Less affluent areas hardest hit by cuts but worse may still come

01-02-2012

The IFS has today published its Green Budget which includes a detailed analysis of local government spending. The information, compiled from statistics provided by the Chartered Institute of Public Finance and Accountancy (CIPFA), suggests the cuts have fallen disproportionately on urban and less affluent parts of the country. The localisation of business rates poses a further challenge for these councils as they risk falling further behind.

As cuts fall across the country, councils in less affluent areas have been disproportionately hit since they receive a higher proportion of their funding from the central government formula grant and they have a higher spend per head of population. Between 2009-10 and 2011-12 cuts average 16.8% among these higher spenders compared to cuts of 5.8% among lower spenders.

The localisation of business rates could make things even more difficult for these councils. They will need to identify resources to maintain the provision of services and encourage economic growth. In doing so the problem is exacerbated by an inability to grow business rates due to a slow economy and some areas being unattractive to investors for multiple reasons including local infrastructure and the skill level of the local workforce.

Alison Scott, Assistant Director of Local Government at CIPFA, commented,

“The success of localising business rates will depend to a large extent on them being able to attract business and for those businesses to prosper. Managing significant cuts in a slow economy will make this an especially difficult task for councils in less affluent areas around the country.”

 

ENDS

Contact: Tim Windle

CIPFA Press Office

t 020 7543 5787

e tim.windle@cipfa.org.uk

 

Notes to editors

The IFS Green Budget can be viewed here: http://www.ifs.org.uk/publications/6003

About CIPFA

CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. As the world’s only professional accountancy body to specialise in public services, CIPFA’s portfolio of qualifications are the foundation for a career in public finance. We also champion high performance in public services, translating our experience and insight into clear advice and practical services. Globally, CIPFA shows the way in public finance by standing up for sound public financial management and good governance.