Tax

The UK is more regionally divided than any comparable advanced economy

Inequality should be a key theme of this election. And not just absolute measures, either, important as they are. Regional inequality is also a massive issue in the UK:

  • The IPPR State of the North 2019 report shows how the UK is more regionally divided than any comparable advanced economy – in terms of e.g. productivity, disposable income and life expectancy.
  • In addition, the UK has the most centralised government of any comparable economy. 
    • This centralisation has helped reinforce inequalities, as evidence shows that decisions taken in central London are biased towards London and the South East.
    • Centralisation has also left the provision of local services weakened and undermined the capacity of local authorities to take investment decisions.
  • Between 2010/11 and 2018, local authorities have seen 24% cuts after population growth and changing responsibilities (IFS), with cuts falling disproportionately on councils in more deprived areas (BBC).
    • The National Audit Office notes that the financial position of local authorities has “worsened markedly”. This has hurt those who depend on local services most; in 2018, only ⅓ of councils felt they would be financially able to provide the “bare minimum” in public services after 2023. (FT)
  • The increase to local authority funding in the 2019 Spending Round would go less than a fifth of the way to reversing this. In the manifestos:
    • Under Tory plans, local authorities would need to make further cuts to services, even with a council tax rise of 4%.
    • The Lib Dem plans would allow councils to meet demand at current level of services with a council tax rise of 2%.
    • Labour plans would allow for increased service provision, though still not to pre-2010 levels. (IFS)

Empowering and funding local authorities is crucial for an efficient programme of public investment, but only one party is even vaguely near funding such a programme. For those with concern for the country beyond London, and all those who have concern for the vital services local authorities supply this is a deeply worrying situation. 

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