Insight: essential youth sector analysis and reflection - Issue 9, 27 October 2010
27 October 2010
Comprehensive Spending Review
The National Youth Agency has produced a briefing paper providing an overview of the key measures set out within the recent Spending Review. This week’s Insight compliments this briefing paper by looking in more depth at how the spending cuts will impact on young people and local authorities.
What does the Coalition Government mean by fairness and how does it propose to achieve a fairer society?
One of the Spending Review’s underpinning themes is fairness. The SR defines fairness in terms of ‘social mobility, providing sustained routes out of poverty for the poorest’. The Government’s view is that the existing system of support has ‘failed to deliver’ because it:
- ‘can trap the poorest families and children in welfare dependency’, and it
- ‘fails to provide effective education and other services, particularly for young children, to help disadvantaged families improve their prospects.’
Through the SR, the Coalition Government sets out its agenda to address these failures. The SR commits to protect ‘schools spending and increases support for the poorest in the early years and at every stage of their education’. The Government will do this by increasing the schools budget by 0.1% in real term each year over the spending review period.
Through the Department of Education, the SR proposes to introduce a new fairness premium worth £7.2bn. Within this committed amount there will be an extension to 15 hours per week of free early education and care to all disadvantaged two year old children. It also includes a ‘new premium worth £2.5bn targeted on the educational development of disadvantaged pupils.’ A National Scholarship fund of £150 million a year has been earmarked to ‘protect those on the lowest incomes in higher education’.
The SR also proposes to support ‘increases in participation for 16 to 19 learning, while moving towards raising the participation age to 18 by 2015’;andto replace the Educational Maintenance Allowance (EMA) with ‘locally managed discretionary funds to target support’.
The SR also commits to ‘increase … opportunities and funding available to the voluntary and community sector (VCS) in the medium and longer term.’ Provisions will be made to help VCS organisations prepare for these opportunities with a Transition Fund of £100m to providesupport in the short term.
What do commentators say about the Coalition Government’s fairness agenda?
The Institute of Fiscal Studies (IFS) held an SR briefing session to discuss its ‘impact on spending departments and individuals.’ The discussion was to build on the IFS’s report that was published in August (The distributional effect of tax and benefit reforms to be introduced between June 2010 and April 2014: a revised assessment). Carl Emmerson Acting Director of the IFS, commented that ‘the tax and benefit changes are regressive rather than progressive across most of the income distribution.’ Emmerson added that ‘with the notable exception of the richest 2%, the tax and benefit components of the fiscal consolidation are, overall, being implemented in a regressive way. But this is not to say that it is unfair: fairness will always be in the eye of the beholder.’
The Deputy Prime Minister, Nick Clegg, responded to the IFS by claiming that their analysis was ‘distorted and a complete nonsense’. Mr Clegg disputed how the IFS reached their findings by saying that ‘it goes back to a culture of how you measure fairness … where fairness was seen through one prism and one prism only which was the tax and benefits system.’
The TUC published analysis of the SR and its affects on the ‘poorest households’. Their findings show that ‘the poorest ten per cent of households will be hit 15 times harder than the richest ten per cent as a result of service cuts.’ Their analysis shows that poorer households, whose incomes are below £10,200, will suffer from ‘reductions in spending on services equivalent to 29.5% of their annual income on average, or £1,913 a year’ – this is because cuts are being made to ‘services which are disproportionately used by the poorest households’. The TUC findings alsoshow that:
- A family with two school age children on modest earnings will suffer service cuts equivalent to 13.2% of their income, or £2,631 a year.
- An affluent family with children at university will suffer service cuts equivalent to 19.4% of their income, or £3,889 a year.
The Chief Executive of the Joseph Rowntree Foundation (JRF), Julia Unwin, commented that the Chancellor citing fairness as one of the main principles behind the measures was ‘encouraging’, and that his claiming that those with the broadest shoulders would bear the biggest proportion of the pain is a stance the JRF ‘welcomes.’ However, Unwin adds that ‘when we look at the detail of the measures announced today, the news is mixed for people and places in poverty. The JRF will monitor the impact of today’s decisions closely and will continue to shine a light on what happens to the poorest.’
What has been the general reaction to the Spending Review?
An independent political poll by ComRes found that the overall perception is that those on the lowest incomes will be worst hit by the spending cuts, with 59% saying they are unfair. 65% of 18-24 year olds agreed with this view. The poll also shows that people in the bottom DE social group (68%) are more likely than those in the top AB group (50%) to view measures as unfair. However, an Ipsos-Mori poll carried out after the Spending Review found that 41% thought the Government had made the right decisions, compared to 38% who thought they had made the wrong decisions.
Research by Demos ahead of the Spending Review found that 80% of young people aged 16-18 thought that the cuts should be slower to give the economy time to recover. In general young people understood and agreed with the rationale for cuts in public spending – 77% were in favour of cutting unemployment benefit, 43% favoured cutting education budgets and 46% favoured cutting spending on children’s services. However, they were also very aware of the potential impact on young people – 32% of 18-21 year olds thought that 16-24 year olds would be the age group worst affected by the Spending Review and 60% were pessimistic about their employment prospects over the next five years.
The impact on young people
The recession has already had a disproportionate effect on young people – almost a million 16-24 year olds – or one in five - are not in work or learning, and some 200,000 young people failed to get a place at university this year, with more set to be disappointed next year as the number of places are cut and tuition fees rise.
There is real concern in the youth sector that young people will emerge as among the worst to be hit by the cuts announced in the Spending Review. Housing benefit changes, the reduction in child benefit, the removal of the Educational Maintenance Allowance (EMA), and cuts to grassroots youth services will have a serious impact on the lives of young people, particularly those from disadvantaged backgrounds.
The cutting of EMA, which enables many disadvantaged young people to study for A-levels, will be keenly felt. A survey by the NUS in 2008 showed that 65% of those who receive the £30 rate of EMA stated that they could not continue to study without it. The introduction of the £2.5bn pupil premium to support education for young people from poor or disadvantaged backgrounds could go some way to alleviating the effects of this cut, but as yet there is little information about how this will work.
The Department for Education has cut its non-school budget by 12% ‘rationalising and ending’ all centrally directed programmes for children, young people and families. Local authority cuts and the removal of ringfenced protection for youth services will also mean restructure or closure for many services for young people. Chief executive of the National Children's Bureau Paul Ennals says the youth sector should rise to the challenge and start thinking creatively. He says organisations must come together to establish “new creative alliances – aimed at preserving the best of our existing work, willing to pool sovereignty and budgets”. Organisations must redouble “efforts to collect evidence of what works, simplify it, and share it across our sector”. Finally, he says the sector must get the best from its workforce, which means “more integrated working, more shared assessments, more teamwork”.
Although the Government announced investment in early intervention services in the form of a non-ringfenced Early Intervention Grant worth around £2bn by 2014/15, uncertainties over its value for each of the next three years has led to concern that councils will not set aside enough money for vital services.
In his letter to heads of local authorities, Communities Secretary Eric Pickles revealed that the Care Matters grant, which aims to improve the care system and narrow the gap between children in care and their peers, will be halved by 2014. The grant will be ‘rolled into’ the local authorities' formula grant - a general funding stream that will not be ringfenced.
Changes to housing benefit coupled with the lifting of the ringfence on homelessness grants to local authorities have also raised concerns about increases in youth homelessness. The Government is proposing a 10% cut in housing benefit and under 35s will only be allowed to claim housing benefit on a room rather than a whole property from 2012. Balbir Chatrik from Centrepoint says this could leave vulnerable young people unable to access housing.
Although the schools budget is to be protected, spending on school buildings will fall by 60%. An article in the Guardian reveals that the 600 school building schemes previously spared by education secretary Michael Gove when he reduced Labour’s Building Schools for the Future (BSF) programme, now face cuts in funding of up to 40%.
There is also concern that the cuts could lead to civil unrest among disaffected young people. Paul Ennals said that cuts to youth services, along with unemployment and college cuts "stored up trouble for the future" and could mean young people become "progressively disengaged from their own communities” in much the same way as has been happening recently in France. Councillor Rita Krishna, a member of the Children and Young People's board of the Local Government Association, said there was a risk that the long-term gains of youth work would be lost to short-term cuts. She said: "There are people whose whole lives are changed by youth work. I am worrying about the potential human waste where people don't have the kind of enablement that youth work can give them."
The impact on local authorities
Local authorities will face an annual 7% cut in funding from central government from 2011 which will mean an average of 25% cuts over four years. It is estimated that around 490,000 public sector jobs will be lost and the Local Government Association forecast that around 100,000 local government jobs will go as a result of the Spending Review.
In his letter to heads of local authorities, Communities Secretary Eric Pickles reiterated that the loss of grants from central government would also be accompanied by new financial freedoms and flexibility for local authorities. The Government has established 'Community Budgets' aimed at pooling various strands of Whitehall funding into a single 'local bank account' for tackling social problems around families with complex needs. The first sixteen areas to set up pooled budgets have already been announced with the intension that this model of accountability will be rolled out across the country by the end of the Spending Review period in 2013/14.
Other proposals include ‘super councils’ where a number of councils merge in order to improve services while simultaneously cutting costs. The London boroughs of Westminster, Hammersmith and Fulham and Kensington and Chelsea have already proposed to share services. Local authorities in Greater Manchester are also in discussions to join up aspects of children's services. The region's 10 local authority children's services departments are looking to collaborate on services, combine the management of services or merge services altogether. However, Andrew Webb, director of children's services at Stockport said: "We know by collaborating we will get efficiencies, but they won't come anywhere near the saving requirements of the comprehensive spending review”. Barnet, hailed as Britain’s first ‘easyCouncil’, has revealed just how difficult it is to improve services while making cuts. The north London council, which has also been named as a pilot for the government's ‘Community Budget’ scheme, has committed to spending £1.5m this financial year on its ‘One Barnet’ reform programme which involves innovative projects aimed at making efficiency savings. However, the council has revealed it is on course to recoup just £1.4m in savings in the year.
A Guardian analysis of the impact of the key decisions reveals that urban areas will bear the brunt of the spending cuts and the predicted 490,000 job losses in the public sector will fall most heavily on cities. Patrick Butler’s cuts blog in the Guardian claims that local government will be one of the biggest losers in the Spending Review. He says a consequence of the spending cuts will be the disappearance of services such as youth services, careers advice services, and parenting support programmes. There is already concern that decentralisation along with the cuts is threatening the future of the seven regional youth work units in England who work independently to support statutory and voluntary youth work in their regions. Speaking in Children and Young People Now magazine, chief executive of the National Youth Agency Fiona Blacke said the biggest challenge for the youth sector will be “the impact of cuts in local government support from central government and the removal of ringfencing of key budgets”. She added: “Now it is going to be down to communities and local elected members to determine where the axe falls locally. Let us hope they remember that young people are their future and that a robust local youth offer makes for stronger communities and savings in public services in the long term”.
Youth Work Week will be taking place between 1 - 7 November 2010 with the theme of "celebrating great youth work". As part of NYA’s activities we will be launching the new Health-e online learning tools. There will be an interactive broadcast followed by discussion on Friday 5th November. Find out more or register to take part >>