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Levelling up? Most of the UK is still in the grip of austerity

John Harris
·6-min read

It may be neither fair nor particularly rational, but in the past three weeks or so Boris Johnson and his allies have been buoyed up by rising public optimism. Thanks to the vaccination programme and the expectations swirling around the somewhat provisional back-to-normal date of 21 June, the government’s dire handling of so much of the pandemic has receded from view.

The prime minister looks both very lucky, and a more formidable leader than he seemed in the grim days of late 2020; Keir Starmer seems to have stalled. Meanwhile, even people with an understandably cautious sense of the immediate future can surely warm to the prospect of packed pub gardens, revived music festivals and family reunions.

If the resulting political shift endures, it will be underpinned by one key element of Johnson’s public persona. Austerity, he has repeatedly insisted, is over. That may not reflect the enduring Tory beliefs crystallised by Rishi Sunak’s recent insistence that government borrowing to finance greater spending is “morally, economically and politically” wrong. Indeed, in Wednesday’s budget the chancellor will reportedly pledge to keep a tight grip on day-to-day spending, introduce tax rises and point towards an eventual fiscal reckoning.

But Johnson is at pains to be seen as the figurehead of the hazy crusade termed “levelling up” – and whatever Sunak’s basic instincts, the budget will surely be sold to us as the work of a government that has a keen sense of its current responsibilities, a social conscience and big plans.

The sheer level of current public spending – and borrowing – seems to back that up. But beyond Westminster, spending cuts are not only continuing but suddenly getting worse. Last month it emerged that at least 12 councils in England were in emergency talks with the government to avoid bankruptcy, and across the country budget crises are becoming the norm.

Despite some emergency help from central government, the financial gaps that councils are facing remain huge – and urban areas seem to be particularly affected. Manchester city council is facing cuts in the next financial year of £41m; in nearby Bolton, the figure is £35m. The London borough of Newham will put through “cuts and savings” of £43m by April 2023, £30m of it this year. The council in Leeds is now facing mind-boggling economies of £87m, the single biggest amount to be taken out of its spending since the start of austerity – and which, according to the city’s new leader, James Lewis, could be followed by further cuts of as much as £60m unless the government takes decisive action. As he told me last week: “It means that any ambition we have to do anything other than the basics will be really limited. It’s an incredibly grim picture.”

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The path that has led to all this is plain enough. Unlike the government, councils have to set balanced annual budgets for spending on services. Over the last decade, the money they receive from the centre has been cruelly hacked back. Ever-changing Tory plans for local authority funding have made them more and more reliant on council tax and business rates – both of which have been squeezed by the pandemic. Now, the social crises let loose by Covid are putting renewed pressure on the most essential services, not least help for older people, those with disabilities and at-risk children.

The result is something that almost defies belief: despite everything we know about the inequalities highlighted by the pandemic, and the vital role councils have played in dealing with it, the dire local cuts that have defined the last decade are grinding on.

Late last week I put in a call to Nick Forbes, the Labour leader of Newcastle city council. He spent half an hour explaining the impact of £40m cuts in the next two financial years. Shops, he told me, pay the highest levels of business rates, and the fact that 55,740 sq metres (600,000 sq ft) of retail space in Newcastle city centre has been vacated in the last two months alone has severely affected the council’s finances.

He and his colleagues are raising council tax – which will include the new “precept” for adult social care – but that will bring in only about £4.5m. So inevitably, after 10 years in which the council lost £300m in government funding, they are now having to look at things they have so far been able to spare from austerity.

“We’re now in the space of having to take money out of adults’ and children’s social care,” Forbes said. “We’ve done our best to protect those things for years, but that’s the only bit now where there’s scope for any significant savings. There’s nowhere else to go.” Budgets for children’s services are planned to come down by £6m; adult social care spending will be cut by £13m. As well as hitting people who so desperately need help – and loading pressures on to the NHS – the latter cut will signify an awful slap in the face for care workers who may have recently been praised and applauded. As Forbes puts it: “It really angers people that the reward they might well get for having been on the frontline in the pandemic is a P45.”

This is one key aspect of how continuing austerity affects millions of people. But equally, cuts and their effects continue to define what this country feels like. Millions of young people now entering adulthood have never known anything other than closed-down libraries, nonexistent youth services, shabby parks and litter-strewn streets.

In large swaths of the country, people’s everyday environment and the lack of some of the most basic services make talk of “aspiration” glib and condescending: whatever the talk at the top about some imagined post-Brexit national rebirth, you won’t unleash the creativity of people in disadvantaged places if their most basic services are in constant decline.

Forbes thinks three things might start to ease his city’s predicament. One is immediate, short-term help to properly plug the financial gap in the social care system. Second, rather than funding – or lack of it – from Whitehall being decided by annual settlements, he says councils need financial plans that cover three- or four-year cycles, with a guarantee of increases each year. And he also wants “economic recovery deals for cities to prevent major collapses”.

These proposals might give the current fashion for optimism a much stronger foundation. If levelling up is going to mean anything at all, its first act ought to be an end to the financial bullying of the people and institutions that run so much of this country, and austerity finally being given the last rites.

  • John Harris is a Guardian columnist