{"id":593,"date":"2019-02-12T11:41:05","date_gmt":"2019-02-12T11:41:05","guid":{"rendered":"http:\/\/blogs.cardiff.ac.uk\/thinking-wales\/?p=593"},"modified":"2022-04-13T17:25:10","modified_gmt":"2022-04-13T16:25:10","slug":"cut-to-the-bone-how-a-decade-of-austerity-has-left-its-mark-on-local-government-in-wales","status":"publish","type":"post","link":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/cut-to-the-bone-how-a-decade-of-austerity-has-left-its-mark-on-local-government-in-wales\/","title":{"rendered":"Cut to the bone? How a decade of austerity has left its mark on local government in Wales"},"content":{"rendered":"\n

This\npost draws on work from a recently published report into local government\nfinance by Guto Ifan<\/strong> and Cian Sion<\/strong> from the Wales Fiscal\nAnalysis team: <\/em>Cut\nto the bone? An analysis of Local Government finances in Wales, 2009-10 to\n2017-18 and the outlook to 2023-24<\/a>.<\/em><\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

As local authorities across Wales prepare to publish their budgets for 2019-20, expect to see a significant rise in Council Tax, with councils increasingly relying on locally-sourced revenue to partially offset cuts to their funding and to meet increasing demand pressures.<\/strong><\/p>\n\n\n\n

In Part 1<\/strong> of this two-part series\nexamining local government finance in Wales, we look at trends in revenue and\nspending over nearly a decade of austerity.[1]<\/a><\/p>\n\n\n\n


A shift towards local taxation<\/h2>\n\n\n\n

Local\ngovernment in Wales is primarily funded via grants and redistributed business\nrate revenues from the Welsh Government. The Welsh Government budget for\nday-to-day spending has fallen by 5.3% in real terms since 2009-10. Since\n2013-14, the share of this budget allocated to local government has also been\nfalling, from 39.1% to 35.5%. <\/p>\n\n\n\n

The value of Welsh Government grants to\nlocal authorities fell by \u00a3918.5 million (18.8%) in real terms between 2009-10\nand 2017-18, a decrease of \u00a3340 per person.<\/strong> <\/strong><\/p>\n\n\n\n

The Welsh Government\u2019s policy decision not to freeze or\ncap Council Tax increases, as was done in Scotland and in England, allowed\ngreater freedom for Welsh local authorities to offset reductions in grant\nfunding to avoid deeper cuts to spending. However, this meant that Council Tax grew\nat a faster rate on this side of the border.[2]<\/a><\/p>\n\n\n\n

Council Tax revenues in Wales have grown by 22.6% in real terms, accounting for 19% of local authorities\u2019 total gross revenue in 2017-18, up from 13.8% in 2009-10 (Figure 1).

<\/p>\n\n\n\n

Figure 1: Composition of local government gross revenue, 2009-10 to 2017-18 (2018-19 prices)<\/strong>[3]<\/a><\/p><\/blockquote>\n\n\n\n

\"\"
Source: StatsWales (2017-18 and previous) Financing of Gross Revenue<\/em><\/figcaption><\/figure>\n\n\n\n


The overarching trend in Welsh fiscal policy over the last decade has been a shift towards local taxation.<\/strong><\/p>\n\n\n\n

This may not be welcome news. It is\nwell-documented that Council\nTax rates are regressive<\/a> relative to\nits base \u2013 the higher the property value, the less is paid in Council Tax as a\nshare of that property\u2019s value.<\/p>\n\n\n\n

Furthermore, more\ndeprived local authorities, with a higher concentration of properties in the\nlower bands tend to have higher band D council tax levels (Figure 2). This\nmeans, in effect, that the Council Tax burden is unevenly shouldered across\nlocal authorities. For instance, in 2017-18 a band B property in Blaenau Gwent\npaid \u00a31,364 in Council Tax while the bill for a band E property in Pembrokeshire\nwas set at \u00a31,379, only \u00a315 dearer. <\/p>\n\n\n\n

As Council Tax becomes an ever more important component of local government financing, issues around its fairness and appropriateness as a tool for funding local services become increasingly salient. <\/strong>

<\/p>\n\n\n\n

Figure 2: Band D Council Tax levels, 2018-19<\/strong><\/p>
<\/cite><\/blockquote>\n\n\n\n

\"\"
Source: StatsWales (2018-19) Council Tax Levels by Billing Authority<\/em> <\/figcaption><\/figure>\n\n\n\n


A decade of downsizing <\/h2>\n\n\n\n

Despite\ngrowth in Council Tax receipts, local authorities saw a \u00a3577m (8.3%) cut in\ntheir revenue between 2009-10 and 2017-18. In response, they have resorted to cutting spending on\nlocal services.<\/p>\n\n\n\n

Local authority spending on services fell\nby \u00a3232 or 10.4% per head between 2009-10 and 2017-18. <\/strong><\/p>\n\n\n\n

The\npicture varies significantly across local government departments. Since\n2009-10, expenditure on social services (excluding the Flying Start<\/em> programme) has increased by \u00a3106.4m (6.5%) in real\nterms.   This means that social services\nand education spending now account for 73% of total service expenditure, up\nfrom 68% in 2009-10.<\/p>\n\n\n\n

However, during the same period there have been large cuts to other spending areas, including planning and economic development (55.4%), libraries, culture, heritage, sport and recreation (36.3%) and roads and transport (28.5%), as shown in Figure 3.

<\/p>\n\n\n\n

Figure 3: Percentage change in service spending, by local authority service area, between 2009-10 and 2017-18 (2018-19 prices) <\/strong>[4]<\/a><\/p>
<\/cite><\/blockquote>\n\n\n\n

\"\"
Source: StatsWales (2017-18 and previous) Net Current Expenditure, by local authority and service<\/em> <\/figcaption><\/figure>\n\n\n\n


These cuts have been accompanied by significant job losses. 37,000 local government jobs were lost between December 2009 and September 2018, equivalent to 19.9% of the total workforce size.<\/strong>[5]<\/a><\/p>\n\n\n\n

This is less than the\nreduction to the workforce size in England (32.4%) and Scotland (20.6%) but the\nfigure is still significantly more than the combined workforce of Tata Steel<\/em>, Admiral<\/em>, Airbus<\/em>, Transport for Wales<\/em>, Ford<\/em>, S.A. Brain<\/em> and the Principality\n<\/em>Building Society.[6]<\/a><\/p>\n\n\n\n


Growing demand for social services <\/h2>\n\n\n\n

The\nreal-terms increase in spending on social services partly reflects the\npriorities and commitment made by successive Welsh Governments, as well as\nlocal authorities\u2019 prioritisation of these services in successive budget\nrounds. However, it is also an indicator of increased demand.<\/p>\n\n\n\n

Spending on children in care has increased by \u00a395.9 million (33.2%) in real terms since 2009-10. At the same time, the number of children in local authority care has risen by 1,710 (36.4%).<\/strong>

<\/p>\n\n\n\n

Figure 4: Total expenditure on children in care and number of children in care across Wales, 2009-10 to 2017-18 (2018-19 prices)<\/strong><\/p>
<\/cite><\/blockquote>\n\n\n\n

\"\"

Source: StatsWales (2017-18 and previous) Net Current Expenditure, by local authority and service\ufeff<\/em> <\/figcaption><\/figure>\n\n\n\n


The sharp increase in the number of children in care from 2009-10 onwards coincides with a period of welfare reforms and cuts to spending on preventative services.<\/p>\n\n\n\n

To put these figures in context, the rate\nof children in care in Wales now stands at 102 per 10,000, significantly higher\nthan the rate in England which is 64 per 10,000.[7]<\/a><\/p>\n\n\n\n

Spending on older adults\u2019 (over 65) social\ncare fell by 1.3% in real terms between 2009-10 and 2017-18. However, demand has\nmarkedly increased during this period, putting downward pressure on the per\ncapita figure. On a per capita basis, spending on older adults\u2019 social services\nfell by \u00a3157 (-14.8%). <\/p>\n\n\n\n

Wales\u2019 aging population will continue to\nplay a key role in driving demand for social services. Conwy already has a\nhigher share of the population over 65 (27.2%) than Japan, the country that\ntops the world ranking on this measure. However, when examining the challenges\nassociated with funding social care, we must investigate both demographic-related\npressures and non-demographic ones. <\/p>\n\n\n\n


Conclusion<\/h2>\n\n\n\n

Increases in Council Tax levels have only\npartially offset cuts to local government grants. Local authorities have\nresorted to making extensive cuts to service spending, especially in areas\noutside of social services and education, leaving local taxpayers essentially\npaying more money for fewer services. After a near decade of austerity, it is difficult\nto gauge how much further attrition some local government services can face\nbefore they become unsustainable. <\/p>\n\n\n\n

In Part 2<\/a>, we explore the future prospects for local government finance and offer revenue projections for the next five year period.

<\/p>\n\n\n\n

Read Part 2<\/a><\/div>\n\n\n\n
\n\n\n\n

Notes<\/h4>\n\n\n\n

[1]<\/a> The revenue and spending data cited in\nthis post has been sourced from the Outturn and Financing of Gross Revenue\nExpenditure tables published by StatsWales<\/em>\nfor the years 2009-10 to 2017-18.<\/p>\n\n\n\n

[2]<\/a> Although Council Tax levels in Wales remain lower than in England, the gap has narrowed in recent years. In 2009-10, the headline Band D rate was \u00a3277 higher in England than in Wales. By 2017-18, this figure had fallen to \u00a3171.<\/a> <\/p>\n\n\n\n

[3]<\/a> <\/em>Council Tax and gross revenue figures are calculated net\nof the Council Tax Reduction Scheme, which is paid to people on low incomes\nand\/or certain welfare benefits to help with council tax bills.<\/p>\n\n\n\n

[4]<\/a> The change in social services and\neducation spending is somewhat exaggerated in this graph due to the Flying Start<\/em> element being removed from\nthe education category and re-classified as social services spending in\n2013-14. <\/p>\n\n\n\n

[5]<\/a> Dataset was produced by the Office for National Statistics<\/em> on request and is available here<\/a>.<\/p>\n\n\n\n

[6]<\/a> https:\/\/cymru-wales.unison.org.uk\/tag\/audit-of-austerity\/<\/a><\/p>\n\n\n\n

[7]<\/a> The rate of looked-after children in England is sourced from a recent report by the National Audit Office: https:\/\/www.nao.org.uk\/report\/pressures-on-childrens-social-care\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"As local authorities across Wales prepare to publish their budgets for 2019-20, expect to see a significant rise in Council Tax, with councils increasingly relying on locally-sourced revenue to partially offset cuts to their funding and to meet increasing demand pressures.","protected":false},"author":1658,"featured_media":599,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[60,110],"tags":[112,61,111,5],"class_list":["post-593","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-local-government","tag-austerity","tag-finance","tag-local-government","tag-wales"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p8iFWs-9z","meta_box":[],"jetpack_featured_media_url":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-content\/uploads\/sites\/509\/2019\/02\/local-government.jpg","_links":{"self":[{"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/posts\/593","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/users\/1658"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/comments?post=593"}],"version-history":[{"count":24,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/posts\/593\/revisions"}],"predecessor-version":[{"id":639,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/posts\/593\/revisions\/639"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/media\/599"}],"wp:attachment":[{"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/media?parent=593"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/categories?post=593"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/tags?post=593"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}