Austerity and local government – Is it fair, will it work and what will be the consequences?

I am signed up to austerity as a principle – we can’t spend what we have not got and we can’t borrow what we can’t afford to repay. Of course we can argue about what should be cut and by how much but the fact that austerity has to play a big part in rescuing our economy is a given to me. Of course I hate it as it impacts on me and my family but without it things would clearly be much worse.

Clearly local government is taking a big hit at present as the Coalition Government reduces what it gives to Councils. Indeed, the socialist elected Mayor of Liverpool seems to be predicting riots as a consequence. Liverpool is also soon to host a gathering of those representing the hard hit cities across England.

Firstly, let’s hope that those attending the gathering pay for themselves and don’t expect their hard hit cities to cough up for their attendance. A pledge from those attending that the public purse will not be subsidising the event would give it some credibility.

Secondly, will the gathering do any good and will there really be riots on the streets of Liverpool as Mayor Joe Anderson fears and makes reference to in a recent letter to Downing Street? Protest gatherings serve a purpose in so much as they can give an opportunity for those who wish to vent their concerns. However, the gathering can only really serve a wider purpose if it is able to find a way to influence the way Government interacts and funds our major towns and cities, particularly those in the north. That means that a string of speeches decrying austerity will do nothing other than make those who make them feel a little better for getting things off their chest. So I was pleased to see some research has been done by a local chap who really does know local government inside out.

I refer to Cllr. Richard Kemp of Liverpool and the link below to his web site. Please have a look at the comparisons he draws from his research which I think are compelling.

 http://richardkemp.wordpress.com/2012/12/17/liverpool-and-the-north-discriminated-against-in-funding-formulas/

I have always felt that the formula used to distribute funds to local government by successive governments (all of whom fiddle with it a bit more) is at best random and that it needs radical reform.

On a related matter there was a fascinating programme on BB2 last night (The Great Spanish Crash) about Spain’s economy and how it got into such a mess. Clearly local/regional government in Spain had a hand in the financial crisis that has engulfed that country. Frankly, it seemed to show that the balance between austerity and investment is crucial. Too much investment in infrastructure projects that are not sustainable leads to more austerity. Spain tried it and they found out the hard way. The lesson? – Beware of anyone who says there are easy ways to fix the economy especially those who say the UK Ltd should simply borrow more money!

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