Former local government finance chief Andrew Hardingham calls on government to start a “meaningful dialogue” over devolution of powers and funding.
“The Government is overseeing a fundamental shift of power away from Westminster to councils, communities and homes across the nation. A radical localist vision is turning Whitehall on its head by decentralising central government and giving power to the people.” Department for Communities and Local Government – 2012
I wonder if this is true? Has this revolution, promised ten years ago, taken place? Let us take a few minutes to ponder and explore the role of “local” in government, the role of “local” in the place shaping and the role of “local” in service provision for of our communities.
The foundations for the system and structure in place today were laid because of the review carried out by the Local Government Commission for England, (established in 1992), which recommended that some counties should retain their two-tier structure, but others should change to one-tier unitary authorities (UAs).
Subsequently several unitary authorities were created in 25 counties between 1995 and 1998.
Local government in England has been the subject of a constant re-structuring process over several centuries. Today the House of Commons library tells us that we have 339 local authorities in England, of which 188 are district councils, 126 are single-tier authorities and 25 are county councils. Of the single-tier, 33 are London boroughs and 36 are metropolitan boroughs. The council map is a mess. Melton is the smallest district serving a population of 51,000 while Birmingham serves 1.1m people. Rutland is the smallest unitary (37,300).
History books also tell us that the kind of local government in existence today really began to evolve in the 19th century. The first major piece of legislation was The Local Government Act 1888 which provided for the creation of 66 county councils and a London County Council. These county councils were to be run by elected councillors and comprise a chairman, aldermen and councillors.
The Act transferred responsibility for the administrative and financial business of their counties from the Quarter Sessions together with responsibility for the maintenance of roads, bridges, and county buildings. Councils were able to raise money through levying of rates and could appoint staff.
The Local Government Act 1894 provided for elected parish councils to be established in rural areas and for the creation of urban district councils and rural district councils with elected councillors. (Oh, how we finance officers love the parish precepts and all the administration that surrounds them).
Further Acts followed in 1888 and 1894 Acts which were subsequently consolidated under the Local Government Act of 1933. In 1960 when the GLC was created, 32 new London boroughs were created and 12 years later the Local Government Act 1972 created the country-wide two-tier system.
New metropolitan and non-metropolitan counties were created, and these counties were in turn divided into districts. Each county was administered by a county council and each district by a district council.
And amidst all this the section 151 officer was born. The Act required every local authority to appoint a suitably qualified officer responsible for the proper administration of its financial affairs.
The coalition government of 2010 pledged to promote decentralisation, saying it believed central government had become “too big, too interfering, too controlling and too bureaucratic.”
Strengthen
The Localism Act passed in November 2011 contains a few measures designed to strengthen the role of local government. But have they?
Looking at the finance system one must wonder whether “local” or “central” controls the purse strings. Rob Whiteman has raised the profile of this debate again suggesting that form should follow function. A view that I subscribe to.
From a purely finance perspective the form of funding must be right purpose. Revenue Support Grant (RSG) has all but gone for some councils and is being phased out for others. Will it be replaced, or will we continue to see the ever-expanding plethora of specific grants?
RSG was top sliced to create the new homes bonus, which itself was top sliced to create the better care fund—money taken from general purposes to incentivise housing growth and then taken to fund social care. Money has been moved from districts to county and single tier councils because the care system is in a mess. The long promised green and white papers are now turning brown with age and have never seen the light of day. Form today consists of grants topped up with more grants and yet more at year end as the urge to splash the cash kicks in. Oh, and let’s not forget the privilege of raising local care precepts.
Broken
I have previously argued that the system of local government finance is broken. Council tax exemplifies this: Local government with the permission of Whitehall can raise local tax but only by following central rules, centrally imposed limits and with conditions attached if the local desire is to exceed the centrally imposed ceiling. And then there is the ridiculous notion of a precept to fund social care, directly taxing those that can least afford to pay for their own care. Much simpler, it seems, to allow a precept than “government taking a decision one way or the other in order to deliver reform that is meaningful and real”.
Business rates has never been a local tax. The rate in the pound is set by central government, policies regarding reliefs are set by government and valuations undertaken by a government agency. Local government collects the tax and hands it over (unless of course you are a “pilot” area).
As Rob argues, if we are to deliver more at the local level then government needs to reform local funding and more diverse streams will need to be made available. I would also argue that local government needs to be able to operate within the powers available under the legislation; it needs to find the space to be creative, it needs to be supported by regulators and commentators working together to ensure good governance and appropriate decision making.
The pandemic has proved that there is a place for local government. Come on central government, be brave, back your own department and start a meaningful dialogue (that leads to results) about devolution of powers and money so that local councils can deliver for local people in a lasting way.
Adrew Hardingham is the former finance director for Plymouth City Council.
Photos:
Photo by Ugur Akdemir on Unsplash
Photo by James Newcombe on Unsplash
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