Centralism – the new localism

Agent 151 is a senior local authority finance director and S151 officer writing exclusively for Room151. 

The local government press is groaning with examples of how this government, led no doubt to some degree by the wisdom of civil servants, is busy centralising.  This of course is localism in action, according to the spin, but let’s have a look at the reality in some current examples.

The Public Accounts Committee and the National Audit Office are now the “only show in town” for monitoring council finances, according to PAC Chair Margaret Hodge.  She said the PAC would be doing “deep dives” into some councils’ finances, and expressed concern that the watchdog role was not adequately resourced following the abolition of the Audit Commission.  Stand by for growth in NAO resources to hold councils to account!  Whatever happened to those armchair auditors Mr Pickles assured us could do the job?

Staying with the PAC for a moment, the Treasury’s top civil servant told the PAC recently that local authority chief executives were, in his opinion, paid too much.  His solution to this?  The Treasury should set town hall chief executives’ pay.

Meanwhile, ministers have stiffened their resolve to take control of council pension funds.  It appears that they are persuaded that bigger is better and that there are major savings to be made from merging funds down to no more than six or seven for the whole country.  Indeed, they decided not to wait for the results of a call for evidence before issuing a tender for a cost benefit analysis of three options. There is little hard evidence to support the case for structural reform, and the move will sever the link between the democratic accountability of councils for local spending and their pension costs; a link that may not be entirely transparent but at least attempts to make someone accountable!  Cynics will suggest that ministers have been seduced by the suggestion that such an arrangement will make more pensions cash available to fund infrastructure investment.  Frankly, the idea that there is a shortage of investors in infrastructure at the right rate of return is just plain silly, as indeed is the idea that public pension funds should be made to subsidise commercially unviable infrastructure projects.

Public sector procurement should be standardised according to the Cabinet Office, which has been consulting on proposals to make it easier for small firms to win a greater share of government contracts. SOLACE has responded by pointing out that this is something that councils do already very well, thank you.  Analysis shows that about half of councils’ spending goes to SMEs, whilst only 12% of central government spending does. Is the proposed legislation really necessary?

Meanwhile, the DWP is forcing through its Single Fraud Investigation Service, which will take over housing benefit fraud investigation from councils.  This will leave councils with a capacity gap in fraud investigation and worse still ensure that benefit fraud is investigated entirely separately to other types of fraud being perpetrated by the same fraudster (housing tenancy, council tax support etc).  This is a good result for fraudsters, but not the best answer for the country as a whole.

It seems there is a mindset in central government that simply cannot grasp the concept that government at a local level can be more effective and efficient than central provision.  Central government departments are hungry for more and more control, and are simply thumbing their noses at the public service reform that is being attempted.  Essex County Council’s Leader has recently said that his council had “hit a brick wall” with its community budget pilot due to lack of co-operation from the Department for Business, Innovation and Skills regarding devolving skills provision.  Another pilot at Kent CC ran into similar problems with DWP’s skills team.

We are already, according to Tony Travers, the most centralised western democracy.  It’s becoming increasingly obvious that the forces of centralism are still gaining ground.  It’s time for ministers to show that they, and not the civil servants, are running the country.  There are more cuts in funding and more difficult decisions ahead for central and local government.  Let’s stop the squabbling and start working together to strike the right balance between central and local control and, in doing so, balance the books.