Localism - Communities and Local Government Committee Contents


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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