It’s grim up North? How public sector cuts will hit cities like Stoke-on-Trent harder…

By Dr Phil Catney

Keele Urban Research Network

On March 1st I participated in a BBC Radio Stoke debate on the results of a survey that the BBC has undertaken on the likely funding cuts and job losses that will arise from broader cuts in local government funding. Of the local authorities in this area, Stoke-on-Trent City Council will be hardest hit with projections of more than 1,000 job losses over the next five year, almost a quarter of its total workforce. Spending will be reduced by between 20-25%. These are among some of the deepest cuts expected in the country. In a city that is already suffering from severe deprivation, the social consequences of such a cut will be profound both in terms of the services that people access and for people working in those services.

Managing through these severe cuts will be challenging. In the debate this morning I set out a number of options which any council might consider in the downturn (though I didn’t get a chance to discuss the various strengths and weaknesses of each):

1.    Further shifting services to the private sector and the voluntary sectors. This is an option which has a long heritage in local government, but which has a patchy record. Contracting out to the private sector has often been criticised for failing to realise true value for money, and where there have been genuine cost savings, it has often been at the expense of creating low-paid employment. Utilising the voluntary sector is possibly more promising, but too far an extension of core welfare tasks to the voluntary sector risks diluting their dynamism.
2.    Service reduction. This is a strategy which is already taking place for ‘non-statutory’ functions (such as libraries, leisure services, arts and so on). However, cuts that are too deep run the risk of creating social problems which are even more costly to tackle (for example, cutting fitness programmes may create further health burdens that will need to be addressed by statutory functions within the council).
3.    Limit expenditure. Again, this is a method that central and local governments are already utilising. Hiring freezes, early retirement schemes, reductions in capital project spending, and so on, have been used across the public sector in order to avoid mandatory redundancies, though it now appears that previous rounds of these schemes seem to have picked the low hanging fruit, making compulsory redundancies a clearer prospect.
4.    Increase revenues. Outside substantial increases in Council Tax (which can be ‘capped’ by central government if they are considered to be too high), another tool that councils could use to address funding shortfalls is to increase charges for services they offer that are not statutorily required to be offered free-of-charge. For example, substantial increases in car-parking charges could generate more income for the local authority, though this could also drive customers away from the centre of cities, further threatening local economies.

Each of these strategies have severe limitations, though each are being used by local authorities to manage the funding shortfalls they expect over the next few years. Whatever the result of the 2010 general election (expect on May 6), the future for local government in its current form is bleak.

The prospects for cities such as Stoke where public sector employment is a significant part of the local economy, appears even worse. Deep cuts in public funding across the board will have even more severe social, economic and political consequences than in many other cities in England.