Governing Austerity in Leicester

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This post outlines the main findings from the first round of research carried out by Prof. Jonathan Davies and Dr. Adrian Bua in Leicester as part of the collaborative governance under austerity project sponsored by the Economic and Social Research Council as part of its Urban Transformations Network. It will be followed by a further seven publications relating to the comparator cities of Athens, Baltimore, Barcelona, Dublin, Melbourne, Montreal and Nantes.

Leicester has experienced several waves of industrial decline and restructuring over the past 40 years, leaving it with high long-term unemployment and income poverty. The crisis of 2008 and ensuing national austerity regime intensified these problems.  In 2013, ONS statistics suggested that gross disposable household income in Leicester was the lowest in the UK.  In-work poverty persists at very high levels with full-time workers earning less than 80% of the national average.  These conditions mean that many citizens rely on public welfare. However, our research suggests that benefit cuts, continuing policy reforms and the government’s sanctioning regime have hit the city very hard in the eight years since the crash, leaving many unable to meet their basic needs, and eroding the social fabric that people depend upon to participate effectively in social, political and economic life.

In this project, we are looking at different ways in which austerity is governed and contested.  Who gets to have a say and how?  The national context is that despite George Osborne’s “localism” agenda, English cities still have little financial room for manoeuvre – deficit budgeting has long been illegal and the power to levy taxes is minimal. Since the 1980s, UK authorities have largely avoided confrontation with government. One councillor quoted in the Leicester Mercury commented on the implications for austerity: “we are not happy making cuts but we cannot set an illegal deficit budget. If we do Eric Pickles will simply come in and take over the running of the council”.  This comment captures Leicester’s approach, which we call “austerity realism”.  By austerity realism, we mean that the city applies cuts regretfully, but diligently, because policy makers cannot see any alternative..

Leicester City Council estimated last year that by 2019, it would have lost some 50% of its budget over a decade. Its goal is to manage down demand for services and mitigate the impact of austerity for those worst affected, while trying to avoid dramatic headlines and conflicts with central government.  Anti-austerity activists have mixed views about this strategy. They mostly accept that it is impractical for local authorities to defy Westminster and set expansionary anti-austerity budgets, but argue that there is room for manoeuvre.  One commented on twitter in response to a CURA blog on localism, that Leicester City Council could agitate against austerity and plough reserves into sustaining services – ideally as part of a concerted national strategy of municipal resistance.

As we explained in the project overview blog, our exploratory research focused on the relevance of the “collaborative moment” for austerity governance, the idea that networks sustained through trust could be a new and exciting way of governing complex problems, ushering in a new era of empowered participatory democracy.  In Leicester, many respondents see working in partnership with others as good sense, but without any idealism.  As one VSO respondent put it, “the only way to compete is to collaborate”.  Collaboration was seen as a functional and practical tool for austerity management, and some respondents thought austerity had made collaborating easier by concentrating minds.  On the other hand, attitudes to collaboration were strongly influenced by austerity realism, lacking any optimism about the potential in networks for democratic revitalisation and social flourishing.  In practical terms, this means that while public engagement is a high priority for public authorities in Leicester, many of our respondents think that participatory governance is a pale shadow of the New Labour years – a period for which there was some nostalgia.

Within this broad ethos of austerity realism, we see four basic tactics and strategies: amelioration, rationalisation, co-production and development.  We explain each and highlight associated dangers and criticisms.  We conclude by looking at what the research suggests about the vexed problem of how to resist and exit austerity.

Amelioration: The Department of Work and Pensions (DWP) exercises a formidable grip on the lives of benefit claimants in Leicester under a regime that regulates, disciplines and punishes – what academics call “workfare”.  Those who fail to meet stringent work-search targets receive a “sanction”, which means a punitive cut in benefits.  While sanctioning has eased in the past year, it has affected many thousands of people in Leicester. National research shows that the workfare regime causes widespread destitution.  In Leicester, agencies from the statutory and voluntary sectors aim to pick up the pieces.  The capacity of public and voluntary organisations to work in partnership is seen as vital for plugging the gaps through advice and emergency payments. One danger is that while these networks do good work, they are under the constant and growing stress of having to do more with less.  With further cuts ahead, a priority for us is to explore whether the system of advice, discretionary and emergency payments will remain sustainable without either further rationing or a dramatic improvement in the local jobs economy.

However, our research draws particular attention to the “invisible” effects of destitution.  We know anecdotally that the welfare regime drives some people “off grid”. Young claimants in particular are prone to giving up on the benefits system, at which point they disappear from official records.  The numbers are unknown, and nor is there much evidence of what happens to them beyond the demand for emergency payments and food parcels. Do they fall back on family; do they find formal or informal work of some kind, resort to crime, or migrate out of the city?  Respondents suggested that some affected groups find support in family and friendship networks, while others – particularly in traditional working class neighbourhoods – lack those resources and are disproportionately affected. The critical question moving forward is whether communities in Leicester and across the UK can continue absorbing the costs of destitution and disappearance. Or, will a breaking point come, making the crisis “visible” once more in the form of angry protests?

Rationalisation: some critics of austerity nevertheless concede that the public sector could be leaner and work “smarter”, as one respondent put it, even after decades of efficiency measures.  The view is that rationalising services and delivering them in partnership is a way of implementing austerity while minimising cuts to the front-line. However, we heard from front-line workers in both the statutory and voluntary sectors that restructuring reduces the time they have to work with communities. Moreover, some respondents were critical of the rationalisation discourse, pointing to the impact of cuts on the front-line.  Debate about the city’s approach to homelessness exemplified the difference between those who believe reorienting the service from provision to prevention can deliver services more effectively, and others who think it hits client groups hard.  The message is that efficiency savings do not absorb the full impact of austerity.

Co-production is the idea that citizens and community organisations can run public services, with support from public agencies. This agenda is popular with organisations wanting to promote the “commons” – the expansion of “social” goods beyond the state and the market.  Leicester recently agreed a first-wave of asset transfers under the Transforming Neighbourhood Services programme. Facilities are leased to community groups on condition that they continue to provide for all.  A danger is that community groups have little time or expertise for facilities management and that such arrangements will not prove sustainable. More broadly, cash-starved community organisations have fewer opportunities to win ever-bigger government contracts and grants are now exceptionally scarce. Local voluntary organisations must form consortia to stand any chance of competing with outside bodies – big charities and corporations often with little or no connection with Leicester.  The danger for advocates of “commoning” is that austerity erodes the fabric of local civil society and “co-production” becomes a figleaf for privatisation instead of a vehicle for empowerment.

Development and growth:  Most of our respondents see Leicester as a city “on the up”, buoyed by a cultural and sporting renaissance and the proud heritage of multi-culturalism.  The role of the Mayoral system adopted in 2011 and the leadership style of the Mayor himself, were often cited as explanations for the renewed focus on urban development.  As in many cities, growth, investment and job-creation are seen as the only viable solutions to Leicester’s poverty and unemployment. But, this is not a win-win option for everyone.  The concern among critics of the Mayor’s approach is that if the city does achieve an economic renaissance, those in deprived areas will not benefit and become further marginalised.  Moreover, getting the right kind of employer into the city will remain a huge challenge, even in an improved investment climate.  Leicester needs many thousands of good quality jobs. International literatures suggest that urban “boosterism” rarely delivers for those most severely hit by austerity and neoliberalism.  Building a socially just city through economic competitiveness would require Leicester to buck this powerful trend.

Viewed in an international context, especially our comparator cities of Athens and Barcelona, resistance to austerity has been very muted – certainly since the brief national upsurge of spring 2011.  There have been lively anti-austerity protests in Leicester, with unions playing an important role alongside local campaigns against national welfare reform and local cuts to hostels and community centres.  However, no durable anti-austerity movement has yet emerged on any scale in Leicester, or in the UK.  The research points to multiple inter-related explanations, including lost traditions of struggle linked to the legacies of industrial and trade union decline.  Another possibility is that low mortgage rates and low inflation afforded some protection against stagnating incomes for those in stable employment, muting protest and isolating people trapped in the workfare regime.

Austerity has a seemingly vice-like grip on England and it is not easy to see beyond it. At the same time, several respondents mentioned Jeremy Corbyn’s election to the Labour leadership as a weathervane of change and foresaw potential tipping points ahead.  The next phase of our research will look in more depth at how different actors in cities govern and organise around crises and social change. In Leicester, we hope to extend our study to explore the impact of austerity on the governance of migration and multi-culturalism, neighbourhood services, local economic development and adult social care and health.

Professor Jonathan Davies is Director of CURA and principal investigator on the collaborative governance under austerity (CGA) project, Dr. Adrian Bua is a core member of CURA and research assistant on CGA.