Taming the wild frontier

By Michael Burton | 22 July 2015

Has the new devolution agenda of combined authorities created a ‘Wild West’ in which risk management is being sidelined? This and other issues from integration to commercialism were discussed at a recent The MJ/Zurich Municipal round table debate with local authority finance chiefs at the CIPFA conference. Michael Burton reports.

Maybe it was nervous energy, but the one word which ran like a thread through The MJ/Zurich Municipal debate on the future of local government was ‘excited.’

All participants felt upbeat about the agenda ahead, albeit with one or two reservations.

One participant said the past five years ‘have been the best I’ve had in my career and I expect the next five to be even better.’

All were aware of the challenges of which those named were financial sustainability, health and care integration, housing, devolution, technology, rising demand and transformation.

So what has caused this surge of half-glass-full optimism?

Firstly, there is a sense of achievement that local government has endured five years of spending cuts without demolishing frontline services, though one participant said: ‘We have made it look all too easy.’

Another admitted: ‘We’ve seen a take-up in our library usage now they’re run by community groups.

'The question is whether that can be transferred to other models.’

Participants all expect the next five years to be tough, but at least have experience of what it means in practice from the previous five years of cuts, unlike in 2011, at the start of the last Spending Review and have responded with transformational change.

One commented: ‘What a couple of years ago seemed a fantasy is now reality.

'The pace of change is quicker than ever, quicker even than the banks, which took 20 years to move to online banking.’

However another participant disputed this level of change stating: ‘There’s lots of talk but not much pace.

'We need to turn rhetoric into reality.

'There is only a minority really doing transformation.

'We can deliver and have delivered but standing still and saying our budget’s fine for the next couple of years so we don’t need to do anything isn’t an answer.’

Secondly, the devolution agenda has galvanised the sector.

One said: ‘People have woken up to the art of the possible.’

Another added: ‘Who would have thought a year or two ago about the degree of autonomy planned for Scotland or even that the NHS would regard the “N” as standing for neighbourhoods as well as “National.”

'Manchester, in turn, is creating the first local authority-controlled regional settlement.’

However there were concerns expressed about risk management issues in a world when new structures such as combined authorities are springing up without proper accountability.

One participant said: ‘It’s like the Wild West out there.

'It’s scary from the point of view of risk and governance.

'Internal frameworks aren’t up to speed with what is happening with combined authorities.’

Another commented on the localist agenda: ‘We mustn’t be seduced by the idea that there are now no rules attached to government initiatives.

'Good ideas still need to be backed up by clear plans and outcomes, otherwise we could be hammered.’

Thirdly, a new government, even one committed to austerity, always provides opportunities with new policies and new ministers.

Not having Eric Pickles is one positive, while Greg Clark’s accession as his replacement has also been generally welcomed in the sector.

It is also likely that with Labour in disarray and the Liberal Democrats down to a handful of seats that the Conservatives will win the 2020 election giving them the luxury now of a 10-year timetable for public policy.

However, as one participant said: ‘We must challenge the Government to be better at governing.

'The Department of Health didn’t think that lopping £200m off the public health budget was a good idea but some bright spark at the Treasury did.

'It’s the same with capping social housing rents.

'We have a right to ask ministers to stop making decisions two days before a Budget.’

Fourthly, many councils are now seriously contemplating ceasing to rely on government funding altogether.

As one participant commented: ‘The revenue support grant (RSG) will go down to zero in the next five years’ so the priority is on new income streams.

He said councils must now, in an emerging age of commercialism, see their role not as ‘administrators of services but as creating value for taxpayers.’

Another added: ‘We will lose our RSG by 2020.’

Planning budgets remains a challenge with one participant saying: ‘It would help if we knew what we were aiming for.

'We need a four-year settlement.

'We need to know our funding streams.’

There was discussion about the role of local authority trading companies delivering surpluses – or profits – to their authorities as income and the new Municipal Bonds Agency as a source of borrowing.

One participant said local authorities should be more savvy about their balance sheets, using their assets to borrow and invest, though one retorted: ‘I’ve got a negative balance sheet due to pension liabilities.’

Fifthly, health and care integration is both hugely exciting for local government but also fraught with danger, especially financial.

One participant said: ‘It’s illegal for councils to overspend, but not for the NHS.

‘In local government you’ll always get service cuts or service failure before financial failure.

'In health it’s the opposite.

'Half of hospital trusts are running a deficit.

Last year, NHS pension liabilities rose by 20%, more than the £8bn planned to inject into the NHS by 2020.’

Another added: ‘If Manchester gets responsibility for health then it will eventually need powers to raise local taxes.’

There was also discussion about public health with one participant saying: ‘Public health since its transfer from the NHS is still in its infancy.

'There’s been a bit of re-alignment but we’ve yet to grab hold of it.’

Another confirmed this with: ‘Health outcomes aren’t working.

'In my area I’ve still got big differences in mortality.’

But a word of caution was added at the end of the lively discussion.

One participant said: ‘We need to debate issues about which we’re not comfortable, in particular pensions and reorganisation.’

Another added: ‘We need to show that if things go wrong we can show how to rectify them.’

Attendees

Caroline Al-Beyerty, Corporation of London

Andrew Burns, Staffordshire CC

Roger Chadwick, Corporation of London

Ian Knowles, West Lindsey DC

Steve Manson, Doncaster MBC

Peter Mason, Carlisle City Council

Jaki Salisbury, past-president, CIPFA

Rob Whiteman, CIPFA

Brian Roberts, Leicestershire CC

David Forster, Zurich Municipal

Paul Tombs, Zurich Municipal

Heather Jameson, editor, The MJ (chair)

Michael Burton, editorial director The MJ (rapporteur)

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Health Whitehall Business Finance Social Care Community groups Housing Devolution NHS Scotland Transformation Combined Authority CIPFA Eric Pickles Greg Clark
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