Spending cuts have devastated the Big Society and left local communities and voluntary sector organisations in turmoil across the country, says a leading think-tank.

A ground-breaking two-year study, Surviving Austerity, published today by think-tank New Economics Foundation (NEF) paints a bleak portrait of the impact of spending cuts on communities in England.

New research from nef documents the impact of austerity on local communities in Birmingham and Haringey, highlighting:

The welfare state no longer provides a safety net; with changes to benefits meaning many are no longer able to meet their basic needs, and are increasingly forced to choose between basics like food and fuel.

The unemployed face a job trap: those out of work risk getting stuck in a ‘low-pay no-pay’ cycle, where temporary, poorly paid work is all that is available to them.

Cuts have undermined the ‘Big Society’ - without state support and facing rising demand, charities and voluntary organisations are being squeezed by spending cuts, weakening their ability to pursue the ‘Big Society’ agenda.

Local authorities face a clear choice - with rapidly shrinking budgets affecting core services, local councils that wish to protect vulnerable citizens must change the way they commission and deliver services.

Researchers spent 24 months in Haringey and Birmingham, working with residents from some of the most deprived areas of the country to document how austerity is affecting them.

Their findings highlight that for those on low incomes, social security has been dramatically eroded.

Welfare state no longer provides a safety net

People on lower incomes have felt the worst effects of the recession, with job losses, falling rates of pay and rising living costs. Initially, state support cushioned this initial blow, but as welfare reforms have come into effect, social safety nets have been taken away, leaving people more vulnerable:

Once current welfare reforms come into full effect, approximately £19 billion a year will be taken from people’s pockets – the equivalent of £470 per working adult per year.

Unemployed face job trap

Many of those out of work are falling into a ‘low pay, no pay’ job trap.

Even if they do find work, job seekers often find themselves in temporary, poorly paid jobs, meaning they cycle between unemployment and in-work poverty.

The number of people in in-work poverty has overtaken the number in out of work poverty: 4.4million jobs in the UK pay less than £7 per hour.

In Haringey there are 22 people on Job Seeker's Allowance for every Jobcentre Plus vacancy; there are 7 in Birmingham.

The number of people claiming Job Seekers Allowance from the start of the recession to May 2013 has risen from 2,672 to 9,341 in Haringey, 36,578 to 47,365 in Birmingham.

Cuts have undermined the ‘Big Society’

NEF says local communities and voluntary sector organisations have been left in turmoil due to a combination of reduced public spending and a doctrine of open public services and competitive tendering.

These were the bodies best placed to bring about the government’s vision of a Big Society.

From 2010 to 2015, funding to local authorities in England will be reduced by £7.6bn, or 27.4% in real terms

There has been a disproportionate impact on some of the most deprived areas – in Haringey, for example, £88m has been slashed from a budget of £273m.

With even core services are facing cuts, others are being scrapped entirely – in Haringey, its youth services budget has been slashed by 75%, putting huge pressure on voluntary sector organisations.

Local authorities face a clear choice

Local councils and the voluntary sector are constrained in how they can act by shrinking budgets.

But nef research highlights areas in which they can have a real impact on the lives of their residents:

More fairness commissions – councils like Islington and Sheffield have introduced fairness frameworks to tackle poverty and inequality in their areas

Introduce co-production – working with residents to deliver services can improve their quality and reduce their cost

Reform commissioning – local authorities should commission for social, environmental and economic value, to prevent driving down standards.

Julia Slay, senior researcher at nef, said: “The government’s programme of cuts has had a devastating impact on communities across the country.

"The most vulnerable members of society, already struggling with the effects of recession, are now caught in a perfect storm of benefit cuts, dwindling public services and a chronic lack of good jobs.

"People are losing control of their own lives and struggling to make ends meet through no fault of their own - constantly cycling between periods of low-paid, insecure employment and dependence on ever-shrinking benefits. The government must do more to provide good jobs and tackle the growing problem of underemployment.”

Joe Penny, Researcher at nef, added: “The Government’s plans to build a ‘Big Society’ have been thwarted by the combined effects of recession and their own spending cuts.

"Local authorities and community-based organisations - those best placed to make the Big Society a reality - are buckling under the dual pressure of budget cuts and increased demand for their services.

“Austerity is making life harder for already vulnerable people and communities.

"No Big Society was ever going to fully mitigate the impact of such swingeing cuts to welfare, but concerted action from local authorities, third sector organisations and residents can help make a difference, promoting social justice and well-being at a time of worsening hardship for millions of people.”


Surviving Austerity
By Julia Slay, senior researcher and social policy programme co-ordinator
& Joe Penny, researcher, social policy

The welfare state no longer provides an adequate safety net. Many people are struggling just to meet their basic needs. Precarious employment is rising, and in-work poverty has overtaken out-of-work poverty for the first time.

Public spending cuts are giving rise to more needs and greater demands on the welfare state. Austerity measures have thwarted the best ambitions of the government’s plan to build a ‘Big Society’. But people can use local assets and resources to try to tackle these problems.

In 2010, the Coalition Government began trying to reduce the national deficit through public spending cuts and welfare reform. This – along with the effects of the recession – became the ‘new austerity’. It was linked with a new political programme to build a Big Society by promoting local social action.

Two years ago, nef (the new economics foundation) set out to explore how people in two of the most economically deprived parts of Birmingham and Haringey, North London, were experiencing these changes. Through peer research, photojournalism, interviews and workshops with local residents, community organisations and local authority officers, we asked:

How are people experiencing welfare reform and public sector cuts?

What does the Big Society mean for local residents?

What can be done at local level to promote social justice and improve people’s well-being?

1. Living with the new austerity

The burden of reducing Britain’s deficit is falling predominantly on those who get vital support from public services and welfare: the unemployed, low-income earners, the very elderly, the young, and the disabled. As part of this research we interviewed a diverse range of local people: they all shared experiences of everyday insecurity, an unravelling safety net, precarious employment, and growing demands for unpaid labour.

Everyday insecurity: People’s lives are made increasingly insecure by the rising cost of living; unemployment and/or precarious, part-time and poorly paid employment; changes to social security; and debt. There are mounting pressures to afford basic necessities such as food, utility bills, and rent, which often contribute to – and are compounded by – insecure relationships with family and friends, and mental and physical ill-health. People feel they are losing control over their lives – with scarcity of money and time closing down their options. They feel powerless in the face of change and have little hope for a future they cannot control.

An unravelling safety net: Benefits and tax credits are becoming less generous, more conditional, and increasingly punitive. The divisive rhetoric of ‘strivers versus skivers’ demonises people who are unable to work through no fault of their own. There are growing risks of food and fuel poverty, homelessness, and indebtedness. Services which could help meet these needs, such as social care, child care, youth services, housing services, and legal advice, are all being restructured and reduced. Services aimed at preventing needs arising or getting worse, are being cut back, piling up problems for the future.

Precarious employment: Our research reveals a growing prevalence of precarious working conditions, zero-hours and temporary contracts, underemployment, and very low wages. Jobs like this push people into in-work poverty. Many are caught in a ‘low pay, no pay’ cycle, oscillating between short spells of poorly paid employment and unemployment. Low wages have helped employers to keep employees in work but more people are now involuntarily underemployed than before the recession.

Growing demands for unpaid labour: Cuts to public services and tax credits are placing an impossible burden on people who have to step in and look after family members while doing paid work. As demand for care rises, a growing strain is placed on unpaid human resources and relationships. Women are most often left to pick up the pieces. For many, this added burden brings emotional stress, decreased well-being, and loss of earnings.

2. What happened to the Big Society?

The Big Society vision of empowered local communities driving forward an agenda of social action and local ownership of public services has faced major challenges. Many in the voluntary and community sector (VCS) viewed it as window dressing for a programme of cuts that had already thrown them into turmoil. As people have become less economically secure, they have tended to turn inwards, focusing on just getting by from day to day, with no time or energy to connect with others or take local action.

This has led to a general weakening of the core economy – a term used to describe all the unpaid time, caring, support, friendship, expertise, giving, and learning that underpin society and the formal economy. The Big Society vision relied on a strong core economy. But people have found their time and capacity increasingly stretched by reduced local public services, changes to working and child tax credits, and insecure, low-paid employment.

The Big Society project depended on people having disposable time and other assets, which have never been equally available to all. The new austerity has widened inequalities. Those who are poor and powerless have less time and fewer resources at their disposal. This makes it much harder to get involved in local activities, to take over local assets at risk of closure, or bid to run services, or develop neighbourhood plans. The Big Society has gradually disappeared from public and political discussion.

3. Promoting social justice in an age of austerity

Drawing on our research in Birmingham and Haringey, as well as on nef’s work in other areas, we set out five themes to guide socially just local action. These recommendations draw on our conversations with residents in Birmingham and Haringey, and on wider research into how people are creating local, asset-based strategies to survive austerity.

Promote fairness: Embed the principles of fairness in all decisions that a local authority takes, and use resources to reduce poverty and inequality. Our research shows key areas where local authorities and the VCS can take action to mitigate the worst effects of austerity. We have also drawn on knowledge accumulated by the Fairness Commissions, recently conducted in different areas across England.

Commission for social, economic, and environmental value: Local authorities control vast sums of money spent locally across the country, influencing the quality and availability of public services and their impact on the local economy. External contracts are routinely awarded on the basis of financial cost rather than value – a practice that is on the rise, despite the new Social Value Act. If commissioning is to make radical improvements to the quality and impact of local services, value must be understood differently – not in terms of the lowest price, but in terms of long term social, environmental and economic outcomes.

Make co-production a standard way of getting things done: Co-production is a way of sharing power, strengthening relationships, and making the most of our collective resources. It is an approach where people work together with professionals in an equal and reciprocal partnership, pooling different kinds of knowledge, skills, and assets. Time-banking, asset mapping, Crowdsourcing and Crowdfunding are all considered as examples of this approach.

Make well-being for all the primary goal of all public services: When budgets are being cut, it is vital to make carefully considered, evidence-based decisions that are directed at improving well-being for all. Promoting well-being is about making the best use of all local resources to improve people’s material conditions and enhance their psychological and social well-being.

Develop sustainable local economies: Local authorities can invest public resources to transform local economies, so that they promote well-being for all and environmental sustainability. This involves, for example, supporting community-based enterprises that promote sustainability in key sectors such as energy, transport, and re-use of waste, and ensuring that public money is spent only with organisations which provide good quality jobs.

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