̽��ֱ�� of Cambridge - Mia Gray

Austerity cuts ‘twice as deep’ in England as rest of Britain

fpjl2 — Mon, 08 Oct 2018 23:31:55 +0000

A “fine-grained” analysis of local authority budgets across Britain since 2010 has found that the average reduction in service spending by councils was almost 24% in England compared to just 12% in Wales and 11.5% in Scotland.

While some areas – Glasgow, for example – experienced significant service loss, the new study suggests that devolved powers have allowed Scottish and Welsh governments to mitigate the harshest local cuts experienced in parts of England.

̽��ֱ�� of Cambridge researchers found that, across Britain, the most severe cuts to local service spending between 2010 and 2017 were generally associated with areas of “multiple deprivation”.

This pattern is clearest in England, where all 46 councils that cut spending by 30% or more are located. These local authorities tend to be more reliant on central government, with lower property values and fewer additional funding sources, as well as less ability to generate revenue through taxes.

̽��ֱ��north was hit with the deepest cuts to local spending, closely followed by parts of London. ̽��ֱ��ten worst affected councils include Salford, South Tyneside and Wigan, as well as the London boroughs of Camden and Hammersmith and Fulham. Westminster council had a drop in service spending of 46% – the most significant in the UK.

̽��ֱ��research also shows a large swathe of southern England, primarily around the ‘home counties’, with low levels of reliance on central government and only relatively minor local service cuts. Northern Ireland was excluded from the study due to limited data.

̽��ֱ��authors of the new paper, published today in the Cambridge Journal of Regions, Economy and Society, say the findings demonstrate how austerity has been pushed down to a local level, “intensifying territorial injustice” between areas.

They argue that initiatives claimed by government to ameliorate austerity, such as local retention of business taxes, will only fuel unfair competition and inequality between regions – as local authorities turn to “beggar thy neighbor” policies in efforts to boost tax bases and buffer against austerity.

“ ̽��ֱ��idea that austerity has hit all areas equally is nonsense,” said geographer Dr Mia Gray, who conducted the research with her Cambridge colleague Dr Anna Barford.

“Local councils rely to varying degrees on the central government, and we have found a clear relationship between grant dependence and cuts in service spending.

“ ̽��ֱ��average cuts to local services have been twice as deep in England compared to Scotland and Wales. Cities have suffered the most, particularly in the old industrial centres of the north but also much of London,” said Gray.

“Wealthier areas can generate revenues from business tax, while others sell off buildings such as former back offices to plug gaping holes in council budgets.

“ ̽��ֱ��councils in greatest need have the weakest local economies. Many areas with populations that are ageing or struggling to find employment have very little in the way of a public safety net.

“ ̽��ֱ��government needs to decide whether it is content for more local authorities to essentially go bust, in the way we have already seen in Northamptonshire this year,” she said.

Local authorities with largest spending drop	Change in service spending 2010-2017
Westminster	-46%
Salford	-45%
South Tyneside	-44%
Slough	-44%
Wigan	-43%
Oldham	-42%
Gateshead	-41%
Camden	-39%
Hammersmith & Fulham	-38%
Kensington & Chelsea	-38%

̽��ֱ��latest study used data from the Institute of Fiscal Studies to conduct a spatial analysis of Britain’s local authority funding system.

Gray and Barford mapped the levels of central grant dependence across England’s councils, and the percentage fall of service spend by local authorities across Scotland, Wales and England between financial years 2009/2010 and 2016/2017.

Some of the local services hit hardest across the country include highways and transport, culture, adult social care, children and young people’s services, and environmental services.

̽��ֱ��part of central government formerly known as the Department of Communities and Local Government experienced a dramatic overall budget cut of 53% between 2010 and 2016.

As budget decisions were hit at a local level, “mandatory” council services – those considered vital – were funded at the expense of “discretionary” services. However, the researchers found these boundaries to be blurry.

“Taking care of ‘at risk’ children is a mandatory concern. However, youth centres and outreach services are considered unessential and have been cut to the bone. Yet these are services that help prevent children becoming ‘at risk’ in the first place,” said Gray.

“There is a narrative at national and local levels that the hands of politicians are tied, but many of these funding decisions are highly political. Public finance is politics hidden in accounting columns.”

Gray points out that once local councils “go bust” and Section 114 notices are issued, as with Northamptonshire Council, administrators are sent in who then take financial decisions that supersede any democratic process.

̽��ֱ��research has also contributed to the development of a new play from the Menagerie Theatre Company, in which audience members help guide characters through situations taken from the lives of those in austerity-hit Britain. ̽��ֱ��play opens tonight in Oxford, and will be performed in community venues across the country during October and November.

Gray added: “Ever since vast sums of public money were used to bail out the banks a decade ago, the British people have been told that there is no other choice but austerity imposed at a fierce and relentless rate.”

“We are now seeing austerity policies turn into a downward spiral of disinvestment in certain people and places. Local councils in some communities are shrunk to the most basic of services. This could affect the life chances of entire generations born in the wrong part of the country.”

Research finds significant inequalities in cuts to council services across the country, with deprived areas in the north of England and London seeing the biggest drops in local authority spending since 2010.

Public finance is politics hidden in accounting columns

Mia Gray

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Estate sunset

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European alternative finance market could top €7 billion in 2015

sc604 — Mon, 23 Feb 2015 11:27:21 +0000

̽��ֱ��European online alternative finance market grew by 144% last year, and could reach €7 billion in 2015, according to a new report produced by the Centre for Alternative Finance at ̽��ֱ�� of Cambridge Judge Business School and professional services organisation EY (formerly Ernst & Young).

̽��ֱ��report includes input from 14 key national or regional industry associations, as well as 255 leading platforms in Europe, covering an estimated 85%-90% of Europe’s online alternative finance market. While previous studies have charted alternative finance in the UK, this report is the first to cover other European countries in detail.

Seen until recently as a niche activity, online alternative finance, including equity-based crowdfunding and peer-to-peer business lending, has become a vital and increasingly commonplace source of essential funding for many businesses throughout Europe, says the report.

Online alternative finance grew across Europe from €1.21 billion in 2013 to €2.96 billion in 2014. ̽��ֱ��overall European alternative industry is on track to grow beyond €7 billion if the market fundamentals remain sound and growth continues at current rates.

̽��ֱ��volume of online alternative business funding has been growing steadily at around 75% year on year, and the estimated number of businesses funded in this way has been growing at an even faster average rate — 133% over the last three years to around 5,801 companies in 2014.

“These new forms of alternative finance are growing quickly, and this growth is beginning to attract institutional investors,” said Robert Wardrop, Executive Director of the Centre for Alternative Finance at Cambridge Judge, and co-author of the new report. “Alternative finance, at least in some European countries, is on the cusp of becoming mainstream.”

“To date there has been little hard data about the extent of the industry across Europe,” said Andy Baldwin, EY Managing Partner, Europe, Middle East, India and Africa Financial Services. “This report shows that, while it is still considerably smaller than the industry in the UK, alternative finance on the continent cannot be ignored. ̽��ֱ��whole financial services industry should be watching this space with growing interest and this study will provide a valuable benchmark against which to measure future developments.”

̽��ֱ��new report is written by Robert Wardrop, Bryan Zhang, Operations and Policy Director of the Centre for Alternative Finance, Raghavendra Rau, Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge and Research Director of the new Centre, and Mia Gray, Senior Lecturer at the Department of Geography at the ̽��ֱ�� of Cambridge, who has focused on alternative finance and regional economies.

̽��ֱ��new Centre provides a disciplined research framework to support the fast-growing structures and activities of alternative finance, in order to address the growing needs of academics, policymakers, regulators and industry. ̽��ֱ��Centre plans to launch a research programme, host a Global Alternative Finance Data Depository, and organise conferences, networking events and a fellowship programme.

Moving Mainstream: ̽��ֱ��European Alternative Finance Benchmarking Report is available to download for free at www.jbs.cam.ac.uk/ccaf/movingmainstream.

Originally published on the Cambridge Judge Business School website.

̽��ֱ��European alternative finance market - which includes crowdfunding, peer-to-peer lending and invoice trading - reached €3 billion last year and could top €7 billion in 2015, as businesses increasingly seek more efficient ways to raise funding.

Alternative finance, at least in some European countries, is on the cusp of becoming mainstream

Robert Wardrop

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Financiación colectiva (cropped)

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Alternative finance market set to double in 2015

sc604 — Fri, 07 Nov 2014 09:10:33 +0000

A total of £1.74 billion will have been raised through alternative finance intermediaries – including crowdfunding, peer-to-peer lending and invoice trading – by the end of 2014, according to new research published today by the ̽��ֱ�� of Cambridge and Nesta, the UK’s innovation foundation.

Alternative finance covers a variety of new financing models which connect people seeking funds directly with funders, often through online platforms. ̽��ֱ��majority of these providers have been founded in the last five years. Regulation of parts of the industry was introduced by the Financial Conduct Authority (FCA) in April this year, and in October the Treasury launched a consultation on a proposal for an ISA for peer-to-peer lending.

In the first three quarters of 2014, alternative finance platforms facilitated loans, investments and donations worth £1.2 billion, with the amount predicted to reach £1.74 billion by the end of the year. ̽��ֱ��researchers predict the amount will reach £4.4 billion in 2015.

̽��ֱ��report shows:

Peer-to-peer business and consumer lending continued to dominate the market with £749 million and £547 million being lent through the models respectively in 2014.
Equity-based crowdfunding reached £84 million, up 201 per cent year on year.
̽��ֱ��alternative finance market has more than doubled in size year on year from £267 million in 2012 and £666 million in 2013, to £1.74 billion in 2014.

By the end of the year it is expected that the UK alternative finance market will have provided more than £1 billion in business finance to over 7,000 small and medium enterprises in the UK, the equivalent to 2.4 per cent of all bank lending to SMEs. In the last quarter, bank lending to small and medium-sized enterprises was down by £400 million, according to the Bank of England’s latest Trends in Lending report.

44 per cent of SMEs surveyed were familiar with at least one type of alternative finance, but just nine per cent had approached an alternative platform for finance.

Over half (58 per cent) of UK consumers surveyed were aware of a type of alternative finance, with more than one in seven (14 per cent) saying they had used an alternative finance platform to seek, lend or donate funds.

“2014 has been a phenomenal year for the industry and this record-breaking growth is set to continue into the next year and beyond,” said Bryan Zhang of the Department of Geography, one of the report’s co-authors. “By connecting people directly and offering more efficient, diverse and transparent ways to invest or raise funds, alternative finance is increasingly becoming a viable source of capital for individuals and businesses alike. Although there are challenges ahead, the future looks very promising for alternative finance.”

Liam Collins, another co-author on the report, said: “These findings shed light on a growing movement that is revolutionising banking, investing and giving by using technology to simplify the links between those who want to invest money and those who need it. With bank lending to SMEs down again this quarter, it’s no wonder that alternative finance is fast becoming an important source of funding for individuals, businesses and organisations who struggle to access finance elsewhere.

“ ̽��ֱ��UK is leading the way globally, and with significant potential for the market to expand it won’t be long before we see alternative finance moving into the mainstream.”

“ ̽��ֱ��UK alternative finance market is burgeoning and we need to develop a more nuanced understanding of its structural drivers, intrinsic characteristics, dynamics and diversity, challenges and opportunities,” said Dr Mia Gray of the Department of Geography. “This report is an important first step to promote empirical research in this increasingly significant area of our economy.”

̽��ֱ��report is the result of a collaboration between Nesta and the ̽��ֱ�� of Cambridge, with support from PwC and ACCA.

̽��ֱ��UK’s alternative finance market – which includes crowdfunding, peer-to-peer lending and invoice trading – is set to reach nearly £2 billion by the end of the year, and is expected to double in 2015, as businesses increasingly seek more efficient ways to raise funding.

By connecting people directly and offering more efficient, diverse and transparent ways to invest or raise funds, alternative finance is increasingly becoming a viable source of capital for individuals and businesses alike

Bryan Zhang

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Crowdfunding

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