[Skip to content]

Public Finance logo
News and expert comment on public policy and finance
Public Finance Google plus Public Finance Facebook Public Finance Twitter Public Finance YouTube
.

Cut councils free, by Sir Sandy Bruce-Lockhart

More information

27 May 2005

The general election brought home to the government the country's desire for a return to local democracy. The LGA calls for this to be made a reality and its chair, Sir Sandy Bruce-Lockhart, explains how

In the recent general election there were two clear messages from the electorate. First, local issues were seen to be more important than ever. The wide regional and local variations, and the number of local single-issue campaigns and minority parties, all pointed to a clear shift towards local people voting on local issues. The lesson needs to be learnt that the public is hungry for more choice and power at the local level. Second, although the public was deeply interested and concerned about the issues, there has been an erosion of trust and a wider disenchantment with politicians. Democracy now needs to be strengthened, and this can be rebuilt most effectively from the bottom up, through more vibrant, confident and more autonomous local government.

There have been positive early signals that the government acknowledges this shift, including the appointment of an extra Cabinet-level local government minister, David Miliband. The Local Government Association has had encouraging meetings with him, Deputy Prime Minister John Prescott and other colleagues.

Through the LGA manifesto, local government has made clear its agenda. We are calling for radical decentralisation, to bring continuing improvement of services, better use of public money and a resurgence of local democracy. There is now a real opportunity to drive home the case for a return of power and choice to local people through elected local councils.

Last week's Queen's Speech outlined a challenging legislative programme of 45 new Bills. A strong partnership between local and central government is essential to the delivery of the aspirations of this programme and to the modernisation of public services.

During the previous Parliament there was widespread debate about localism and it was recognised that, in the UK, national government exerts a uniquely centralised control over public services and local government. This was rightly seen to waste money, stifle the innovation of frontline staff and hold back improvements in delivery. The localism debate has been won by the strength of evidence that decentralisation and deregulation are necessary to make better use of public money and improve performance.

In calling for a bolder decentralisation, we need to recognise that there is a natural tension between national standards and local diversity. We therefore need to agree with government which few aspects of public services require national standards. We can then free the rest from the burden of central control – government guidance, performance indicators, targets, bid systems and inspections. For example, national standards might be required for hospital operations and some aspects of education and social care, but why should swimming pools or libraries in Exeter be the same as those in Leeds?

Councils' ability to provide what local communities want and need is being strangled by central government red tape. We know from experience that targets are more effective when they come from the front line and are not passed down by Whitehall. We want to deliver diversity, choice and independence for local people and we can do this best without central government second-guessing us. The US has many examples of liberated local government providing innovative services for millions. Let's see the same here.

The LGA manifesto urges government to simplify the inspection regime and remove unnecessary burdens so that we can focus on better delivery. Greater improvements in public services could be achieved by introducing co-ordinated inspections, along with a system of self-regulation developed by local government itself. The cut in the number of inspectorates from 11 to four will have an impact only if the activity is properly co-ordinated. We also want the government to keep its promise of giving the best-judged councils a three-year inspection holiday.

In building local trust, we must also look to the barriers to local accountability and choice that the government has created through its focus on unelected, unaccountable bodies. In the past 30 years the quango state in the UK has grown such that elected local government is now responsible for around only 20% of public service expenditure in any area. Many quangos and agencies are unaccountable, largely unaudited and their effectiveness at best unproven. Where is the Comprehensive Performance Assessment for the quango? If the government is to meet local people's hunger for choice and accountability, it must work with us on a widespread reduction in quangos and a move back to accountable local government.

In a centralised system there was first a failure to decentralise and deregulate, and second, there has always been a difficulty in 'joining' government centrally. I welcome council-led Public Service Boards joining the totality of public services in their area and focusing on locally owned targets through Local Area Agreements.

Finance is a complex area, but must be resolved if central/local trust is to be strengthened and if the public's understandable concerns over council tax are to be answered. There have been some positives in recent years – prudential borrowing is a distinct improvement over the central control of capital spending, and there has been an increase in resources for local government services overall. However, several thorny issues remain.

Over the past eight years we have seen an unprecedented increase in national taxation and public expenditure. The government decided to do this not through the traditional income tax route but through indirect taxes, including council tax. Its expenditure plans, and instructions to councils to spend at specific levels such as in education, have also not been matched by grant, forcing up council tax.

The £1bn put in by the government in December to keep council tax rises down this year was a 'one-off'. In March, the LGA publication Beyond the black hole set out this challenge for the Treasury and the Office of the Deputy Prime Minister, identifying a 'Budget black hole' for councils which, if left unaddressed, will add some 5% to their council tax next year. For 2006/07 the Spending Review figure sets a 1.7% increase in grant for local authorities (excluding school funding, which has been disconnected from local government). The LGA is keen to work closely with the ODPM to provide clear evidence from authorities across the country of cost pressures.

We want a government commitment to match its expenditure plans and pressures imposed on councils with grant, bringing an end to unacceptably high council tax or last-minute financial fixes.

Equally important is a resolution to the 'balance of funding' problem. All sides acknowledge that the local government finance system requires a radical new approach. The present system, with the combination of gearing and a fixed tax base, means that council tax is unsustainable in its present form. Around three-quarters of local government money comes from the centre. We want to see more of the money that is raised locally being retained to spend on local needs. This is the way to restore accountability and trust in politics – by reconnecting tax payers, local democracy and the quality of local public services. We await the findings of Sir Michael Lyons' review and the responses to it.

Inflationary pressures on local government and public services remain stubbornly high. The LGA has offered to work with the ODPM and the Treasury to identify and bear down on the drivers of these pressures. These include: legislation that has been enacted with little idea of the consequential cost on councils; the burden of regulatory systems; workforce reforms; pension issues; health and safety; European legislation, particularly on waste costs; and a climate of litigation that brings risk and all its costs to both the public and private sector providers of public services.

With local government's record of improved service provision, with the public's renewed interest in local issues and with the need to rebuild democracy, councils have a new legitimacy and a new confidence. Given greater autonomy, we can provide better services, choice, efficiency and value for money, while strengthening democracy and trust.

Sir Sandy Bruce-Lockhart is the chair of the Local Government Association

PFmay2005

Comments