Local government: ever the bridesmaid

27 Feb 17

Next week’s Budget is unlikely to bring much comfort to local government. The sector must seize the initiative, redefining its objectives and the financial freedoms needed to deliver

Poor local government!

Next week the chancellor will, against his earlier instincts, almost certainly announce some welcome additional resources for social care. This is good news, but I’m afraid that's about all there is to celebrate.

Though in the Autumn Statement prison services rightly got more money without strings (well it’s a government service so it must be well enough run) owing to an acknowledgement that the cuts had gone too far for too long, councils won’t be so trusted. It won't be recognised that they simply need more money for social care, so the government will probably deem that they need some more regulation, and equally probably Whitehall will in some way need to play a greater role in driving local integration.

Councils will be glad on behalf of their clients and in light of their dire fiscal positions to accept whatever they are given, knowing that it’s the knock-on effects on the NHS that have most concerned ministers. Sadly, councils know they are forever the policy bridesmaid and not the bride.

It's a shame to see the hopes of just a few years ago stall, because after 2010 the opportunity of unregulated and devolved local government appeared to be a genuinely shared agenda between George Osborne’s Treasury and Eric Pickles’ and Greg Clark’s CLG. Of course the sector saw more draconian cuts meted out to it than other parts of the state, but there was also a creditable vision emerging of a new future settlement with powerful mayors for devolved city regions. These policies, including reforms to business rates retention by 2020, are still going ahead; but it appears that the pace of change is stalling rather than accelerating. Ten months in, what is the May administration’s vision for local government?

And because there is no route map, our business rates system runs the risk of being seen solely through the lens of current troubles  – not least in relation to revaluation – rather than considering the wider policy reforms needed, because one cannot realistically and meaningfully reform the business rates system without wider devolution.

There will be winners and losers from rate retention, so how will areas set to lose relative resource from changes to historic equalisation fund their services? Could councils, in say an area like the North East or South West, raise additional resources from charging or gaining access to new taxes? Or, theoretically, might central government have to give direct regional grants funded outside of rates redistribution?

Conversely, if government does not wish to see councils access new funds through greater devolution, then rate retention with winners and losers would be wrong. The sector is more likely to accept short-term upheaval if it can see the long-term opportunity of greater localism being simultaneously offered; but it should collectively call out anything that falls short of this.

It is decades since the country last saw massive local government house building programmes to meet our national needs. Once again we find ourselves living through the worst housing shortage in modern times and four years after self-financing took place, output is only around half the intended figure. Ironically, while the recent housing white paper encourages greater ambition and planning consents from local authorities, what many actually need is for the government to simply lift the cap on borrowing relating to council housing.

So what worries me most? Well, it's two things: firstly that social care precepting, further adjustments at next week’s Budget, and then rate retention are ultimately not solutions to funding local services when the government will not commit to further reforms which fiscally liberate local government on revenue and capital; and secondly, councils having to put up arguments to have the best possible share of the scraps on offer in the absence of this.

My personal view is that we are still operating within a Victorian model in which road repairs, libraries, fostering children or economic development are undertaken on very different spatial and economic footprints to now. We should therefore reorganise, set a new vision for local government based on 21st century forces and demands, and articulate with one voice the financial freedoms needed to deliver this. Regardless of their politics or type of council, it is the sector’s own leadership which must debate and promote the best solution going forward. The one thing I can assure you is that government will not do this for us.

  • Rob Whiteman

    Chief executive of CIPFA since 2013, after leading the UK Border Agency and the Improvement & Development Agency. Previously, he was CEO at Barking and Dagenham council.

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