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New balance

Published: Wednesday, 3rd October 2018

Council and central government workforces reach record levels; and a look at changes in council spending on disadvantage.

As recently as 2011, councils employed more people than central government. Now it seems the balance has changed to such an extent that a million more people work for central government than for councils. A new report looks at the “Quiet Crisis” of falling council spending and the move from prevention to crisis measures. WMiC takes a look at these and other shifts in balance.

Record high, record low

Through Local Enterprise Partnerships, City Deals, Combined Authorities and the like, there have been a number of significant initiatives aimed at giving local areas more control. Against the context of the devolution agenda it is interesting to note how the relative numbers of centrally employed and council employed staff has changed over recent years.

Figures from the Office of National Statistics (ONS) show that as recently as 2011, councils employed more people than central government. However, since then council employment has fallen precipitously while central government employment has increased. Since June 2011, the centrally employed workforce has grown by 320,000 people, while council employment has fallen by more than twice as much. Overall, this leaves over a million more people employed by central government than by councils collectively.

Indeed, the ONS note that “central government employment continues to rise while local government employment continues to fall”, so much so, that central government employment reached a record high of 3.11 million in June, at the same time that local government employment fell to record low of 2.05 million. Within this shift, it should be noted that there have been notable increases in NHS employment, and some straight transfers of staff, such as when schools become academies, a key driver of the employment change and an indicator in the change in accountability.

Top heavy

This doesn't mean that the Civil Service has been growing. Instead, it had fallen to a record low in 2016, before the “slow but steady increase” to 430,00 in March this year. Interestingly, this seems to have gone hand in hand with a rebalancing of the Civil Service workforce, with the proportion of higher ranking officials growing since 2008. In the year to March, for example, the ONS note that while administrative grades were lost, there were well over 4,000 more grade 6 and 7 officers appointed.

Fairer funding review

With funds increasingly stretched, councils are watching the progress of the Government’s Fairer Funding Review with a great deal of interest. Although the approach is for councils to become more self-financed, due to the variation in councils’ revenue raising abilities, redistribution between areas is still needed. The Review is therefore looking at how to allocate funds between councils, improve ways of estimating the different ability of councils to raise money and assess their different spending needs.

Considering this Review, in August the Institute of Fiscal Studies (IFS) investigated whether a “fair assessment” of councils’ spending needs was “feasible”. One of the potential pitfalls raised by the IFS, was that approaches for certain types of council spending could be skewed by factors other than need, not least central government’s past funding decisions. The IFS commented that as “government policy has led to much bigger cuts for councils serving deprived areas” than less deprived ones, formulas based on recent spending would “weigh deprivation less highly” than if 2009-2010 spending patterns were used. As a result, settlements would “be less generous to deprived and more generous to more affluent councils”.

Quiet Crisis

As far as the current situation is concerned, research carried out for the Lloyds Bank Foundation by the New Policy Institute (NPI) has shed some light on the matter. The NPI “Quiet Crisis” report investigated how councils are supporting people facing disadvantage and explored “how local services have fared during a sustained period of severe financial pressure”. With funding shifting from central government funding to local revenue retention, the NPI commented that, since 2011 “this has led to larger funding cuts for more deprived councils that used to receive more from central government based on higher need and which usually have less capacity to raise their own revenue”.

As would be expected, the NPI work found the main elements of spending on disadvantage to be in adult and child social care, such as learning disability support and looked after children, in housing, and on services such as substance misuse support and local welfare assistance schemes. Unsurprisingly, there is considerable variation. All in all, against a general 8% decline in council spending between 2011/12 and 2016/17, it seems that spending on disadvantage in child social care increased by 5%, while it fell by 2% in adult social care and on disadvantage in housing by 13%. Over the three years up to 2016/17, spending on substance abuse fell by nearly 60%.

The NPI also noted that “almost the entire burden of the reduction on spending on disadvantage has been concentrated in the most deprived fifth of all councils”. Looked at by region, the West Midlands has had the third largest reduction in England over the 2011/12 - 2016/17 period.

While these absolute changes are significant in themselves, it is worth noting that at the same time, the demands on these services have been increasing. The NPI notes for example, that the number of looked after children has gone up by 11% over five years and that there has been a 60% increase in the number of households in temporary accommodation since 2011.

Firefighting

With finances stretched tight, one of the key findings of the report is that there has been a switch away from spending on prevention towards crisis services, ameliorating current problems, but not tackling underlying issues.

Within the housing spend on disadvantage for example, NPI comment that “there have been large cuts (46%) to preventative services, helping people stay in their home, and big increases in crisis services (58%)”, mainly the cost of putting people up in temporary accommodation. They also highlight cuts to other preventative services such as local welfare assistance funds and family and carer services. As the NPI comment, “even if dealing with a crisis is cheaper in the short term for the local authority than trying to prevent it, there are costs with this approach which fall elsewhere”, such as the people needing support, family members, NHS services and schools. The report comments that “these costs are not all captured in the local government finance statistics but are borne by local communities and the public finances overall”.

Sources

ONS - Public sector employment, UK: June 2018, September 2018

ONS - Civil Service statistics, UK: 2018, August 2018

IFS - The Fair Funding Review: is a fair assessment of councils spending needs feasible? , August 2018

Lloyds Bank Foundation/National Policy Institute - A Quiet Crisis: Changes in local government spending on disadvantage, September 2018

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