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On how one man's commercialisation is another's municipal socialism

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LGC’s essential daily commentary 

By far the issue that shadow communities secretary Andrew Gwynne became most animated about in his interview with LGC this week (and one of the few on which he climbed down from the fence on which politicians hoping to form the next government naturally find most comfortable on complex policy issues) was what he termed “municipal socialism”.

New buzz phrases such as these can understandably provoke a weary apprehension at the potential for a major about-turn in policy direction should Labour win the next general election. Except in this case it seems what Mr Gwynne means is what the sector has in recent years been calling ‘commercialisation’.

Mr Gwynne pointed to the example of Stockport MBC’s housebuilding company, which is delivering a community need and turning a profit that can be ploughed back into services as “municipal socialism in action”. “If there are exciting models to deliver that then let’s explore them,” he told LGC.

Which is of course exactly what many councils have been doing over recent years, with varying degrees of success at generating additional income.

Mr Gwynne said he did not accept the analysis that outsourcing always saves money, and indeed there have been increasing examples of councils taking services back in house in recent years, as long-term contracts are found not to deliver the savings and flexibilities required during austerity. As LGC reported last year the back-office outsourcing market shrunk by 30% over the three years to March 2016.

Core to Mr Gwynne’s vision is that more councils should run their own services. He wants to introduce the preferred provider concept, first floated by Andy Burnham as health secretary in 2009, to local government. The idea is that public sector organisations would not have to put services out to tender if they did not want to. Back in 2009 lawyers disagreed over whether it was compatible with EU law. Our impending Brexit may remove that barrier.

As “co-national co-ordinator” of this year’s general election campaign, Mr Gwynne is clearly close to the current Labour leadership, which is widely viewed as one of the most left-wing in the party’s history.

Yet in echoes of the New Labour motto ‘what matters is what works’ Mr Gwynne told LGC “what works should be the mantra” when it came to decisions to outsource services.

On devolution, despite our best journalistic endeavours, it is difficult to get much between Mr Gwynne’s position and that of the government, particularly with news emerging this week of two county areas seeking devolution deals having been told by ministers they will not necessarily have to have a mayor.

In his interview Mr Gwynne, who was first elected to Parliament in 2005, referenced that Labour government’s policy of regional devolution. However, it is not clear whether his fence-sitting over proposals for a Yorkshire devolution deal, which the government has been pretty clear it will not entertain, is an indication Labour would give the idea serious consideration or an attempt to keep and win friends.

It is encouraging that he puts English devolution in the context of the devolved administrations, and with its constitutional convention Labour appears to have recognised that there is a need to bring some coherence to an increasingly muddled picture of powers and responsibilities.

On the future of local government finance, Labour seems a bit confused, although perhaps the same could be said for many of us. Mr Gwynne did not support or reject the full localisation of business rates and acknowledged it was not clear how this could fit with the party’s commitment to look into replacing council tax and business rates with a land value tax.

Mr Gwynne was also keen to stress he recognised the funding shortfalls particular to rural areas, perhaps in recognition of the fact many of those areas have felt penalised by previous Labour governments’ decisions on funding allocation.

What is clear when it comes to divvying up funding is, unsurprisingly, that were Labour to form the next government the pendulum would swing back from incentivising councils to grow their economies to ensuring they had adequate funding for services.

Austerity has driven radical changes in local government since the start of the decade but amongst the dispiriting rounds of cuts and closures has been some genuine innovation. Perhaps now more and more councils have developed a commercial approach to running services the stage could be set for a new era of municipalisation, with or without a change in government.

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Readers' comments (1)

  • New buzz phrase? From the middle of the nineteenth century?

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