All quiet on the local government front?

4 Oct 16

Theresa May’s new government has had almost nothing to say about the flagship local government policies of devolution and finance reform. We need some clarity

It has become a seasonal ritual for me to head home from party conferences and bemoan how little attention is paid to local government.

There’s nothing new about that, but it comes to something when even the secretary of state for local government barely says anything about the most important issues facing councils.

For the last couple of years we have had a clear direction of travel driven by DCLG and by George Osborne at the Treasury: more devolution, more local powers, new governance arrangements such as combined authorities and directly elected mayors. At the same time we have seen a plan to phase out central funding of local government and replace it with locally generated income.

No one pretends this agenda was unproblematic. There was a lack of detail about redistribution mechanisms and insufficient fiscal devolution to fully compensate for the loss of central funding. Many people were unhappy with a devolution process that was based around secretive deals between groups of councils and DCLG/Treasury, a process that many felt was too rushed, insufficiently transparent and involved some suspiciously mobile goalposts.

Nonetheless, we knew in broad terms where we were heading.

Now it all feels a lot more up in the air.

Some of our city regions have got their devolution deals through Parliament and are looking forward to mayoral elections next May. Almost everywhere else the devolution agenda seems to be on a knife-edge. Many of the deals that have been announced are at risk as constituent councils fail to ratify them. The secretary of state has already pulled in the plug on the North East deal on that basis. In other two-tier areas work on prospective deals has been quietly shelved and is yet to be unshelved.

This matters because both the public service integration and the local economic growth that councils need to be sustainable and effective into the future rely on the sort of localised policy and funding mechanisms that devolution promises.

So it would be good to have a clear statement from the government about the importance of the devolution agenda and how they see it going forward. I’m not sure we’ve got that at this week’s Conservative Party conference.

Sajid Javid’s speech focused entirely on housing with only a single glancing reference to devolution. This re-enforced the message of an interview he gave to the Financial Times on the eve of conference in which he described his view of DCLG as an “economic department” which should focus on housing and regional productivity.

That’s vital of course, but it undersells the range and complexity of what local government does and fails to appreciate that service areas from housing to adult care, to skills, to roads, to parks, to leisure all have to be dealt with in an interconnected way if you want to maximise the impact of any one of them.

Philip Hammond’s speech had a couple of lines more about devolution when he said that “We will continue to drive the Northern Powerhouse partnership and the Midlands Engine, two great projects that can be emulated across the country” but there was no sense of what form that emulation might, or should, take or over what sort of timescale.

And for some, protestations about the government’s commitment to the Northern Powerhouse will be somewhat undermined by George Osbornes creation of a new think-tank apparently to protect this part of his legacy and Jim ONeills departure from government.

We have heard nothing about reform of local government finance and whether government intends to press ahead with the passing out of the revenue support grant and the retention of business rates. All this announced with great fanfare by George Osborne at conference last year: proof, if any were needed, that a year really is a long, long time in politics.

Given that the chancellor abandoned Osborne’s signature deficit reduction target his plans for local government finance reform must now also be in doubt.

So we have at worst uncertainty and at best a lack of energy about the two most important policies that affect local government.

In the absence of a clear policy direction from central government there’s perhaps an opportunity for local government to start shaping its own destiny a little more in relation to these issues.

If it’s unable to do so there’s a real risk we end up with a semi-devolved country that entrenches gaps in growth and productivity. That’s in no-one’s best interests.

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