Abstract
Local costs would have risen appreciably during the post-war period in Britain even if local authorities had not taken on a wide range of new services, and even if they had not spent more and more money in an attempt to provide better services. At least it is widely argued by economists that the costs per unit of output in the public sector will tend to increase faster than the costs of other services, and that it will do so as a result of increasing productivity in the economy as a whole, even when inflation is close to zero. It has been calculated that the costs of local government in recent years have been rising by rather more than 1 per cent a year faster than costs generally.1 When inflationary increases are added on, the rise in local costs is still faster, because public sector costs are said to be particularly susceptible to rising prices. And when inflation reaches record-breaking levels in excess of 20 per cent, as it has in recent times in Britain, the burden of rising costs for local government is even greater.
Preview
Unable to display preview. Download preview PDF.
Notes and References
Report of the Committee of Inquiry into Local Government Finance (Layfield Committee), Cmnd 6453 (London: HMSO, 1976), 21.
Donald H. Haider, ‘Fiscal Scarcity: a new urban perspective’, in L.H. Masotti and R.L. Lineberry (eds), The New Urban Politics (Cambridge, Mass.: Ballinger, 1976), 176.
See, for example, R. Reischauer, ‘The economy and the federal budget in the 1980s: Implications for the state and local sector’, in R. Bahl (ed.), Urban Government Finance (Beverly Hills, Ca: Sage, 1981), 30–1.
D. Greytak and B. Jump, ‘Inflation and local government expenditures and revenues: Methods and case studies’, Public Finance Quarterly, 5 (July 1977), 275–302
D. Greytak and B. Jump, The Impact of Inflation on the Expenditure and Revenues of Six Local Governments, 1971–1979 (Syracuse, NY: Metropolitan Studies Program, 1975).
See Kenneth Newton, Balancing the Books (London: Sage, 1980), 100–2, and
L.J. Sharpe, ‘Is there a fiscal crisis in West European local Government?’, in L.J. Sharpe (ed.), The Local Fiscal Crisis in Western Europe (London: Sage, 1981), 21.
W.J. Baumol and W.E. Oates, ‘The cost disease of personal services and the quality of life’, in Harold M. Hochman (ed.), The Urban Economy (New York: Norton, 1976), 60–1.
As one writer puts it, wage costs and employment numbers have become a measure of service quality: see A. Thomson ‘Local government as an employer’, in Richard Rose and Edward Page, Fiscal Stress in Cities (Cambridge University Press, 1982), 119.
Ian Gordon, ‘Subjective social indicators and urban political analysis: or, what do we need to know about who’s happy?’, Policy and Politics, 5 (March 1977), 93–111.
CSO, Economic Trends (London: HMSO, 1982).
Department of Employment, British Labour Statistics Historical Abstracts (London: HMSO, 1968), Table 153.
For a longer and more technical account of the relative price effect see David Heald, Public Expenditure (Oxford: Martin Robertson, 1983), 114–18 and 177–86.
For details of the calculations see T. Karan, ‘The local government workforce — Public sector paragon or private sector parasite?’, Local Government Studies, 10 (July/August 1984), 39–58.
The suggestion is made, among others, by C.D. Foster et al., Local Government Finance in a Unitary State (London: Allen & Unwin. 1980) 383.
For a closer look at local authorities and the capital markets see A. Sbragia, ‘Cities, capital and banks: The politics of debt in the USA, UK, and France’, in Kenneth Newton (ed.), Urban Political Economy (London: Frances Pinter, 1981), 200–20
A. Sbragia, Capital markets and central-local politics in Britain: The double game, Studies in Public Policy, no. 109, (Glasgow: Strathclyde University, Centre for the Study of Public Policy, 1983).
Copyright information
© 1985 K. Newton and T. J. Karran
About this chapter
Cite this chapter
Newton, K., Karran, T.J. (1985). Spiralling Costs. In: The Politics of Local Expenditure. Public Policy and Politics. Palgrave, London. https://doi.org/10.1007/978-1-349-17849-0_6
Download citation
DOI: https://doi.org/10.1007/978-1-349-17849-0_6
Publisher Name: Palgrave, London
Print ISBN: 978-0-333-34427-9
Online ISBN: 978-1-349-17849-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)