When national political commentators start tweeting about a council it can mean one of two things – either their bins haven’t been collected or something big has gone wrong.
The only good news for councils from him tweeting, ‘there has never been a financial calamity by a local council on this scale,’ was that his bins had probably been collected…
And he wasn’t exaggerating. As one well-placed source told The MJ, the situation in Woking is ‘so severe’ that it risks impacting Government borrowing and national interest rates.
The worrying consideration for local government more widely is the impact such failures have on the sector’s treasured aim of fiscal devolution.
Like it or not, the perception of many who take little interest in local government will be shaped by headline-grabbing stories of financial failure. Equally, will Government policy towards the sector be shaped around the performance of its weakest links?
‘The risk for local government is that the bad apples hold back the freedom and flexibilities for the majority,’ says Chartered Institute of Public Finance and Accountancy (CIPFA) chief executive Rob Whiteman.
‘Most councils are well run and they need more devolution accompanied by fiscal levers and that would make for better services to the public.
‘The risk, of course, is that the failure of the few gives Whitehall the excuse to be fearful of devolution and greater fiscal responsibility.
The answer for Mr Whiteman is that local government must fully acknowledge that in return for greater freedoms and flexibilities it also has to have appropriate assurance and regulation.
‘I think that a lot of important voices in the sector argue against regulation,’ he adds. ‘Unwittingly, they’re making it easy for Whitehall to say that local government shouldn’t have any more responsibilities.
‘Really, we’re not addressing this elephant in the room, which is that without regulation, some authorities such as Woking, have spectacularly failed to a degree unsurpassed in British history.’
But, for others, using the financial failures of a few councils to justify future policy direction for all is unreasonable.
‘There are hundreds and hundreds of councils that haven’t messed up, says Jonathan Carr-West, chief executive of the Local Government Information Unit.
‘It’s a bit unfair to judge everyone purely by the worst performers and that’s not a standard we apply to other parts of government, we don’t apply it to central Government or to the NHS.’
And he argues central Government is largely to blame and the problem is precisely that there has been insufficient fiscal devolution for councils.
‘Government has essentially said we’re taking away a load of your grant funding and we’re leaving you with a limited number of ways in which you can raise revenue,’ Dr Carr-West points out. ‘For example, council tax within limits, fees and charges within rules, or borrow for certain things.
‘So, they’ve had a fairly limited range of things, but if you don’t do those things you won’t be able to provide services, or to balance the books, as we require you to do every year. And we won’t give you long-term funding settlements. We’ll completely cut away all the kinds of things that would help you manage your finances except for these risky borrowings.
‘Central Government has backed councils into a hole and these are the only options available to them.
‘Of course, bad decisions have been made, but that’s the context.’
But, with the evidence for the financial problems facing the likes of Woking and Thurrock apparently pretty easy to find in the numbers, Dr Carr-West is not convinced simply piling on more regulation and requirements will solve the problem.
‘Of course you need accountability and oversight,’ he says. ‘But I don’t think we need more audit, we need more effective audit.’
Some argue that it is exactly because most councils have managed to keep their head above the financial parapet that they should be trusted.
Patrick Melia, Sunderland City Council chief executive and local government finance spokesperson for the Society of Local Authority Chief Executives and Senior Managers (Solace), claims council management of austerity, Covid, the current financial crisis and the cost of living all illustrate local government is doing ‘a fantastic job’.
He points out that local government has achieved the highest level of efficiency savings across the public sector since 2009, so it still delivers ‘great services across the board’.
‘I think we should really be trusted by Government and by the public to do a good job,’ he says.
‘Given our track record as local government, it would be very unfair for the minimum number of poor examples to mean the rest of us are penalised.’
Mr Melia lists the successes of fiscal devolution on managing enterprise zones, the creation of jobs by mayoral combined authorities and the positive impact on communities of well-run investment zones.
‘I would really urge that Government looks at the bigger picture,’ he adds. ‘Look at our track record of delivery, our track record of good governance, the impact when money is devolved to us, the impact that we have in terms of delivery of projects that have a real impact on our communities and trust us with greater devolution.’
But, fair or not, the bad headlines are coming thick and fast for local government at the moment.
Last week not only saw Woking setting out how it was going to begin digging itself out of the financial crater engulfing it, but also the damning findings of commissioners sent into Thurrock Council.
With Thurrock’s team of commissioners, led by former Lincolnshire CC chief executive Tony McArdle recommending sector-wide measures to bolster the role of top officers, it is hard to imagine ministers agreeing to wider fiscal devolution without more assurances being put in place.
Even a handful of bad apples risk spooking the Whitehall horses and ensuring there is no let-up on the fiscal reins.
‘I think we can argue successfully that local authorities need wider tax-raising powers, should manage a greater number of services, which are presently controlled by Whitehall and that local authorities continue to have capital freedoms to invest in their services and regeneration,’ says Mr Whiteman.
‘But we can’t say all of that and say that we don’t need a return to the Audit Commission, or we don’t need a return of strong district audit, or we don’t believe that we need Oflog, because actually, we do.
‘Due to those safeguards, those lines of defence, that can be provided by strong audit, strong data and appropriate regulation, mean Whitehall can have more comfort in order to give greater responsibilities.’
