14 December 2007
Local government minister John Healey has urged councils to look beyond the 'here and now' and face up to some of the long-term, deep-rooted problems that affect their communities.
In an exclusive interview with Public Finance, Healey said councils should be focusing on how they can tackle problems such as entrenched unemployment, instead of worrying over the detail of their share of the local government finance settlement, announced last week.
Published on December 6, the settlement delivers overall real-terms increases of 0.9%, 0.1% and –0.1% in each of the next three years. The Local Government Association branded it the 'worst settlement for a decade'.
Healey has acknowledged the settlement is tight. He told PF it was understandable that councils would be devoting their immediate energies to making sense of the figures.
'The bottom line for any local authority is how much,' he said. 'But I want to encourage local authorities to look beyond the here and now, beyond the how much, at the three years ahead and beyond that.'
He said the £1.5bn Working Neighbourhoods Fund, announced alongside the settlement, gave eligible councils the opportunity to target stubborn pockets of deprivation in line with national ambitions for economic revival.
Healey added that the settlement gave local government what it had been asking for, namely the ability to plan ahead, fewer ring-fenced grants and greater flexibility and freedom.
'If [central] government is going to respond to what local government is asking for, which is more flexibility, more freedom, the scope to lead, then local government has got to look less to central government for the go-ahead, for detailed guidance of what they've got to do and how they do it,' Healey told PF on December 11.
'I'm not trying to take central government out of our responsibility to provide the policy and funding framework for local government, but I am arguing that local government leaders need to do more to demonstrate leadership, and take some of the decisions that are going to be required of them, just as we do in central government.'
Healey harked back to the nineteenth century, saying there was a need for today's council chiefs to emulate the enterprise and innovation shown by their Victorian predecessors, who used surpluses generated by trade to invest in services and infrastructure. Circumstances were different now, he said, but 'the scope is certainly there, more of which could be used by more councils'.
Addressing the LGA's annual finance conference earlier the same day, Healey said he was beginning to see the recovery of the Victorian spirit in the best local authorities, but he highlighted a lack of skills that was preventing councils from exploiting their trading powers.
The minister admitted the settlement provided little festive cheer for local government, but claimed it was 'fair in the circumstances', and reflected pressures on the key areas of elderly social care and waste disposal.
'The Private Finance Initiative support for waste doubles over the next three years. The Department of Health is providing extra funding of £300m over the [spending review] period for adult social care,' he said.
The finance settlement removed the special protection of social care funding, but overall damping was retained to ensure stability. Over the next three years, top-tier authorities will receive guaranteed minimum increases of 2%, 1.75% and 1.5%, while shire districts will receive 1%, 0.5% and 0.5%.
Councillor Derrick Haley, portfolio holder for finance and resources at Mid-Suffolk District Council, challenged Healey on how he could describe the settlement as fair, when it left his council with a 2% real-terms cut.
'This is a tight settlement,' Healey responded. 'Local government was saying to us that the real pressures lie in areas like social care and that is why… those authorities with social care responsibilities do relatively better over the three-year period, because they need to, than areas like [Mid-Suffolk]… That, I'm afraid, is an inescapable fact of life.'
The LGA said the settlement leaves many councils facing tough choices between spending cuts and above-inflation council tax rises.
LGA chair Sir Simon Milton said: 'Ministers must recognise the strains that are being placed on councils. The funding increase announced in the local government finance settlement will chip away at the ability of councils to deliver the services that local people rightly expect and deserve.'
PFdec2007
