What the Budget did for LAs: Andy Sawford talks to Room151

Andy Sawford has been chief executive of the Local Government Information Unit for the last four years. The think tank provides policy advice, learning and development programmes, consultancy and events. Before joining the LGiU Sawford was director at Connect Public Affairs, a communications consultancy. He is also the Labour Parliamentary candidate for Corby and East Northants.

Room 151: What do you think the overall impact of this budget is on local authority finance departments?

Andy Sawford: The first thing from our point of view is there wasn’t anything in the budget that will make local authorities fundamentally change their financial position in the years to come. I mean that in terms of their ability to raise finance locally and look at what their expectations will be of grants and what their expectations may be of funding for public services. So for example there was no significant announcement on social care funding so that will wait for the White Paper. There were no further announcements around education funding, no announcement about Community Budgets, which we would like to have heard more about. There clearly were implications for local authorities as employers in elements of the budget yesterday around the pay and pensions changes and some of those will have a big impact on balance sheets, but we are going to need the detail.

Room 151: On the PWLB announcement, the discount is good news but what should we make of the qualifier that comes later?

AS: It doesn’t say when and how they will determine who is going to access the 20bps discount on the PWLB. Interestingly we did a survey a couple of weeks ago and there was an openess to looking at borrowing from the market and I suspect this will change that. I think some would see a good opportunity for a market for local authority bonds, which isn’t there at the moment. That might lead to greater freedom for local authorities, greater competition and you might see some innovation in how they borrow. On the other hand the most important thing for local authorities is whether it’s cheap or not. There is this mention about a further discount for local authorities who demonstrate best quality and value for money – so who is going to work all that out? How does that work in a post-Audit Commission environment? What are the measurements? Who is going to measure it?

Room 151: What was missing from the budget?

AS: We weren’t expecting it to be game changing in terms of local authorities’ financial positions but we would have liked to hear a little more on how the Government can help to stimulate local economies.
There was for example an affirmation of the 24 Enterprise Zones in England but there are many other authorities that are seeking them and it would have been good to hear something about that. They had a round of bidding then another round and I think there was an expectation that further authorities might get a chance.

Room 151: The elements on TIF and Manchester’s City Deal seem to have been criticised: what did you think of them?

AS: Part of the thing is about government picking winners – if you have real localism what you want is maximum freedom for local authorities to innovate and do things that they think will work in their patch.
You have things like the City Deal for Manchester with the idea that they create a virtuous circle for the local authority to get a return on its investment: a principal established with business rate retention but going further than that with Manchester. But Government has to set out when and how other local authorities get to have this conversation otherwise it looks like picking winners. It’s the same with ultra-fast broadband for cities, same rationale: why not ultra-fast broadband for local economies that have made that the cornerstone of their economy? There are parts of the South West where a good broadband infrastructure could really unlock their economies and their strategy for their economies.

There is some good news. If I was a big metropolitan authority, a big city with a lot of capacity to engage with Government around this, dialogue already going on, I would probably feel more buoyant listening to the budget than the average smaller unitary county or district authority. We work with city councils and I am delighted that they are getting the opportunity but what I hope that we would have evolved from is that old Heseltine thing that he did in the eighties where you did a piece and there was a prize, you had to beauty parade to central government. I hope we can move on from that.

Room 151: Aren’t councils used to this bidding approach for funding?

AS: Well certainly if you think of a range of funds for the last 30 years, Regional Enterprise Zones from the Conservative government in the eighties to some of Labour funding like New Deal and so on, these goodies were given out by central government. However now it’s smaller amounts of resources coming in and for them to be featured as a big part of how central government is going to help local councils and local communities, I think it’s inevitably going to be reeling against the impact. If you’ve got something where local authorities can get multi-millions of pounds from central government (even if I don’t like that strategy, I think it’s a patronising centralist strategy) you can at least see that from local government’s point of view that it might be meaningful in the impact it might have. But when it’s about far, far fewer resources and even some things which don’t even actually bring resources, Enterprise Zones for example just free you up a bit in terms of planning and retaining rates, then for that to be a big element of the budget speech at a time when unemployment is rising and councils are making it top priority to get their economies moving, that to me is limited.

Room 151: What should happen?

AS: In the interests of being constructive, the challenge to give back to central government on this is ‘you set out a range of opportunities to some councils, what is the play if my local authority wants to access these to support resources?’

Room 151: Away from the budget to finish, what do you think is the role of the local authority CFO going forward?

AS: We have been working with councils around their leadership models and senior officer structures. We are seeing the move to reduce the number of senior officers and CFOs are increasingly combining a broader range of roles. It’s clearly leading away from there being a dedicated chief financial officer often in a de facto number two role, to this role sitting at all sorts of different levels in authorities.