Uncertainty forms ‘normality’ for local government finance and reform

Planning reforms, unitary authorities, council tax and lawful budgets all hold the prospect of considerable, though unknown, change, writes Richard Harbord.

It is always a great pleasure to be asked by the editor of Room151 to write an article. In reality it actually means that in desperation he has turned to his C-list* of contributors. Having received such a request I felt it only right to ask deferentially if he had a burning issue he wanted addressed. He felt that my view of the future might be enlightening.

I think not. The future at this point requires 20/20 vision and night vision goggles. It is murky and through the swirling mists little can be discerned. I sit and look at my book shelves for inspiration. I have a collection of most books ever published on local government, particularly local government finance. They start in 1784, although there are earlier Poor Law Accounts.
Fortunately someone once said: “You realise that mistrust of the future makes it hard to give up the past,” and, indeed, as there is nothing new in life, the past must give a clue to the future.

Announcements

August is the season for a variety of political announcements that have yet to be democratically discussed. No doubt many of these are to gauge the initial response from those affected.

It does, however, seem fairly certain that the topic of re-organisation will figure large in the not too distant future, although the exact form remains a mystery. News came in June that a population of around 300,000 residents would be the ideal size for unitary government. That figure has been revised by some comments this week to 600,000.

I have yet to read a sound argument that either of these figures is the optimum size, though it will be difficult to adhere to rigid limits in any case. I assume that the dystopian vision of a future of localism is now given up although I would note, in passing, that unless the current legislation is changed there will be a large increase in applications for town and parish councils to fill the localism vacuum.

On current ratios of elected members to citizens (Inlogov) an authority of 600,000 citizens would need a council of around 250 elected members. A vision of immense delight to most chief executives and directors of finance. Just imagine how many different parties, shades of independents and split factions could be accommodated within that total. Accommodating the council meeting would require a sizeable council chamber as well.

Inevitable

Recently, I have changed my view and now believe a lack of resources and a wholly inadequate local taxation system mean that unitary authorities have become inevitable. I would note that the NHS continues to have large sums of money added to its budget without serious thought to a change in style of service delivery while any consideration of local government starts from structure and fails to deal with finance.

I was critical of attempts to allow local authorities to apply for unitary status, on an individual basis, without proper consideration of the overall position. To become unitary the putative authorities had to demonstrate the ability to meet a mythical savings target. I was involved in two such bids and the targets were easily reached.

The 1965 re-organisation of London was also meant to produce savings of a very considerable size. There are no proper retrospective studies on whether these hopes were ever achieved. When my book appears on London reorganisation the outcome may be a little clearer. ( I do not expect it to be a best seller).

Community

The other major debate about the new crop of unitaries will be access by the community. Will existing civic offices become local hubs thus reducing possible savings, or will we rely on virtual access?

I was very surprised in a recent debate on remote schooling that only 58% of households had broadband access, and those in rural areas still have problems downloading even the simplest forms.

I live in an urban village. My broadband speed creeps up to 30Mbps on a good day and has been unable to support two people working from home. This is because I am some miles from the “fibre optic box” and rely on copper cable (which has been nicked twice).

Another glimpse of the future come in announcements on planning in order to increase the numbers of houses built. There are so many dangers in this around the building of the needed types of dwellings, density and the wider issues of proper provision of infrastructure. Again this needs careful thought. In my urban village new building has placed a real strain on drainage, removal of waste as well as schools and doctors.

Budgets

The immediate future is extremely difficult and the making of lawful budgets will be a considerable challenge. We still have no idea about the future of social care and it’s funding. The latest proposals for moving it to the health service need to be examined carefully and alternative methods of change examined.

On a more immediate level there are indications that the grants and reliefs given by local authorities to businesses may include a considerable level of fraud. Any investigation must take into account that local authorities made these payments quickly to meet the repeated demands of central government and that it is possible that there was not always proper due diligence.

Business rates will see another major review. This has been a long outstanding issue and there is great confusion over issues such as reliefs.

Council tax desperately needs reform but will there be the political will to deal with it? Should we move to a proper land value tax system, for instance? At the very least, proposals put forward by the Institute of Revenues Rating and Valuation over a number of years for an internet sales tax should be implemented. There is an issue of equity here.

The immediate future holds much uncertainty. Will the local pub still be open next week? On my morning walk the other day I met a lady running in trainers but in full evening dress and considerably bejewelled, a dog trailed behind. She felt the need to explain as she passed that she had only just got home and thought she ought to take the dog out before going to bed. It was heartening to see such normality in action. That is to say, in Michael Gove’s constituency such behaviour passes for normality.

Richard Harbord is a former local authority chief executive and finance director.

*Editor’s Note: Mr Richard Harbord has, without question, always been an A-lister for Room151.

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