An Unnecessary Role

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Archive for the ‘Finance’ Category

Time to get interested in local government finance

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Professional discretion forbids me from posting too extensively about the Local Government Resource Review, but for local government it is potentially the most far-reaching legislative move the government will make in the current Parliament. Some reading:

  • London Councils’ own analysis of the issue, including their own model that would redistribute money according to need whilst ensuring councils across London and the rest of the country benefit from growth in the capital.
  • Michael Dugher raising the fears of many about the possible consequences of a sink or swim approach (although the ‘burying bad news’ accusation is a little wide of the mark given the months of consultation there has been on this).

The latter two pieces highlight important concerns about the risks inherent in meddling with the local government finance system, but it is surely undeniable local government needs to be placed on a more sustainable financial footing than it is presently. If the present proposals are not adequate to the task, local government needs to come up with an alternative, and quickly.

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Written by samelliot

August 1, 2011 at 5:13 pm

Posted in Finance, Labour, Localism

If I was Johann Hari…

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I would take every post Paul Corrigan makes, top and tail it with some reference to Bruce Springsteen. He is essential reading for anyone with an interest in the ongoing health reforms and public service change in general.

This post last week shows how the Government’s reforms, far from being localist or decentralising, will in fact result in a centralisation of healthcare commissioning. It is a cutting critique of the centralising tendency:

There is a common sense belief that you need a national centralised system of grip to save sums of money of this size. However like a lot of common sense beliefs, the idea that the only way to save money is through central power is just not true. In fact the illusion of command and control in the NHS is just that – an illusion. Running a national programme that tells people which budgets to cut in Wigan and Wolverhampton gives the appearance of something happening, but it’s just that  – an appearance.

And continues with one of the best interpretations of the central-local divide I’ve read – as one of accountancy versus economics, of the centre attempting to berate local structures into saving money and delivering quality services against a self-sustaining, empowered and incentivised set of local decision-makers driving out cost.

There are two very different world views about how economics works here. The first, from the top, is that public money can be controlled by a set of accounting officers who shout at the people underneath them to do certain things in line with a plan. This is called public sector accounting.

The second is a set of economic incentives that depend upon organisations and individuals operating within those incentives to develop better value for money. This is called economics.

The Government set out in those halcyon days last July believing in economics, but have increasingly lost their nerve and now believe that a strong centre shouting at people will save them the money.

Crucially for the NHS they are wrong. As a method of improving value economics trumps accountancy every time.

As a way of looking at localism, it’s easy to view this as hopelessly managerial, preoccupied as it is by questions of service cost, value and quality, but one of its main selling points is that local decisions are more often than not better decisions. And if you want to deliver a political programme, the quality of decision making is at least as important as the values that underpin them.

Written by samelliot

July 14, 2011 at 8:30 am

Posted in Finance, Health, Labour

Dispatches from LGA Conference

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To Birmingham for LGA conference, the Glastonbury of localism, just with beef stew instead of Goan fish curry and Richard Kemp instead of Bono. The new Chair of the LGA is Sir Merrick Cockell, late of the London Councils parish and a localist with a proven track record of working with all parties and sticking up for local government. I think he is an excellent choice by the Conservative Group, and he marked his appointment with a thoughtful speech. He made clear that local government needs to rise to its reputational challenge and win back public trust and emphasised the value of local democratic leadership in what I took as an implicit rebuke to the prevailing tendency to undervalue local democracy and to fetishise community groups and volunteers.

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Then to the launch of a new book by Barry Quirk, chief executive of Lewisham and all round public service guru. The session explored some of the many ideas in the publication about the ways decisions are made, the ways policy can be improved and the ways things get done in the public sector. He used the example of Kevin Hines, his quest to prevent suicides at the Golden Gate Bridge and the response of public officials to a complex problem. His example brought to mind two imaginative responses from elsewhere in the world, both Big Society in their way. In Belgrade the number of a local support group is projected onto the water with the message “you are not alone”, while in China a man named Chen Si spends his days on the Nanjing Bridge, persuading people not to jump. Community champions and public sector responses come in many forms.

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Business rates and the Local Government Resource Review provides the backdrop to this conference, as potentially the most serious reform to local government in the coming years. London Councils has made their own contribution to the debate, designing a model that would not only work in London but would also ensure fairness across the country. Nick Clegg’s speech to conference this morning contained a much trailed announcement about the future of business rates, but much of the detail remains obscure. Anna Turley has a good summary of the main issues at Left Foot Forward.

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Finally for now, a plenary session on ‘councillors as social entrepreneurs’, and the way local politicians can work with local social enterprises and community groups to deliver services and change in their areas. Inspiring as much of the work so many community projects do, the correct role for local democratic leadership is an elusive one. There is a danger that in simply being vague supporters and enablers of local projects, councillor roles are reduced to simply being the people who know the way around the Town Hall, the person with the officer’s phone number, which I don’t think says a lot about the importance of their democratic legitimacy.

Steve Reed of Lambeth perhaps pointed to a solution to this question by explaining how his council are seeking to reshape how their services are delivered to give more power to local people, doing services with people rather than to people. For him, councillors are the democratic leaders of the community, changing the council so that it is better able to meet the needs and aspirations of residents.

Another speaker compared councillors to Gandalf. I will leave you to make up your own jokes.

Written by samelliot

June 29, 2011 at 5:31 pm

Posted in Finance, Localism

“You sit and wonder just who’s gonna stop the rain”

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The ongoing spasm of vaguely reactionary nostalgia that is Blue Labour and the recent ‘Tesco Revolution’ (sic) in Bristol reminded me of this brief post from Matthew Yglesias from last year. He writes:

To throw a couple of bold claims out there that probably nobody agrees with, brands, chains, standardization, and replication are some of the most underrated economic phenomena and single-establishment retail businesses among the most overrated. There’s an association between multiple-establishment restaurants and low quality, but I think that if you take a broad view you’ll see that this is both a contingent phenomenon and a waning trend.

Now, yes, I’m quite sure there are valid ethical and environmental arguments about supermarkets, certainly in comparison to their smaller high street counterparts. But I suspect also that the view of their quality expressed above is common to many people, and the reduced costs that supermarkets provide common to many others.

Blue Labour make a big play of ‘the death of the high street’, ‘Tescopoly’, the destruction of community. But I am simply not convinced that there are enough people of voting age (outside of North London) who see many of the downsides of consumerism as not being worth the trade-off of higher quality produce at lower prices. By all means seek higher standards of social responsibility, but seeing multiple-establishment retail as essentially and inevitably harmful is out of touch with most people’s experience.

As a brief footnote, I’d also draw your attention to this:

The point, however, is not to argue the merits of these restaurants but merely to observe that they’re successful. And in particular, they’re successful at exactly what our health care & university systems are terrible at, namely actually balancing cost and quality or even at times finding innovative ways to skimp on quality.

This may seem an obvious point to make, but while we are debating the ideological future of the Labour Party there are real live services that need running by Labour councils. Providing local government of high quality at low cost to residents is what Labour councils were elected to do – because it’s only by doing that that they have the resources and the capacity to protect the vulnerable, shape their communities and meet the aspirations of their electors. Maybe that’s something we can learn from big business. Is it really all that different from the business of big government?

(The title is, of course, from every Blue Labourite’s favourite Bruce Springsteen song The Ties That Bind).

Written by samelliot

June 8, 2011 at 10:46 pm

Posted in Cynicism, Finance, Labour

The Coalition is getting London wrong

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Politically, this government is a fairly robust one. The Prime Minister is deeply in love with a job that is fitting him better with every month that passes. The Liberal Democrats know they face certain destruction were a mid term election to occur. And successful Labour Party attacks are few in number and limited in scope, usually quarantined around a suitable Lib Dem whipping boy or non-Cameroon stooge. Beneath the headlines though, the coalition shows signs that they are simply getting it wrong, especially when it comes to London.

As well trailed in the media last year, the government’s changes to the housing benefit (which don’t kick in for current tenants until January) could see 82,000 households forced to move to cheaper areas. Forget the moral argument about whether or not it is right for someone to rent property in an expensive area, or the benefits or otherwise of ensuring that our communities are not ghettoised between rich and poor. We cannot know what chaos will be caused by thousands of families moving across London, with the concomitant pressure on schools and other infrastructure. These are problems that will not arise to the same extent in other areas of the country and are easy to alleviate by ensuring the cap is adjusted for the relative costs of different areas of the country.

Meanwhile, the pupil premium has been introduced to great fanfare (not least from enthusiastic Lib Dems for whom it represents the sunny uplands of power made flesh – “Look, a real life manifesto pledge we have delivered. And it’s not even mad.”) Additional funding to every school according to how many deprived pupils they have, paid at a flat rate of £430 per pupil. What could be wrong with that? Well, if you’ve read the previous paragraph you may detect a pattern. £430 doesn’t go as far in London as it does in other areas of the country (just as houses are more expensive, staffing costs are higher, transport is more pricey, cider is £4.00 A PINT! etc). That’s not even getting into the discussion about whether London needs even money to address a shortage of primary school places (but here’s a clue: it does). Again, a simple adjustment for the higher costs would solve these problems (and might even be cost neutral were the rate adjusted correctly).

Two flagship polices, the Conservative’s drive to radically reform the welfare system and one of the few concrete Liberal Democrat policy achievements in government, both fundamentally broken simply because things are more expensive in London. You don’t need to be a policy specialist to have anticipated that. Their negligence on this point means that these policies are deeply unfair on London and the people who live there.

To win or retain power, a political party needs both a moral argument and a competence argument. The former plays a part in building the case for why a government of a particular colour is a good, desirable thing. The latter, though, can torpedo a party before the campaign even begins. Some of their policies in London may indicate that this coalition simply isn’t up to the job.

Written by samelliot

June 5, 2011 at 10:44 pm

Posted in Finance, London

Llama Localism

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Sometimes, for those of us who value and believe in the importance of local government – not vague and woolly ‘localism’ but a well resourced, democratically accountable local government – the weekend papers bring little cheer.

Facing that ‘difficult second album’ after exposing the unconventional method Britain had until recently chosen to reward its parliamentarians, the arbiters of fiscal responsibility that populate the Daily Telegraph (including the Wodehousian Conrad Quilty-Harper) have done battle with local authority press officers to bring us the news that ‘Councils spend £100m on taxpayer-funded credit cards’. They’ve even found a ‘senior Government source’ to compare the shenanigans with the MPs-expenses scandal, thus at least giving the paper a bit of internal cross-promotion if nothing else.

Let’s leave aside the misleading opening paragraph that is clearly designed to give the impression that chief executives and council leaders are as we speak yukking it up on first class flights to Singapore at the expense of Joe Taxpayer. And let’s not pretend that local authorities, like many businesses, quangos, and public bodies, couldn’t stand to benefit from a bit more rigour when it comes to deciding how to use corporate credit cards. I, for one, think it’s about time councils got out of the llama-buying business.

When taxpayer’s money is at stake, there is clearly some news value in investigating what is simply one of the mechanisms through which local authorities procure goods and services. But is it complacent to suggest that this should be more the stuff of the trade press feature pages that the front page of a national newspaper? The quoted £100m figure amounts to a fraction of one percent of the annual budget of the country’s local authorities. The fact that some of it is spent on junkets to the far East and XBoxes for the staff room is worthy of scrutiny but in the grand scheme of things I suspect most people will sleep at night.

In which case, the reader might think, why spend a sunny afternoon devoting your first blog post to this? It is because it speaks to a phenomenon that believers in local democracy from all parties should be concerned about – the consistent undermining of the legitimacy of local government by elements of the national media, in open collaboration with Government ministers, creating the perception of a local government infrastructure that is chronically wasteful, riddled with corruption, out of touch and inadequate in meeting the needs of local areas.  And I have to hand to them, it’s working. It’s an easy message to sell, certainly, and nobody ever made themselves unpopular slagging off their local council. The reason it is working, though, is that local government doesn’t have the space to make its own case.

It’s not just that lobbying organisations like the LGA and some guys in Southwark are hit just as hard by the cuts to funding that local authorities are facing. More importantly, it’s that local authorities don’t have the true freedom to do what they are democratically elected to do – to shape their areas according to the wishes of their residents expressed at the ballot box. They don’t have the financial independence to raise their own funds, plan for the long term and promote economic development that their local area can benefit from. And they don’t have a settled constitutional role out of reach of the man at Eland House.

Graham Allen MP wrote last week of his select committee’s ambitious (yet, in other countries, utterly unremarkable) proposals for a codification of a role for local government as an independent entity, rather than the administrative arm of the centralised state. Perhaps this is a way past the ‘Rotten Boroughs’ image of local government, elevating the status of the Town Hall, ensuring the best political and managerial talent want to pursue their careers at a local level, and giving councils the chance to show what they can do free from the financial and reputational restrictions imposed from above.

PS. The llamas are actually lottery-funded llamas, so aren’t even really an example of whatever spurious point the Telegraph were trying to prove anyway.

(Photo by Flickr user mrapplegate.)

Written by samelliot

May 29, 2011 at 3:54 pm

Posted in Finance, Localism