One of David Cameron’s most senior shadow front benchers has poured cold water on Conservative councillors’ radical plans to devolve responsibility for benefits and health services to local government.
In exclusive comments to LGC, shadow chief secretary to the Treasury Philip Hammond said he was “not convinced” that plans put forward by Kent CC leader Paul Carter (Con) were viable because they would lack support from the electorate.
Cllr Carter recently claimed £21bn worth of savings could be made by transferring control of services such as health and policing to local government. He proposed dividing the country into 46 ‘sub-regions’ mirroring traditional metropolitan and shire county boundaries (LGC, 7 January).
Cllr Carter submitted the plans to the shadow cabinet in the hope of convincing a potential Tory government to allow councils to run highly valued public services.
But speaking to LGC after a New Local Government Network annual conference, run with LGC, Mr Hammond indicated Cllr Carter’s bid was unlikely to be successful.
“I said to Paul … if you put [the question] to your electorate: ‘How comfortable would you feel about your local authority being involved in benefit entitlements as opposed to the government setting it nationally?’, I am not convinced the public would be comfortable with that,” Mr Hammond said.
The UK’s “big history, of equity of provision” was one of the big “impediments to localisation”, he added.
“Whether you are talking about the health service or welfare, you will find a body of opinion led by the national press that will light upon the street where the person on one side gets one thing and the person on the other gets another because they live in different local authorities.
“I think we need to be aware of that issue, it’s not an insurmountable problem but it is one we have to address as we take forward any kind of devolutionary agenda.”
Cllr Carter conceded local variation in service standards could be a by-product of his plans. But he said: “There are postcode lotteries already. The macro outcome [of devolving services] would be better than centralisation.”
He added that he did not think that his views and those of Mr Hammond were “that far apart” but local government had a lot to do to convince doubters that the localist route would bear fruit.
“I have some sympathy with where he is coming from but, as I said to him, it is not about changing the entitlement, it is about how the money is spent,” said Cllr Carter.
The Kent leader’s Bold steps to radical reform paper called for powers to be devolved from quangos and regional bodies to local government. It also called for devolution of the welfare-to-work programmes, currently commissioned by the Department for Work & Pensions, because it was “too distant to effectively performance manage”.
“There is no reason why the function of primary care trusts should not be brought back under local government purview,” the report said.
Mr Hammond was, however, more supportive about devolving some financing powers to councils, through US-style model, tax incremental financing (TIF).
TIF would allow councils to borrow against projected uplift in business rates in order to fund capital projects and regeneration.
Mr Hammond said it was compatible with already announced Tory plans to encourage councils to build more housing by letting them keep council tax receipts.
He added: “We are working with the [London] mayor, who is one of the big protagonists of TIFs, and two or three law firms on this. There are technical issues on how TIF funding would score on public sector net borrowing but we are working on those.”
It is widely anticipated that funding mechanisms for capital projects, such as TIF, will be addressed in the Tories’ regeneration green paper, which is expected soon.