Article

A Piece of Cake
Simon Parker, Director, NLGN, 7 December, 2015

In one sense, George Osborne’s Spending Review confirmed what we already knew. Local government will take fairly steep cuts and be forced to rely far more on the resources it can generate from the local economy.

But what appears to be continuity is actually masking some very significant shifts in government attitudes.

The biggest of these is the weakening, if not the demise, of the very old idea that redistribution from richer areas to their poorer counterparts can solve regional social and economic problems.

There are at least two questionable assumptions underpinning the chancellor’s approach to local government funding.

The first is that handing money to more deprived areas does not necessarily make them any richer: in fact, it might help to maintain residents in poverty over the medium-term.

The second is that a ‘winner takes all’ approach to economic growth can revitalise the regions. This assumes that growth hotspots such as Leeds and South Manchester will act as magnets, drawing people and jobs in from poorer communities in the urban fringe and nearby towns.

This approach has huge policy implications. If the chancellor is serious then we may need many more affordable houses in and around urban growth hotspots to accommodate people moving in. Many parts of the North will become little more than commuter towns.

Combined authorities will need to rapidly adopt measures like business rate pooling to ensure that the urban fringes benefit from downtown economic activity.

We may eventually need a new set of national anti-poverty policies to invest in transforming the places that are left behind in the rush to the urban centres.

George Osborne is not the first chancellor to hope that growing the cake will compensate for the fact that some people’s shares are getting smaller. Whether or not he is right, local government has its work cut out in managing the medium-term impact on communities.

Simon Parker is director of the New Local Government Network and author of Taking Power Back: Putting People in Charge of Politics.