15 September 2006
Local and central government are under intense scrutiny, as a plethora of inquiries and reviews get set to report by the end of the year. But with near-civil war gripping the government, how likely is movement on any front? Tony Travers investigates
Consumers of politics will find the autumn of 2006 action-packed and thrill-filled, if a little repetitive. It now appears that every day will bring fresh 'Blair faces resignation demand' stories. Threats to the prime minister's survival will be countered by his brilliant set-piece speeches. Dates for retirement may arrive and depart. The commentariat will go into overdrive. There can be no release from this particular Groundhog Day until the great escapologist of Downing Street finally heads for the backbenches.
The impact of this rambling political saga on the quality of government is unlikely to be good. The public will, at best, be bemused. Eventually they might tune out altogether. But for those concerned with the public services, the dying months of the year will bring a cornucopia of official reports, white papers and government responses to policy questions. The implications for local public service providers – both within councils and other bodies – ought to be profound.
One of the most keenly awaited statements of government policy will be the local government white paper. Delayed from the summer because of ministerial succession, Ruth Kelly's first big policy statement as communities and local government secretary should provide details of her conclusions on issues as diverse as city regions, neighbourhoods and communities, the move to single-tier local government, the future of regional policy and the extent of freedom to be given through Local Area Agreements.
As the white paper is completed, Sir Michael Lyons' inquiry team will be coming to its final conclusions about finance and concepts such as 'place shaping'. Lyons has promised to hand his report to the government before Christmas, although it will then be up to ministers when they actually publish it. So will end a tortuous process that started in spring 2003 when the Balance of Funding review started its work.
Local government and most other parts of the public sector will be using the autumn to finalise their submissions to the 2007 Comprehensive Spending Review. In the light of the tightening public expenditure position from 2008/09 onwards, most public institutions see the review as being of supreme importance in setting the financial scene for not just the three years beyond 2008/09, but probably for the foreseeable future. The Treasury and spending departments will be receiving research putting the case for particular services or institutions to be given priority – or at least to avoid real-terms cuts.
Individual local services will also be awaiting the final outcomes of official inquiries that have been toiling through the summer. The Eddington Review of Britain's long-term transport needs could lead to radical changes in transport policy, such as the rapid introduction of road pricing, a major shift in civil aviation policy or the construction of a new high-speed rail line through the middle of the country. It is expected to report before the chancellor's Pre-Budget Report is published in late November or early December.
The economy's skills needs are also under the microscope. The Leitch Review is charged with identifying the optimal skills mix for 2020 so as to maximise economic growth, productivity and social justice, and also to consider the policy implications of achieving the changes required. Like Eddington, Leitch should report before Christmas and will have significant implications for skills training in England. Note that the government has already decided to give the mayor of London an enhanced role in chairing a new Skills and Employment Board for the capital.
Then there is the Barker Review of the planning system, which, in common with Eddington and Leitch, is operating under the Treasury's wing. It, too, will report before the end of the year. In her interim report, Kate Barker concluded that the government should make the planning system more efficient and reduce unnecessary delays and complexity at all levels of government.
Her final report will cover out-of-town shopping, the future of developer contributions towards public infrastructure through 'section 106' agreements and a possible Planning Gain Supplement. The Treasury has previously suggested that such a levy on development could – at least in part – be centrally controlled, thus removing an element of local government's control over resources.
The publication of all these final reports will just be the starting point for government consideration of what to do next. There will be further fierce lobbying during the spring and summer of 2007, or at least until the government produces its final proposals on each subject.
The existence of four reviews of this kind operating out of the Treasury, coupled with CSR07, gives a clue to the chancellor's absolute dominance of home policy in England. Final government decisions about future spending priorities and policy will come early in 2007, which could hardly be more awkwardly placed in the great Blair-Brown handover saga.
It would be unkind to refer too much to the paralysis and near civil war that recently broke out within the government. But it is instructive to note that Kelly, Brown and other key policy-makers will be operating in difficult circumstances when it comes to making decisions. This, to put it mildly, is unfortunate.
But, for local public services, there will be no choice except to respond to the agenda as it emerges. Lyons, above all, could propose fundamental changes to the financial underpinning of local government. Eddington might recommend changes to the funding and control of transport infrastructure, while the government's response to Leitch could trigger wider reforms in the control and funding of skills training. Many local authorities will certainly be pressing the government to shift control away from Learning & Skills Councils, possibly towards locally democratic bodies. Barker, like Lyons, has the propensity to change some of the fundamentals of local government.
When the government comes to respond to these reviews and to put forward its final proposals for the future of local democracy, it will do so against the background of virtually a decade in power. In the period since 1997, there have been a number of notable efforts to relax central control, including devolution to Scotland, Wales and London, the 'prudential rules' system of capital control, Business Improvement Districts, the Local Authority Business Growth Incentive Scheme and Local Area Agreements. Not all of these changes have been simple or unqualified, but each suggested a desired direction of travel, ie, towards a less centralised system of regional and local government.
On the other hand, Whitehall has been immensely cautious about taking the next steps forward, particularly since 2000. After the initial radicalism of Scottish and Welsh devolution and the creation of regional development agencies, further steps have been halting. Early attempts to abandon tax-capping and the later move to prudential rules-based capital controls were well-intentioned efforts to empower local government, but not only has capping returned with a vengeance, recent moves to decentralise have been painfully slow.
In fairness, the Department for Communities and Local Government and the Office of the Deputy Prime Minister before it have regularly attempted to convince other parts of central government that there should be a consistent move towards decentralisation. But other departments (with the laudable exception of Transport) have been notably obstructive, preferring to keep control of their own resources and powers.
The DCLG now faces the tactical and strategic challenges of how to keep control of the local government agenda when there is so much political 'noise' in the system. As the white paper is expected to come out in advance of Lyons, Eddington, Leitch and Barker, it is hard to see how the local government proposals can be fully 'joined up' with the others. There is surely an argument for delaying this key document about the future of local democracy until we know what all the other reviews are proposing.
Lyons, after all, could propose subtle but challenging reforms such as more extensive use of charging for local public services, ending full equalisation of the local tax base (so as to provide incentives to authorities to encourage development) or introducing smaller revenues linked to investment in infrastructure. Such changes would have profound implications for many authorities, especially in the light of Barker's final proposals.
The outcome of the Lyons Inquiry will also send a signal as to how far Sir Michael believes central government would be willing to go in changing the local tax system. The original reason for the Raynsford Balance of Funding review – the large share of council revenue raised from central government – has been mitigated by the transfer of schools' funding to a ring-fenced Whitehall grant. But the problem of the council tax remains. The contents of the 'finance' section of the Lyons report (and, of course, the chancellor's response to it) will provide conclusive evidence as to whether the government is willing even to consider radical local tax reform.
For its part, the government, whether run by Blair or Brown or Cameron or Cameron/Campbell, will have to decide how to take local government forward in the light of so much expert advice. Fundamental decisions lie ahead for the prime minister and the government. Should cities and counties be able to move ahead by competition, or should there be a 'no town left behind' policy? How far can successful areas pull ahead of less dynamic ones? What role are regions to play, or are 'city regions' a more plausible next step? How can governmental clutter be removed? Where has the neighbourhoods and communities policy got to? Where next for directly elected executive mayors? This list is long and potentially awkward.
While the government is attempting to come up with answers to such questions, others are also in need of resolution. The regulation of public services is in the process of reform. Regulators and auditors are being merged and reformed. The number of targets and the weight of regulation are to be reduced. And any changes to local government will occur in the three-year period covered by CSR07, which will leave councils with their lowest year-on-year spending increases since at least 1999/2000, if not before.
Local public service providers outside local government will also be caught up in the policy frenzy that is about to be visited upon us. Local Area Agreements look set to remain a key element in the present government's approach to 'the local'. Local Strategic Partnerships will be the focus for the co-ordination of council, NHS, police and children's services within local authority areas. The obvious lack of capability within parts of Whitehall, coupled with the slimming down of government regional offices, will increase the pressure on LSPs.
Looking beyond the next six months, it is possible to see further radical reforms for local public services. A new prime minister in 2007 could well introduce new approaches to the decentralisation of government. The Conservatives will have to start putting forward their own proposals for local government. Ideas will pour out as political leaders attempt to paint themselves as true localists. When the political endgame of the Blair era finally arrives, there will be a short period in which the balance between centralisation and local autonomy will be re-set. The question is: when – and indeed where – will this be?
Tony Travers is the director of the Greater London Group at the London School of Economics
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