March 8, 2013 6:18 pm

Where austerity really hits home

The next time that a market analyst blithely demands yet more austerity, they should visit the backstreets of a northern town
Illustration by Shonagh Rae of Britain being cut in half by a letter A©Shonagh Rae

A couple of weeks ago, I was chatting with some friends in their house in a deprived area of Liverpool when they showed me a haunting crayon picture. Drawn by a local child, it featured a large, empty plate with wobbly letters stating baldly: “Do you see any food?”

“There’s a lot of little kids going hungry round here,” explained one friend, who works in a local community centre. Indeed, just the other day she had spoken to a family where the child had been chewing wallpaper at night. “He didn’t want to tell his mum because he knew she didn’t have the money for supper,” she explained. “We hear more and more stories like this.”

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Gillian Tett

What should we make of this? To many readers of the Financial Times, such tales may seem hard to believe. After all, if you live in the more pleasant parts of southern and central England today, the idea of children chewing wallpaper seems far-fetched. To be sure, the “squeezed [English] middle” is howling about government austerity, inflation and stagnant wages – but life feels bearable for most Home Counties dwellers. And for the jet-setting international cadre in central London, austerity is just a theoretical word.

But go a few hours north towards Blackpool, Manchester or Newcastle – or even just Birmingham or Hackney – and that “A” word assumes a very different hue. Liverpool is just one case in point. As it happens, I have been watching one corner of that city well for more than two decades (in the interests of disclosure, I support a community project there). In that time I have seen several mood swings. In the 1980s, for example, there was an atmosphere of defiant, militant protest, as the city reeled from austerity imposed by Margaret Thatcher. Then, in the 1990s, recovery took hold: street lamps were fixed and some people even found jobs, as Liverpool benefited from a wider UK boom, an influx of European Union aid and state largesse from the Labour-controlled central government.

But what hit me most forcefully on a recent visit is the sense of sullen pain. Most of the time this is half-hidden: unlike in Greece today (or Liverpool three decades ago), nobody is throwing firebombs. But tucked away behind (cheap) curtains on the estates, thousands of poor households are being quietly hammered by a myriad of subtle, hard-to-understand cuts. And what is most striking is not just the austerity – but the sense of regional divide.

The numbers tell the tale. The city of Newcastle recently calculated that the government’s budget plans between now and 2015 will cut council spending by £284 per person in the northeast of England and £184 in the northwest. That is sizeable: in Liverpool, for example, half the council’s discretionary budget is slated to disappear (this covers items like child services and infrastructure but not schools or health). However, in the southeast, the cut is merely £74 a head, and for many affluent rural areas it is lower still. That is partly because those southern regions never received as much public largesse in the first place. But wealthier areas have also relied more heavily on local council tax for funds, rather than the central budget, and thus have less to lose.

Now some wealthier southerners – including, I daresay, FT readers – might argue this pattern is fair. After all, those wealthy regions have essentially been subsidising public sector aid to the north in recent years. Moreover, the pressure on the UK government to tackle the debt is clear, given the recent credit ratings downgrade. In any case, outsiders might wonder why people do not simply leave places such as Liverpool to get work elsewhere, if they cannot subsist without state aid.

But such arguments – unsurprisingly – infuriate those who are battling in the north, particularly those who are trying to stimulate private sector growth there. “Most of what [our] council spends goes on protecting and supporting children and vulnerable adults,” explains Joe Anderson, Liverpool’s mayor. “We are doing our very best to mitigate the impact and do it as fairly and equitably as possible, but it is simply wrong that people in the poorest city in the country should have to shoulder cuts amounting to £252 per household when the national average is £60 and north Dorset’s cut is £2.70 per household.”

And what really rubs salt in the wound is that econometric analysis suggests that the biggest cuts of all are hitting where child poverty is the highest. Thus, irrespective of whether absolute levels of child poverty are lower than before – which is a point of dispute – “pockets of deprivation” appear to be intensifying, as Enver Solomon, policy director at The Children’s Society says.

Don’t get me wrong: in pointing this out I would not pretend there are any simple solutions for reducing that debt burden. Nor am I defending the old benefit system, which created many perverse incentives to keep people trapped. But the next time that a market analyst blithely demands yet more austerity, they should visit some of the backstreets of a northern town. Hopefully they won’t find any children chewing wallpaper. But they might note that the Trussell Trust reported it expects the number of people in the northwest using foodbanks in 2012-13 to rise to more than 230,000. And that is before the bulk of the planned austerity cuts even come in force – be that in Darlington, Dorset or anywhere else.

gillian.tett@ft.com

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