Local authority public expenditure : a case study of Glasgow 1948-70

Abstract

Most of the people in Western Europe and North America live in towns. One hundred and fifty years ago only one person in five, in Britain, and one in twenty-five in the U.S.A. lived in urban settlements. The growth of the modern town dates from the Industrial Revolution and was accelerated by improvements in transportation systems, which have allowed it to extend its influence over an ever growing area. A large number of the social problems facing society today arise within the context of the urban area. High density living, traffic congestion, and noise, are all aspects of consumption externalities or social costs. Local markets in imbalance characterise a large number of urban areas. The disequilibrium of local housing markets, local labour markets, and local product markets is a common feature of a large number of modern towns and cities. Very little, however, is ever said by the economist about the imbalances in the public sector of urban areas. Individuals complain about poor housing standards, poor educational facilities, poor health and welfare services and the problems of crime in cities. The rate-payers' or local taxpayers' revolution, which is frequently reported, testifies to the importance of the local public sector. This thesis attempts to redress the imbalance. Local government expenditures (excluding debt interest) accounted for 16% of GNP in 1970. This figure compares with 3.4% in 1890 and 9.6% in 1950. As a proportion of total public expenditure local government expenditures were 24.8% of the total in 1950 and 34.7% in 1970. In 1970,10% of the working population of the U.K. were employed by local governments. Local government has been one of the fastest growing sectors of the U. K. economy in the post war period. However, it is a sector of the U.K. economy which has escaped, almost entirely, the interest of the economist, even although it is such an important allocator of the nation's resources. Gramlich (97) makes the point clearly in the context of the U.S.A.: - "The recent spate of large econometric models has probed into many previously unexplored corners of the United States' economy. But there is one sector still relatively untouched by the model builders and strangely enough, it is a sector which today is generating some of the most heated political controversy - that of state and local governments." (p 163).