By Peter Hetherington
9 December 2010
From the shires to the inner-cities, local authorities are coping with cutbacks by radically slimming down their role. So is this the new face of localism? Peter Hetherington reports from the council front line
The vision of slimline local government pioneering a smaller state by moving away from direct service provision – with communities and businesses taking over libraries, youth services, municipal buildings, and maybe sections of social care – is fast becoming a reality in a corner of southwest England.Among the timeless villages and honeyed limestone of Gloucestershire, where the outward wealth of the Cotswolds can obscure low incomes and a rapidly ageing population, the public sector as we know it could soon be a distant memory.
By next year, a Conservative county council will be on the way to achieving a ‘transformation strategy’ by gradually assuming the role of service commissioner, rather than provider. Although this has been driven partly by a near-30% reduction in its non-schools budget in four years – cutting £108m and losing one in six posts (1,000 jobs) – council leader Mark Hawthorne believes change is overdue.
Britain’s financial woes have merely hastened action, he insists. ‘We are talking about a new settlement for local government. You will see a very different county council focusing on large-scale commissioning of services, especially around social care, working in partnership with (six) districts and parishes by franchising to them “street-scene” services, such as road maintenance and parking.’
Chief executive Peter Bungard put this starkly: ‘The state will get smaller across most of the county – that is the reality.’
And for Gloucestershire, read England? Across the country, savage cuts – ‘significantly front-loaded’ on to 2011/12, according to the Local Government Association – mean many councils are thinking what seemed the unthinkable. They are planning to offload buildings and assets, close libraries, shrink once-prized services to a bare minimum and hand others over to third sector and commercial providers, assuming there are takers.
If, on the latest estimate from the Office for Budget Responsibility, 330,000 public sector job losses are likely over the next four years, early calculations suggest at least a third of these could be in local government.
Funding redundancies on this scale has set alarm bells ringing in town halls. Many authorities were relying on borrowing to meet severance payments in an attempt to protect fast-depleting revenue and reserves. This could now prove impossible because the government has set a £200m ‘capitalisation’ limit for the next financial year, severely restricting council borrowing for this purpose.
According to Paul Woods, finance director of Newcastle upon Tyne City Council, this will tip some town halls over the edge, making it difficult to set a balanced budget.
Even before this restriction, usually cautious finance directors were wrong-footed not so much by the scale of the 28% cutbacks in revenue support grant over four years from 2011/12, but by the front-loading. The LGA says it adds up to 11% ‘average’ cuts for English authorities next year. Many town halls, however, are budgeting for considerably more.
Even the odd crumb of comfort promised by the government has proved to be a smoke and mirrors exercise, notably reimbursement to councils for the centrally imposed council tax freeze next year. The ‘extra’ cash will apparently be found in next year’s much-reduced Whitehall grant.
Paul Carter, Conservative leader of Kent County Council – England’s largest, in population terms – says: ‘They haven’t given us any more money, have they? We were all hoping for a bit of additionality... if you resist all the pressures, against a pretty miserable revenue support grant settlement, then they said we’ll incentivise you to deliver a zero council tax – it’s all stick and no carrot, isn’t it?’
Back in Newcastle, the city council is planning for 1,000 job losses initially over 18 months and, maybe, a further 1,000 over the next four years. Aside from the multimillion-pound costs of redundancies, the council is alarmed by what it calculates will be a 16% real-terms cut in formula grant in 2011/12.
Woods says: ‘This is around double the average quoted by the secretary of state and the front-loading is significantly higher than anticipated.’
How, then, can the Conservatives’ much-hyped concept of localism gain traction with so little in council kitties to kick-start community ventures? The 264 town and parish councils in Gloucestershire could, if blessed with active citizenship, conceivably assume the role of alternative service provider. They could help to fund libraries or take over swimming pools (an option that is being considered) through modest increases in parish precepts, which remain uncapped.
But the picture is much bleaker in challenging urban areas, beset by high unemployment and other social ills, with parish and neighbourhood democracy thin on the ground. The impact of cuts on these areas will be greater through the withdrawal of the area-based grants, such as the Working Neighbourhoods Fund, which add up to some £5bn overall. Woods says this loss amounts to an unexpected double whammy, further undermining finances. And he warns: ‘This will cut the legs off the third sector, absolutely hammer it.’
Against this background, the political temperature is rising in town and county halls from the Conservative heartlands of shire and suburbia to marginal cities, such as Newcastle, under fragile Liberal Democrat control. When the full impact of the cuts become clear, will some Tory councillors join the LibDems in rounding on the government? Perhaps – some clearly feel betrayed by the unexpected enormity of the cuts.
The emotional response of Peter Callow, Blackpool’s Tory council leader, when he announced up to 1,000 redundancies, almost a third of the council’s non-school workforce, underlined the unease in Conservative ranks.
‘It’s heartbreaking for people like me who’ve got to say to staff... that there are no jobs for them any more at this council. It’s a terrible situation. I didn’t come into politics for this. I came in to turn Blackpool round, which we are doing. We’ve had a fantastic [holiday] season, a lot of private investment coming in – even the football team [now in the Premier League] is doing well, and then – slam.’
David Faulkner, leader of Newcastle council, one of the LibDems’ flagship authorities, finds it hard to hide his disenchantment. Unhappy and disillusioned? ‘Yes, I am,’ he says. ‘My position now is no different to what it was before the election. I would have preferred the cuts phased in over a longer period of time. I don’t believe we need to clear the deficit in four years. But that course has been set. [Deputy Prime Minister] Nick Clegg has said the economic situation is worse than it was when the party drafted its manifesto – well, I’m not sure.’
Faulkner’s plea for leniency, sent to Clegg and Chief Secretary to the Treasury Danny Alexander before the Spending Review, fell on deaf ears. He says his city was addressing localism long before Prime Minister David Cameron started championing it. He cites Newcastle Futures – a training-for-work agency with 38 staff. It combines council and Jobcentre Plus staff as ‘customer co-ordinators’ easing long-term unemployed people into jobs, with considerable success.
In her small office, agency head Gillian Hewitson, seconded from Jobcentre Plus, can point to almost 2,000 clients ‘supported’ into work over the past year. A further 1,800, often lacking basic skills, have completed training courses. ‘These are good numbers, but we’re constantly asking ourselves: “how can we do more, how can we add value to reach more people?”’ she enthuses.
But the future of the agency, a social company that has also helped spawn new businesses, rests on a knife-edge. And that’s in spite of intense lobbying by the city council. ‘We’re being reviewed... can they afford us?’ laments Hewitson.
Between the fine lines of that review, a string of councils are discovering that the true cost of the Treasury onslaught against town hall spending goes far beyond the 30% headline cuts. The 40 different area-based grants have become an essential ‘add-on’ for many councils and the means of turning the government’s localist rhetoric into reality. That is particularly true of the Working Neighbourhoods Fund.
Newcastle received £9m from this fund this year, channelling part of the cash to Newcastle Futures, which is totally dependent on this money. Faulkner, his voice betraying a little anger, says: ‘Working with the long-term unemployed, it’s got a lot of people back into jobs and is extremely successful. Look, if you are serious about fairness, putting arguments about benefit cuts to one side... you’ve got to maintain this or at least have some taper for its demise. You can’t just switch it off.’
In the east London borough of Hackney, it’s a similar story. Elected mayor Jules Pipe – who also chairs London Councils – says that the loss of £12.5m WFN funding next year will compound the looming financial crisis for his council. Overall, he says the capital’s 33 councils face cuts of 15%–20% next year although, at a recent meeting, Communities Secretary Eric Pickles angrily disputed this figure as ‘fiction’. Pipe says: ‘Even if we are wrong about front-loading – and I’m sure we’re not – the view in Hackney is that these near 30% cuts over four years represent the dismantling of all we have held dear over the past decades. How is the voluntary sector expected to step in and fill the void?’
It’s not just WFN cuts that are threatening localism. In Newcastle, a small level of devolved revenue and capital funding has already been channelled to ward committees – supported by specialist co-ordinators – and, below that, to neighbourhood forums, voluntary groups and social enterprises such as Newcastle Futures.
The government can at least point to the freedoms and flexibilities included in the Localism and Decentralisation Bill and new measures to underpin a ‘communities first’ approach. The ‘general power of competence’ for councils, for example, will – in Prime Minister David Cameron’s words – allow councils ‘to do anything they like as long as it's legal’.
If councils are to become much leaner and to be more strategic commissioners than providers, at least they might be given powers to join up all services on the ground. They could perhaps become the public face of the slimmed-down state. That, certainly, is the vision of some – but not all – ministers.
From next April, councils – rather than the soon-to-be-scrapped Audit Commission – will be responsible for what the LGA’s improvement and development arm calls ‘on-going performance management and monitoring, regular self-assessment and peer review’.
At the same time, the LGA believes the government is making the right noises on the important democratic role of town halls – namely, that ‘councils are responsible to local people and communities, not to central government and inspectorates’.
Nevertheless, it is perhaps one of the greatest ironies of our times that, potentially, the most significant devolution of power from Whitehall to town and county hall in a political lifetime – and here, we must take Cameron and Clegg at their word – will be accompanied by the deepest, most centrally directed cutbacks in local government that anyone can remember. Is that what localism means?
A ‘community offer’ they can’t refuse
Long before Chancellor George Osborne’s Comprehensive Spending Review, Gloucestershire County Council seized the initiative. Knowing the cuts were coming, it held a ‘Meeting the Challenge’ campaign to determine where the economies should fall.
Some 5,000 people took part in roadshows and surveys, supported by an online virtual budget. ‘People had to make choices,’ explains council leader Mark Hawthorne. ‘If you are going to protect something, what are you going to stop?’
The result is what the council calls ‘two big ideas’. Over the next four years, it will hive off a third of its buildings and land holdings (including council-owned tenanted farms) – around 30 assets in all – to communities and others. It hopes to raise £100m.
Under a ‘Big Community offer’, it will support communities taking over the buildings and small grants from a £50,000 fund.
The library service is a big part of the change. The council will keep only 9 of its 38 buildings and beef up its online library. Hawthorne hopes to hand over at least 11 libraries to communities.
The contraction of services in Gloucestershire provides a snapshot for how cuts will bite across England.
The council is severely pruning its highways budget by £8m to £21m. It will scrap all road improvement schemes and focus on maintenance and safety.
The transport budget is being slashed by 40% to £3m annually. Scores of bus services are being axed and the focus put on busier routes. A string of youth centres is being closed to concentrate support on vulnerable teenagers and those considered at risk.
However, the council is protecting its budget for old and vulnerable people – offering, for instance, a guaranteed six weeks ‘quality support’ when people leave hospital. But its elderly population is growing much more than the national average, so the council is moving away from an ‘assumed entitlement of service towards a greater level of self-funding and fairer charging’. It wants to close five day centres.
These sweeping economies are wrapped up under a mantra that will appeal to the government’s ‘localist’ instincts: ‘A shrinking organisation changing its focus from directly providing services to helping communities help themselves.’
But the question yet to be answered is whether communities will rise to the challenge.
Peter Hetherington writes on community affairs and regeneration
