Councils are hampered in their ability to innovate and provide good quality low cost services by three factors:
An onerous, centrally-imposed performance framework – despite the welcome end of the CAA and Audit Commission, we still have the onerous regimes of Ofsted and CQC plus the ‘control freakery’ from Whitehall departments with directives, guidance and data demands requiring us to produce numerous plans and strategies implementing Government priorities. This leads directly to the next factor and leads to Whitehall telling local authorities how to run their services.
Insufficient operational freedom to design services that suit local circumstances – local authorities are best placed to know what will work at a local level, are directly accountable to local residents and operate effective partnerships with other local public service providers. As we will detail over the next few days, local services should be freed from central control to design services around the needs of the customer and produce better outcomes at lower cost.
Lack of financial control in their areas – businesses in Westminster contribute £1.2bn in business rates to the national economy, but the council receives only 12% of this to invest locally. Meanwhile, nationally-set fees and charges, for example in planning and licensing, mean that councils are unable to recover their costs.
Legislation to permit locally differentiated charging based on a full cost-recovery model would have saved Westminster Council £2.8m in 2009-10.
We believe that the solution to these issues is the creation of Foundation Councils – a concept that has been jointly developed by three authorities with a long established track record of delivering high-quality, value for money services – Hammersmith & Fulham, Wandsworth and Westminster.
Foundation Councils would automatically be granted powers to:
- set local fees and charges, including variable business rates, to enable them to recover costs and generate a profit for reinvestment in local public services;
- generate income and save money through full freedom to trade and share services;
- exempt them from regulatory burdens, including the excess of Ofsted and CQC requirements. We recognise that in areas of high risk social care, assurances are needed but these two regimes have gone beyond ‘safeguarding’ to regulate local authority activity in these areas;
- introduce bye-laws and manage the public realm without reference to specific enabling legislation;
- present “offers” to central Government for more specific powers, freedoms and flexibilities in particular areas, such as employment and skills services, where it can be demonstrated that these would improve performance, increase satisfaction, and reduce cost.
We believe that the establishment of Foundation Councils would:
- Support government in its ambitions to decentralise
- Demonstrate the savings and better outcomes possible from reducing the duplication of local and national agencies.
- Match payments and results. The growth in public spending over the last decade has not been correlated with results. Productivity and competitiveness must be built into the DNA of local public services. The specific grants, targets and inspection regimes of the last decade have been enfeebling and counter-productive. Foundation Councils now give us the opportunity to drive this major and necessary change where payment is by results.
Over the next few days I will be setting out further details of how Foundation Councils could work and the sort of powers and areas that we believe they could make a genuine difference to delivering high quality, cost effective public services.