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TREASURY FLEXES ITS LOCAL MUSCLE

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Gordon Brown's speech to the Local Government Association general assembly before Christmas showed the Treasury has...
Gordon Brown's speech to the Local Government Association general assembly before Christmas showed the Treasury has its eye firmly fixed on local government.

The chancellor gave his version of the central/local relationship. He called for a new era of trust and raised hopes for the introduction of fundamental freedoms for councils (LGC, 21 December, 2001).

The speech was clearly intended to convey that any thaw in central/local relations extends to the Treasury. It also highlighted the detailed way in which the department is engaging with public policy under a chancellor with a strong social vision.

The department's interest in local government is no secret. Mr Brown called for a 'renaissance' of local government at last year's Labour Party spring conference (LGC, 24 February 2001). The department has also adopted local public service agreements.

Treasury staff appointments show its commitment to local government. Lucy de Groot, the former Bristol City Council chief executive, has occupied the influential position of head of the public services directorate since 2000.

It is a little known fact that a local government consultant was appointed to the department's board of economic advisers after the June general election. Stewart Wood, a fellow of Magdalen College, Oxford, and founder of Nexus - a policy network for academics - was brought in to advise on European Union affairs and education, as well as local government.

Mr Wood has no local government background - a fact seen as a positive advantage by some wishing to influence him - but has brushed up on the subject by visiting councils including Kent CC, Middlesbrough City Council, Stockton-on-Tees BC and Wigan MBC.

It is likely he was behind much of Mr Brown's speech to the LGA general assembly, and the Treasury's new precision on local government.

According to a Treasury source, Mr Brown genuinely wants to reinvigorate

local government, and local public service agreements are merely a first step.

The source says: 'You will see in the next term that we no longer believe Whitehall can deliver all the objectives of central government. Nor should local government just be doing the business of central government. There has to be partnership.'

LGA chair Sir Jeremy Beecham (Lab) says the Treasury has changed from the 'traditional great abominable no-man of central government finding good reasons for not doing things' into an enabling force.

He adds: 'The contrast is with the classic occasion when David Curry announced 'the Treasury has shafted us all' when he was local government minister.'

But London School of Economics Greater London Group director Tony Travers says, thanks to Mr Brown's interest in the way 'levers in the economy change behaviour', the Treasury uses centralising measures like specific and targeted grants much more than it used to.

Mr Travers dismisses local PSAs as a 'last-ditch grasping at a kind of limited autonomy', but suggests the close relationship they have fostered with the Treasury has paid off in another way.

He says: 'Consciously or not the LGA and others are playing off the Treasury and DTLR - and the spending departments - all of whom have different interests. I think the cosiness with the Treasury may inadvertently create a sense of divide and rule.

'The chancellor is an intellectual who has a wide sweep of interests. The DTLR will inevitably find itself shunted out of the way in all this. If the DTLR finds things are settled with local government outside its knowledge, that would be an extraordinary state of affairs.'

Institute of Local Government Studies director Sir Michael Lyons also believes the Treasury is evolving - but into a guiding intelligence in Whitehall.

He suggests the Treasury is building up its ability to gather information in order to go beyond its traditional economic management role, and that this provides coherence across the departments: 'The Treasury is our great hope for joined-up government at a central level.'

He adds: 'If we want to win new powers to trade and get a stronger grip over our own tax base, all of that is about the relationship with the Treasury.'

The Treasury source says: 'If you look at the speech [to the LGA general assembly], Mr Brown's quite frank about the idea of making a genuine commitment to a more responsible but more autonomous local government. He sees these things as going hand-in-hand.'

This is remarkably similar to what a Downing Street source told LGC about the white paper: 'It's not controlling councils, it's holding them to account for delivery of outcomes.' (LGC, 14 December 2001).

If ministers and their advisers are all saying the same thing, maybe there is some joined-up thinking in central government.

But Mr Curry, the aforementioned local government minister who so memorably exploded at Treasury intransigence, says any hope it has mellowed is misplaced: 'If you were to ask Nick Raynsford, he'd characterise it in exactly the same way. The Treasury is extremely bloody minded [and] more powerful than any other Treasury.'

by Varya Shaw, political correspondent, LGC

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