An Unnecessary Role

embracing false choices

Archive for the ‘Finance’ Category

Now to make all this sensible stuff stick

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Did you hear? There’s no money left. Apparently debt and deficit are terrible things that eventually need to be sorted out. And you can be darn sure that when the Labour Party get back into power that’s bally well what we’re going to. Well, here’s a slow hand clap for you, stalwarts of the radical progressive centre. Bravo. I suppose it only took eighteen months or so, but we got there in the end.

Now to make all this sensible stuff stick. First, I would recommend that you don’t answer every question about the economy like you were forced at gunpoint to talk about cutting the deficit by Anthony Painter, and that you don’t say that you’re doing it “to make the party credible” but instead that you are doing it because it is the right thing to do.

Then with that irritating reflex action out of the way, we can get on with the real stuff. The esteemed former blogging home of Luke Bozier, Labourlist, has recently been running a series called “When there’s no money left?”, an Opportunity Knocks for the various policy hobby horses of the kooks, waifs and strays that make up The People’s Movement. The winner is stunning, a real gem. It manages to combine the best qualities of the Labour Party – authoritarianism, intrusion and inverted snobbery – into one single policy:

I propose that all income tax returns of anyone living in the UK should be in the public domain. These should also include a nil return for those not paying any income tax at all.

There is surely nothing more likely to persuade the working class voters of Harlow to stick their cross next to the red rose logo than the prospect of all their neighbours knowing exactly how much they earn. Even so, I fear that if we think of policies like this as the only alternative to spending lots of cash on stuff, we are making an error. The alternative to not spending any money does not have to be isolated gimmicks. It could be far more ambitious than that. When you can’t redistribute money then maybe you could redistribute power.

By and large, people’s attitude to the cuts goes something like this: “I accept the need to spend less money, but I am sad to see local services I value being affected”. People feel they don’t have the power to affect those changes, to influence the choices being made about their local hospitals, schools, libraries, leisure services, even the bins.

So why not make a real commitment to local democracy the alternative? Put more power in the hands of councillors, leader and mayors who are doing this “In the Black” stuff every day of their working lives, give voters genuine democratic influence over their local services (perhaps through directly elected mayors) and lead a debate about making a heavily centralised bureaucratic state more local, more democratic, and yes, cheaper.


Written by samelliot

January 20, 2012 at 6:25 pm

The great local government stress test

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The Government’s deficit reduction strategy is like building a bridge. That’s what someone with far more knowledge that I about local government finance told me. And when you’re building a bridge you need to test the constituent parts so you know how weight they can bear. And to do that, you put them under immense pressure until they bend and break.

As far as local government goes, this isn’t only being done by the reductions in basic grant outlined in the comprehensive spending review, it’s also being done by making structural changes to the scale of funding local councils have to draw on. Today the LGA has indicated that local government funding is likely to be to adjusted take account of the public sector pay cap of 1%. Never mind that local government sets its own pay rates and hasn’t increased pay at all for two years. Government pay policy now dictates local government funding, and restraining pay restrains overall funding.

The proposals that came out of the local government resource review (with the full outcome due to be published any day now) sought to establish the principle that local government will be funded directly by business rates, and that councils can benefit from stimulating business growth in their areas. But also built into the system is the ability of Government to ensure that overall spending by local councils remains within a centrally-set limit by retaining a proportion of the overall business rates pot.

This is important because the scope for councils to raise their own funds is already drastically limited. Council tax rises are subject to a de facto cap of 3.5% (above which a council must hold a costly referendum to ratify the proposal). Even the Government’s council tax freeze ultimately does more harm than good to local authority budgets, providing some short term funding but reducing the tax base for years to come.

Now, local democracy isn’t only about the total amount of money it spends, and very many good councils will continue to thrive even with radically reduced resources. But the thing that is increasingly concerning those in local government is how long before this stress test leaves some councils in impossible budgetary positions, what happens when it does and if we can prevent that happening.

There has always been a conflict between the way local government claims (rightly) to be both the most efficient part of the public sector whilst at the same time in need of more money. This is not an easy argument to make. Local leaders pride themselves on their ability to cope, to manage budgets effectively whilst making a difference to their communities. But it’s essential to make the argument for more resources (or more realistically, more freedom to generate more resources) if local government is to be about more than providing the bare minimum of services and protection for the vulnerable.

And the politics? If the consequence of the Government’s policies is going to be a process of creative destruction, permanently reshaping what councils are fiscally capable of by permanently changing how they are funded, then that is not going to be reversed by simply reinstating investment, even if that were possible. The Labour Party’s challenge will be to explain what its plans are for public services that will have changed beyond all recognition.

Written by samelliot

December 12, 2011 at 2:04 pm

Posted in Finance, Localism

Labour gets a dose of white hot sensibleness

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The ‘In the black Labour’ authors are already the Smiths of the the post-Blairite sensible-hack-Labour centre-centre-left. In bedrooms across the land, weedy youth with posters of Matthew Taylor on their wall think “at last, someone else feels the way I do.” In the same vein, former party staffer Steve van Riel is liberated from saying nothing to saying all the sensible things he’s been saving up after the last few years of holding ‘the line’. Even Ed Balls this morning manages to write an opinion piece for the Times that doesn’t suggest the nation’s problems can be solved by a banker’s bonus tax (a lefty trope skewered by Sadie Smith here).

I’ll be writing a bit more about all this dangerously subversive stuff about balancing budgets and doing things that are popular soon. But it’s worth saying now that ‘In the black Labour’, and the calm and constructive debate it has triggered, could be a very important step for the Labour Party. Interventions like this put the party back on the path to reassuring the ordinary working voter that Labour is, to coin a phrase, ‘on their side’. That we offer practical solutions to the competing crises they see in their lives, and that we respond directly to their concerns.

In some ways, though, getting the debate back on that territory is the easy bit. The real difficulty is in identifying what policies can accompany the ‘In the black…’ fiscal rules to promote the innovation, efficiency and reform required meet them, whilst still pursuing a social democratic mission. In contrast to the salami-slicing policies of the present Government, ITBL* suggests a ‘zero budgeting’ approach, fundamentally questioning each element of spending – an ambitious approach that, although the authors don’t say so directly, would mean taking significant decisions about what it is the business of government to be doing.

This is the right place for Labour to be. In his Purple Book essay, Douglas Alexander said the 2010 election was not about the role of the state, an abstract debate ordinary voters rarely engage with. Instead, it became a ‘referendum on the public sector’. Labour was seen as the party of an often wasteful, frequently bureaucrat state sector. One of the Tories minor ideological strengths is their general suspicion of vested public sector interests. I am not suggesting Labour treats the public sector with the contempt many Tories often reserve for it. But we do need to be far more willing to question the necessity of certain Government functions and not retreat to the easy assumption that because money is being spent on something then it is essentially A Good Thing.

But as I said, saying all that is the easy bit. Picking those things we no longer want to do, or those things that can be reformed to make them dramatically cheaper is where the challenge starts.

*Guys, would it have killed you to think of a snappier title?

Written by samelliot

December 6, 2011 at 9:02 am

Posted in Finance, Labour

Start the political term with some low cost flooring solutions

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It’s back – the perpetual, ulcer-inducing treadmill that is the body politic, the swirling, chaoatic miasma leaving even its most bit part of players (i.e. me) with a gnawing sense that something, somewhere is going horribly wrong. Did you have a nice holiday? Nobody cares.

How do I know it’s back? Why, there was a speech by Michael Gove of course. It was a very long speech, about all the kinds of trad cultural conservatism touchstones that I assume now pass for ideology in post-Dave Toryism – school uniforms, extra Greek prep, perhaps the odd ‘never did me any harm’ beating. Ordinarily it’s the kind of thing I wouldn’t read if I was stuck in a lift, but noted local government comedian Cllr Pete Robbins drew my attention to a line where Gove is praising Lord Harris of Peckham, interiors tycoon and part-time educational messiah.

Phil is able to support state education so generously because of his success in business.

His firm Carpetright has brought jobs and opportunities, as well as high quality low cost flooring solutions, to thousands.

Now, as a fully paid up member of the Blair/Adonis axis (excellent article from Adonis on big city mayors here, btw) I am what many comrades would view as dangerously suspect when it comes to academies and even free schools. But my reptilian pinko brain stem is not so denuded that a Secretary of State plugging World of Leather wouldn’t register on my “something dodgy about this” scale. When politics makes you think the world is going mad, then you know that it’s business as usual.

What’s on the agenda then? If you’re in local government, it’s still the Local Government Resource Review, as councillors, officers, wonks and journalists try and work out how a system as complicated as formula grant but with the word GROWTH sprinkled liberally through the press material gives local authorities anything other than a giant headache. It’s council tax benefit localisation, the pigs foot in the localist stocking, with councils being given the new, radical opportunity to take local responsibility for cutting poor people’s benefits. It’s school capital funding (not enough of it), school places (not enough of them either), public transport fares (too high), police numbers (too low), and, oh yes, it’s Annual Conference soon. In Liverpool.

It’s good to be back.

Written by samelliot

September 5, 2011 at 9:41 pm

Posted in Cynicism, Finance, Localism

Hands off my Grandad’s golf course

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If it’s a day with a ‘y’ in the name, it must be another hit job on local authorities from CLG. And so it was on Friday that CLG published a list of council-owned assets showing that many local authorities own golf courses and golf clubs, accompanied by the clear insinuation that this sort of thing simply is not the business of a local authority.

Now I could burble on about councils having sound asset management strategies and how the Government will suggest councils develop  innovative revenue streams one minute and chastise them for doing anything more than pick up the bins the next. But this time, it’s not a theoretical argument, it is “personal”.

My grandad, who passed away just over two years ago, worked his whole life to provide for his family, including his only daughter, my mother. He worked shifts, day and night, at Manchester Airport, to pay the rent on their house on a smart council estate in a sleepy suburban village in south Manchester, and all he wanted at the end of the week was a drink in the local Labour Club (home of many a Frank Sidebottom gig) and a round of golf at the local municipal course.

I remember him taking me to the driving range (for my first taste of a game I never really took to, I regret to say), and him proudly pointing out his name on the board of club captains. If this sounds like I’m idealising him, then I am, he was my grandad. But even through that I can tell you he was a proud working man who could only afford to pursue his great passion because the council thought that a community golf course wasn’t a drain on resources, or an inappropriate use of public money, but a civic good that benefited the area and the people who lived there.

And this Government would kick him out of his council house for the sin of having a steady job and and then sell his golf course. Charming.

Written by samelliot

August 8, 2011 at 8:00 am

Posted in Finance, Leisure, Localism

Want to make Universal Credit work in London? Just make stuff cheaper

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I posted a little while ago about the risk to London posed by the lack of regional variation in the way Government funding is being allocated and benefit rates are calculated. I was suggesting that in order to avert real-terms funding discrepancies and, even more importantly, the likelihood of thousands of benefit claimants (many of whom are in work) being forced to move the Government should ensure that their decisions reflect the cost of living and working in particular areas of the country.

It turns out that I couldn’t have be more wrong. This London Councils report  indicated that the Universal Credit reforms did not reflect the cost of living in London and would ultimately prove a disincentive to work. Responding to it, the company Policy In Practice (an unbiased lot given it was “was established to help the government deliver its welfare reforms”) makes clear that actually all those of us worrying about the impact of this policy are looking at this from completely the wrong direction:

A better policy response would be to reduce the costs of childcare, transport and housing to improve conditions for all Londoners and make the capital more competitive.

I cannot deny, this would make a lot of difference. If stuff cost less, then benefits would go further. If the cost of living wasn’t so high, then the Government’s plans wouldn’t be faulty on a grand scale. At this point if I was being politically mischievous I could point out that when you have a Mayor that does this:

Public transport users in London are being reminded that fares across the capital’s range of services are set to increase by 6.8 per cent next week in line with changes first announced in October.

The new fares come into effect from Sunday 2 January 2011 and will see the cost of a single Oyster bus fare rise to by 10p to £1.30. On the Tube the Zone 1 pay as you go fare will also increase by 10p to £1.90 while “overall” Travelcard season ticket prices will go up by RPI plus two per cent.

The increases are the third implemented by Mayor of London Boris Johnson since he took office in 2008.

Leads a London housing sector like this:

The problem is illustrated by two examples provided by London and Quadrant to the London Assembly planning and housing committee back in March. If a tenant were charged 65% of the market rent on a one bed home in Haringey their rent would be around £137 per week, a full £52 higher than a social rented home.

There is obviously a demand for housing let at these intermediate rents. But London and Quadrant told us that 77% of their residents earn less than £15,000 a year. The mayor’s own research shows that some 14% of Londoners in work earn less than than this threshold, and that this group is in the most acute housing need. This new “affordable” housing isn’t affordable for them.

Families on low incomes are even worse off. The mayor wanted 42% of social rented homes to have three or more bedrooms, but only 29% of the affordable rent homes will be that size. The likely result will be more overcrowding. As for rent, a family seeking a four bed property in Haringey would need to pay £293 per week if it were let at 65% of market rent, 132% higher than a social rent of £126 per week.

Or this:

Boris Johnson today urged the coalition to leave London’s rising house prices alone or risk worsening the housing crisis.

And did this:

The Conservative threat to affordable childcare and frontline services was highlighted in London today following the news that Tory mayor Boris Johnson has disbanded London’s dedicated childcare unit.

Then you probably aren’t going to stand much of a chance of making all that stuff cheaper. As I’m not being mischievous I’ll simply say this is a hopelessly naive way of looking at the problem. These changes are coming, they will cause chaos for London’s housing sector, local authorities and the people they serve. And airy theories without the policy to back it up won’t solve anything.

Written by samelliot

August 4, 2011 at 10:53 am

Posted in Finance, London, Welfare

Impractical cuts dressed up as localism

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Forgive the source of this link, but as the Mail appears to be the only media source covering this it will have to do. The latest  initiative from the government is to transfer responsibility for the payment of council tax benefit from the Department for Work and Pensions to local authorities. With new responsibilities comes new money to fund it. However, the total given to councils to pay out on council tax benefit will be a full 10% less than is currently spent.

This essentially means that councils are being instructed to find a way of giving less people council tax benefit, which is challenging enough, but CLG won’t leave it at that. Pensioners will be protected from any change in eligibility, as will people already in work. The burden of that 10% reduction will inevitably fall on the most vulnerable. Pickles attempts to sell this as giving councils the opportunity to benefit form getting people back in work, but the impractical nature of this transfer of responsibility and the potential damage it could do means many councils will not see this as a good deal. In this case localism is a confidence trick, with duties being off-loading to councils without giving them the resources or the power to fulfil them.

Written by samelliot

August 2, 2011 at 11:04 am

Posted in Finance, Localism, Welfare