28 were Labour controlled in 2010, while just six were Conservative. The remainder were Liberal Democrat controlled (two) or had no overall control (14).

The disparity grew by the end of the decade, with 38 of the 50 worst-hit councils being Labour-controlled while only five were Conservative authorities.

Hackney council reported the biggest percentage cut of any council, losing £180m in real terms, a 41% decline in its spending power. Newham, another east London borough, and Knowsley and Manchester in the north-west of England all suffered similarly deep cuts. All are also Labour areas with high levels of deprivation.

Labour council leaders from the worst-hit areas have told the Guardian that the cuts were so politically skewed as to feel like electoral manipulation. Graham Morgan, Labour leader of Knowsley council, said the targeting of Labour authorities was “deliberate, and the equivalent of gerrymandering. Funding of some of the most affluent areas increased while ours decreased.”

Graphic showing percentage change in spending power of 50 worst-hit councils

Describing austerity budgets as “shattering”, he added that Knowsley had lost nearly 2,000 staff over 10 years out of a total workforce of 4,500. “We’ve had to cut across the board.” The “deliberate” aim was to shift the political risk away from the Tories, the Labour leader of Birmingham city council, Ian Ward, agreed.

The north-west and north-east of England, which have historically had a high proportion of Labour voters, saw the biggest reductions in spending power. The more affluent and Conservative-voting south-west and south-east saw the lowest cuts.

The average council in the north-east saw a reduction in spending power of 34%, losing significantly more than the average council in the south-west or the south-east, whose spending power reduced by 23%.

The Guardian/Sigoma analysis is based on figures from the Ministry of Housing, Communities and Local Government (MHCLG) and looks at core spending power, a measure which encompasses all main income streams for councils, including central government grants and revenue from council tax and business rates.

Urban areas tended to see deeper cuts than rural areas. Inner London boroughs and metropolitan areas outside of the capital both received budgets cut of more than a third, while district and county councils in rural areas lost 22% of their budgets.

“It was very clear right from the beginning that Labour areas were being hit harder because of the way the government changed how central government funding for councils was calculated,” Richard Watts, Labour leader of Islington council and chair of the Local Government Association resources board, said.

“They took away specific grants targeted at deprived areas, and later started stripping out the deprivation weighting from the funding formula,” Watts said. Islington has seen a 37% cut in its core spending power, our analysis shows.

Going into austerity, poorer, mainly Labour-supporting areas, especially in the post-industrial north, were far more dependent on their grant from central government than more affluent areas in the south, which had greater ability to raise revenue from council tax and business rates. Cuts in central government grants therefore represented a far greater loss to them proportionately.

A spokesperson for MHCLG denied there was any political motivation behind the distribution of cuts. “The local government finance system treats all councils fairly and has never made a distinction on political grounds,” they said.

The party political impact of the local government cuts largely stayed below the public’s radar in the early years of austerity because they were implemented through lots of different mechanisms, Graham Chapman, former Labour leader of Nottingham city council, believes. One example was the allocation of the government’s highways grant to councils for road maintenance; it used to be based on road use, but is now allocated by length of road, so that less-used rural roads in largely Conservative shire areas have received more at the expense of urban ones.

MHCLG pointed out that councils had been given a £2.9bn increase in their core spending power in total this year – the biggest annual real-terms increase in a decade – and said that councils in the north-east and north-west would receive 6% increases on the previous year. “We are working on a comprehensive plan to ensure councils’ financial sustainability over the coming year,” the spokesperson said.

Data from 2010/11 has been adjusted to reflect inflation and changes to accounting conventions. Shire counties and shire districts have been aggregated and the political control data for these combined authorities is that of the prevailing county