Memorandum from South West Councils (SW
10)
This short response provides additional information
to the oral evidence provided by SW Councils and Strategic Leaders
Board representatives on 30 March 2009. It does not seek to repeat
information already provided or other publicly available statistics.
The main messages below are that there needs to be:
— Involvement of the SW Councils Strategic
Leaders Board in the planning (not just delivery) of all government
initiatives in the region.
— Sustained investment in capacity to deliver
future growth and infrastructure and as much use of front funding
initiatives as possible.
— Recognition of the falling level of income
for local authorities and SW RDA at a time when demand for support
is rising.
Councils in the South West are undertaking a
wide range of actions to support business, help vulnerable households
and ensure that, when the upturn come, we are well placed to recover
quickly.
South West Councils have an important role to
play in leading the response to the recession over the coming
months. We are confident that working together, we can deliver
what matters for local communities—not just improved services
or better value for money but better places to live, work and
visit.
The responses to each of the main points in
the inquiry's call for evidence are set out in turn below.
The impact of the economic situation on the South
West, including problems around unemployment and debt
It is clear from the data that some areas are
experiencing much larger rises in unemployment than others. Even
in areas with a pre-recession backdrop of relatively low unemployment,
the proportionate increases in unemployment in parts of the South
West have been some of the largest in the country.
Many councils have reported a substantial increase
in visitors seeking advice on benefits (roughly a 20% increase
from last year). New claims have been particularly noticed and
the means testing elements are found intrusive by some applicants
which can be a challenge for council staff.
Councils themselves are not immune from the
effects of the credit crunch or the recession. As the economy
slows, local authority income from interest payments, land searches,
planning fees, recyclables and car parking fees is all affected—at
a time of rising demand for council services. Losses in these
areas are significant (estimated as greater than £100 million
across the South West) and roughly equivalent to 2-4% on council
tax in many areas. The problem is exacerbated in the South West
by a greater dependency on these sources of income due to a lower
level of revenue support grant. In some cases this is leading
to further job losses in the public sector, particularly in services
whose budgets are underpinned by these income streams.
In this context, efficiency programmes are assuming
an even greater importance for local councils, particularly when
set against pre-recession pressures such as: increasing service
demands; a particularly ageing population in South West England;
waste costs and; a reducing rate of Government support in real
terms.
SW Councils now incorporate the work of a Regional
Improvement and Efficiency Partnership which helps councils collaborate
and innovate in service delivery. Local government is already
the most successful part of the public sector in delivering efficiency
savings but this work ensures that further value for money is
delivered, freeing up resources for front line delivery.
Councils in the South West provide a wide range
of services which will help support local households through these
challenging financial times. These include: home energy efficiency—grants
for loft and wall insulation and advice; housing solutions—such
as affordable housing, sheltered housing, housing benefits and
support for the homeless. In addition to these existing core council
services a wide range of additional measures are being taken to
help businesses and people through the recession. These include:
— encouraging housing benefit take up;
— adopting a discretionary policy of no
evictions for rent arrears;
— extending time available to pay council
tax and rent;
— introducing support measures for people
facing eviction;
— providing support for debt counselling—through
the Citizens Advice Bureaux and others; and
— support for Credit Unions, which can
provide finance and support to those who need it most.
SW Councils are ensuring that best practice
in these areas is shared with other local authorities in the region.
The nature and extent of the Government's response
to the current economic situation in the South West
The steps taken by Government at national level
to combat the credit crunch and the recession have been well publicised.
Within the region, some of the main sources of support
for people who have lost their job are currently Job Centre Plus
and the Learning and Skills Council. As the impact of the recession
is varying across the region, it is critical that support for
employment and training are effectively targeted on the needs
of local people and employers. Through direct involvement in the
community and local business groups, councils have a good picture
of how business is being affected on the ground and are well placed
to respond.
In this light, the announcement of the £1
billion Future Jobs Fund in the Budget was particularly welcome,
with its emphasis on local authority led job creation programmes.
SW Councils are working together through the
Regional Improvement and Efficiency Partnership (RIEP), with GOSW,
Job Centre Plus and SW RDA to support a comprehensive action plan
to tackle worklessness. SW Councils' Local Economy Programme has
allocated £100k of RIEP support to combat worklessness, together
with £200k of funding provisionally allocated by the Department
for Work and Pensions. Working with Economic Development Officers,
the action plan will support the preparation of applications to
the Future Jobs Fund, sharing of best practice and ensuring an
equitable share of the Fund comes to the South West.
The South West has the highest percentage of
small businesses of any area of England so ensuring the right
support arrangements are in place is vital. Councils in the South
West already provide a wide range of services which will be of
benefit to business through the economic downturn. These include:
— Small Business Rate Relief.
— Rate Relief for Business in Rural Areas.
— Charities and Discretionary relief (from
rates on non-domestic property).
In response to the recession, councils are also
now undertaking additional measures to support local businesses.
These include:
— paying suppliers ahead of schedule;
— stepping up publicity on support and
advice available to business;
— encouraging take up of small business
rate relief and introducing full rate relief in areas where there
are no alternative employers; and
— putting in place local procurement strategies.
On average, councils in the SW already procure
between 60-70% of their goods and services locally but a number
of councils are currently reviewing their procurement policies
to see if this could be increased still further. SW Councils recently
undertook a major member-led multi-agency review on Sustainable
Procurement, which has made recommendations to a wide range of
partners on the scope for further collaboration, potential RIEP
support and the best way to reduce environmental impact.
Councils in the South West also spend roughly
£27 million a year on marketing the local area and many are
currently reviewing tourism marketing plans to take advantage
of the substantial depreciation in the value of sterling. This
may open up some significant opportunities for the domestic tourism
market. An associated review of the South West's regional tourism
strategy is therefore also timely.
In many areas the area action force approach
with SW RDA, councils, Job Centre Plus and other agencies is working
well. In other areas councils and Job Centre Plus have taken the
initiative to establish a "Rapid Response Service" to
deal with closures and redundancies.
The effectiveness of the Government's response
in reducing the impact of the current economic situation on the
South West
At this moment it may be too early to judge
the effectiveness of the Government's response. The work the Government
has undertaken to stabilise the banking system has been well publicised,
however some concerns remain on access to credit and associated
falling confidence amongst consumers is a critical issue for the
South West's economy.
Councils are at the forefront of implementing a wide
range of Government initiatives, tailoring them for local circumstances
and leading close working with other public sector agencies. However,
many local authorities do not see the Government's package of
support measures as a unified programme and clear guidance on
their implementation can be more difficult to come by in some
cases.
It is also especially important in a downturn
that local authority work with the third sector is well coordinated.
In this light there is a need to ensure that the work of the RIEP
on Stronger Communities and the Regional Empowerment Consortium
are complementary.
The effectiveness of the Government Office for
the South West, the Southwest Regional Development Agency, the
South West Regional Economic Task Group, and other Government
agencies and partner organisations in the South West in delivering
the Government's response
A great many of the issues raised by SW Councils
representatives (Cllr Rod Bluh, Leader of Swindon Council, representing
the Strategic Leaders Board and Dr Phil Norrey, Chief Executive
of Devon County Council) in the SW Regional Economic Task Group
(SW RETG) are now in the Group's Action Log (available online
at www.swretg.org.uk).
Some of these have been or are being addressed—notably
guideline council housing rents and a temporary increase in business
rates of 2% rather than 5%. However, whilst the temporary increase
of 2% was welcomed by businesses in the region, the cost of administering
this initiative could not be re-couped by local authorities and
had also come at a time immediately after initial bills for the
year had been sent out. It would have been helpful if local authorities
had been consulted about the initiative prior to its announcement.
For a number of other issues SW RETG now appears
to be at the tricky stage between diagnosis and the prescribing
of treatment. Acknowledging that there is no "deus ex machina"
to help solve all the problems we face, SW Councils are encouraged
that at the very least the Group is a useful mechanism in which
to engage directly with Government.
Not all of the SW RETG sub groups have appropriate
local authority representation on (such as the People and Skills
and the Green Economic Recovery sub groups) and this appears to
be a major oversight of the role SW Councils are playing in these
areas.
Some of the main changes to Government policy
that South West Councils are asking for are:
1. Faster and less complex decision making
processes in Government Departments such as Transport and
Schools to enable investment to be fast tracked.
2. Risks on capital projects to be shared
fairly between Government and councils (otherwise projects
could dry up).
3. Treasury rules to be loosened to allow
essential pre-planning of projects and the revenue costs of programme
management to be capitalised.
4. A "capacity fund" to be introduced
in Regional Funding Allocations to allow that to happen with
greater flexibility for local authorities to use funding creatively
ie change capital/revenue mix.
5. More support for front-funding infrastructure.
The South West has innovated in setting up a Regional Infrastructure
Fund to forward fund essential infrastructure which unlocks development
projects, with the costs recouped later. The fund is playing a
crucial role in bringing forward development at Exeter, for example,
by funding road improvements and a station. This fund if much
bigger could act as a catalyst to make sure that when the upturn
comes major development projects can proceed quickly.
6. Reform of the Housing Revenue Account subsidy
system. Many councils in the South West are net contributors
to this scheme. Given the need for investment in the region, it
is unfair for tenants, many of whom have very limited finances,
to be taxed to support investment in other regions when the South
West has the oldest and least energy efficient housing stock in
the country.
We welcome the steps taken by the SW RDA to
combat the effects of the recession in the South West (set out
in the publication "First Steps: Action for Recovery").
In particular, proposals for community finance initiatives and
a Business Loan Fund are supported and we hope that sufficient
funds will be provided by Government to enable the proposals contained
within the document to be implemented.
The recent depreciation of sterling, and the
requirement for RDAs to match fund Rural Development Programme
for England, has meant that SWRDA funding has been diverted from
other strategic regional projects. Together with the recent RDA
budget raids and a fall in capital receipts, this could jeopardise
some important activities at a critical time. The South West already
has one of the smallest RDA budgets and some complex and difficult
challenges to address but may not be in a position to respond
as fully as RDAs with much larger budgets in other parts of the
country. Given the universality of the shortage of credit across
the country this situation does not seem fair.
Following a "Grey Skies" thinking
day for SW Councils Chief Executives in December, Members of the
SW Councils Business Committee also recently agreed a reprofiling
of the Regional Improvement and Efficiency Partnership (RIEP)
support available to local authorities in light of the economic
downturn. The reprofiling has leant greater support to programmes
of transformational change and to the new Local Economy Programme.
SW Councils' Local Economy Programme has three
main aims: overcoming barriers to employment and training; ensuring
sustainable economic growth; and building capacity for development.
These goals will be achieved through skills and capacity development
for Local Authorities (involving capacity needs analysis, skills
training programmes and support from a pool of experts), performance
support (in the form of a programme of technical peer reviews
and event and seminars) and bespoke support for sub-regional working
and adapting to new roles and responsibilities.
The impact that the response to the current economic
situation might have in the longer term on the economy and wellbeing
of the region
Local authorities have important roles to play
in planning, economic development and supporting regeneration
projects. Over the next 20 years the population of the South West
is expected to grow by an additional 500,000 people so ensuring
that sufficient housing, transport infrastructure and employment
land is available for this growth will be essential.
However, the slowdown in the housing market has affected
a wide range of development schemes and infrastructure projects
already. As a result, councils are re-evaluating short term priorities
to ensure construction does not grind to a halt and so that longer
term plans can be delivered. By undertaking assessments of the
state of the local economy, councils can underpin these decisions
as well as ensure appropriate support is provided to business.
South West Councils' Strategic Leaders Board,
with the SW RDA Board, also recently signed off Regional Funding
Advice, which will decide how and when £9 billion of expenditure
is invested over the next 10 years, for housing and regeneration,
economic development, transport, and the skills agenda. This advice
took account of the impact of the recession to accelerate schemes
which could deliver quick wins and the best result for the South
West as a whole.
Councils also have important responsibilities in
14-19 education, working with local colleges to ensure that businesses
are provided with appropriately skilled people. A number of councils
are supporting and expanding apprenticeship schemes with local
colleges. Councils' work with Further and Higher Education will
assume particular importance in ensuring the local workforce has
the right skills when the recovery comes.
Evidence from previous recessions has shown
that pockets of worklessness have persisted in some areas despite
subsequent widespread recovery. This is an important lesson to
learn and there is a need for concerted action to tackle this
and ensure people do not miss out when the recovery comes. Similarly,
while many rural areas are entering the recession later than cities
and towns, they may stay in recession for a much longer period
of time afterwards.
There are concerns that the current profiling
of public expenditure may also lead to a "w" shaped
recession, in which a recovery begins but stalls as Government
spending is cut back in the next spending review period. Increasing
the amount of money available for front funding initiatives could
be one way of avoiding this.
The opportunities for a "green" economic
recovery—achieving a structural shift in the economy to
a low carbon base—have been widely highlighted and could
be particularly beneficial to the South West which has a strong
base in environmental industries. Local government will play a
critical role in ensuring the successful scoping and delivery
of a green economic recovery plan.
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