Manchester: front line in the cuts blame game
“There’s no reason why in Manchester you should see them cutting away 25 per cent of their services, many of them frontline, like their libraries and their swimming pools, and next door in Trafford, who by the way receive half as much money per head of population to Manchester City Council, they are not making any of those frontline cuts. And it seems to me that must be down to bad management.”
Housing minister Grant Shapps, 8 February 2011
Cathy Newman checks it out
Within a few hours, the new financial year dawns, and with it the age of austerity. For residents in Manchester it will be a particularly rude awakening. The city council is reducing its spending by a quarter – cutting deeper than almost anywhere else in the country. It will no longer run a youth service at all, libraries and swimming pools will be closed and children’s centres dramatically scaled back.
But the government says the council’s cutting more services than it needs to because it’s managing its finances badly. According to the local government minister Grant Shapps, Manchester are the bad boys of local government, while Tory-run Trafford get full marks for keeping frontline services despite the cuts.
So is Mr Shapps right? Are Manchester’s woes self-inflicted, or should the government take some responsibility for failing to do enough to help the poorest areas of the country cope with dwindling resources? The FactCheck team has been hard at work, and I’ve been to Manchester and Trafford to talk to the council leaders, and also residents who are already seeing their public services withdrawn.
The background
The border of Manchester and neighbouring Trafford marks the frontline of a fierce political battle over public spending cuts.
For the Conservative-led Coalition Government the contrast between Labour-run urban Manchester and leafy, Tory-controlled Trafford couldn’t be simpler.
In the inner city, Labour is set to axe 2,000 jobs and slash some frontline services – unavoidable, the council says, because of the size of the cuts from Whitehall.
But out in the suburbs, Conservative councillors appear to be able to absorb most of the funding shortfall by efficiency savings. Only 150 jobs to go, and services largely protected.
The Government has seized on all this with glee, claiming that it proves what they’ve been saying all along: councils are perfectly capable of surviving on less money, and if they have to take the axe to local services, it’s becaue of their own mismanagement.
Ministers are lining up to heap derision on Manchester City Council.
Danny Alexander said: “That council has over £100 million of reserves. I think that Labour need to look at what it is doing and I think they should thoroughly ashamed of themselves.”
Nick Clegg told the Lib Dems’ spring conference: “Anyone who sacks a member of staff or shuts down a public service for political purposes is a disgrace to politics and a disgrace to Britain.”
Trafford are also enjoying their moment in the limelight, with Deputy leader Alex Williams accusing his neighbours in Manchester of a “slash and burn” approach.
Manchester City Council’s leader Richard Leese has hit back, saying: “The Coalition Government have to take responsibility for the speed of these cuts and the scale of these cuts. Those are their choices.”
The analysis
This is a political argument that has run and run, and confused statistics have been muddying the waters throughout.
Local authority income comes from two main sources: council tax collected locally, and various grants from central government based on complex formulae designed to work out how much different areas need.
More affluent areas receive less from Westminster than areas with higher deprivation, unemployent and so on. So a bigger proportion of their income comes from council tax.
Manchester got £430 million from the Government this year, and just £143 million in council tax – or just under a quarter of its total resources. Trafford got £70 million from Whitehall and £88 million from its citizens - so just over half the council’s income is raised locally from residents.
Manchester is more dependent on money coming from Whitehall because the people who live there are worse-off.
In Trafford, 23 per cent of the population is economically inactive compared to 32.5 per cent in Manchester. The average weekly wage in Trafford is £536 and in Manchester it’s £438.
Ministers have made much of the fact that the main grant the government gives councils is being cut by more, in percentage terms, in Trafford than in Manchester. So Manchester should be able to make ends meets, the government insists.
It’s true to that the main grant has been cut by 13.3 per cent in Trafford and 10.9 per cent in Manchester. These were figures trumpeted by the Government in December last year, when communities secretary Eric Pickles said: “What the data shows is that funding fairness underpins this settlement.”
But that’s far from the whole story.
What Mr Pickles didn’t point out in what he called “the Government’s commitment to transparency” was that other funding streams have also been squeezed or switched off altogether.
So in addition to the 10.9 per cent cut in formula grant, Manchester is facing a £4.5 million fall in the Early Intervention Grant – money supposed to go to children’s services (including Sure Start centres).
More importantly, £33m wrapped up in something called the Area Based Grant has disappeared altogether.
A week after issuing a press release focusing on the cut in formula grant, the Government switched to an entirely different set of figures to compare the cuts in various areas – something called revenue spending power.
This is total income from central government plus council tax and a few other hand-outs. It’s supposed to give an idea of how much the council actually has to splash around, hence “spending power”.
And using these figures, it’s clear that deprived areas are worst affected.
As a poor inner-city authority that gets more Government money than council tax, Manchester’s spending power is down 8.8 per cent in this financial year and 6.7 per cent in 2012/13. In Trafford it’s only 3.8 per cent this year and 3.4 next year.
This is a pattern that’s repeated right across the country: big inner-city authorities like Liverpool, Hackney and Sunderland are hit harder than the shires.
That’s why unions like Unison are claiming that there’s a political motive behind the scenes – the cuts appear to be victimising Labour-run councils and favouring Conservative-run ones in particular.
Grant Shapps isn’t about to admit to that, but what he has finally done today is admit that Mr Pickles’ claims about the settlement being “progressive” just don’t stand up.
Mr Shapps told Channel 4 News: “If you are entirely reliant, or largely reliant, on central government, then of course when central government is having to make cuts because we don’t want the country to go bust, of course those are the areas who end up seeing the biggest reduction in spending.”
But does the local government minister have a point when he queries why Manchester’s cutting by 25 per cent over two years, when its spending power is reduced by just 15.5 per cent?
The council points out that the government’s figures don’t mention some grants that have disappeared from the books – and they don’t take into account rising costs faced by councils.
Manchester opened its books to FactCheck, and the figures appear to show that more than £4 million of funding has dried up without any explanation from Whitehall.
And the 15.5 per cent figure doesn’t allow for increases in national insurance, or government levies like the carbon reduction tax.
It doesn’t take into account pension costs, the rising number of looked-after children, an extra £7 million cost to adult services for older people who are living longer, or repairs to potholes.
Some of the pressures come from central government itself – £1 million extra for carbon reduction tax, a £2 million increase in repayments to the Public Works Loan Board. And finally, the figures quoted by the government are in cash terms, forgetting to factor in the cost of inflation.
Overall, the list of rising costs and falling income adds up, the council insists, to 25 per cent.
Cathy Newman’s verdict
While Grant Shapps is right to point out that the grant Manchester receives direct from Whitehall is being cut by a smaller percentage than Trafford’s, that’s only half the story. When you look at the two councils’ total income – the money coming from government, other hand-outs and council tax - Manchester is being hit far harder. That’s because Trafford can rely more on council tax from its richer residents, while Manchester has to depend largely on money coming from central government.
So as Mr Shapps rather surprisingly admitted to me, deprived areas will inevitably suffer most from the spending cuts the government has put in place as it tries to stop the country going bust. It’s all very well for ministers to praise their Conservative colleagues in Trafford. But efficient as they may be, they’re also blessed with a financial cushion denied their poorer neighbours across the border.
Perhaps council bosses could have managed their finances better in Manchester, but when they’re making cuts of a quarter of a billion pounds over the next few years, getting rid of a few ornamental statues and docking the chief exec’s pay, as Shapps suggests, isn’t going to save a swimming pool or keep the youth service open. Central government has to own up to its part in frontline cuts there and elsewhere.
Analysis by Patrick Worrall
Read more: Cutsmap – show us the spending map
There are 21 comments on this post
[...] http://blogs.channel4.com/factcheck/manchester-front-line-in-the-cuts-blame-game/6138 cuts [...]
Like or Dislike:
0 
0
I think ministers should be made to stand up in parliament and address factcheck blogs point by point.
I’m sick of them lying.
Like or Dislike:
0 
0
Your coverage of the cost savings looks very biased seen from France. Most companies have to achieve greater cost savings than Manchester just to remain competitive in the world markets. After years of over spending the local councils should find better ways to cut costs and encourage real job growth rather than subsidies from other UK taxpayers!! Please let UK make use of the weak pound to grow real jobs and continue ..or start cuts.
Like or Dislike:
0 
0
Manchester is a local government body. Exactly how can it take advantage of the weak pound? By selling its population as slaves? Selling their houses to the French? Local councils are not profit-making organisation, they rely on tax or payments from central government to operate, so if their income from these sources is suddenly and drastically reduced, how can they magic up more money?
Like or Dislike:
0 
0
The real front line, that everybody misses because statistics conveniently conceal it, is where you are forced to exist on the minimum wage, or (even worse) live off savings, in what is considered a wealthy area (like Trafford or Hampshire) where Council Tax is higher…
Nobody cares, because they are blinded by the statistics…
Like or Dislike:
0 
0
And people criticsed the previous Government for “spinning”! The most sickening thing about this is how Clegg has gone from that open person, a symbol of a “new politics”, to being a spinning partisan of a Coalition economic strategy he opposed before the election.
Like or Dislike:
0 
0
Don’t be so naive. This is what ALL opposition parties do when they get into government. This is not unique to Clegg or the Lib Dems. The other two big parties both did the same when coming to power in 1979 and 1997… You are singling out Clegg for doing what all opposition leaders do when coming to power at last..
Like or Dislike:
0 
0
This is surely an easy one to solve. Ministers will have had advice over the summer 2010 on the spatial distribution of cuts. It will have spelt out in gory detail how bad things things were going to be for the likes of Manchester, including any lack of flexibility due to issues with overheads/burdens. CLG tends to keep an eye on that sort of thing. It will also likely included a political impact map, as Ministers like that sort of thing. Simply FOI it. Even if it’s restricted under ministerial perogative, the underlying research presented to ministers shouldn’t be. It should also appear in the department’s impact assessment for the SR.
Unfortunately however, either outcome is likely to make Mr Shapps look a bit silly. He is either stupid and incompetent, as he failed to get hiis department to fully consider the impact of cuts for individual authorities, or he has rationally decided to push ahead with specific targeting of metropolitan areas in absolute terms. If it’s the later, why doesn’t he just say so?
Like or Dislike:
0 
0
I am saddened and disappointed by what I have heard over the past few days and months. Manchester can ill afford to lose any of its public services. Yes, it has had to rely on money coming in from central government more than other councils but it has also managed to provided many well managed and expertly maintained services that many of us access and value. 25% is an extraordinary amount to have to save – I don’t think that we will recognise our city after the cuts have been made. There must be a better way forward than this? Is it really the case that once again the more deprived areas must suffer the most? What will be left to us after this government has finished demolishing the fabric of our lives I don’t know….
Like or Dislike:
0 
0
“the main grant has been cut by 13.3 per cent in Trafford and 10.9 per cent in Manchester.”
Don’t we all love relative figures? Letting politicians compare apples to oranges since 1832. Let’s look at the real terms;
430,000,000 * 0.109 = £46,870,000
70,000,000 * 0.133 = £9,310,000
So, before we even factor in the additional grants, Manchester City Council are losing £37,560,000 per year more than Trafford, or just over 5 times as much. Like I said, apples and oranges.
Like or Dislike:
0 
0
Some points for consideration:
1]Ed Balls has now admitted that there was no way the economy could recover and the debt be reduced under the implementation of the last Government’s measures.
2]Why have ”slower cuts” become the buzz words of Labour when presumably it would simply increase the debt thereby prolonging the economic recovery. Ireland’s situation is alarming.
3]The dubious motives of the Manchester Council with their £100 million in reserves.
4]Why were they eligible for all these grants with their high reserves?
Like or Dislike:
0 
0
1. Are you referring to Alistair Darling’s pre-election deficit reduction plan?
1.1 The reason Balls thinks it wouldn’t work is because Ed Balls knows that an economy can’t recover when the state and private sectors are simultaneously de-leveraging.
1.2 the current plans can be criticised regardless of the supposed plans of the hypothetical chancellor of a hypothetical government.
2. Ireland (the “Celtic tiger”)was seen as the wonder child of centre-right economic thinking in Europe. Osborne visited on a number of occasions to learn lessons for the UK economy. I agree, Ireland is worrying – and Ireland is now engaged in a similarly harsh deficit reduction regime.
3. The £100m in reserves held by MCC are not reserves in the rainy-day sense. The £100m has already been allocated to pre-existing contractual commitments and known costs.
4. You can navigate the complexities of the formula grant system yourself. I also refer you to answer 3.
As for the IMF – economists are not infallible, they are all over the place.
Like or Dislike:
0 
0
@Sighn: “The reason Ed Balls thinks it wouldn’t work is because (he) knows an economy can’t recover when the state & private sectors are simultaneously de-leveraging”
Balls is an argumentative windbag. For years at the Treasury he helped mess up the nation’s finances (separate from the effects of the financial crisis).
Balls & Labour said they couldn’t give details of ‘Labour’s 50% deficit reduction plan over a parliament’ prior to the 2010 election because the figures were ‘not available’. Yet IN power Labour they deliberately deferred the Comprehensive Spending Review until after the election in a wanton decision to hide the UK’s virtual bankruptcy. Liam Byren: ‘There’s no money left’. Now Balls & Labour claim ‘we can’t itemise our own deficit reduction plans (altered since the election anyway) as we don’t have the figures’.
Labour are liars & deceivers & can’t be trusted with anything. They had no intention of dealing with the deficit. We’re paying £120 million a day in interest alone, & they left the opposition to do the essential but unpopular work of putting it straight, expecting to reap the benefits & ooze back in later…
Like or Dislike:
0 
0
One more thought:
Why did the last Government not heed the warnings of the International Monetery Fund, whom I believe were advising that their economic policies were disastrous.
Like or Dislike:
0 
0
I’m sick and tired of the constant sniping in this country. One lot comes in and does their politics, then the next come in and does theirs. Each side attacks the other and massages the truth.
This has been going on for decades and is destroying this Britain. Yes, there are big cuts, not surprisingly. No doubt the cuts are greater as a ratio for city councils who get more of their income from central government.
Can we please bare in mind that for many years Labour were throwing huge sums of public money – much of it borrowed, and long before the world financial crisis hit – at the public sector, deceitfully engineering mass immigration whilst telling the population (and their own voters) the opposite, and spending large amounts of public money on their own spin.
Far more public money went to Labour-controlled councils in those 13+ years as a percentage than went to Tory councils, which let’s face it are virtually always far more efficiently run.
I’m sure it’ll be tough for Manchester, and equally sure that the executives who run it who earn twice or thrice what Britain’s Prime Minister does won’t suffer any cuts. I’m equally sure some of their cuts are political. For…
Like or Dislike:
0 
0
Dave H – the reason more money goes to Labour run councils is because they are predominately city councils with higher levels of housing benefit, lower incomes and higher costs spent on care and social support than in the predominately Conservative run “shire” councils. It stands to reason that poorer areas will need more funding than affluent areas. It’s not a party political conspiracy. I will leave it up to you to decide why poorer people seem to support Labour over the Conservatives.
Like or Dislike:
0 
0
Besides – some brief research will reassure you that local authorities can be inept and corrupt and wasteful across the political spectrum.
Finally, I’m not sure I’m quite grasping this – are you implying that “throwing huge sums of public money – much of it borrowed… at the public sector” (is there a contradiction in terms there somewhere?) somehow increases immigration?
Like or Dislike:
0 
0
Dear Sighn Wave,
I am well aware of the details you have posited – thank you – and, with respect, do not require an explanation.
I do not disagree with the reality in principle viz-a-viz higher percentages of poorer people in city areas.
However, I hold to my point that Conservative-run councils tend in general to be more efficiently run, tax rates cheaper and reliance on the national taxpayers’ purse less demanding.
There are plenty of statistics over many years to back this up, though of course nothing in life is absolute and I dare say you could study them and pick out the odd example that proves the exception to the rule.
Regards,
Dave
Like or Dislike:
0 
0
Dave,
I have searched in vain for statistics which back up your claim that Labour run councils are inherently more wasteful. I have not found any evidence, which is odd as I work in economic development at a regional level so my colleagues should have this sort of thing at their fingertips. Perhaps you could point me to some?
I do not disagree that Conservative – run councils receive less money from the state – if, that is, we are assuming that Conservative areas are always richer. Things like council tax benefit and services for the needy come out of a councils budget and are not really to do with how efficient a council is run: these are the statutory duties of councils. You said you didn’t need this pointing out but then once again reiterated your original claim.
As for Conservative authorities setting lower rates: That is just plain wrong. Business rates are not set locally. As for council tax: shire counties (more Con.) have significantly higher tax than the mets (more Lab.). This is again to do with how formula grant works.
Where do the Lib Dem run councils fit in for you?
Like or Dislike:
0 
0
These are difficult times and some cuts are probably unavoidable but many of the councils are not in the real world, – they should examine their priorities. Manchester City council are complaining about grant reductions but they seem to think this absolves them of any responsibility. They are imposing painful cuts on front line jobs and services but at the same time they spend money they don’t need to.
EG. They are spending a fortune on redeveloping the Town Hall and renting office accommodation in the meantime. They are getting involved in property developments they don’t need to. – They want to CPO London Road Fire Station and are spending a huge chunk of council tax money in the process. Why can’t they leave the development to the private company who ownes it and save all these costs?
Like or Dislike:
0 
0
[...] with the cuts to the main grant, most importantly the £33 million Area Based Grant. In short, the Council isn’t lying when it claims it has to make total cuts of 25 per cent, but the Lib Dems are when they claim [...]
Like or Dislike:
0 
0