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As the country heard news of the gloomiest budget for years, The MJ and Cambridgeshire CC held a debate in the city last week. Heather Jameson reports. A later version of Flash Player is required to view this content Download flash player // As news of chancellor Alistair Darling's recession Budget trickles through, we are in Cambridge, Britain's intellectual heartland, to consider what councils can do to address the financial problems facing the country. What is clear from the outset is that those around the table are adamant it is as much their job to fix the economy – regionally, nationally, and even internationally – as it is the job of Mr Darling's budgetary proposal. The barriers may be high, but that does not stop Cambridgeshire – and indeed, other areas around the country – from thinking higher. As one debater puts it: ‘We feel that this region is well-placed to lead the country out of the recession.' ‘It's easy, when you think of Cambridgeshire, to think of Cambridge.' In economic reality terms, this is misguided. Cambridge City and the surrounding ‘doughnut', with the university and Addenbrooks Hospital, has a far stronger economy than some of the other parts of the county. In the county as a whole, unemployment has doubled in the last year alone, and employment in rural areas is even harder to come by. It is a mirror image of much of the country, where everyone is feeling the economic pinch. We are warned not to spend so much time focusing on the big picture and forgetting the real purpose of local government – to protect local residents when they are most in need of help. The county council is trying to do what it can. A dedicated website – weatherthestorm.org.uk – attempts to provide a coherent response to the challenges the downturn has brought. In addition, the county pumped £500,000 into local voluntary and community agencies to help them provide extra advice services for those in need. One of the key messages, which is repeated round the table often, is to keep an eye on the long term. Maintaining a long-term approach during short-term difficulties may not always be easy, but it is essential to keep the area on track for the future. ‘What we don't want to do us to make decisions in the short term that we would regret in the long-term' – particularly when it comes to sustainable communities Housing has ground to a standstill – even in the relatively-affluent Cambridgeshire. However, at the same time, there has not been a fall in demand for housing. ‘The housing need is as acute as before – if not more so.' And there are implications for infrastructure, too. For a long time, the Government has used Section 106 cash – money charged to developers for infrastructure – to provide all major infrastructure in the local authority area. But now, there is no development boom, there will be yet another hole in the funding. ‘If that model is broken, what on earth are we going to do.' There is support around the table to move to a tax increment finance model. Under the system, which is widely used in the US, councils would have the chance to spend money on regeneration, based on their chance to recoup the costs from income from the regenerated local economy. ‘It shifts an element of taxation back to local government.' And the benefit for central government is ‘the risk doesn't have to sit at a Treasury level'. The plan would only take a small shift from central government to change the rules. However, it would make a huge difference at a local government to places like Cambridgeshire. ‘It will also solve, in part, some of the unemployment problems'. Cambridgeshire as a whole is a net contributor to GDP. But, as one of our guests claims: ‘One can't keep milking the cash cow that is Cambridge. We have to invest in it too.' Local authority bonds are also mooted as something which can ‘play off as well in a recession as it can in a boom'. ‘What we are arguing for is not more money, it's more innovation.' The university is also keen for the Government to shift the rules. Despite having a solid funding income, the university has large-scale projects to fulfil, in order to ensure its future. It must be able to borrow against future income to undertake modernisation and bring the university up to date – rather than waiting for funding to come year-by-year. The private sector is looking to the public sector to make investments now, as it is the only driver of the economy. ‘The only ones who can do it now are those in the public sector. If we look at how we built the structure of the country back in Victorian times, it was through the public sector.' We hear examples of the railways and the sewers – but are reminded that it was done through a very high tax level. As one debater puts it, it isn't the Government borrowing and spending more. Instead, it is shifting the borrowing from central to local government. There are other things local government can do – but one of the main difficulties is that it will have to take risks and step outside its comfort zone. ‘It's about giving ourselves permission to do things differently,' someone around the table claims. ‘We need other people – primarily local government – to take a risk.' ‘One of the things we can do more on is working on pilots, which can be scaled up quite quickly.' Helping others take risks is also seen as an imperative. In times of recession, there is often more entrepreneurship. Local authorities should do more to support that in the further education sector, and help young people develop their own businesses, we hear. But perhaps a less popular approach to helping the economy is the Budget's plan to put even more of an efficiency squeeze on local government. ‘Could any local authority say, We are as efficient as we could be? No. But is this the time to launch into a massive GBH on the organisation?' Someone agrees that ‘we have to ask the efficiency question'. But we are warned the Government shouldn't punish authorities which have already made large-scale efficiency savings, and will struggle to make more. For Cambridgeshire, though, the optimism shines through. ‘I think we are a place that's going to take the country out of recession. I really do believe this notion of a long-term strategy.' Mark Lloyd, chief executive, Cambridgeshire CC John Hill, chief executive, East Cambridgeshire BC Alex Plant, chief executive, Cambridge Horizons Janet Horton, public sector development director, Capita Professor Ian Leslie, pro-vice chancellor for research, Cambridge University Dr Teri Willey, chief executive Cambridge Enterprise Rachel Bosworth, deputy chief executive, EEDA Michael Burton, editor, The MJ Heather Jameson, deputy editor, The MJ

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FINANCE

Gathering of minds in intellectual heartland seek cure for recession

By Heather Jameson | 05 April 2011

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