Caring in the time of austerity

The years after the election of the UK’s coalition government in 2010 saw a decline in central funding to local government and a fall in expenditure on a range of local services, including social services. These cuts were backed by a theory that individuals in the community would step in with voluntary action (the ‘Big Society’) to fill the void left by withdrawal of public support, a specific case of the argument that government activity crowds out that of private individuals. With borrowing costs in the UK sharply increasing and austerity debates resurfacing elsewhere in Europe, evaluating the consequences of the previous round of spending cuts is particularly timely. Using a large panel survey of individuals linked to detailed local government income and spending data for the period from 2008/9 until 2016/7 and exploiting central government funding cuts as an exogenous source of variation in Local Authority spending, we estimate how these changes in public support affected individual caring, voluntary and charitable behaviour. Our main finding is that spending cuts had no causal effects on these activities when considered in the aggregate, providing little support for the proposition that cutting public sector spending increases individual caring and philanthropic activities. The near-null results, however, mask spatial heterogeneity: rural communities show greater responsiveness to spending cuts than urban populations, consistent with thinner provision of formal public and third-sector support in rural areas.