Is it fair that cities get more government funding than rural areas?

Stop whinging, Surrey. This is Box Hill. Image: Getty.

Last week the Centre for Cities submitted our response to the Government’s latest consultation in its Fair Funding Review for local government – its proposals for a new funding formula to determine how much grant funding councils should receive.

The purpose of the funding formula should be to secure a good standard of well-run public services across the country based on an assessment of need and demand for those services. Cities are home to the majority of people living in England – and what the government is proposing in relation to the formula, no matter how you look at it, fundamentally misjudges the needs of those cities. That is even starker when you remember that it is already set against a background of 10 years of grant cuts.

As with all things local government finance, the proposals are complicated. But local government minister Rishi Sunak made plain the intention when he responded to MPs’ questions about our Cities Outlook 2019 report. The Minister told MPs:

We heard a lot about Liverpool and a lot about Surrey. Members of this House should know that households in Liverpool have £400 more to spend on local services than households in Surrey. Only a third of spending in Liverpool is financed by council tax versus almost 85 per cent in Surrey. This funding formula is accurate and based on the facts.

In short, the government proposes allocating resources to places based on the size of their populations. While ostensibly this appears to reflect a more balanced allocation of local government funding, it does not adequately resource the higher levels of demand for public services that tend to be seen in cities, compared to other parts of England. Although the needs assessment in the consultation is currently focused on accessibility and remoteness, which does have a geographical bearing, it does not identify how demand for public services per capita is higher in some places more than others.

With that in mind, it’s worth unpacking the minister’s statement as there is quite a lot that sits within it. First, let’s look at spend.

That more is spent in Liverpool on a per head basis is undoubtedly true. And it is also true that while spending in cities has seen double the level of cuts that places elsewhere in Britain have experienced, cities still have higher spending on a per head basis than elsewhere. The cuts have served to close the gap between the two. On the face of it, this has increased fairness in the system. That’s certainly what the minister was suggesting.


But this ignores two big factors. The first is need. Because of the make-up of their population, need in cities is much higher than elsewhere. What we know is that demand for public services is much higher in poorer communities. What we also know is that these communities are clustered in cities. Of all the people living in the top 10 per cent most deprived communities in England, 83 per cent of them live in cities. By comparison, of the 10 per cent least deprived communities, just 40 per cent of residents live in cities. In Liverpool, close to half of its population live in England’s most deprived communities, while just 0.3 per cent lived in the country’s least deprived areas.

At the same time, cities are the most productive places in England, responsible for 65 per cent of economic output. They attract people in for employment, to shop, for tourism and to spend leisure time, placing additional demands on services in cities. The formula should therefore reflect the real geography of need across England, recognising that demand for local authority services is concentrated in cities.

Second, let’s look at the ability to raise money. It is true that Surrey does fund a greater proportion of spending through its council tax base. But this is due to the far higher cost of property in Surrey, particularly when compared to Liverpool. That Surrey has such a strong council tax base is in part because of the strength of neighbouring London’s economy, which generates the jobs that many of Surrey’s resident taxpayers take advantage of.

In contrast, Liverpool raises less money from council tax because lower housing costs simply mean the levels there are no match for those in Surrey. However how much funding cities can raise varies as well; York for example generates around a quarter of its income from sales fees and charges, which it is able to do thanks to a relatively wealthy population.

The question then is, how should the lower income of some cities be reflected in how government grant is distributed to local authorities?

First, it is clear that cities should be incentivised to permit new development, and both the New Homes Bonus and the part retention of business rates do just that.

Second, allowing local authorities in the capital to permit more development to both enlarge their budgets and support London’ economy further would be a good thing. But it is difficult to see a world where the level of taxes that can be raised locally has no bearing on how government grant is then distributed, seemingly making the minister’s point a little disingenuous.

Finally, while not all cities have higher levels of social and economic need, those that do should not be penalised for this. The government should distribute money for public services to the places that need it most, while at the same time working to reduce the causes of high demand.

Paul Swinney is head of policy & research at the Centre for Cities, on whose blog this article first appeared.

 
 
 
 

Does it matter that TfL are renaming White Hart Lane station Tottenham Hotspur?

New White Hart Lane. Image: Getty.

Pretend for a moment that you’re travelling in the London of 1932. You’re taking the Piccadilly Line northbound and alight at Gillespie Road station. The name should be obvious: it’s inscribed in bespoke brown tiling on the platform.

But that 31 October, following an intense campaign by the eponymous football club, the London County Council changed the station’s name to Arsenal (Highbury Hill). The area’s growing association with the name “Arsenal” ended in a lengthy negotiation that changed maps, signs and train tickets alike. Football had acquired so much power that it changed the name of not just a Tube station but an entire suburb, even before the era of Wenger or the Emirates.

Now the spectre of name changes is on the horizon once again. As Tottenham Hotspur FC inches closer to completing its new stadium, the club is clamouring for a renamed Overground station. Despite the fact the new stadium is located on almost exactly the same site as the old just off White Hart Lane, and fans have long been calling the scaffolding-laden mess “New White Hart Lane”, the club’s executive director is adamant that the station’s existing name cannot stand. White Hart Lane station, on the Overground line leaving Liverpool Street, is set to be renamed “Tottenham Hotspur”, at a cost to the club of £14.7m.

Little has been made of the fact that this peculiar PR kerfuffle is tied to Spurs’ failure to convince Nike to sponsor the venue. Some sources have even claimed that the sponsorship is yet to be finalised because it is somehow contingent on the renaming of the Overground station; beyond the ridiculous Johnson-era vanity project that was the Emirates Air Line, it seems improbable that TfL will allow any more corporate-flavoured information pollution. There will be no “Nike Stadium” station on the way to Enfield, much as there is no “Emirates” on the way to Cockfosters, especially if public consultation gets a look in.

The scene of the crime. Image: TfL.

But there’s a problem with the new name, all the same. “White Hart Lane” already means “football stadium”, in the same way Loftus Road or Stamford Bridge do. Changing it to “Tottenham Hotspur” risks opening the floodgates to an “O2 North Greenwich” or a “Virgin Euston” at some point in future, names as banal as there are dystopian. The Greater London Authority has promised to spend the £14.7m fee on community programmes in the local area – but that’s not much money to set the precedent that a private company can mess about with the Tube map.


What’s more, as CityMetric has often observed, there are plenty of station names across London that could do with a tidy up. Picking one that’s perfect already and asking for £14.7m to change it is adding insult to injury. How much would it cost a community group if they asked to change the name of Goodge Street to Fitzrovia? Why does a vast corporate entity backed by international sponsors and thousands of season ticket holders get to set the standard?

Back in Arsenal’s day, changing names on the Tube must have been easy; changes could be accommodated gradually without bothering the every day traveller. But in our world of online information, maps and apps, name changes are rather more complicated.

The question is – if TfL can bring itself to balefully accept this particular proposition, why can’t it accept ours? Why sort out a single non-issue on the Tube Map when you can catch lots of real ones in one go? A day’s pandemonium might just be a price worth paying to fix the Bethnal Greens problem once and for all.