Localism

Memorandum from Essex County Council (LOCO 068)

Executive Summary

o For localism to work, Whitehall will need to let go and local areas need to be empowered . Whilst a degree of accountability to the centre will remain, Place Based Budgeting and other localism approaches mean a change for national government and indeed for local government as decisions are moved to the lowest practicable level . Whitehall departments will need to radically review the way budgets are allocated to localities. In much the same way that County Councils will devolve budgets to local forums, so must central government.

o We support strengthening the relationship between services and the citizen. Democratic accountability will be at the forefront of this change in emphasis and the ability for the citizen to influence decisions, to deliver the services themselves and to take ownership of those services they need and rely on. The citizen will also have more of a vested interest in those who represent them and to that end a welcome consequence will be a massive re-invigoration of interest in local matters, local democracy and local accountability. It will be the citizen who will best give an oversight of local authority performance at the ballot box .

o Place-based budgeting provides the opportunity to get ‘more for less’ out of public sector resources and services. By drawing public funds into a single locality-focused budget, s ervices would be targeted more effectively on local needs. By targeting specific local needs, rather than delivering centrally prescribed programmes, local partners will also have greater opportunity to improve outcomes and reduce spending.

o A locality-focused budget could provide powerful incentives to investment in preventative interventions, reducing the medium to long-term cost to the public services. With all service providers accountable to the same local commissioning board, ‘split incentives’ would be removed entirely from the local public sector. Historic problems associated with fragmented responsibilities and ambiguity over different agencies’ roles would also be removed if partners were brought together around a single budget, with a strong focus on outcomes. This model would ensure that interventions are linked and sensitive to local circumstances, helping contain costs and deliver improved outcomes.

Introduction

1. Essex County Council welcomes the opportunity to contribute evidence to the Communities and Local Government Committee’s inquiry into localism. The difficult economic times we face focus our efforts to bring about the most cost effective service delivery to our residents which will mean a radical and challenging change in attitude from the public sector, the voluntary and third sector and indeed the private sector. October’s Comprehensive Spending Review will likely offer a once in a generation opportunity to overhaul the way we go about delivering services. The time is ripe for responsibilities to be delegated to the most practicable hyper-local level.

2. For many years Essex County Council (ECC) has been a committed proponent of localism and has been at the forefront of devolving power, budgets and responsibilities to local communities. ECC has constantly strove to ensure that our residents have the ability to control matters that relate to them directly at a level that is most relevant.

3. Last year the public sector spent £10 billion in Essex and it is likely that this figure will shrink significantly in future years. Central decision making on how to spend this dwindling budget will be forced to become a thing of the past. We welcome government announcements that roll back the influence of Whitehall and leave it to local communities and neighbourhoods to best decide what services they feel are important to them and who will carry them out. We would argue with the Public Services Trust that, given imminent reduction in budgets, there should be a move toward "more for less" – move responsibility even if this is over less funding.

4. Essex is a large county with a population of 1.3 million. With twelve district and borough councils and over 284 parish and town councils, nearly fifty of which have been accredited with Quality Council status, Essex is well placed to continue down a place based budgeting route. A degree of democratic accountability has to be maintained when considering the devolution of public resources and this needs to be extended to include the commissioning of health and social care, police and fire service budgets at the most local level.

The extent to which decentralisation leads to more effective public service delivery; and what the limits are, or should be, of localism.

5. It is a truism that the man in Whitehall doesn’t know best. Our own Total Place style pilots in Tendring district demonstrated the value of engaging those citizens who use the services the public sector provides.  A locality-focused budget offers an opportunity to move from a supply-side to demand-side approach which views citizens as active agents, not passive recipients of services. An improved citizen experience is the natural concomitant of services that residents are better able to shape.

6. For example, by tailoring and linking decisions on benefits, social housing, health and social services and transport development, local commissioners may be able to address longstanding regeneration issues, persistent long-term unemployment, health inequalities and other ingrained societal challenges. Historic problems associated with fragmented responsibilities and ambiguity over different agencies’ roles would also be removed if partners were brought together around a single budget, with a strong focus on outcomes. This model would ensure that interventions are linked and sensitive to local circumstances, helping contain costs and deliver improved outcomes.

7. As far as limits are concerned, subsidiarity means at the lowest practicable level. Some services, personal care being the prime one, can easily be administered by the individual. Decisions on planning, schools, roads, defence are all, by contrast, less suitable to be devolved to that level.

8. October’s CSR is widely expected to herald in an age of public sector austerity measures as the chancellor announces plans to tackle the national deficit. It is perhaps poignant that throughout the sixty years since the war, decisions on public sector spending have progressively been increasingly taken at the centre. Devolution to the Scottish Government and the Welsh Assembly aside, in England, there has been little progress towards locality budgeting and the top down approach has become the expected norm.

9. The brief foray into regionalism did little to bring decision making on budgets to a local level and instead introduced a layer of unaccountable, unrepresentative bureaucracy. Since the present government came to power, however, and the abolition of those bodies announced, it is clear that a shift is occurring and that through the Big Society agenda, local government has a unique opportunity to come to the fore.

10. Diktat from the centre, in the form of ring-fenced funding to suit national priorities along with guidance and directives have also become the expected norm. We are facing exciting, if not a little anxious, times as the directives and informatives from government departments dry up. In this hiatus, there is a chance both for local authorities and David Cameron’s Big Society to step up to the mark to take the initiative locally. This is where councils can and should show leadership in the transition from a nationally driven policy framework to more local solutions.

11. There can be little doubt that local people know what is best for their localities. ECC has a proven track record in devolving decision making powers downwards. The Community Initiatives Fund, or CIF, is one such example. By returning capital receipts to local communities in grant form has allowed a raft of community led projects to come to fruition. By keeping bureaucracy to a minimum, community involvement to a maximum and a broad and objective view of how money is spent, hundreds of communities across Essex have benefitted in one way or another from CIF – from projects costing £500 to capital investments of £50,000.

12. Geographies and communities vary greatly across the country. Participation in local democracy, willingness and ability to volunteer time as well as the cohesion of neighbourhoods is not uniform. However, there is always evidence that where local interests are challenged or effected by outside influences (or often in the case of antisocial behaviour and crime, from within), when enabled, local communities can and do rise to the challenge of addressing these issues and finding solutions. The lesson to all in government, at whatever level, is to allow this spirit to be freed, not contained, and to nurture it, not stifle it in rigid structure, bureaucracy and regulation.

13. ECC has also had a very positive intervention with parish and town councils. By providing advice, funding for IT equipment and other support measures, fifty parishes have been accredited with Quality Council status. These councils are key to delivering localism. They have the expertise and wherewithal to commission services; they can manage budgets competently and have democratic accountability at the most hyper-local level. As a county council, we can support the procurement and commissioning process for services, add value to the community led planning regime and ensure that no neighbourhood is left behind when it comes to be being represented and having resources allocated to it.

14. The Conservative Party’s Paper on Open Source Planning [1] raises some interesting questions around the level at which planning decisions need to be taken. There is no reason why planning decisions (and indeed subsequent planning benefits) should not be made and benefited from at the most local of community levels, whether that be parish or town council or neighbourhood level. Devolution does work. Government needs to recognise the realities of this and lean upon departments who may be reluctant or nervous about handing down control or resources. This means matching the locality rhetoric with reality and this will mean devolving funds to those organisations or communities that are best able to shape the solutions; and realising the need for a common integrated approach built around the citizen.

The lessons for decentralisation from Total Place, and the potential to build on the work done under that initiative, particularly through Place Based Budgeting.

15. That the public sector does not act as one is already a cause of frustration for many. In an age of retrenchment, though, this territorialism is increasingly untenable. A locality-focused approach would help tackle the departmental mindset that militates against a ‘single public sector’ approach.

16. A single budget would promote the incentives public sector agencies have to enlist the help of local partners and, by emphasising the holistic nature of interventions, would help prompt partners to volunteer their help. Locality-focused budgets would help combat the reluctance to invest resources in a programme whose successful conclusion would not benefit the funding organisation’s own budget or performance metrics. Outcomes would be more important than organisations.

17. Arguments for the benefits of place-based budgeting are already well rehearsed. Simply put, a locality-focused budget should deliver:

· Reductions in service costs at the level of both central and local government

· More effective use of public funds

· Greater emphasis on preventative services and

· Enhanced customer experience

18. Total place demonstrated the challenge faced by authorities and the scope to improve services and reduce costs by devolving services. Whilst Essex was not an official pilot area for Total Place, the Essex Partnership undertook two ‘Total Place’ style pilot projects. Geographically and sectorally diverse, the pilots highlighted a number of issues – conflicting incentives; confused accountability and a focus on the convenience of the state of the citizen.

19. Place Based Budgeting would also help reduce duplication and fragmentation within local services. Essex’s own Total Place style research has shown the panoply of provision faced by citizens. Clearly no public agency sets out to be deliberately obstructive. Yet, on a single street in a seaside town in Essex there are four different public agencies with which young people might need to interact, and with whom they might share basic personal details. Bringing partners together around a single budget would help reduce these ‘multiple contacts’ (and remember that each contact incurs a cost), enhance data-sharing between public agencies, and deliver substantial improvements in the customer experience.

At the very local level the neighbourhood based budgeting concept would not be expected to deliver substantial savings but rather work to promote hyper-local decision-making allowing local communities more control over how anticipated funding reductions affect their area. The fundamental value of a hyper-local, geographically-focused budgeting is in the promotion of local democracy: communities will have a more direct role in influencing the decisions that affect their lives.

20. With this in mind, Place Based Budgeting would appear best when it is:

· Based on a defined area containing distinct localities which have resonance with local people

· Supported by robust hyper-local governance structures

· Committed to neighbourhood-based decision making

· Backed by willing partners with a track record for innovation and

· Delivered within acceptable levels of risk

The role of local government in a decentralised model of local public service delivery, and the extent to which localism can and should extend to other local agents

21. As a locally democratically accountable body, we would expect local government to play a key role in providing accountability to the public for the public money spent locally.

22. The devolution of control and budgets will require a change in attitude from a range of public service organisations – including Whitehall departments.

23. ECC firmly believes that localism is applicable to far more than local authority services. Indeed, it would be valid to argue that, under the subsidiarity principle, public spending of all kinds should be devolved as far from the centre as possible.

24. There is clear scope for greater local control of all local and national public services. Indeed to suppose that localism can work without significant areas of spend in health and welfare benefits is open to debate: particularly given the entrenched health and welfare issues facing the UK today.

The action which will be necessary on the part of Whitehall departments to achieve effective decentralised public service delivery

25. For localism to work, Whitehall will need to let go. Whilst a degree of accountability to the centre will remain, Place Based Budgeting and other localism approaches mean a change for national government. Whitehall departments will need to radically review the way budgets are allocated to localities. In much the same way that County Councils will devolve budgets to local forums, so must central government. This will, of course, be counter-intuitive to some and will require some brave decisions by ministers. Whilst there will be exceptions to the general rule that there are no sacred cows when it comes to retaining funding at a Whitehall level, these exceptions should be few and far between [2] .

26. The question of devolving performance management functions and responsibilities is also likely to cause a cultural shift in Whitehall . Localities will be presented with a finite pot to spend in each financial year. It is for them to best manage that and to be judged locally on how it is managed.

27. Medium to long term financial consistency is essential. A common criticism of central government is that announcements have been made of money committed to specific schemes and initiatives that either do not materialise or are much diluted when they reach the local level. With new place based budgeting, ministers and their departments will have to accept that the days of nationally launched initiatives are numbered.

28. The contract that must remain is the year on year consistency of funding wherever possible. Some organisations (ie. schools) are well practised in keeping a level of reserve to meet contingency shortfalls in funding. Others, particularly in the voluntary sector are not so and locality forums will need to be assured by central government that the locality budget is going to be consistent, year on year, in the medium to long term.

The impact of decentralisation on the achievements of savings in the cost of local public services and the effective targeting of cuts to those services

29. By drawing public funds into a single locality-focused budget, s ervices would be targeted more effectively on local needs. Commissioners could bring their knowledge of local communities to bear in a way that national programmes – whether delivered through ring-fenced grants or locally active quangos – have failed to do. By targeting specific local needs, rather than delivering centrally prescribed programmes, local partners will also have greater opportunity to improve outcomes and reduce spending.

30. Under a locality-focused place-based budgeting model, local commissioners will be better placed to link decisions and take a ‘whole public service’ approach to intractable social problems.

31. A locality-focused budget could provide powerful incentives to investment in preventative interventions, reducing the medium to long-term cost to the public services. With all service providers accountable to the same local commissioning board, ‘split incentives’ would be removed entirely from the local public sector. Short-term costs in a policy area controlled by one department would no longer be a barrier to the long-term benefits that might be enjoyed in another. The financial and social benefits of prevention would accrue to the ‘whole system’ rather than to disparate service providers. The taxpayer already thinks in terms of a single public sector – it is time for the public sector to catch up.

32. As commissioners look to vary the local service mix in response to changing circumstances, services can be decommissioned safely without unintended costs and consequences being passed from one part of the public sector to another. A locality-focused budget would allow cuts in spending to be viewed in terms of their wider impacts and costs rather than their impact on a single organisation’s budget or balance sheet.

33. Yet to view locality-focused budgeting as solely a means by which to bring together the public sector with a view to improve processes is to miss the point. Whilst process and service improvements do make a difference to those who use a service, helping to minimise the structures that exist for the convenience of the public sector not the taxpayer, the potential to devolve funding means there is a further opportunity – namely to see citizens play a greater role in deciding and designing the services they value.

34. Total Place pilots suggest a range of savings – from back office and support functions through to redesigning delivery functions. Whilst these have yet to be realised, moves to a single coherent approach to local public services appear to offer scope for intelligent savings.

What, if any, arrangements for the oversight of local authority performance will be necessary to ensure effective local public service delivery

35. The taxpayer, or the citizen, is at the heart of the localism agenda. As already mentioned, the structures that commission or deliver services will be moulded and determined by the citizen. Democratic accountability will be at the forefront of this change in emphasis and the ability for the citizen to influence decisions, to deliver the services themselves and to take ownership of those services they need and rely on.

36. The citizen will also have more of a vested interest in those who represent them and to that end a welcome consequence will be a massive re-invigoration of interest in local matters, local democracy and local accountability. It will be the citizen who will best give an oversight of local authority performance at the ballot box.

37. Internal executive scrutiny of councils will continue to operate and an element peer review between councils will also ensure a consistency of standards

38. Checks and balances can be introduced locally to ensure that citizens are getting the services they need and that the vulnerable do not fall through the net. Councils and other service providers, at whatever level will be required to operate within the law and statutory obligations are in place to deal with this.

How effective and appropriate accountability can be achieved for expenditure on the delivery of local services for that voted by Parliament rather than raised locally

39. As already stated, in order for localism and Place Based Budgeting to be successful, Whitehall, and to a certain extent, Parliament is going to have to let go and trust citizens to commission and provide the services they need in their localities. This will include a virtual cessation of initiatives and funding commitments from the centre.

40. Where it is absolutely necessary for funding to be used for a specific purpose identified by Parliament, it will be for central government to agree a compact with local commissioners on how best to administer the allocation of funding. In this way, a double check for spending public money is established whereby if Parliament require money to be spent on a specific initiative, local commissioners will be best placed to determine whether their locality actually needs that funding for that particular purpose.

41. In the event of emergency (human or livestock pandemic for instance), a more pragmatic approach will need to be adopted but the negotiation still needs to take place between commissioners and Whitehall as to how best to spend that money locally.

Conclusions

42. Localism is reliant on responsibility and decision making for funding being situated as close to the point of delivery as possible. It does not only relate to what local government is responsible for currently but includes most, if not all, of public sector spend in a given area.

43. Structures will change and in some cases, bureaucracies will disappear. Local accountability and peer review will do away with the need for central audit and regulatory control.

44. Localism is based on and around the wellbeing and satisfaction of the citizen. It is not there for the convenience of the state or as a way of passing the buck. In order for it to work it requires Whitehall to release its grip on budgets, local government and commissioners need to mould themselves into a framework that best suits that locality and individual citizens need to take a more active and discerning interest in their interaction with the services they need.

October 2010