Austerity policies have taken a serious toll on Welsh public services, says report from Unison
Martin Shipton
Years of austerity and ongoing funding pressures have badly affected local government services across Wales, says a new report from Unison Cymru.
The Future of Local Government Services in Wales looks at the challenges facing councils and the people providing services in sectors such as social care, housing, leisure and youth provision.
The report, written by the Association for Public Service Excellence, argues that slashing funding for vital services can store up problems in the long run, and end up costing even more to fix.
It also warns that short-term financial settlements and repeated rounds of cuts make it harder for councils to plan for the future, retain experienced staff and maintain high service standards.
Unison Cymru says a new approach is needed, with multi-year funding that gives councils the stability to rebuild services, invest in early support for families and protect the workforce from constant upheaval.
Gwynedd branch secretary Gwawr Eilian said: “Councils have been starved of funding for years and suffered from multiple rounds of job cuts. We’re stretched to the limit just trying to cope with the increased demand for our services.”
UNISON Cymru head of local government Darron Dupre said: “Investment in council services strengthens communities and means people are happier and healthier.
“As this report shows, failing to fund local government just stores up problems down the line.
“It will now take proper funding and long-term planning to fix the problems of austerity and rebuild public services. There are no short cuts or easy answers.
”The report states: “The election of the Thatcher government in 1979 marked the end of a 40- year consensus on social and economic policies that had transformed Britain into a world leader in the redistribution of wealth and the provision of ‘cradle to grave’ public services. Since then, the redistributive, universalist principles of the welfare state have been gradually undermined to leave the country less equal and many core public services in crisis.
“The period of austerity that followed the financial crisis of 2008 accelerated these changes but had little impact on the overall level of public expenditure or the size of the state.
The main impacts on Wales are:
• A shift from universal services to means tested cash benefits
• Ramped up demand for reactive services as preventative services have been systematically
underfunded
• A large fiscal deficit as funding fails to keep up with demand
• Record levels of taxation for middle and low income earners
• Stalled social mobility
• A housing crisis caused by the shift from building public housing to subsidising private rentals
• Public service pay and conditions falling behind that of people working in the private sector
• Increasing leakage of public money to private profit
• A two tier public service workforce with minimum pay and pension provision for those whose jobs
have been outsourced
• For most the promised ‘property owning democracy’ where people are free to spend their own
money as they please has failed to materialise.
“Since devolution the Welsh Government has largely recognised these problems and adopted policies aimed at addressing them. The Future Generations (Wales) Act 2015 is a far-reaching piece of legislation that has potential to create a more prosperous, fairer Wales focussed on the causes of social and economic disadvantage.
“Unfortunately, it fails to address the need to reinvest in preventative services as a first step toward reducing demand for reactive provision. The loss of youth service provision for example has been linked to an increase in anti-social behaviour, a decline in the mental health of young people, a loss of safeguarding opportunities, higher levels of drug and alcohol abuse and greater exposure of young people to exploitation.
“Recreating universal services aimed at children and young people clearly has the potential to reduce demand for some of the most expensive of responsive services but this will not happen without an initial investment – effectively bringing forward future savings to fund it. If this does not happen the vicious cycle of cuts to preventative services leading to an increase in demand for reactive services, leading to further cuts to preventative services, that fuels further increase in demand for reactive services will continue. This is an unsustainable situation both in terms of cost and outcomes.
“If Wales and the rest of the UK is to recreate a universalist welfare state, focused on life enhancing opportunities it must confront the myth of unaffordability. The UK is not highly taxed by comparison with countries that have similar social policies, nor does it perform well in terms of redistribution of wealth and income. For the majority of taxpayers improving on the latter is a more important policy objective than reducing the overall tax take and the evidence suggests that the key to achieving this lies in the balance between services and cash transfers.
“The Nordic countries have higher overall tax takes but much higher levels of redistribution achieved through universal services such as free childcare provision which fuel intergenerational social mobility as well as productivity and social equality. The result is that despite higher taxes these countries consistently top the league for happiness.
“This report is not intended to create a wish list that ignores economic reality. Wales has limited ability to act unilaterally, and the UK is part of a global economic system. Recent experience shows what can happen when governments make unfunded commitments to cut taxes or increase spending on services.
“However, it has to be recognised that breaking the demand cycle described above is essential to tackling the public service crisis and achieving the stated objectives of the Welsh government. “This may mean that the overall tax take has to increase, but more important than this is the need to reinvest in services that lead to a fairer redistribution of wealth and income, and promote social mobility as the most effective and efficient mechanism for addressing social problems. Key elements of this are:
• Refocussing on prevention e.g. early years provision to reduce demand for reactive services such as residential child-care
• Shifting the balance away from cash transfers back to universal services – e.g. from housing
benefits to building municipal housing
• Promoting and pursuing greater post tax equality as a priority in itself
• Restoring the status of public service workers and recognising the intrinsic socio-economic benefits of decent pay and pensions
• Ending the leakage of scarce public money in the form of private profit through a programme of insourcing.
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There is no economic rationale for austerity and the neoliberalist dogma which spawned it. Scarcity of public funds is wholly political – driven by Tory, Labour and Reform ideological blindness. We must drop the ‘Full Funding Rule’ (established by Geoffrey Howe as Chancellor in 1981) to deliberately constrain public spending on schools, hospitals, potholes etc and utilise the power of sovereign government with a fiat currency to meet the real needs of real people. Reeves’ little games with stability and debt ‘rules’ are self-defeating, reduce well-being and undermine small businesses and households. National Debt, if only the Chancellor knew a… Read more »
While it’s true that austerity was a bad idea because it killed GDP making the economy worse, the suggestion that there’s an unlimited pot of money is irresponsible fiscal snakeoil. If that was true why would anyone work, and how would anything get done.
The first thing someone suggesting an alternative way of doing things must do is point to somewhere else that is already doing it successfully. Otherwise the proposal is an unproven irresponsible reckless experimental gamble with everyone’s future, just like Trussonomics.
Thanks for your comment, Greg. First, GDP is a poor measure of just about anything – as Bobby Kennedy said it measures everything except what makes life worthwhile. But I agree with your implication that austerity has made many things worse, including ‘the economy’. As for growth, we may have reached the end of material growth (the measurable stuff) – though not of cultural growth, personal growth, societal growth etc. Second, I would not say (and did not imply) there’s an unlimited pot of money. What I do say is that the real limits are not on the amount of money… Read more »
If you agree there isn’t an endless pot of money then the size of the pot available for government spending must be defined. The failure to do this is a gift to the right who can with some justification continue to make jokes about running out of other people’s money.
Greg, with respect, I don’t accept the conclusion of your first sentence. Why must the ‘size of the pot’ be defined? And what meaning can be attributed to ‘other people’s money’? What money? What people? If pushed, I would say it is defined by the extent of peoples’ needs, subject to their deliverability within that budget period, that can be met within the limits of the availability of skillsets and resources, and on the capacity of our environment. The right has never understood macroeconomics (it doesn’t fit in with their dogma) and they won’t want to understand macroeconomics in a… Read more »
If a pot is limited there must come a point where no more cheques for public services can be written. Otherwise you’re saying it’s unlimited. And I don’t mean defined by what it’s used for, defined in pounds and pence. You wouldn’t accept a job where the hiring manager when asked about salary said it was defined by the extent of peoples’ needs. The joke is on the right but that joke wins them votes from the right and the centre, and even from the centre left, which is why they keep winning. You need an answer that makes sense… Read more »
My point, Greg, is that the limit is not controlled by accounting in the neoliberalist manner but by the real world. Governments with a fiat currency can keep key stroking (printing) but there are practicalities in terms of international credibility and maintaining its value (by avoiding Argentina-style hyper-inflation, say). Commonly, their central banks are charged with achieving monetary and fiscal stability. They issue currency and credit, while tax acts as to control inflation, withdrawing and destroying excess money supply. Once the transparency of Modern Money is understood by the right, their attention will shift from the technicalities of ‘can we afford… Read more »
We’re getting there. So the limit is set by keeping inflation in check, and unlimited money printing can be allowed to happen until it becomes unacceptably inflationary. So the next question is this. How can governments know in advance how much money can be printed each year without affecting inflation? Can this actually be calculated say five or ten years ahead or must the printing machine be adjusted in real time? Because this creates a situation where the need decides to hire 10,000 extra teachers but a year later increasing inflation dictates that less money is printed, and those teachers… Read more »
Possibly not, Greg… Central banks monitor many features of the economy. They have accurate records from previous years, detecting trends and taking precautionary action where indicated. As well, they need to take account of annual budgets and other government activity. But I am definitely not saying that central banks are immune to error! In previous comments, I outlined the potential restrictions on constant fiscal expansion. These include the availability of skillsets and resources, and on the capacity of our environment. I added the need for international credibility and maintaining the value of the currency, plus the duty of central banks to achieve… Read more »
Greg, I must also refer you to Richard Murphy’s blog (www.taxresearch.org.uk) which provides definitive information about Modern Money and much else. This is an example from today – https://www.taxresearch.org.uk/Blog/2025/12/21/mmt-questions/
Another blog entry from today on Post-Financialisation (proposed by Steve Hinton) looks as if it will provide the way forward for the political economy of the future.
I am a mere follower seeking to interpret…
We can thank Welsh Labour for the demise of our public services. Welsh Labour love two main things: firstly they love themselves and will do anything to cling on to power in Wales; secondly they love Westminster and their dream of a British socialist utopia. I’m sorry to shatter your dream but Westminster is typically run by the Tories. The Tories traditionally run down public services. I have a message for Welsh Labour and Unison in Wales stop bleating about austerity and do something about it, like start supporting Welsh independence – it is the only long-term solution to the… Read more »