Spiralling Costs

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.