A STUDY produced yesterday by the Centre for Cities think tank highlights the reality of Tory austerity cuts that have fallen on the backs of the most deprived areas of the country.
Since the Tories embarked on their austerity war against the working class in order to pay off the national debt – massively increased to bail out the banks following the crash in 2008 – council spending has fallen nationally by half as government funds to local councils have been cut to the bone.
But as the study shows these cuts have not been universally spread over the country. Instead, areas like Liverpool, Blackburn and Barnsley have experienced cuts twice the size of areas in the more affluent regions. The reason for this gross disparity lies in the provision of social care in the face of soaring demand especially in the cities and in the most economically deprived areas of the country.
In the relatively affluent, more rural communities, demand for social service support from local government has traditionally been at a much lower level, while the ability of these (mainly Tory) councils to raise money through local taxation has been much greater.
According to the study, nearly half of cities spend at least half of their budget on social care alone – an increase of 12% since 2010. In Barnsley 62% of the entire council budget is spent on social care while its annual budget has been cut by £145 million – the equivalent of a cut of £688 a year for everyone living there.
Liverpool has had the largest spending cuts per head on local services of £816 a year with its annual budget cut by £145 million. London has been subjected to the biggest cuts in absolute terms with £3.9 billion cut from spending on services since 2010.
While the working class in the cities has borne the brunt of the most savage of Tory cuts, the affluent Tory-controlled county areas have also started squealing about having to make cutbacks.
Fearful that this will destroy the careers of scores of Tory MPs facing a backlash from enraged Tory voters in the shires, Tory ministers unveiled before Christmas a new funding proposal designed to transfer money from the poorest inner city areas into Conservative voting regions.
The new proposed formula would do away with the policy of higher grants to councils in poorer areas with higher demand for social care, housing and other services. Instead the Tories want to remove deprivation from the formula and distribute cash purely on a headcount of population, with extra money for rural areas.
This ‘act of war’ is designed to shore up the finances of Tory-controlled councils at the expense of the working class in the inner cities. As for the banks, not content with demanding that the working class pay for bailing them out of their crisis, they have been screwing vast profits out of councils’ suffering due to massive Tory cuts.
In order to balance the books many councils took out large loans from the banks known as Lobo (lender option borrower option) in the belief that repayments would be at a cheap fixed interest rate.
In fact, many of these Lobos have proved to be cripplingly expensive as they contain a clause allowing the banks to impose higher interest rates on repayment entirely at their discretion. If councils refuse to pay the increases then they are liable to repay the entire loan immediately.
Newham Council in east London, one of the poorest boroughs in the UK, has the largest amount of Lobo loans in the country, and last year they spent £75 million on debt repayments while getting only £68 million in council tax. Many of these councils are now taking legal action to cancel over mis-selling of these loans and are demanding compensation.
The answer for the working class will not be found in the courts but in demanding that the TUC organise a general strike to kick out the Tories and end austerity for good by bringing in a workers government that will not just cancel debt but will expropriate the bankers and bosses under a planned socialist economy.
