“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Manchester and Trafford to talk to the council leaders, and also residents who are already seeing their public services withdrawn.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
