Memorandum from Henry Peterson
1.0 EXECUTIVE
SUMMARY
1.1 This submission to the Select Committee
looks at the key developments in central/local relationships
in England over the past decade. It then goes on to argue that:
- For localism to achieve the core aims of better
outcomes at significantly less cost, a modified form of local
governance body is needed—with integrated and accountable
responsibilities across all key public services.
- The form of accountability should be through
democratically elected representatives, exercising roles which
are broadly consistent across health, policing, and employment
support alongside existing local government functions.
- Place based budgets, with true pooling of public
expenditure streams, are critical to achieving the scale of public
expenditure reductions needed.
- Accountability for the totality of place-based
budgets should rest with Parliament. Accountability for spending
decisions within these budgets should be fully devolved to local
level.
- There is a viable and phased route to such a
form of local governance in England, building on the work of councils
and local partnerships since 2004 (including LAAs and Total Place).
2.0 BRIEF INTRODUCTION
TO THE
SUBMITTER
2.1 I worked as a director and deputy chief executive
for a London Borough (Hammersmith and Fulham) until 2005 and have
subsequently acted as a consultant and adviser to CLG (and former
ODPM), the Local Government Association, Local Government Improvement
and Development (formerly IDeA) and London Councils.
2.2 I have been closely involved in the localism
agenda, and in particular on governance issues (future of LSPs,
ideas on local public service boards), and on the development
and implementation of local area agreements.
2.3 Awarded the OBE for services to local government
in June 2006.
3.0 THIS SUBMISSION
FIRST ADDRESSES
FOUR OF
THE SPECIFIC
QUESTIONS POSED
BY THE
COMMITTEE
The extent to which decentralisation leads to
more effective public service delivery; and what the limits are,
or should be, of localism
3.1 The issue here is who is to judge the "effectiveness"
of public service delivery? One of the main arguments for localism
is that it leads to public services which are more responsive
to the differing needs and aspirations of communities across
the country. Judgement is made from a local rather than a central
perspective, with decision-makers better positioned to reflect
varying needs and aspirations across the country.
3.2 The debate on universal minimum standards,
versus local autonomy and responsiveness, remains unconcluded.
As the 2020 Public Service Trust has commented "the tensions
in the public mind between fairness of provision, on the one hand,
and both local control and choice, on the other, remain unresolved".1
3.3 Notions of universality, minimum national
standards, and "fairness for all" are deeply embedded
in the UK psyche. Other countries, with a history of more devolved
or federal administrations, do not appear to experience to the
same degree our apparent tensions over devolved decision-making
versus universality and equity.
3.4 The picture in the UK seems unlikely to remain
static, as the public confront stark choices and trade-offs to
a degree not faced for several decades. As the detailed impact
of public expenditure cuts becomes evident, the current weight
placed on principles of equity, universality, uniformity and choice,
look likely to shift. Government is already opening up this debate
in relation to certain hitherto universal benefits.
3.5 Hence the "limits to localism"
should not be seen as fixed. Few if any public services or forms
of welfare support should be deemed off-limits to democratically
accountable adjustment and fine-tuning at the local level.
3.6 In times when every public pound has to be
well-directed, the public will look for decisions to be made closer
to them. They will also want to see visible outcomes, services
tailored with more precision, and waste avoided. English local
government has a relatively good track record in these respects,
as compared with many other parts of the UK state.
3.7 Concerns over "postcode lotteries"
may well give way to growing public regard for thoughtful, well
planned, and democratically legitimated "postcode variance".
This assumes that a way can be found to achieve integrated and
coherent decision-making across the totality of public services
delivered at local level, with visible and consistent accountability.
The lessons for decentralisation from Total Place,
and the potential to build on the work done under that initiative,
particularly through place-based budgeting
3.8 The lessons from the Total Place initiative
are set out in the HMT report2 and work by the Office
of Public Management.3 The Select Committee will no
doubt be looking back further, to the experience of councils and
local strategic partnerships in rethinking delivery of services
through local area agreements and joint strategic commissioning.
3.9 The original thrust of LAA thinking, developed
jointly between local and central government, was devolutionary
and localist. The initial ODPM prospectus4 built on
the Treasury's 2004 proposals for more devolved decision-making.5
The LGA simultaneously published proposals for local public service
boards, promoting the idea of multi-agency governance bodies with
a remit to oversee and steer the totality of local public expenditure.6
3.10 Seen from a localist perspective, early
commitments by the previous administrations to "let go"
from the centre were never carried through. The "deal"
struck between CLG and local government in 2003-04 proved insufficient
to shift the underlying culture of Whitehall. Those parts of government
most wedded to top-down performance management prevailed. LAAs
became bureaucratised through target negotiations. Removal of
ring-fencing from central funding streams was piecemeal and slow.
Freedoms and flexibilities granted to local councils were limited.
3.11 Despite these setbacks, LAAS (and their
sub-regional equivalent of MAAs) have had significant impact.
Across all 152 first-tier local authority areas in England (and
with alternative models in Wales and Scotland) multi-agency partnership
working across the public sector became more deeply embedded.
Local political leaders took on a wider and more active role,
encompassing issues of crime prevention, community safety, health,
wellbeing and sustainability.
3.12 To date, policy developments on localism
and devolution in England have moved forward largely through a
series of White Papers, pilots and pathfinders. The 2007 LGPIH
Act consolidated some of the progress made, but not with any permanence.
In particular, issues of governance and accountability were largely
sidestepped, with reliance placed instead on informal and voluntary
partnership working.
3.13 The institutional capacity-building and
constitutional underpinning that might be expected as part of
a coherent decentralisation programme (as pursued in Denmark,
and previously in France)7 has yet to be put in place
by any UK national government (beyond the 1998 legislation on
devolution to Scotland and Wales, and the Greater London Authority
Acts).
3.14 The current difficulties in devising suitable
accountability arrangements for place-based budgets, and unresolved
issues over the status of future LEPs, can be seen as symptoms
of this ad hoc and incremental approach.
3.15 Despite being a signatory to the European
Charter of Local Self Government, successive UK administrations
have never accepted the principles of the Charter's Article 9
on finance. The negotiations between the LGA and CLG on the December
2007 Concordat exposed this basic difference of view.8
3.16 With the benefit of hindsight, it could
be argued that had Government put real weight behind localism
from 2003-04 onwards, the necessary expertise, institutional capacity,
and governance frameworks could have been built at a time when
public sector resources were plentiful.
3.17 As it is, it may prove that a critical window
of opportunity has been missed. The years in which a localist
governance framework could most easily be built have now passed.
3.18 While it is not too late for localism, it
feels too late for further gradualism. If decentralisation and
localism are to happen, a more radical shift is needed, comparable
to the devolutionary programmes carried through elsewhere in Europe.
Further years of pilots and pathfinders, chipping away at an over-centralised
state, do not look to be a sufficient solution.
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
3.19 The "community leadership" and
"place-shaping" roles of local councils, and of their
political leadership, were consistent themes of the previous government.
Local authorities were expected to take on this wider remit without
explicit constitutional changes and with very limited influence
over the totality of public resources. Many felt this was an exercise
in being handed responsibilities without powers. Now facing massive
financial constraints, a retreat by local councils from this ambitious
remit could well gather pace.
3.20 Yet there has been a significant
shift in relationships between councils and other public sector
agencies in the area, which could be consolidated if the Coalition
government moves purposefully and quickly.
3.21 The enhanced role of local partnerships
and the introduction of national frameworks to provide underpinning
to these bodies (such as LAAs and MAAs) have made a difference.
The previous government's aims of strengthening horizontal accountability
in a "place" while diluting vertical accountability
to Whitehall were advanced over the period 2004-10, if not far
and fast enough.
3.22 On the extent to which localism should be
extended to other local agents, the answer depends on the form
of localism. "Silo localism", in which individual Whitehall
departments simply shed responsibilities from the centre, may
reduce central budgets but create an even more fragmented and
expensive local state.
3.23 "Integrated localism" will continue
to have some upfront costs, in putting appropriate support architecture
in place. But the local government community is not alone in arguing
that such devolved autonomy offers the only long-term route to
more intelligent (and cost-effective) forms of intervention and
prevention by public agencies, along with better outcomes for
citizens.
3.24 The potential role of local government in
such a devolved (as opposed to decentralised) model would seem
clear. It is to govern, in the classic sense, and not merely to
undertake an agency role in attempting to co-ordinate local service
delivery. It is to engage with, and to reflect through representative
democratic decision-making, the needs and aspirations of local
people. It is to make the judgements, choices and trade-offs necessary
to reconfigure the boundaries of our public realm, within broad
parameters and budgetary allocations set by Parliament.
Place based budgets
3.25 The concept of a single local governance
body with a remit to bring together and steer the totality of
public expenditure in an area has long been a localist ambition.
3.26 LGA and Innovation Forum 2004 proposals
for local public service boards envisaged (as their endgame) a
streamlined partnership of all key players, overseeing a locality
based block grant covering the totality of locally relevant public
expenditure.9
3.27 In its 2005 proposals for "second generation
LAAs", the LGA again argued for such arrangements, at the
Central Local Partnership Ministerial Sub Group on LAAs and Performance
Management.10
3.28 Interest by the previous government in such
ideas quickened only towards the end of its term of office, as
a result of the work of Cumbria County Council, the Leadership
Centre,11 and the Institute for Government. This led
on to the Total Place Programme and the more recent lobbying proposals
from the LGA.12
3.29 Proponents of place-based budgets now have
to fight their corner in the context of public service cuts, and
not at a time of growth or steady-state. This is raising questions
on viability and costs of implementation.
How effective and appropriate accountability can
be achieved for expenditure on the delivery of local services,
especially for that voted by Parliament rather than raised locally
3.30 The extent to which Parliament can be said
to be genuinely accountable for spending decisions on current
levels of centrally voted local funding is debatable.
3.31 The House of Commons determines annually,
by affirmative resolution, the total amount and distribution of
all elements of Formula Grant. But there are no restrictions on
how local government spends the major part, Revenue Support Grant.
Specific formula grants, and other ring-fenced funding streams
have been shrinking as a proportion of the total of local authority
spend. The Coalition Government has committed to further removal
of ring-fencing.
3.32 In this context, and with layers of democratically
elected decision-makers in place within first, second and third
tier local government, what further level of accountability does
Parliament need for place-based budgets?
3.33 Historically, public services in England
have a mix of central and local financial accountability, with
no particular rationale behind the mix. As others have noted,
"At no stage of English history has any government held a
consistent and logical policy on the range and limits of municipal
services." 13
3.34 The LGA's June 2010 publication on place
based budgets14 suggests a new form of "Place
Estimate", approved by Parliament, as the means of ensuring
Parliamentary accountability for the "national" element
of a set of PBBs. An alternative option, of devolving a tax base
equal to any expenditure streams included in a PBB, is also floated.
3.35 Either way, any solution comes back to basic
issues of the central/local constitutional settlement. How should
place-based budgets combine "Parliament's money" with
"the local area's money"?
3.36 As argued above, distinctions (and accountability
arrangements) for "national" as opposed to "local"
public funds are already blurred.
3.37 Place-based budgets could go down the route
of cautious pilots, ring-fenced to specific "themes"
(as explored in recent weeks by Government Departments and local
councils). But if they are to have significant impact, and to
move beyond "alignment" of funding streams (with accountabilities
unchanged) national roll-out and a new set of public expenditure
principles is needed.
3.38 These could be similar to those developed
for the Scottish Parliament, at the time of devolution,15
as assigned budgets over which local decision-makers have freedom
to spend according to local priorities.
3.39 Where existing public funds are spent at
local level, is there evidence that the public value a system
of Parliamentary accountability more highly than accountability
to locally elected politicians? The latter is closer to them.
The concept that Parliament exerts close and direct control over
the details of expenditure in a "place", once Estimates
are voted, is surely largely notional?
3.40 This is not the same issue as that of devolving
tax-raising powers, where successive governments have made
clear their reluctance to devolve significant new powers to local
level.
3.41 Hence current arrangements for Parliamentary
accountability should not be seen as an insuperable obstacle to
place-based budgets. The case for place-based budgets is that
a locally-based governance body, bringing together key decision-makers
in an area and ensuring local democratic oversight, offers the
best hope for more carefully targeted allocation of public funds.
4.0 IS THERE
A VIABLE
AND PHASED
WAY FORWARD
FOR LOCALISM?
4.1 The second part of this submission looks
at the prospects of achieving a transition to a form of localist
governance that is radical, while minimising costs and upheaval
resulting from institutional change.
4.2 The proposals are based on six guiding themes:
- Start with the money with a re-ordering of accountabilities
for public expenditure.
- Keep governance simple, rationalising the currently
ambiguous relationships between local authorities and local partnership
bodies.
- Strengthen directly elected accountability as
the primary means of extending citizen influence across the full
range of public services.
- Use existing spatial boundaries—unlike
the current "bottom up" approach for deciding the spatial
geography of LEPs, this submission suggests using the 152 first-tier
local authority areas in England as the spatial level for place
based budgeting and governance (i.e. the areas currently covered
by LAAs).
- Use existing legislation where possible to avoid
the extended delays inherent in Parliamentary timetables.
- Place faith in local politicians, and in those
public servants already working at local level to improve, integrate,
and reinvent public services.
Theme 1 Start with the money
4.3 Place-based budgets, under this model, would
be a formula-based grant for the locality with no ring-fencing.
Parliament would determine the total figure (ideally with settlements
spanning three years or more). Decisions on spending within the
total would be devolved to local level, on principles similar
to those applying to the UK devolved regions. As at present, local
councils would raise a proportion of the total through local taxation
and precepts.
4.4 Scope of PBBs would be similar to that being
developed (in their widened version) for Local Spending Reports
under the Sustainable Communities Act 2007. Scope would exclude
national spend on eg defence, and potentially include some transfer
and welfare payments to individuals in cases where limited local
variation has demonstrated benefits.
Theme 2 Keep governance simple and strengthen
directly elected accountability
4.5 In order to extend local democratic accountability
across the full range of locally delivered public services, the
suggested model is that of a local board made up of directly elected
mayors/leaders, working collectively with directly elected portfolio-
holders for health and wellbeing, policing/community safety, employment
and skills, alongside existing local government services.
4.6 These locally elected politicians would form
the executive of the local authority, and the core executive of
a local public services board (or "local budget board").
The latter could be constituted as a public service trust, or
community enterprise company, with legal capacity to hold funds
and employ staff. Other key local partners (business, third sector)
would have membership, as with local strategic partnerships (LSPs)
at present. But a directly elected executive would sit at its
core.
4.7 Current proposals for directly elected Police
Commissioners would be adapted to fit with this more collective
model of governance (while still meeting the commitment to introduce
"directly elected persons" in this role). These public
service boards would oversee public health and wellbeing, as proposed
in current NHS reforms. That part of the place-based budget assigned
for GP commissioning would be passported onwards, other than when
withholding or redirection became necessary in the public interest.
4.8 Over the longer term, such local public service
boards (or "budget boards") would come to be seen by
the public as the key governance body for the area. They would
subsume current council cabinets or executives. Non executive
councillors on the local authority would continue to act as the
"assembly" for the area, with functions of constituency
representation, overview and scrutiny (as for the GLA in London).
Theme 3 Use existing spatial boundaries
4.9 The June proposals from the LGA on place-based
budgets suggested that spatial boundaries should be set through
local negotiation and agreement between key partners and players.
The initial stages in the establishment of Local Enterprise Partnerships
(LEPs) have followed a similar bottom-up approach, leading to
the submission of proposals for 56 sub-regional LEP areas.
The case for variable geography for place-based budgets,
between sub-regional for economic issues to district or neighbourhood
for issues such as crime prevention, is a strong one. But the
complexities of making such arrangements happen, and ensuring
any level of citizen understanding or coherent accountability,
are formidable.
4.10 This submission suggests an alternative
approach, of using the existing 152 first-tier local authority
areas as the spatial architecture for place based budgets and
governance. This is for several reasons:
- statutory accountability for budget-holding and
resource decisions, on local government spend, already lies at
this level;
- existing forms of democratic electoral accountability
are in place;
- Local Strategic Partnerships provide the foundations
for multi-agency integrated governance in these areas, building
on relationships of trust and collaboration;
- six years of LAAs has already built partner relationships
at this level;
- progress could be made swiftly, avoiding extended
local debate alternative spatial options; and
- Local Spending Reports already operate at this
level.
4.11 There is no perfect solution to the question
of the ideal spatial level for place-based budgets. With LAAs,
district councils and neighbourhood bodies have often struggled
to make their voices heard and their more local priorities included.
But there has been the chance to build more mature communication
and dialogue.
4.12 First-tier councils have learnt that their
statutory responsibility for putting together a LAA does not give
them the right to dictate priorities to lower spatial levels.
And, looking upwards spatially, these same councils swiftly recognised
the need to come together to tackle wider issues, at the level
of natural economic areas, through MAA arrangements.
Theme 4 Use existing legislation where possible
4.13 Many councils and their local partners already
work together to make use of existing legislative opportunities
for pooled funding and joint governance. The history of LAAs,
MAAs, LSPs, and partnership working in the Core Cities and larger
counties demonstrates this.
4.14 The full scope of secondary legislation
(such as the provisions in Sections 11 and 12 of the Local Government
Act 2000, for the Secretary of State to approve alternative forms
of local authority executive) remains relatively unexplored territory.
4.15 With a Government willing to support innovation,
a means of testing out more radical options for directly-elected
multi-agency partnership executives, of the kind suggested above,
may prove possible without the need for primary legislation. Significant
changes to central government funding regimes (such as Area Based
Grant) have been introduced in the past non-legislative routes,
and hence relatively quickly. More fundamental changes in accountabilities
of eg NHS bodies or police authorities are another matter.
Theme 5 Place faith on local politicians and those
who serve them
4.16 Experience of England's devolutionary efforts
over the past decade, and current Whitehall moves to "localise
services", suggest that some fundamental cultural blocks
remain at the heart of the central/local relationship. While the
rhetoric of localism has been ramped up, many Ministers and MPs
appear still to see locally elected politicians as an insufficiently
credible locus for devolved decision-making. There is a perceived
reluctance to introduce a strengthened local state.
4.17 Advocates of local government often struggle
to understand why local councils are not seen as the natural option
for providing integrated and accountable localism. Following the
series of reforms over the past decade, does the quality of decision-making
and priority-setting at local level still have to justify itself?
Is it notably worse than that at national level?
4.18 Many would also argue that the calibre of
staff supporting and servicing local partnership work, from councils,
NHS bodies, police and other arms of government is as good as
that of civil servants in regional Government Offices and in many
parts of Whitehall.
4.19 Given the track record of improvement in
local government, particularly in use of resources, project management,
and delivery (as compared with many NDPBs, quangos, and central
departments) what's not to be trusted?
4.20 Yet cultural attitudes towards local government
remain slow to change. Ministers and Whitehall have gained more
respect for local government in recent years, but historic perceptions
of councillors as "a bit dim and often self-important"
still run deep. As does the prejudice that civil servants possess
"Rolls Royce minds and local government officers… motorcyclist's
minds".16
4.21 Efforts were made by CLG and others, as
part of the previous government's "new performance framework",
to shift these cultural attitudes in Whitehall. The Institute
for Government has continued to press on this theme.17
But there are signs of Whitehall reverting to its silo traditions,
while simultaneously pursuing forms of localism that bypass local
government.
Potential risks of localism
4.22 For any government, there are risks inherent
in devolving and decentralising. Yet at a time of major budget
public expenditure cuts, there are also big risks in doing nothing,
or in a fragmented approach to localism.
4.23 Some risks that the Select Committee may
wish to consider, and to look for ways to ameliorate, include:
- the lack of an integrated governance layer to
which to "let go". The previous government moved cautiously
in strengthening the role of local strategic partnerships. Following
the 2005-06 review undertaken by ODPM, 18 these partnerships
were left as non-statutory bodies with no powers or capacity of
their own. Total Place took integrated local governance machinery
no further.
- The current search for suitably robust decision-making
arrangements for LEPs, place-based budgets, or for health and
social care, demonstrates this gap in our governance landscape.
There is still no adequate statutory means through which local
decision-makers can come together to create strong and effective
vehicles for multi-agency, democratically accountable, leadership
of place.
- Without such a layer of governance to let go
to, the devolutionary ambitions of the current government will
remain hindered. The suspicion remains that Whitehall will always
find reasons why such a governance layer is not needed, or is
undesirable.
- fragile support arrangements for local partnership
working. Much of what has been achieved at local level in recent
years has relied on commitment and energy of small numbers of
staff, working to make a success of LSPs, LAAs and MAAs, and "joined-up"
working. Funding arrangements for such staff have often been ad
hoc and short-term, relying on sources such as Neighbourhood Renewal
Funding and LAA Performance Reward Grant, which are no longer
there.
- Hence there is little solid institutional capacity
in place to take joint working and place-based budgets to the
next level. More worryingly, a number of councils are already
dismantling or reducing their local partnership arrangements,
in their efforts to cut costs.
- In doing so, their hope is that collaborative
working is sufficiently ingrained as the "day job" for
many service providers, for working relationships to survive intact.
This may well prove a false hope. Several Coalition Government
initiatives potentially run counter to an integrated approach
to local public service delivery (separate directly elected police
commissioners, GP consortia of unpredictable size and spatial
level).
- the temptations for any Government to "axe
and devolve", cutting budgets while passing down accountability
for the consequences. In the minds of the public, this could forever
associate greater local autonomy and place-based budgets with
much increased austerity. As discussed above, this is not the
best moment to be embarking a shift from central to local decision-making.
5.0 CONCLUSIONS
5.1 That a decade of public service expansion
passed by under a government cautious and ambivalent in its moves
towards localism is already one missed opportunity.
5.2 It will be doubly ironic if a new government
committed to the "radical devolution of power and greater
financial autonomy to local government" finds that it presides
over the dismantling of the modest advances towards integrated
local governance as have been put in place (despite the obstacles)
in English counties and cities.
5.3 Empowerment of neighbourhood groups, and
a more active civic society, may help us through these difficult
years. Silo-based decentralisation, through which Whitehall departments
offload responsibilities (and shrunken budgets) to more localised
delivery agents, may prove better than nothing. But neither is
a substitute for integrated and democratically accountable local
governance, bringing together resources and decisions in a way
that citizens can understand.
5.4 Localised and devolved governance in England
should not prove an impossible nut to crack, if the political
will is there.
REFERENCES
1 What do people
want, need and expect from public services, 2020 Public Services
Trust and Ipsos MORI March 2010.
2 Total Place:
a whole area approach to public services
HMT and CLG March 2010.
3 Learning
from the Total Place pilots, OPM Sue Goss
February 2010.
4 Local Area
Agreements: a prospectus, Office of the
Deputy Prime Minister 2004.
5 Devolving
Decision Making 1 delivering better public services: refining
targets and performance management, HMT
and Cabinet Office March 2004.
6
7 With a little
help from our friends: international lessons for English local
government Localis and LGA January 2009, Council of Europe
report on central government supervision/control of local government,
Nov 2006.
8 Localis commentary
on 2007 statements by Hazel Blears (as for 8 above).
9 Local public
service boards, LGA and Innovation Forum
July 2004.
10 LGA paper to
CLP sub-group, July 2005.
11 Counting
Cumbria December 2008 Leadership Centre
for Local Government.
12 Freedom
to lead—trust to deliver LGA January
2010, Place based budgets—the future governance of public
services LGA June 2010.
13 Whitehall
must learn to let go, Peter Hetherington,
Guardian 1 Nov 2006.
14 Place based
budgets - the future governance of public services
LGA 2010.
15 See http://www.scotland.gov.uk/government/devolution/scpa-10.asp
16 Both sets of
comments quoted in Attitudes to Local Government in Westminster
and Whitehall, George Jones and Tony Travers, Commission for
Local Democracy, May 1995.
17 Shaping
Up: a Whitehall for the future, Institute
for Government 2010.
18
September 2010
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