A guest briefing from Solace senior policy officer - and former LGC chief reporter - David Paine
We are over two months into 2019 and it is shaping up to be a significant year, and not just because of Brexit.
While the fair funding review rumbles on and we await a sighting of the mythical beast that is the social care green paper, the main event is the spending review, due in the autumn, determining how much (or little) money will be available to councils in the short to medium term.
A week might be a long time in politics, but just over six months is a short period to turn the tide of a decade of austerity, which has reduced the sector to its core offer.
Services are facing a £5.8bn funding gap in 2019-20, according to the Local Government Association. That figure is set to rise to £8bn by the middle of the next decade. The Institute for Fiscal Studies has calculated that revenues raised from business rates in conjunction with 4% increases in council tax every year will not be enough to bridge that gap.
This is unsustainable. And yet winning Whitehall (or specifically the Treasury) over on this issue is far from easy.
Health Service Journal editor Alastair McLellan recently claimed the leadership in the NHS “is streets ahead” of that shown in local government when it comes to securing more money from government, specifically referencing the influence of the service’s chief executive Simon Stevens. Clearly Mr Stevens is a canny operator, but it helps that the NHS is seen as a single body conducting a single negotiation.
Local government, by its nature, is fragmented. There are many benefits to that, but the downside historically has been the lack of a clear, single voice on some issues, and inconsistency in different councils’ arguments and lobbying of central government.
Mr McLellan wrote: “The NHS is trusted with public money by government (and indeed the public); local government often is not. You might want that to change, but it is not likely to soon (under any possible administration).”
While it would be easy to point the blame at ‘out of touch’ ministers and civil servants, and argue with our partners in health, local government needs to challenge itself and ask why it has failed to persuade politicians, public servants, the public and media that the sector needs more money and it is worthy of it.
Before joining the Society of Local Authority Chief Executives at the start of 2019, I spent a large chunk of my 13-year journalism career writing about the challenges facing councils. Yet in that time I never felt like the sector developed a coherent and compelling narrative about the impact of austerity, and the toll it has taken on the places and people they represent.
Early in this decade there was pride in how councils maintained public satisfaction with services, despite having less funding at their disposal. While there was, and is, merit in claiming to be the most efficient part of the public sector, there is also a cost to such success.
While more burdens look set to be placed on dwindling council budgets, the NHS is set to receive an extra £20bn a year by 2023, despite the National Audit Office reporting earlier this year how “substantial deficits” in parts of the health system are increasing concerns about its sustainability. Sometimes it feels like nothing succeeds like failure.
Local government also faces questions about variation in performance and spending. This is now the Treasury’s go-to get out clause for providing any further funding for certain services (unless you’re the NHS, of course). In spite of the many bright minds working in the Treasury, they still have not quite accepted that it is impossible for spending and performance to be exactly the same in every area.
The National Audit Office also recently highlighted how 25% of all variation in performance and spending in children’s services could not be explained. But given the wide range of local factors at play, this is largely predictable, surely? We are talking about complex, highly variable services, not paperclips.
Local government has, for one reason or another, not managed to clearly articulate this argument. At root cause this feels like a question of trust – which brings me on to the subject of reserves.
I’m sure attempts have been made, but councils have never managed to successfully counter former local government secretary Eric Pickles’ narrative about reserves. But if you speak to any sensible finance officer (not just in local government) you quickly realise just how important those funds are for transforming services and balancing books in the short and longer term too, especially in times of uncertainty.
After all, you wouldn’t want to run a household or business without any savings in the bank. Why should local government be different?
I’m sure that individual parts of local government have got a lot more sophisticated and effective at arguing their cause in recent years. The introduction of the social care precept, while far from ideal, at least shows the government has acknowledged there is an issue. The same is true of the various announcements of extra funding for social care – again of limited value (literally), but better than nothing.
For a fragmented sector there is much we can all agree on. But I have not yet got the sense that everyone has united around anything that could be described as a single vision for local government. We need to, and quickly, or the next spending review may be the most painful yet.
David Paine, senior policy officer, Solace