The local government finance settlement, announced today, creates both challenges but also opportunities. On the latter, you will hear a lot of noise from Labour authorities and from those unwilling or resistant to change. The message is clear and unambiguous. Local government has an opportunity over the next 12 months, to further change and adapt to meet the continuing financial challenge.
Integral to this will be finding new ways of sharing services. We know that this works with £40m per annum saved by 2015 across Westminster and its Tri-borough partners, Kensington and Chelsea and Hammersmith and Fulham, which has been achieved by reducing management by 40% and reducing back office costs whilst preserving front line services. This is just one example and the whole of local government needs to see, and seize the opportunities that are available for changing what we do and how we do it. Shared services should be the norm; it is though not the only story.
To genuinely innovate and to deliver further savings, we need Whitehall to give the green light to a number of major programmes. The most high profile of these is Community Budgets. Based upon our Tri-borough pilot, the savings of £40m per annum could be more than doubled through the full implementation of Community Budgets, at the same time delivering more jobs, affordable homes and better public services. Translated to the national stage, local authorities could save billions for the taxpayer.
Government also needs to be bolder in extending the City Deals programme, including looking at a deal for London. It needs to implement the Heseltine review for a single pot around skills, transport and housing that can be devolved to the local level. Now is the time for the Government to back councils to deliver as we have displayed through a track record of innovation.
Using the census to allocate local government funding also needs urgent attention. In Westminster we estimate that the census has under calculated population by more than 40,000 people – potentially losing us up to £15 million a year. It fails to take into account the presence of short term migrants who, as local authorities know, use council services but are not accounted for in the money we receive from central government. A funding formula based on a fixed population may be right for some areas but doesn’t reflect the reality of a highly mobile population.
Similarly, more needs to be done to encourage growth and recognise the importance in funding settlements of areas such as the West End, which is an engine of the country’s GDP.
Finally, the Government must drive through proposed reforms to the setting of service fees by local authorities. In Westminster alone, centralised restrictions on fee setting mean £5 million worth of licensing and planning services have to be subsidised by the council taxpayer every year. This is in spite of them being services they may have not used. It is a system that is ripe for reform.
We applaud the progress made by the Government over the past two and a half years in freeing local authorities to start innovating, finding the right solutions to local problems. However there remains huge untapped potential; potential which can only be realised through findings new ways of working and funding of services.
Good Conservative local government is up for the challenge in playing its part in reducing the deficit and getting the economy going but we can’t do this with one hand tied behind our backs. It’s time for government to realise the potential that local government has in driving further change an improvement and make this a reality.