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The Treasury-led devo agenda could be the prelude to more cuts

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The Conservative election victory has implications for many aspects of national life and local government is no exception.

The politics of local government tends to move counter-cyclically with that of national government as voters register their disapproval of national policies at councillors’ expense. This centralist model of politics may change if the Tories are serious about decentralisation but the rhetoric is running far ahead of concrete plans to repatriate powers to councils.

Vince Cable

Consequently it would be reasonable to assume that Conservative-led councils will find themselves under siege for the next few years. What is less clear is who will benefit.

A big uncertainty is what happens to my own party. We suffered serious political damage during the coalition and lost over half our councillors. The base has shrunk to 1,800 in England, Scotland and Wales; about 10% of the total number of all councillors, but still well ahead of the Greens (180) and Ukip (495). We still lead 16 councils.

There is now the potential for a big rebound. There is a mood of defiance and resilience after what was an undeserved hammering in May. Some council seats are being won back in by-elections on large swings, including in my own constituency.

Unlike Labour, we now have a new leader chosen by a convincing majority. His declared intention is to recapture ground lost by grass-roots campaigning rather than grand gestures at Westminster. Expect a big push on Conservative seats where Lib Dems are the main challengers, and attempts to rebuild council groups in Labour-led cities which Lib Dems ran until recently and retain both a base and a reputation for competent and decent politics: Newcastle, Hull, Oldham and Sheffield.

Some issues loom large. First, there will be severe cuts because local government support is an ‘unprotected’ area of government spending. On top of the cuts already experienced, a further round of 25-40% cuts is in train.  This additional squeeze is due to the government choosing to reduce the deficit by roughly twice as much as the coalition judged to be necessary, to ‘finish the job’.

The government has changed the definition of ‘deficit’ to include all government borrowing, including for capital spending, which increases the scale of cuts required from the unprotected departments.

Critics can reasonably argue that the scale of cuts envisaged is disproportionate and ideologically driven rather than an economic imperative.

As a former secretary of state who oversaw 25% cuts in current spending and 40% cuts in admin costs, I understand the need for efficiency and recognise that in local government there has been a transformation in attitudes towards efficiency. But the low hanging fruit has now been picked and for many councils there will soon be little left to spend on activities beyond statutory services. 

One obvious way forward is to free up revenue, which in practice means council tax. There is a crying need for reform and revaluation of property tax and wider local tax reform to make this easier. The moves to free up business rates are welcome but very circumscribed. If the government is serious it will also free up the rules around prudential borrowing.

A second set of issues is housing, especially in the inflationary south and east of England. Conservative policy is seriously damaging and appears to be based on the calculation that the interest of older owner-occupiers in rising house prices takes precedence over increased supply and balanced tenure. Paraffin has been thrown on the inflationary fire by artificial and unnecessary stimulus to demand through initiatives like help-to-buy.

There is now the potentially devastating set of initiatives which will weaken social housing provision: right-to-buy for housing association homes; enforced sales of empty council houses and rent cuts on councils and housing associations; and weakening of the social housing obligations on developers.

Housing will become an increasingly divisive issue in local government with the mounting pressure on younger people, including families, to go into private rented accommodation, however unsuitable. There will be mounting pressure on councils’ homelessness obligations and, in planning, aggravated tension between those demanding and resisting building. My party will champion social housing including greater freedom for councils to borrow for development.

The overriding issue for local government will be whether the current mood music about devolution can be translated into a reversal of the longstanding trend towards tighter central control and infantilisation of councils. I have confidence in the sincerity of Greg Clark who was an excellent minister in my department during the coalition.

I worry, however, that in this initiative the Treasury has little interest beyond creating a pretext for another top-slicing of funding. My party will be out there seeking genuine decentralisation.

Vince Cable was business, innovation and skills secretary until May 2015



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