Memorandum from the New Local Government
Network (NLGN)
The concepts of localism and decentralisation have
been the defining emphasis of the work of the New Local Government
Network since its inception. We are an independent, not-for-profit
think tank that seeks to transform public services, revitalise
local leadership and empower local communities. NLGN's unique
networks of innovative local authorities and private companies,
voluntary, community and public bodies work alongside the research
arm of the organisation to provide thought-leadership and original
research into the future of localism and the ways it can improve
public service delivery and re-energise democracy in England.
We welcome this timely inquiry into localism and
decentralisation being carried out by the Communities and Local
Government Select Committee. We are grateful for the opportunity
to present our thinking and recommendations.
EXECUTIVE SUMMARY
- NLGN believes strongly in the ability of localism
and decentralisation to deliver better public services, make public
money go further and strengthen civic society. The UK's overly
centralised system of government too often leads to unresponsive
and wasteful public services. The scale and complexity of social
and public policy problems requires a response that can only be
developed at a local level between those that access and those
that decide and deliver services.
- The relationship between the citizen and the
state is changing as government responds to severe short term
financial pressures and longer term social and demographic changes.
Councils are at the forefront of renegotiating this relationship,
and we expect that they will remain the focal democratic presence
in the UK's towns and cities. In the absence of any realistic
alternative to local democracy, local government will have to
retain a major role in public service delivery, civic society
and the economic health of their areas.
- This is not an argument for complacency. The
role of local government may need to change radically in the coming
years, a fact evidenced by the wide range of institutional innovations
emerging from councils like Barnet, Brighton, Lambeth and Suffolk.
To maintain their legitimacy and handle the spending cuts, local
authorities must redefine their role in dialogue with their communities.
- This role should combine, at a bare minimum,
the following functions: democratic negotiator and leader, strategic
commissioner, service provider, co-ordinator of public bodies,
facilitator of civic society, and a driver of economic growth
and investment in the locality.
- The fiscal consolidation means that councils
will have to make very difficult decisions over the coming parliament.
This process will be made considerably easier if central government
offers a stable and long-term policy framework and funding settlement.
- Decentralisation can help councils cope with
the cuts by providing the power and flexibility to do things differently.
The potential of shared services, collaboration with other local
services, better asset management, personalisation, early-intervention
and prevention are well known. The reason this potential has not
yet been realised is, in part, because of siloed budgets and accountability
mechanisms in Whitehall. These silos can be removed by devolution
of power and money to councils, communities and individuals.
- As this suggests, devolution can only happen
effectively if Whitehall is prepared to change radically. The
locality—as the totality of all organisations providing
public services to a particular area—needs a way to have
a single conversation with central government about money and
policy, rather than working through bilateral negotiations with
each individual department. This would enable all parties to decide
upon the allocation of resources according to the unique priorities
within a particular area.
- Local government's unique strength lies in its
democratic accountability. Councillors are the primary source
of legitimacy for their locality, and they have a key role to
play not only in renegotiating the role of their council, but
in leading the debate about transforming public services more
generally. This means that the primary avenue for accountability
should be direct election of councillors and mayors, bolstered
by increasing transparency and the active participation of citizens.
- That said, we recognise the continuing need for
some form of light touch central oversight to share good practice,
promote innovation and to spot and tackle persistent or systematic
underperformance.
1.
1.1 The United Kingdom is a highly centralised
country. Whitehall is responsible for a remarkable 70% of government
expenditure.[75]
Among the OECD countries, this level of central control is surpassed
only by New Zealand. International comparisons of governmental
effectiveness consistently show that the highest performers generally
have either strong local government or federal structures.[76]
1.2 The UK's centralised model of government
means that public services are more often designed to meet the
needs of Whitehall silos than to meet the needs of citizens. This
can result in significant inefficiency as citizens receive too
much of the wrong kind of service, or fall between the cracks
in different parts of the public sector. The LGA estimates that
area based budgets could save £100 billion over the life
of the current parliament by designing out some of these flaws.[77]
1.3 A major shift towards localism and decentralisation
is inevitable. But this shift is also desirable, because it has
the potential to remove bureaucratic central constraints and create
much more space to redesign services around the needs of local
people. Many local authorities have proven that they can deliver
excellent services, and that they have ideas on how to go further.
1.4 These practical arguments serve to reinforce
the principled case for localism. In a liberal democracy, power
should flow upwards from the people, rather than downwards from
the centre. Political authority should be exercised at as low
a level as possible to reflect this fact and to ensure that power
is used in an accountable and responsive fashion.
1.5 It is important to raise two definitional
issues at this point. Localism and decentralisation are overlapping
but separate concepts, and they suggest different strategies for
public service reform. Localism can be taken to suggest a move
to devolve power to local government as a primary democratic institution.
Decentralisation is more about giving power to individuals and
communities.
1.6 The two concepts can lead to very different
policy conclusions. A localist might be sceptical of free schools
because they weaken democratic control over education, while a
decentraliser might support the same policy because it appears
to give parents more choice. A localist would favour giving councils
a large degree of influence over all local public services through
area-based budgets, while a decentraliser might prefer to go beyond
the council and make services directly accountable to individuals
through individual budgets. Such approaches are not necessarily
mutually incompatible, but issues of clarity about democratic
accountability and coherence across local public services are
likely to come to the fore.
1.7 One of the biggest limitations on localism
is arguably public opinion - the people of England are deeply
ambivalent about devolution of power. While many people say they
want more local control over public services, it is less clear
that people always desire the local variations in service provision
that would inevitably follow.[78]
However, NLGN believe that such views reflect more on the historically
centralised nature of decision-making, public services, taxation
and funding than they do on community aspirations for greater
power and control.
1.8 Decentralisation is a more managerial approach
to reform which transcends some of the political barriers to localism.
Free schools and consumer choice in health do not require a major
shift in public attitudes, partly because they seem to raise fewer
concerns about the "postcode lottery". However, even
here the government must contend with the fact that the public
does not tend to value public service choice as an end in itself,
and that many people are not very inclined to become involved
in managing their own local services. Only one-in-ten of us is
currently involved in local civic activism.[79]
1.9 These objections and barriers must be overcome
politically before the Coalition Government's vision of a localised
and decentralised Britain can become a reality. This is partly
about ministers having an honest debate with the public about
the likely impact of localism, but it may also involve a more
thoroughgoing renewal of local politics and civic activism. The
UK is not yet a nation of localists.
1.10 There are also a number of managerial conditions
that NLGN believes should be in place to allow localism and decentralisation
to flourish. Chief among these are safeguards to ensure that localist
solutions are successful. This means that councils and other services
still need to be able to compare the quality and unit costs of
their work, and to develop mechanisms for sharing innovation and
best practices. This information is also vital to ensuring that
the public can hold the local state to account.
1.11 The government also needs to maintain an
"early warning system" for spotting failing services
and tackling them effectively. Armchair auditors and benchmarking
systems will help to maintain the quality of public services,
but alone they do not provide a way to address systemic corporate
failure.
2.
2.1 Numerous pieces of research, including work
by NLGN, have demonstrated the huge financial potential offered
by the concept of Total Place. Its successful implementation is
estimated to be worth billions in savings. In addition to financial
savings, there are huge benefits to be gained through greatly
enhanced, integrated service delivery that is centred on the citizen,
which ultimately leads to better and more sustainable outcomes.
2.2 Perhaps the biggest gain from the Total Place
pilots was a demonstration that devolution can deliver on its
promise. It is the local dimension that can bring a truly citizen-centred
approach to policy and services.
2.3 The government currently appears to be moving
beyond Total Place towards a revised model of Community Based
Budgets. NLGN supports this move in principle, but we await details
of exactly how the budgets will work and, more importantly, whether
they will allow local government to influence spending in worklessness,
the criminal justice system, primary care, policing and schools.
2.4 Moving beyond the concept of Total Place
to look at its practical implementation reveals the cultural,
architectural and operational barriers that currently prevent
greater financial and organisational integration of agencies at
the local level. It is clear from NLGN analysis that many of these
barriers are the result of an overly centralised government and
heavily siloed civil service.
2.5 Whitehall silos can have highly damaging
implications for localities - these take the form of ring-fenced
budgets, professional, organisational and sectoral cultures, performance
targets and processes, specific departmental budgets programmes,
and a reluctance within the centre to let go.
2.6 Major phased reform is necessary. The long-term
ambition should be a mutual and equal partnership of trust and
collaboration between central and local government in responding
to the challenges in each place, where Ministers feel able to
devolve and refrain from intervention in local issues.
2.7 We propose that the Government should encourage
interested localities to come forward with clear robust business
cases for reform, where responsibility and resources should be
handed down to the local level. These should include hard edged
deals on responsibility over agreed outcomes, risk and reward.
NLGN believe that positive proposals could be forthcoming in areas
such as worklessness and skills, acute care, regeneration, transport,
offender management and probation service spend, drug and alcohol
abuse.
2.8 NLGN propose that the following should be
up for discussion and dealmaking through this medium:
- All Non-Departmental Public Bodies spend and
revenue budgets and over domestic public service spend such as
social benefits.
- Removal of additional specified performance targets.
- Length of budgetary cycles.
- Freedoms across space and geography for allocation
of resource.
- Payment by results approaches.
- Propositions from national government for local
government on bringing together appropriate services within collaborations
or across the country (for instance, HR payroll) and a sharing
of the financial benefits.
2.9 We propose that to cut out unnecessary bureaucracy
and to allow full discretion over spend across regeneration, transport
and housing, a single capital pot with greater longer term
certainty should be given to local areas.
2.10 Reform at central and local level must retain
a focus on the whole public service agenda whilst recognising
the function that each tier of government must perform to ensure
fair, efficient and user-centred services and sustainable outcomes.
3.
3.1 The relationship between the citizen and
the state is in a process of transition, placed under the spot-light
by the Coalition Government's aims to: decentralise power away
from institutions towards people and communities; reduce public
expenditure; and to pursue a recalibration of the means by which
Government achieves its objectives.
3.2 The size of the state will undoubtedly be
scaled-back through a period of fiscal consolidation, and via
this process its remit and presence will be redefined. Within
the context of a Big Society, questions must also be asked of
the role of local government.
3.3 NLGN believes that although local government
may operate in a fundamentally different way in the future, as
a democratic institution it remains vital to the objectives of
thriving communities, economic growth and effective and efficient
public services.
3.4 Potential reform could take many directions
and NLGN sees that whatever these are, local government will remain
a vital presence in local public service delivery. NLGN believes
that a sustainable approach to localism must involve local authorities
extensively. This is founded on three grounds:
- Efficiency—we believe the principle of
subsidiarity[80]
should be used to decide how far power or responsibility needs
to be devolved. There are clearly examples where power could be
devolved further than a local authority to advance many social
and economic aims, but there are also examples where the local
authority is the best placed agency to tackle a particular issue
or provide a service. This is particularly pertinent to strategic
planning and co-ordinating roles, which cannot be performed adequately
below this tier. Furthermore, there are clear examples where responsibility
may best lie at a supra-local level in order for sufficient scale
to be gained (such as infrastructure planning or worklessness
prgrammes).
- Equity—the principle of fairness is a key
ambition of the Coalition Government and it must be recognised
that there is a need for democratic representation to protect
the rights of the vulnerable and uphold fairness across service
provision. In the context of decreasing budgets, upholding fairness
necessitates a careful negotiation of priorities. To do this there
must be devolution of resources and power to enable a proper dialogue
across sectors and with citizens.
- Democratic legitimacy—Councils are the
major democratic presence at a local level, with a clear mandate
and legitimacy with which to make decisions about public service
delivery and to lead their communities. Without the involvement
of local government it is far harder to ensure accountability
in service provision or galvanise the aspirations of local communities.
3.5 A truly localist approach should empower
local authorities to define their own role and remit. There would
be a number of ways to configure this, dependent on the needs
of a locality and the approach the local authority deems to be
best. This taken into account, NLGN believes that the role of
a local authority in a decentralised model of public service delivery
entails at its narrowest:
- Strategic Commissioner: local authorities may
choose to commission, rather than directly provide, some or all
of their services in instances where the desired outcomes are
clear and known but where there may be multiple ways of achieving
these. As such the council may decide its role is simply to commission
from any available resource the service on behalf of the public.
Through this lens, the complete resources can be mobilised to
meet the services needs whether it be public, private, third sector
or communities themselves.
- Service Provider: Financial constraint is likely
to impel models of delivery to evolve, and services may increasingly
be delivered by the private sector, voluntary and community sectors.
However, NLGN believes that one of the core roles of local authorities
will remain as service provider.
- Facilitator: local authorities possess size,
capacity and information to be effective facilitators of civic
society. This is a role that entails empowering citizens and communities,
providing them with the skills and capacity they require to take
a more active role in the running of their area.
- Co-ordinator: the complexity and/or scale of
many social and public policy issues requires organisations from
all sectors to work together. As the democratic core, and with
a remit that cuts across all public policy at a local level, the
local authority is often best placed to lead on collaboration,
integration and co-ordination of efforts to ensure that services
can be centred around citizens and delivered in the most efficient
and fair way possible.
- Democratic point of accountability: Local authorities
will remain the institution that is visibly responsible for services
in the eyes of the public, even in instances where there has been
out-sourcing or community ownership. As the centre of local democracy
and either the provider or commissioner of services, it is councils
that must be ultimately accountable for the quality of the service.
As community leaders, councillors and councils play an advocacy
in representing views and concerns of citizens to other parts
of government.
- Well-being and economic health: these are fundamental
to the successful functioning of a society and sense of "place".
It is therefore crucial for local authorities to have a role in
promoting these factors, particularly in supporting its residents
to gain employment and providing a suitable network of infrastructure
of support businesses, employment and trade in its locality and
across neighbouring authorities in line with functional economic
geographies.
- Municipal finance: local authorities should be
recognised as macro-economic entities with an active relationship
with the economic destiny of their localities. As such there is
a need for them to have a broad remit that includes entrepreneurialism,
trading, freedom in taxation and a scope to enable them to drive
capital investment locally through active municipal finance that
is independent of central government.
3.6 This list is not exhaustive. It is intended
to cover the principal roles that local authorities are likely
to play in a decentralised model of public service delivery but
we accept that there could be wider roles that can legitimately
be held by local authorities.
3.7 It must also be noted that councils will
have additional or different roles when interacting with other
parts of the public sector where there are plans to decentralise
functions, such as GP commissioning, free schools and academies,
and co-ops and mutuals. However, if these inherent roles are recognised
as fundamental to localism, then they should be applied to develop
coherent and accountable local public services.
3.8 Some of these plans implicitly entail a less
active role for local authorities as power is devolved from them
to other agencies or organisations. However, they simultaneously
create an important need for local authorities to retain a democratic
oversight of these services and to act as convener and facilitator
of the myriad of agencies in the field.
4.
4.1 Over the last couple of decades, alongside
major public investment, the focus on public service "delivery"
and new performance management techniques has led to a deeply
engrained tendency for Whitehall departments to organise on a
heavily centralised, managerial and prescriptive basis.
4.2 Public services saw major improvement over
this period, but in recent years there has been a growing awareness
that to get services from good to excellent a far more decentralised
approach is necessary.
4.3 Devolution of power to local government,
civic institutions, communities and citizens allows far more responsive,
innovative and ultimately effective public services. Continuous
improvement should be increasingly driven by empowering citizens
to shape the services they receive and strengthening democratic
accountability, rather than through top-down initiatives and control
from the centre.
4.4 However, the devolution of power and decentralisation
of services has been frustratingly slow and stunted. Enormous
pressure from the national London-based media and lobby groups
for Ministers to provide instant responses to issues, combined
with the temptation of Ministers to cling on to their levers of
influence and control, are powerful forces that should not be
underestimated. Part of the problem also rests with the passivity
of some in the local government sector itself who have been schooled
into a dependency on central guidance and direction.
4.5 Referring to Whitehall as one entity hides
significant differences. It is important to note that some departments
have been better than others at decentralising service delivery.
NLGN research has highlighted substantial variation between departments
in their willingness to decentralise.
4.6 The current architecture of departments and
processes does not facilitate decentralisation of services across
Whitehall. The siloed nature of local public services is often
an echo of the central architecture above it. Driving improvement
at a local level means gaining financial integration and buy-in
from the centre. To drive area-based budgets, we need a means
by which central and local government can work together to decide
on the allocation of resources, dependent on the needs and priorities
of individual communities.
4.7 The principle of "earned autonomy"
risks creating a mindset within Whitehall that is resistant to
devolution. The premise that autonomy has to be earned may serve
to perpetuate existing centralised arrangements and we would recommend
that it is replaced with an attitude of "earned centralisation".
4.8 NLGN recommends that the devolutionary rhetoric
used by current and previous Ministers is captured in a new "duty
to devolve". Government departments should regularly assess
whether their functions have been devolved to the lowest and most
appropriate spatial level. If a function has not followed the
principles of subsidiarity in this way, central Government should
be under a legislative duty to devolve that function in line with
specified criteria.
4.9 Government Departments are currently "judge
and jury" when it comes to devolution and are open to the
charge that they are insufficiently impartial and too institutionally
protectionist to make a judgement about whether they should decentralise
services. Therefore NLGN also recommends the creation of a Parliamentary
Devolution Select Committee to oversee and scrutinise departmental
policy and, if implemented, to monitor the implementation of a
"duty to devolve".
5.
5.1 More localised responses at the individual
citizen, community, local authority or sub-national tier offers
considerable scope for significant savings. The appropriate scale
for activity will depend on the nature of the services, economic
and labour markets and potential provider markets.
5.2 Whether on their own or in cross-boundary
collaborations, localities would have an interest in taking additional
responsibilities in worklessness and benefits, offender management,
local policing, youth services, drugs and alcohol abuse. Siloed
funding streams, duplication of activity and a lack of local responsiveness
results in sub-optimal outcomes and the injection of avoidable
costs. When local decision-makers are able to access the full
spectrum of public budgets going into an area, evidence demonstrates
that financial savings of over 10% can be unlocked. In London
alone, analysis showed that over £11 billion could be saved
if decision-making and commissioning functions were devolved and
brought together at the local level.
5.3 There is opportunity to create a far wider
role for individual budgets and more community decision-making
and provision of services. When designed carefully and applied
appropriately, personalisation can deliver improved services,
can increase social capital and reduce costs to the public sector.
5.4 Financial savings can come from handing over
greater responsibility to citizens for assessment (which can lead
to reductions in staff and process costs) and from each citizen
driving value for money for themselves; from channel shift and
from tailoring services better to individual needs. For instance,
individual budgets in adult social care witnessed cost reductions
of approximately 7%.
5.5 To do this effectively also requires sophisticated
knowledge of the depth, scale and nature of existing and potential
community capacity and capability. Due to its proximity to its
residents, local government is in a privileged position to understand
where and how to mobilise responses from civil society, and marshal
all the local intelligence on its customers.
5.6 Though decentralisation would deliver significant
savings, the rapid pace of fiscal consolidation and planned reduction
of public funding means that the range of services local authorities
provide will have to shrink. Deciding where to rationalise spending
over the coming years will prove a considerable challenge.
5.7 NLGN research has found that a number of
core tensions are likely to come to the fore: between acute and
preventative services; between services that are received by a
majority of the population versus resource-intensive services
targeted at a minority of more vulnerable residents. There are
no easy answers to these tensions and barriers, and local communities
should be allowed to negotiate their priorities.
5.8 Councils as local democratically-elected
bodies are uniquely placed to engage their communities in meaningful
debate on the priorities of their area. A new service settlement
is required. In-depth community engagement should underpin the
negotiation process in a local area. An honest dialogue is needed
about which services currently provided by the council communities
and individuals, with proper support, will have to take on themselves
in the future.
5.9 Crucially, for all this to happen, longer
term funding certainty is needed from Whitehall to allow councils
to develop invest-to-save schemes and to plan strategically, with
their communities, over the timeframe of major budget reductions.
NLGN has previously argued strongly for a three-year framework
which would allow councils to think innovatively and radically.
The Government should certainly seek to ensure that unexpected
or additional budget reductions are not sprung on the sector.
6.
6.1 NLGN has consistently argued for a series
of reforms that would reinforce democratic processes, localism
and a focus on the citizen, whilst reducing bureaucratic processes
and "red-tape".
6.2 We believe that local authorities should
remain free to choose the institution conducting their audit.
However, the lessons from the financial sectors should be heeded,
and mechanisms should be put in place to ensure that this does
not lead to cosy relationships between auditing bodies and their
clients. We also believe that, following the abolishing of the
Standards Board, a new Code of Conduct must be established detailing
the ethical and behavioural standards expected of public officials
and officers, and the recourse mechanisms available to citizens.
6.3 Performance should be based on outcomes,
as perceived by citizens and service-users. Greater emphasis should
therefore be placed on the means and methods to gather and act
upon citizen and service-user input. We believe that any oversight
should be based around four key principles:
- Transparency: Transparency is an efficient, democratic,
and organic way to make elected officials accountable. NLGN has
advocated for the publishing online of salaries and expenses of
elected officials. NLGN also believes that the financial revenue
and expenditure local authorities are operating in should also
be published, in order to provide citizens with the tools needed
to make democratic decisions. Further thought should be given
to the balance between national frameworks of data transparency,
in order to achieve consistency and comparability, and allowing
for local variations designed to reflect the priorities of local
communities.
- Centred on the Citizen: Assessment should become
a bottom-up process, with citizens defining priorities for areas,
and measuring the progress made by local authorities against those
priorities. They should act as de facto assessors, and
should have a wide variety of options for expressing their views,
journeys, and experiences of local services. NLGN has also recommended
that the potential should be explored to allow citizens to petition
an LGA oversight body to assess a service if it is failing.
- Owned by local government: Local Government possesses
the democratic mandate and legitimacy, the desire, and the knowledge
to organise and oversee self-assessment processes, peer-reviews,
mentoring schemes, and best-practice sharing. This should be done
on an "area-wide" basis, as outcomes are the result
of partnership workings.
- Designed to protect vulnerable individuals: In
difficult financial times, attention must be paid to the most
vulnerable sections of society: children in care and vulnerable
adults dependent on critical services. This must be achieved through
a risk-based, proportional, and efficient system of weighted random
inspections for specific services, designed to reassure citizens
that vulnerable individuals are being properly cared for. We believe
that the organisations - such as Ofsted and CQC - currently conducting
those inspections should remain in place.
7.
7.1 NLGN believes that the principles which apply
to the oversight of local government performance should be similarly
applied to the expenditure on the delivery of local services voted
by Parliament.
7.2 Audit should be the primary tool used to
ensure that the money being transferred to local services is being
properly accounted for.
7.3 Financial and audit trails should be published
online, in a way which is intelligible and clear, enabling concerned
citizens to understand the financial realities in which local
authorities operate.
7.4 The concept of area-based budgeting raises
some important to questions relating to accountability, legitimacy,
and outcomes. Who in an area should be held responsible for the
spending decisions made with regards to place-based budgets? Although
the arguments to retain ultimate accountability nationally for
funding voted through parliament has some merit, NLGN believes
that this has scope also to re-introduce harmful centralising
dynamics. If budgets and risks are devolved, then mechanisms should
be developed for locally elected representatives to be answerable
principally to their citizens.
7.5 Those spending decisions would have to be
judged with regards to the outcomes they produce and it would
be important for any area-based budget to have a robust business
case that set out the intended outcomes and proxy measures that
can demonstrate progress towards these goals.
7.6 The National Audit Office should have a prominent
role to play in following the audit trail, and in facilitating
the implementation and oversight of place-based budgets. Some
form of linking between expenditure and outcome indicators would
allow for the monitoring and assessing of the efficiency of spending
decisions, and enable some form of evidence-based accountability.
September 2010
75 OECD, Government at a Glance, 2009. Back
76
See, for instance, the Bertelsmann Sustainable Governance Indicators.
The Status Index puts federal countries like Australia, Canada,
Germany and Switzerland ahead of the UK for socio-economic performance.
The Scandinavian countries, Denmark and Norway, which are small
and generally have strong local government, also rank ahead of
the UK. Back
77
Local Government Association figures available at:
http://www.lga.gov.uk/lga/core/page.do?pageId=13748140 Back
78
Ipsos Mori, The Future
of Local Government, 2010. Back
79
Communities and Local Government, Our Nation's Civic Health,
2010. Back
80
The principle of subsidiarity states that for efficient operation
of a system, power or responsibility should be devolved to the
lowest possible level. It is the principle used to bind EU law. Back
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