02 December 2005
Public bodies providing local services should be able to opt out of implementing new policies if central government has not provided adequate funding, according to a think-tank.
The Local Government Information Unit made the call in advance of Gordon Brown's Pre-Budget Report on December 5.
It said that such a mechanism could resolve many funding disputes between government departments and public sector bodies, since neither would benefit from the opt-out being invoked.
Organisations such as local authorities would not want to do so for fear of becoming marginalised as service providers, while Whitehall ministries would want to avoid having to find alternative means of delivering services.
Under the proposals, parliamentary select committees would give a binding ruling where disputes could not be resolved by the parties involved.
LGIU chief executive Dennis Reed told Public Finance that an opt-out regime would end the 'constant arguments' over whether the Treasury has adequately funded the statutory responsibilities placed on public bodies.
'It would mean, hopefully, that both parties would act in a more mature manner,' he added.
Brown's PBR statement to Parliament is expected to have several public sector-related announcements. He has already confirmed he will set out how the government intends to implement the recommendations of Kate Barker's housing review.
Brown has also indicated he will unveil further reforms to the planning system to make it more responsive to business needs. Measures on training and skills, investment in transport, and enterprise incentives are also anticipated.
In addition, the chancellor is expected to downgrade his economic growth forecast for 2005 from the 3%–3.5% outlined in his March Budget.
Respected economic think-tank the Organisation for Economic Co-operation and Development pre-empted that on November 29, forecasting UK economic growth of just 1.7% this year.
Brown has tacitly acknowledged his fiscal constraints. In a speech to the Institute of Directors on November 25, he said he had written to all the public sector pay review bodies calling for pay settlements that reflected inflation at 2%.
'When tackling all long-term pressures from pensions and welfare to the public services, we will spend only what we can afford and maintain all our fiscal disciplines,' he added.
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