England & Wales, Global Democracy, devolution and governance, Finance

Predictions in an age of uncertainty

Photo by Mathilda Khoo on Unsplash

When writing a column in January it is traditional, almost compulsory, to set out one’s predictions for the year ahead. But if 2016 taught me anything it is that prediction can be a shortcut to looking foolish.

Few commentators, myself included, are rushing to unearth their pearls of wisdom from this time last year.

But if I am hesitant about making predictions, I am much clearer about the big questions facing local government that we will have to be clearer upon by the end of the year.

First, will 2017 be the year in which a sustainable funding system for local government begins to emerge? The omens are mixed. More than a year after it was first announced, we’re still not entirely clear what the Government’s commitment to 100% business rate retention will look like in practice, but 2017 sees the beginning of pilots in Greater Manchester, Liverpool, London, the West of England, the West Midlands and Cornwall.

So we may not know much more by this time next year, but by the middle of 2018 we should have a sense of its impact.

No doubt many councils will welcome the ability to retain the proceeds of business rate growth, but does a system of taxation based on physical presence best reflect the level of activity in an economy that is increasingly digital?

We will also see how far the additional 3% precept on council tax goes towards meeting the social care funding gap, though the general view seems to be that it will not go nearly far enough.

Is council tax ever going to be an effective way of funding social care? The areas with the lowest numbers of self-funders and therefore the highest social care bills also tend to be the places with the lowest property values and the smallest council tax base.

In thinking about how we fund local government we are always fighting the last war, basing our thinking on the economy of the 20th century, not the emerging economy of the 21st.

Social care reveals the limit of our thinking about funding but it also illustrates the broader need for service transformation. Like housing, the complexity and scale of the challenges in social care cannot be funded away. They require radical new thinking about demand management, community capacity and individual responsibility.

Looking across local government we see many examples of innovative approaches, but too often these remain at the margins, locked in a sort of pilot hell. Will 2017 be the year that big new ideas about service transformation start to really enter the mainstream?

Finally there is a bigger question about local democracy, governance and autonomy.

I don’t want to start the New Year by obsessively rehashing the events of 2016, but it is clear that whatever else may have been going on we saw both in this country and in the US a populist revolt against mainstream ‘politics as usual’.

Was this a flash in the pan or the beginning of a more profound transformation in the ways in which we understand political life?

In the debate around Brexit the theme of ‘taking back control’ was resonant for many people. Councils have to be at the forefront of this debate.

If people do not feel they can shape the neighbourhoods they live in and the services they use locally, they will never feel they have any control of the wider world.

This raises a series of questions for local government. What next for devolution, localism and leadership? How do we address violence in political discourse? How can we make local democracy more representative? How can citizens be empowered and connected with democratic structures?

The devolution agenda would and could have been a partial response to some of these challenges and we will see it developing in our major cities this year with the election of metro mayors in May. However, in non-metropolitan England devolution seems to have lost momentum.

The three big questions for 2017 are: How do we fund local government? How do we transform services and how do we reinvigorate local democracy?

None of these are trivial questions and none of them are simple. All have been around for a long time but are growing more and more urgent. We will not solve them in 2017 but we will need to make progress. If not we will be in real trouble. And yes, that is a prediction.

Jonathan Carr-West is the Chief Executive of LGIU. This article was first published in The Municipal Journal.

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