England & Wales

LGiU commentary on the new Conservative – Lib Dem government coalition agreement


The Conservative and Liberal Democrat parties have published a statement outlining the agreement they have reached on a range of issues where they have previously advocated differing policies.   What does it mean for local government?

The LGiU fully supports political and democratic reform where this will lead to a new settlement between government and the people it serves. The starting point for this reform must be a radical commitment to localism and we welcome the bold statement from the incoming government that it will promote devolution of power and financial autonomy to local government.

We await more detail from the incoming Secretary of State, Eric Pickles, but we know that he has been a champion of localism and he was the architect of the Power of General Competence proposal that we hope will be legislated for as soon as possible. It is also good to see the commitment to a ‘full review of local government finance’, notably absent from the Conservative manifesto, but strongly advocated by the Liberal Democrats. The LGiU will be publishing a major contribution to this review and we hope that it will lead to real change, rather than gathering dust alongside the Lyons Review.

The commitment to a referendum on PR does not include reference to local government elections, a Liberal Democrat manifesto commitment, and it would be surprising if local council PR were not introduced as it has been in Scotland, Wales and Northern Ireland, as well as for elected Mayors.

The agreement makes clear that Conservative plans for deficit reductions now, rather than later, will be implemented. Local councils and other public service providers are already facing severe financial constraints and will want to know how the commitment to find £6 billion of savings within this financial year will be implemented, what share of savings they will be expected to absorb and if, as we are assuming, this is coming on top of existing efficiency targets?

The agreement contains major financial commitments, including real terms increases for the NHS, a guaranteed minimum rise in the state pension of at least 2.5 per cent year on year, a ‘significant’ premium for disadvantaged pupils, and tax cuts. Whilst these are all things that many people will welcome, the agreement says they will be paid for by ‘savings elsewhere’, which will cause real concerns that there will be an extra squeeze on local government budgets and other non protected areas of spend. The real terms increase for the NHS is a major ring-fencing which may lead to reductions in other vital and related areas of spending such as social care, which is notably not mentioned in the document.

The proposed Comprehensive Spending Review to be published in the autumn will shed light on these issues, and while the need for urgency is clear, there must be time for effective consultation across government nationally and locally.

On schools more generally we will be asking how the coalition partners will reconcile their very different views of the local authority role, which must be resolved quickly if a Schools Bill is to be published within 100 days as promised. The Liberal Democrats have proposed an extension of the role that councils play, such as by becoming responsible for academies, but the Conservatives oppose this, a disagreement which is masked in the language of today’s statement by a general commitment ‘that all schools are held properly accountable’.

The proposals to increase the state pension contrast with a warning sign that public sector pensions may be cut or scrapped by an Independent Commission. On welfare and unemployment we are very pleased to see that the parties have agreed to reform the funding mechanism to reflect the fact that initial investment delivers later savings in lower benefits. This was at the heart of recent LGiU proposals advocating a new, incentivised role for local authorities in supporting people back to work. It is not clear what role the new government proposes for local government, particularly as all previous welfare to work programmes are to be brought together into one single programme. This probably means the end of initiatives such as the City Strategies Pathfinders and the Working Neighbourhoods Fund, which many in local government have successfully embraced to support employment during the downturn.

On immigration, the proposal to end the detention of children will mean that local authorities must house them in children’s homes and separate them from their parents. As an alternative the government should consider major reform of the Home Office and immigration services to radically speed up the time it takes to progress immigration cases, so that detention is only for a very short time, and children remain with their parents.

There are notable omissions from the agreement, where the parties have differing views which must be reconciled, including on planning, housing and community safety, so we await further detail. In the meantime the LGiU will be seeking meetings with key new Ministers, as we also engage with the new Parliament by re-establishing the All Party Parliamentary Local Government Group.