The LGA conference in Harrogate was a useful meeting of Councillors from all parties and from across the country and also with officers too. David Cameron gave a polished speach which contained several contradictions – especially on reorganisations. First he said there would be no further change and then he said he wants many more elected city mayors.
Vince Cable, as ever, gave a great speach analysing the economic woe that is facing us and setting out a stall of change required.
His speach
Vince Cable delivers speech on localism to LGA conference
Liberal Democrat Shadow Chancellor, Vince Cable today delivered a speech on localism to the Local Government Association annual conference in Harrogate .
In his speech, he discussed the ways in which local government can be harnessed to avoid the boom and bust of recession. He said that
councils should be given greater powers over their own funding with the ability to set business rates and greater freedom to borrow against their own assets. He also said that scrapping selected area targets could make savings of almost £1bn.
Vince Cable said:
‘Localism’ has become one of those irritating bits of language which we politicians have learnt to throw around like confetti along with: ‘stakeholder empowerment’, ‘people focussed synergies’, ‘win win’ ‘game plans’, ‘direction of travel’, ‘at the end of the day’ and ‘he doesn’t get it’. I personally believe in never letting a good cliché go to waste. But localism is a dangerous cliché because it means such different things to different people.
There is the ‘localism’ which involves strengthening the autonomy of schools, colleges and other bodies by stripping local authorities of their role. There is the localism which really means individual choice at the expense of local community choice. There is localism in the form of regional devolution; devolution to local authorities; and devolution within local authorities. I want to talk about localism in the traditional sense of decentralisation to local communities and their elected councils: not just because I am talking to you but because I believe it is right, and an urgent priority. That is what my party means by localism though I am not sure it is true of our opponents.
I speak with some feeling on the subject having served as a much younger man as city councillor in the early 1970s when councils had serious powers, before they were emasculated by successive governments. Even at that time local councils had shrunk in status and scope from the bodies which once inhabited those Victorian monuments of civic pride in Birmingham , Manchester , Liverpool or Glasgow where I served. I don’t want to glamorise what was often pretty unedifying. I was part of a Tammany Hall, one party, machine. Several of my colleagues went to Barlinnie Prison for various low crimes and misdemeanours (though, arguably, no worse than what many of today’s MPs have been guilty of). Nor am I proud of having voted for projects like the 32 storey Red Road housing development. But for that generation of councillors, local government meant something: it wasn’t an oxymoron.
As a young idealistic and energetic councillor I was able to shape and make good policy on big issues: stopping an urban motorway programme promoted by central government and officials and redirecting money and energy to public transport; stopping large scale slum clearance in favour of improvement and renovation, all without reference to central government departments. I have never been sure whether to conceal or boast about my role as a ‘refusenik’ trying to block, illegally, new legislation to stop councils providing free school meals or to set rents. Some councillors were eventually surcharged for this defiance. That last battle sadly marked a key stage in the nationalisation of local government.
My Liberal Democrat colleagues and I want to see the pull of over-centralised government put into reverse. We have to start by dismantling the command and control apparatus. I find it extraordinary that elected councillors are expected to compete for star ratings awarded by some unelected quango, like young children collecting points from a teacher for good behaviour. This makes a mockery of local democracy. I believe that a prospective Headmaster, the leader of the opposition, is coming here later this morning to hand out black marks to bad councils. This is the same preachy lack of respect for local government, whether it is dressed up in deepest red or palest blue.
Of course I accept that like national government, local government has to have an Ombudsman to appeal maladministration and an independent auditor. But beyond that the safeguard on good government has to be the local electorate, with a reformed voting system as in Scotland , to be fully representative. The whole control system should be scrapped and the savings repatriated to councils to invest in local services or lower council tax.
Even after the cuts in the Comprehensive Area Assessment there are still 35 negotiated area targets and 200 national indicators. We would scrap almost all of these except perhaps quality of care for Looked After Children and Adult Social Care. Cutting the compliance cost of regulation could perhaps save £800 million to £1 billion. Nor is there any need for a Standards Board with its disgraceful kangaroo courts; investigating councillors without even telling the councillor being accused. Then there are the convoluted processes around, for example, Building Schools for the Future which absorb ludicrous amounts of resources.
But Central Government will – quite understandably – demand to control what it finances. As long as 75% of council funding comes from Central Government, Central Government will call the tune. No amount of sloganising about ‘localism’ will alter this simple fact. In countries where devolution is meaningful, local or regional government has a strong and diverse revenue base be they American states or the regions of Denmark and Sweden . The obvious way to move in that direction in the UK is to repatriate business rates going far beyond the current highly qualified business district scheme. This would lift the share of local funding from 25% to around 50%. Local government is already the collecting agency. The issue is not practicality but trust: trust in councils’ ability to operate a system of business tax without killing business. I think a lot of lessons have been learnt in local as well as national government about the importance of attracting rather than repelling business and the jobs it generates. Business critics of devolution are, I think, still living with memories of the 1970s rather than today’s realities. If there are risks in the future it is, if anything, in the opposite direction: of a tax cut bidding war.
The idea that councils will behave more responsibly if they are given more responsibility applies more widely. Councils should have greater freedom to borrow against their own assets – widening the scope for prudential borrowing. If they miscalculate, they pay the price as some have with high yielding Icelandic bank deposits. If they are successful, on the other hand, they have the opportunity to do much more locally through public investment.
I was as disappointed as many of you will have been with the minister’s announcement on Tuesday that the Government is still consulting, after many years, on whether to allow councils to keep the proceeds of sales of council houses and rents for new investment. Nothing, in any event, will happen before an election it will probably lose. There is a desperate need at present, for economic as well as social reasons, to invest in affordable housing, reviving a moribund construction industry as well as meeting housing need. If the shackles attaching local government to Whitehall were cut much more could be done.
The context of this discussion is not an abstract one about the relative powers of central and local government but a severe economic crisis. There is currently an unholy alliance of bankers, government ministers and commentators bored with bad news telling us that the crisis has passed: that recovery is around the corner. It would be surprising if there weren’t some signs of recovery since the Bank of England, the Government (and other Governments) have thrown the kitchen sink at the problem: near zero interest rates, quantitative-easing, extraordinary budget deficits, a big devaluation and nationalising half the banking system. But the issue is: what are we recovering from? I don’t believe we have just had a dose of flu, returning to normal after a nasty fever; but a massive economic heart attack. The patient may have been saved thanks to prompt action in the intensive care unit but deep damage has been done.
Terrible damage has been done in particular to the public finances by the collapse of government revenue, as a share of GDP, to levels last seen in the days of Harold Macmillan. There are totally unsustainable borrowing requirements of 13 to 14% of GDP this year and next and the prospect of Government debt levels last seen in war time. So far the public sector, including local government, has been a relatively safe haven for employment and has been able to act as a counter to recession in the private sector. But there will be a severe tightening when (or if) the economy starts to recover.
Local government will not be spared the consequences of the financial crisis. If past experience is anything to go by, Central Government will be only too eager to pass on the pain in the form of reduced support grants. Even the Government’s, perhaps optimistic, profile for public spending is likely to leave local government facing a 10% cut in central funding, perhaps more, as well as revenue pressures from increased arrears on council tax less opportunity for capital receipts and parking income and spending needs for homeless families, together with a savaging of capital spend.
The Liberal Democrats are trying to make our opponents spell out how they propose to deal with the fiscal crisis and what are the big items of long term government funding which will need to be cut to save the public services which really matter. If you don’t get clear answers local government should assume the worst.
But the recession has also been an opportunity for local government to act more swiftly and effectively to support local businesses and communities: mobilising commercial rate relief; paying bills on time; localising procurement; running apprenticeship schemes; organising drives on benefit take-up; helping landlords refurbish unused properties for rent; acquiring empty property or land at big discounts from developers; using cash reserves for investment in local industry, promoting local credit unions and social enterprise. These are some of the many initiatives being taken by Lib Dem councils and I am sure others are also being active too. Even with highly constrained revenues, councils can use local knowledge in a way Central Government cannot. Local government cannot stop recession. But it can help insulate communities from the worst of the cycle of boom and bust.
Just as banks are being force to review their business models I hope this crisis will force Government to re-examine the centralised command and control model which has done much to harm and dampen the energies of local communities.