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An opportunity for transformation but ‘urgent decisions’ needed: reaction to Labour’s general election victory

An opportunity for transformation but ‘urgent decisions’ needed: reaction to Labour’s general election victory

The new Labour government will have to make some “urgent decisions” but there is “not a lot of fiscal room for manoeuvre given the constraints they’ve adopted on the principal sources of taxation income”.

Reacting to the election result, Conrad Hall, president of the Society of London Treasurers, told Room151 that “there’s a long list of issues to fix in local government, from devolution to outdated council tax valuations and the long overdue fair funding review and many more besides. Some of those require longer-term solutions, but there are some pressing issues that they will have to tackle quickly.

“Housing is a massive issue, perhaps most acutely in London and the south east but across much of the rest of the country too. Longer-term reforms will be needed to boost the quantity and quality of housebuilding, but some very urgent funding decisions will be needed to give local authorities at least a breathing space on temporary accommodation costs.

“A substantial increase to the homelessness prevention grant would be a good start and a rapid conclusion to the outstanding consultation on its distribution would be equally important: at present it’s hard to see much correlation between the acute levels of need we see in London and the distribution of the grant across the country.

“Updating the increasingly hard to justify link of the local housing allowance to 2011 rates is another quick win they could implement as would be at least temporary flexibility on capital receipts in line with the proposals consulted on. All of these might provide at least some temporary respite whilst longer-term solutions are developed.

“But that’s just a start. What about the chronic underfunding of social care? The failure in the local audit market? The complete mismatch between the policy goals on EHCPs and the funding provided?

“The list, sadly, goes on and I hope that the new government will prioritise local authorities in a way that we haven’t seen before. I think we make up around 25% of total public expenditure and without some radical changes to policy across the sector we will, I’m afraid, see more and more services cut and more and more authorities simply start to run out of resources.”

However, Labour’s strong majority has put it in a position to “seize the opportunity to transform the way the public sector works”, according to Owen Mapley, chief executive of CIPFA.

He said: “A mission-driven government can redefine how public services are funded, empowered and supported. Greater stability and more predictable planning cycles will encourage innovation and longer term, more transparent decision making. This will strengthen the design and delivery of Britain’s public services and provide a foundation for sustainable economic growth.”

Mapley also called for greater collaboration between central government and all public service organisations and “a principled and sustainable approach to devolution, with place-based decision-making at its core”.

He also reaffirmed CIPFA’s intent to work with the government to “reform governance and audit, champion professionalism and renew people’s trust and confidence in public service”, with the government’s first Spending Review “an important opportunity to start enabling these changes”.

“The Spending Review must herald the end of short-termism and ad hoc instability,” he said. “We encourage the government to embrace new and more sustainable approaches to planning and resourcing public services which have been severely depleted. It is an opportunity to give hope to those facing demands that far outstrip their constrained resources leading to growing waiting lists, public dissatisfaction and growing budget deficits.

“New approaches to capital funding can support the renewal of dilapidated public service infrastructure and allow investment in the latest technologies to improve service performance.”

A new chair has been appointed at the Local Government Association, with Shaun Davies standing down after being elected as the new MP for Telford. Louise Gittins, who has served as leader of Cheshire West and Chester Council since 2019, replaces Davies with immediate effect.

Gittins said her immediate priority was to work with the new government on a “fundamental reset of the relationship between central and local government, one of trust and mutual respect”.

She said: “It is councils which hold the local levers to the national challenges facing the new government, whether it is building more affordable homes, reducing homelessness, improving care for adults and children or boosting inclusive growth.

“Councils are under pressure like never before, facing a funding gap of more than £6bn over the next two years. It is important we find a sustainable and long term financial solution, as well as the powers and levers required so we can deliver on the priorities of the new government.

“We are delighted that many new MPs come from the local government family and have had first-hand experience of these acute pressures as councillors, which should mean that securing the future of our local services will be a top priority.”

Tim Oliver, chairman of the County Councils Network (CCN), said the organisation’s member councils would “be key in delivering the government’s key priorities in economic growth, planning, and public service reform”.

“But this requires the new Prime Minister to fulfil his pledge of ‘no return’ to austerity, whilst putting forward a radical agenda for reform of public services,” Oliver said. “With non-protected government departments projected to have a real-terms reduction, councils are at a crossroads: facing a very precarious situation with their finances, where even the most well-managed authorities are approaching breaking point.

“The agenda for reform is most desperately needed in children’s services and special educational needs and disabilities (SEND) provision. The new government must work with councils to set out a substantial roadmap for change over the next 18 months in both areas. A failure to do so will mean costs continue to spiral out of control.”

Oliver also outlined potential quick-wins in “maintaining the strong momentum on devolution and giving local leaders key powers in transport, infrastructure and skills”.

On devolution, he said: “It is crucial that ministers build on what has demonstrably worked in securing no fewer than 20 devolution deals over the course of the last two years. Using county geographies as the building blocks for deals, retaining the county combined authority model, and offering flexibility in governance will be key in devolving powers to local residents in the remaining 17 county areas.”

Oliver said he was “encouraged” on Labour’s commitment to planning reform, but said this “must be done with local government as equal partners. Irrespective of whether housing targets are introduced, reform must ensure we have enough infrastructure to mitigate development as well as focus on differing types of homes.”

Sam Chapman-Allen, chairman of the District Councils’ Network (DCN), said a partnership between central government and district councils was “pivotal, with our local knowledge and proven expertise, [being] essential to bring results at pace for the 19 million people who live in our areas. We look forward to discussing with ministers how we can together make the greatest impact.”

Chapman-Allen said the DCN wanted to “continue to drive change locally in genuine collaboration and partnership with central government, based on mutual trust and respect. We want to be your partner of choice in reimagining services from the bottom up and rooting them in real places. We want you to empower us with much greater autonomy to deliver excellent services for the people we jointly serve and make quick, tangible progress on national priorities.”

Claire Holland, deputy chair of London Councils, also affirmed London boroughs’ commitment “to close collaboration with national government to deliver on our shared priorities”.

She stated: “We share many common goals: driving sustainable and inclusive growth, delivering new homes and infrastructure, tackling homelessness, and improving people’s health and wellbeing.

“With national and local government working together through a mission-led approach, we can secure a fairer, greener and more prosperous future for Londoners and for the country as a whole.

“Ensuring the financial stability of London boroughs is crucial for enabling us to play our part in achieving these goals. Addressing the acute funding challenges facing local authorities must remain a top priority.

“A revised devolution settlement for London also has the potential to unlock new opportunities in the capital and ensure that the boroughs and the Mayor of London are suitably equipped to deliver at pace, working in partnership with the government to tackle the challenges we face.”

Tom Stannard, chair of the Institute of Economic Development (IED), called for economic development to be formally recognised as a statutory function provided by local authorities.

“As it seeks to provide greater stability, the new government has committed to providing capacity and support to councils. However, the mission of sustainable economic growth, and deepening devolution settlements across England with statutory Local Growth Plans, requires even greater commitment to economic development practitioners working for local and regional communities,” he said.

“Councils alongside specialists in the private sector could deliver so much more if they were given statutory powers, with their unique understanding of local economies, to better ensure policies are adapted to local conditions and make the most of the strengths of local places.”

Peter Cudlip, head of public and social sector at professional services network Forvis Mazars, called for public services to be a priority for the Labour government. “A focus for the new government must be to support the sector in shoring up their finances so they can be more long-term in their outlook. Councils have recently been forced to focus on short-term measures to plug the finances,” he said.

“Funds should be directed to initiatives that will enable councils to make lasting improvements and allow real change to happen. Local authorities must focus on transformation instead of short-term efficiency gains and prioritise digital skills and capabilities. However, even if available funds are fully invested in transformation, it’s unlikely to resolve the underlying financial challenges facing the sector.”

Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association (PLSA) said there were “two important issues” for the government to resolve. These are “the inadequacy of current pensions savings, and how to attract pension fund investment to support key policy goals such as climate change and UK growth,” he said.

“Labour’s planned Pensions Review provides the opportunity to consider these issues in depth. Whatever the outcomes, it is important that the solutions are right for scheme members and savers,” he added.


BY JASON HOLLAND, IN 151 NEWS · FUNDING, 5 JUL, 2024

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