Richard Harbord: Urgent – solve the local government question

There are a number of important issues in need of resolution at the start of this Parliament but unless the future of local government receives some time and discussion I fear for the worst. The time has come for leadership from central government on the funding and purpose of local authorities. Above all else, there is a need for some clarity about future structures.

One of the major difficulties of the last five years has been the lack of influence and authority of DCLG. Indeed, there was some speculation that DCLG would disappear in a shake up of government departments. But it is crucial that DCLG now takes back the initiative from the Treasury to ensure that devolution is properly and fairly implemented.

The devolution question is given added importance by the funding question. The former chairman of the Local Government Association, councillor David Sparks, has been quoted saying that some local authorities will go bankrupt in the next five years unless the financing of local government is reformed.

Morning after
Ever since the morning after the Scottish devolution referendum local authorities seemed to think that the Prime Minister’s remarks about devolution to England meant an increase in devolution to local authorities.

The chancellor conceived the Northern Powerhouse project to “gather the north’s cities into an economic formation that could rival London and combined can take on the world”.

Manchester was the natural place to start. The authorities forming Greater Manchester have long worked together and have a solid record of achievement. Of any area this is the one most likely to be successful.  It is a major project including policing, skills, housing and control of a £6bn health budget.

But it will have implications for everyone else.

In October 2013 The Economist suggested that instead of subsidising cities such as Hull, Huddersfield and Wolverhampton they should be allowed to decline. This has not been the story of the launch of the Northern Powerhouse Project but many think that it is an inevitable conclusion. As always in major change there will be those who will benefit from devolution. But it could well widen the gap between those who are capable of joining in and those who can’t.

The problems for the future of local government will be crystallised in the July budget.

The NHS questions
Devolution also raises questions for the NHS (actually, the devolution project will see the end of the National Health Service and the creation of a number of smaller regionalised hubs).

The Budget will have to deal with the current need for finance in order to keep the NHS going. The commitment is £8bn but already there are those that believe that anything up to £30bn is needed to achieve all that is needed.  There is a danger that the £8bn currently on offer will just disappear to meet current deficits and difficulties whereas what is really needed is a change in the way the NHS works.

However, given we remain in an age of austerity, the more that goes to the NHS the less there is for other public services.

The Budget also has to deal with £12-13bn welfare savings. However these are made (and as I write this there seems to be a sharp divergence of opinion in the Cabinet over how it should be achieved) it will have an effect on local authorities. The demand for emergency payments and discretionary housing payments has grown considerably and will continue to do so.

Structures
It is clear then that continuing austerity is one of the driving forces in the fight for devolved funds. This last week has seen, Buckinghamshire, Oxfordshire and Northampton combine in an effort to be in place for devolved funds whilst Lincolnshire, in a rather different move, announced that the way forward was a County Unitary.

In this drive to larger and larger devolved authorities it would seem that the concept of localism may be declared moribund.

Talk from the Treasury was that devolved authorities would keep a larger share of their business rates. This was already promised by Eric Pickles. There is a finite amount of resource available and increasing the proportion retained by one authority will inevitably cause a correction elsewhere.

The government must seize the devolution project and lead it, preferably by DCLG rather than the Treasury. They need to decide, at the very least, on the outlines of a future structure for local government, while the devolution project must give some thought to all authorities. There needs to be decisions about fundamental reforms in the health budget and an increase in the working together of health and local government as well as other agencies.

The one topic that everyone managed to avoid in the election campaign was the funding of care for the elderly. There needs to be a properly costed strategy to deal with this too.

The Guardian has suggested that not everyone in the north may be happy to acknowledge Manchester as the northern capital and we may hear more of this in due course.

When the cabinet discusses welfare reform perhaps they could remove housing costs from Universal Credit and leave them where they are best dealt with in local authorities.

Richard Harbord is a consultant and former chief executive of Boston Borough Council.