Unfinished business

Still unfinished business

Listen to the LGIU Fortnightly podcast episode on key themes from this report. 

For the past year, the Covid-19 pandemic has been all-consuming and so profound that it can be easy to forget that local government was in crisis long before coronavirus. Partly as a result of a decade of relentless funding cuts, but also because of an absence of strategic direction in nearly all of the areas most important to councils.

These include the ‘big three’ foundational issues such as how to fund and deliver social care and its relation with health; the basic mechanics of how to fund local government; and the distribution of power between national, sub-regional and local authorities. In all of these areas, the Government has trailed half-formed or incomplete reforms and councils have been left to pick up the pieces, all while operating in conditions of deep uncertainty.

There are also other key service areas affecting every citizen and every community in the country that have been left neglected: local responses to climate change,  provision of housing and tackling homelessness and steeply rising demand for children’s social services.

And, of course, while everyone’s attention has been on Covid-19, no strategic progress has been made on any of these issues, even as they get progressively worse. No social care green paper, no Fair Funding Review, no business rate retention scheme, no devolution white paper. All these problems have been decades in the making.

In some areas, the pandemic has demonstrated how quickly we can move if money and will are there: tackling rough sleeping for example. But others have had a cruel spotlight thrown upon them by the pandemic. We have seen a tragic death toll in care homes, councils on the brink of financial collapse and confusion about the most effective level to make decisions about public health interventions.

Unfinished business in local government policy has fundamentally weakened our resilience as a nation in the face of the worst health crisis in living memory. Unless we can move forward in these areas, we will hamper our ability to recover effectively from the pandemic. That recovery will depend on local government being as fighting fit as possible, but that fitness is undermined in many key areas by our failure to address these long-standing policy dilemmas.

This latest pillar in our Post-Covid Councils project sets out a blueprint for the thinking we need to generate some vital momentum around these pieces of Unfinished Business. It builds upon a set of ideas we highlighted just before the pandemic: outstanding problems from the last decade, solutions for the next decade.

Jonathan Carr-West, Chief Executive

Place shaping power to the people

The Covid-19 pandemic has highlighted once again the ways that UK’s historically centralised approach to governance leads directly to problems with policy, democracy and public services.

Localism has drifted in and out of policy focus over the last decade.  But the commitment to localism have struggled to survive the deep spending cuts imposed on local government. As we argued in Power Down to Level Up last year, the arguments have been made time and time again. In that report we showed that councils continue to demonstrate that they have the capacity, the ideas and the will to do innovative and important work in local communities. They have demonstrated this in their response to the pandemic too, in stark contrast to central government’s failings, especially earlier in the pandemic, as Janet Sillett discussed here.

The argument for localism remains as strong as ever. In 2013 in Connected Localism we set out three reasons why localism is both a moral and a practical good:

1)    Localism has a democratic premium. All things being equal we should seek to give people the most influence possible over the places they live in, the public services they use and the lives they lead.

2)    Complex problems are rarely solved by centralised one-size-fits-all solutions. Innovation must be local, responsive to specific contexts and drawing on the creativity and civic capacity of local people.

3)    The really difficult challenges we face cannot be solved by institutions (of state or market), or communities or by citizens working alone but require a collective, collaborative engagement of all parts of the public realm.

This has remained at the core of our thinking. It informs our approach to public service reform, to devolution and to democracy. The belief that empowering communities is the route both to democratic renewal and to better services.

Yet during the pandemic we’ve seen how important local government is to community and that where local government is organising, supporting and galvanising community efforts we have seen some of the best pandemic responses. But without strong localism, councils are hamstrung. Councils, despite having public health responsibility, have had to beg for data or have been left out of vital pandemic response planning and implementation. Globally we have seen that where different tiers of government have acted as partners rather than rivals trust and public compliance with public health measures are improved.  Still even where local government is responsible for services and the consequences land almost exclusively on local government, such as local elections, central government seems all but completely unheeding to calls for support and postponement.

The centralising tendencies of Whitehall and Westminster show no signs of diminishing. Public trust, social cohesion and the capacity for dialogue and compromise, the essential currencies of localism, are all under unprecedented strain. But we also see cruelly exposed in our politics the limitations of the nation state, the confines of what you can achieve from the centre.

So, localism remains an idea whose time must come and a project that government must eventually embrace. Danny Krueger recently published his report, calling for Community Covenants to re-energise the debate around localism. We covered that in a briefing for LGIU members here. The same questions remain around Kreuger’s ideas as the Big Society, though – what’s the role that local government plays here? And, what is the mechanism for actually, finally, shifting power?

A properly funded housing and homelessness strategy

The big issues in housing and homelessness are still with us. However, one positive thing we have learned over the last 12 months is that it is indeed possible to address a huge problem like rough sleeping with the right resources. We published a bundle in July that looked at strategies for tackling rough sleeping, including coverage of our online webinar with Dame Louise Casey.

The ‘Everyone In’ was widely praised as an important success for local government at the outset of the Covid-19 pandemic. Councils immediately housed rough sleepers and those at risk of rough sleeping in their area, to protect health and to prevent transmission of the virus. Over 33,000 people had been helped through Everyone In by November last year, including over 23,000 in settled accommodation in the private rented sector. This was due to the enormous effort of council staff, which must be applauded and appreciated. Local authorities had shown the way by taking early action, and MHCLG moved to provide support, working closely with local authorities, homelessness charities and hotel chains find shelter for everyone, regardless of eligibility.

According to the National Audit Office local authorities will have spent around £170 million rehousing rough sleepers in the 2020/21 financial year. Some additional support was made available from MHCLG for this, but the money came largely from elsewhere in council budgets. ‘Everyone In’ was not officially repeated in the second and third lockdowns in Autumn and Winter, but council efforts to house rough sleepers and prevent homelessness continues.  The scale of effort from council officers cannot be relied upon as a sustainable approach – it needs investment in capacity and infrastructure. As we have said before, we know what works and we presented plenty of case studies such as evidence from Canada looking at how municipal government deals with drug problems among homeless communities.

We still need a strategic shakeup to get the resources where they need to go.

The Government’s target is to eliminate rough sleeping by 2024, as stated in the Conservative manifesto at the last election in December 2019. There is yet to be a review of the Rough Sleeping Strategy, however, in order to address how this target might be met. Given it will depend heavily on the work of local authorities. Back in May the Commons Housing Communities and Local Government Committee published a report arguing that the enormous effort of the preceding six months presented an opportunity to end rough sleeping and homelessness. We covered the report here. The MHCLG says it is providing a further £10m to local authorities but has resisted calls to revive the ‘Everyone In’ campaign that saw thousands of rough sleepers placed in hotels and other temporary accommodation during March and April. Meanwhile, the universal provision of support has been removed so that those without recourse to public funds are no longer required to be housed.

Our most recent Housing and Planning Roundup has all the latest details, as well as news on the evictions ban. The November Budget had some important implications for housing supply and social housing more broadly

There were other encouraging developments in housing over the past year. There was a Social Housing White Paper in November, which we covered in a briefing here. The main proposals were:

• Routine inspections of larger social landlords every four years
• Expanding the Regulator of Social Housing’s remit to include building safety, plus new consumer standards
• Strengthening the regulator’s enforcement powers so it can tackle ‘failing’ landlords.
• Requiring social landlords to identify a person responsible for complying with health and safety rules
• Creating tenant satisfaction measures for landlords with residents given better access to information
• Ensuring landlords provide a clear breakdown of how their income is spent
• Beefing up the role of the Housing Ombudsman and ensuring it works effectively with the new Building Safety Regulator

The Government also announced a National Infrastructure Strategy, and a spending review that allocated £1 billion to capital expenditure on infrastructure in the coming year, and £20 billion to housing, via the National Housing Building Fund and the Affordable Homes program. Plans to regenerate English cities included new homes to be built in England’s 20 largest cities, with a new funding approach introduced by central government to help councils deliver 300,000 homes annually by the mid-2020s. These new homes would be directed to brownfield and vacant (or otherwise underutilised) urban sites.

Finally, two more recent briefings we have produced highlight potential developments in housing, some more positive than others. Housing supply is a crucial part of climate change adaptation and changes in the planning system will likely impact housing and the places we live in radical ways.

Prioritising public health and prevention

Ten years on from the publication of Professor Marmot’s wide reaching review into health inequalities, are we any nearer meeting the challenges it raised so graphically?

The answer is largely no. Covid-19 has, of course, made the situation worse, but even before the impact of the pandemic, there were worrying signs that health inequalities were actually increasing in several priority areas, such as children’s life chances and developing healthy and sustainable places.

In December 2020, Marmot produced Build Back Fairer: The COVID-19 Marmot Review, which highlights how the virus is increasing existing health inequalities in England. The report makes detailed recommendations, including ones to strengthen the role and impact of ill health prevention in the long, medium and short term (see our briefing on the report here).

The role of local government in public health has been strengthened in the last decade – in England the transfer of public health responsibilities to local authorities in 2011 was clearly significant. Councils in England and Scotland have led numerous initiatives to improve the health of their residents and to tackle the social determinants of health. However, the response to Covid-19 from the centre has been discouraging to put it mildly, especially in the UK government’s reluctance to use the expertise and knowledge of local public health teams and councils.

The importance of preventing ill health and promoting wellbeing has been magnified by Covid-19. The adverse impact on the worst off places, communities and individuals is abundantly clear – the ‘causes of the causes’ of health inequalities -the interconnected social determinants, such as deprivation and pre-existing living conditions are closely linked to worse outcomes in COVID-19.

What is to be done? There needs to be a reinvigorated debate about policy responses to the growing health inequalities gap, a recognition of the underlying causes of health inequalities. Post Covid there is an opportunity to put “equity of health and wellbeing at the heart of all policy making, nationally, regionally and locally”. There seems to be a welcome shift in public policy from a view in which our progress as a country is measured economically by gross domestic product to a more rounded view in which social factors like wellbeing and fairness are at the heart of what we want to achieve.

At the more local level, the importance of local public health needs to be recognised in additional and sustained funding and in real change to the top down approach of central government.

We aren’t starting from ground zero: the pandemic has underlined the importance of  public health, the role of local government and the resilience of communities and civic society. The sometimes harsh lessons from Covid-19 need to be learnt and acted on urgently if we are to see any step change in wellbeing and health in the UK.

Vibrant and thriving local communities

Before 2020 we had been exploring local government’s role in place shaping in the midst of a great many changes that were impacting on communities. Questions that we were wrestling with touched on:

• how both increased movement of people and growing use of technology might impact on a sense of identity and community – are communities still just rooted in a place?
• What effect would online retail have on highstreets already beginning to look hollowed out in many places, with some authorities hoping to fill the gap with leisure and cultural venues.
• The inequalities between communities and between local economies.
• The impact of the uncertainties of local government funding.

But then Covid-19 happened and drove a coach and horses through everything.

Councils and communities now face a mind-boggling myriad of problems as we attempt to rebuild our places going forward. Existing challenges have been exacerbated and added to by Covid; some of which have also been exacerbated by the coincidental exit from the European Union.

Almost overnight, those who could stayed at home and took their work and shopping online. Non-essential retail, personal services, cafes, pubs, restaurants all closed and many may never reopen. So what now for town centres and local economies? Will footfall return in the same way, or not at all, or in a different way – in a much more hyperlocal way perhaps?

Unemployment is now at a five-year high of five per cent and is set to rise. The impact of this is not evenly spread among places, industries or age groups. Hospitality is bearing the brunt of job losses and young people are especially hard hit. Councils will inevitably be the ones picking up the pieces, dealing with the hardship and the ensuing ratcheting up of inequality.

Much was made, particularly in the early lockdown, of communities coming together and supporting each other. This has been true to some extent and further down the line we have seen business and individuals providing for hungry children during school holidays for example. Communities have been resilient but their energy has been focused on firefighting really dire situations – going forward can councils partner with communities so that resilience and practical action be translated into rebuilding places?

At the same time we cannot ignore the divisions and differences that have been spotlighted by different experiences of Covid among diverse communities and the breakdown in cohesion and trust that can stem from those divisions.

Communities and society are never of course ‘finished’; they evolve and change all the time. People’s sense of identity and belonging can shift or develop throughout their lives. Local government’s role in supporting and serving communities and helping to shape places ebbs and flows often at the whim of central government policy. The current perfect storm of  Covid, Brexit and economic crisis is turbo charging that change at the moment. But the blocks that hamper councils’ ability to respond to that change are still without solutions. As we discuss in this pillar on unfinished business, the sector needs answers on finance, social care, the devolving of power, housing and democratic engagement, among other things – and the ongoing lack of progress can only impede communities from healing and thriving.

A new deal for funding adult social care outcomes

Adult social care has been ‘unfinished business’ for what now seems forever. Since the 1990s, successive UK governments have committed to reforming the system, particularly the funding of care, but nothing radical has changed, despite Commissions, including a Royal Commission, reviews, Green Papers, White Papers, and numerous expert reports. The UK government’s proposed Green Paper has been delayed now for several years. Although the systems in the four UK countries have diverged to some extent (and Scotland is ahead of the others in reform) the underlying problems haven’t been fully solved in any of them. All four suffer from chronic underfunding and need a new sustainable funding mechanism.

A recent report from the The House of Commons Health and Social Care Select Committee paints a bleak picture of a system on the brink of failure. The HSCSC heard evidence that people were not getting the care they need, staff were under pressure and feeling under-valued and under-recognised, resulting in a high turnover while providers often struggled to operate. Coupled with demographic change the HSCSC concluded the system was at real risk of collapse.

Covid-19 has exposed and exacerbated the failings of the social care system. But social care was never going to be able to withstand the enormous shock of the virus without there being huge challenges, because both home and domiciliary care were fragile before the outbreak. The sector had little resilience to major disruption. Increasing provider failure was likely. The commitment of those who work in social care has meant the system hasn’t collapsed, but it is a system that is at risk.

What are the critical areas that need urgent reform?

Social care needs an immediate boost in funding to cover demographic change, reverse the decline in access and prevent market collapse. However, although additional funding is crucial, fundamental and sustainable reform still remains the key to its future. As the LGIU has stressed for a decade, this will require a clear and transparent partnership allowing people to prepare for old age and infirmity. Adult social care must be focused on helping people to live independently and with dignity for as long as possible.

The government needs to publish its promised Green Paper as soon as possible. There is never going to be a perfect system, and reform is bound to be politically contentious, but putting off real change is now totally unsustainable.

The King’s Fund has said that “in the vacuum caused by the ongoing absence of the Green Paper, a series of parliamentary committees and other bodies have argued that reform is urgently needed and outlined proposed reforms. Many of the reforms involve some variation on free personal care, echoing the Sutherland commission in 1999. Unusually, however, as well as left-of-centre bodies such as IPPR, its advocates now include (some) fiscal conservatives”.

The care workforce has been essential in the pandemic, but are seriously underpaid, with insecure jobs. Low pay, inadequate training and lack of status have to be addressed and working conditions improved.

Closer working between health and care has long been a mantra of  governments and the sector – with some successes but Covid-19 has highlighted the differences in how social care is regarded centrally compared to the NHS. Certainly at the height of the first wave of the pandemic, care was the Cinderella service. It is nonsense that the interdependency of the two services was hardly recognised.

The government has just published its health and social care white paper. It proposes much stronger collaboration and as such has been welcomed in the sector. But there will still be barriers to integration that the white paper doesn’t directly address, such as culture and funding. It is silent on the key issue of sustainable funding. The select committee recommended that the UK government should introduce a ten year plan for social care, in the same way as one is produced for the NHS, subject to similar levels of planning and, through that, a strategic approach developed to address some of the fundamental issues of pay and conditions.

Social care has been, and remains, high profile during the pandemic crisis in ways it has not been previously. There has been a groundswell of support for reform. Care is probably the main area of ‘unfinished business’ post Covid. The LGIU will continue to press for radical and sustainable reform.

Radical decentralisation of power

The Covid-19 crisis, and how it has been managed in the UK, has highlighted problems that are either caused or exacerbated by the drastic imbalance of power throughout the country.

The failures of our overly centralised approach are serious and came to the fore last year, as Janet Sillett highlighted here. They are evident in the Government’s failed crisis measures, the failure to develop an effective testing regime, or the bizarre and myopic approach to implementing track and trace without engaging in anyway with public health and other local government colleagues who know exactly how to do this because they do it routinely, all the time. But on top of this there are crisis issues in council finances, social care, children’s services, housing, homelessness, high streets and local growth, which did not spring up overnight.

This is not a one-off hiccup in UK politics. It is a longstanding failure of governance. The current moment should be an opportunity to redress this imbalance, and think about how we move power to the places and the people who can actually use it effectively. We argued for exactly this in our report Power Down to Level Up, which we published in the Autumn. Moving power down will be crucial if the Government is even going to get close to its ambitions of “levelling up” the country or “building back better”. It is not just a “nice to have”, it is integral to the success of those proposals. Following the publication of the report, we hosted this fascinating webinar with Jessie Hamshar, from Cornwall Council and Patrick Diamond  from Queen Mary University of London. We also produced this briefing on the superior levels of public trust in local institutions than national ones.

There are still positive developments, however. The West Yorkshire Combined Authority has formally launched, covering the cities of Leeds and Bradford, as well as the surrounding area. We also saw city-region mayors take on a much more prominent role in public discourse after Andy Burnham and others resisted lockdown measures imposed from Westminster without adequate support for local communities. Joseph Ward, of Birmingham University, discussed how centre-local relations became an important and contested arena for the politics surrounding management of the pandemic. Looking to the future, we are running a project on the future of local governance in the UK, with support from our partners the James Madison Charitable Trust. We have also commissioned new research with the University of Kent looking into how we can usefully measure centralisation and decentralisation of power across different states and economies.

High quality public engagement and equal representation

Local government, in common with other democratic institutions, has felt the strain of declining public trust and a coarsening of political discourse in recent years. In a year of pandemic and some high-profile, contentious elections, the strains came to breaking points in some places around the world. We suffered an infodemic alongside the pandemic – a firehose of information and misinformation that many were poorly equipped to wade through. We showed the impact of misinformation on trust and what local governments can do in You Can Handle the Truth – How councils can build trust and recovery in age of alternate facts and our work stream on Trust and Governance.

In the UK, we’ve missed a year of local elections (see our Democracy Deferred work) while other countries have carried out polls to varying degrees of success. The question is whether we have learned from the mistakes and triumphs of others. Electoral officers are carrying on and actively preparing for every eventuality, as central government continued to dither on decisions about when to hold elections and what support to offer local government. Finally, and despite calls from 90% of chief executives, leaders and electoral officers to delay the poll, elections are set for May.

Candidates, campaigners and poll workers alike will face significant challenges working during a pandemic. This adds to previous reluctance to participate. Reports of abuse and harassment towards elected members from the public have been sadly frequent and there are legitimate concerns that talented citizens may be put off standing for election because of fears for their safety. In 2019 LGiU documented such instances of un-democratic behaviour through its crowdsourced Dispatches From The Doorstep campaign during the general election. We will continue to support and celebrate the democratic work of councils as in our Local Elections work.

Democratic processes draw legitimacy from the breadth of viewpoints and experiences of elected representatives so we may rightly worry that public trust in local politics could be undermined by the failure to reflect the diversity of constituent populations in the council chamber. At such a crucial and volatile time in politics, public trust is a valuable commodity which we cannot take for granted. We need to find a way of encouraging more people into political life, navigating the changing landscape of social media and public engagement, and commit to facilitating open but civil dialogue on emerging and contentious issues. Through our new models of municipalism  – the multi-democratic council – and our work on community we have been looking at how citizens and state can work together to tackle tough problems.

A climate change strategy connecting citizens and institutions

The pandemic has dramatically highlighted the link between human and planetary health and the importance of forging place-based resilience. In doing so it has opened up the opportunity for systemic, holistic change and has demonstrated the power of local leadership in times of crisis.

However, as the effects of Covid continue to send shockwaves across the world, the long-term impacts of this crisis remain uncertain. While the desire to “build back better” was top of the agenda at the start of the pandemic, now, after nearly a year, the calls to rethink how we shape policy and deliver public services conflict with urgent demands on government at all levels to deal with the immediate problems of high unemployment and financial difficulty. There appears to be an unavoidable recession to come and with increasing pressure on local government funding, how are public services going to deliver the green agenda? This is a once in a generation opportunity to make the wish for change that has swept across communities an integral part of the recovery process, but it won’t be easy.

Despite the sizeable challenges ahead there are reasons to be hopeful. The US has re-joined the Paris Agreement and is closer than ever to implementing the New Green Deal. Citizens Assemblies, building on Ireland’s experiences, in both Scotland and the UK have boosted direct democracy and recommended progressive action on climate change. Importantly, at a local level this crisis has demonstrated the power of place-based action and provided a clear mandate for local governments to play a key role in leading the recovery from this crisis. More broadly, in the countdown to COP26 countries and organisations across the world will be held accountable to their climate change commitments. This significant event is hugely pertinent to organisations and communities in the UK (and Scotland in particular) as it is due to take place in Glasgow, providing an opportunity for local governments across the country to catalyse action and demonstrate the work they have been doing on this vital issue.

Highlights from 2020

Over the last seven months the LGIU’s Sustainable Futures theme, as part of our Post-Covid Councils project, has highlighted the practical and pressing opportunities open to local government and its partners in building a cleaner, greener, more sustainable and ultimately fairer future for all. From pieces on inequality, air pollution and urban planning to the economy and adaptation, we have brought you original, timely and insightful content from across the world which highlights the importance of a holistic response to climate change that moves beyond the siloes of ‘society’, ‘environment’ and ‘economy’.

The importance of ‘local’ over the course of this pandemic puts councils at the heart of change and there have been a number of recent articles looking at the benefits of tackling climate change through small-scale solutions. From interviews with Council Leaders and blogs from staff working on the front line of sustainable recovery to conversations with partner organisations, this year we have shared first-hand insights from people leading the response to and recovery from this pandemic.

Better life chances for our children

Looking after children is the foundation of any caring society, and vital for the wellbeing of young people, families and communities. It is essential that we get it right. Throughout the past decade and the last year LGiU has drawn attention to issues of school accountability, and to the need for education policies that drive excellence in this vital field.

Schools, places and local accountability

There are bedrock issues around schooling that have long needed to be addressed.

In The Future of Local Government’s Role in the School System (2011) and Should We Shed the Middle Tier? (2012) we looked at the role of local education authorities (LEAs) in providing education and support for schools. The number of academies has risen from a scant 203 in 2010 to many thousands; including the vast majority of secondary schools. Academies are funded directly by the Department for Education, and are outside LEA control. It is impossible for the Secretary of State for Education to reflect local needs and priorities in schools and education policy. The jury is still out as to whether individual children’s outcomes are improved through academisation, and it will also take time to untangle the broader impact on communities. Local accountability needs to return to education policy and councils must be able to deliver school places.

The pandemic highlighted disparities in educational provision between areas and in schools.

Councils have a duty to plan for school places, but as academisation has expanded they have lost the power to expand or contract, or to set up new schools under local authority control. We highlighted this problem in 2013 in Have We Enough School Places? but the situation has deteriorated; councils are increasingly fettered in this fundamental role.

Schooling during Covid is fraught with difficulty, whether attempting to home school or supporting children at in-person settings. Our back to school bundle in September, highlighted some of the learning from the year – and we recently published a briefing on pupil wellbeing and pandemic education.

Children at risk

Children’s services have overtaken adult social care as the primary driver of council budget concerns. Around 90% of councils overspend on children’s services, despite frequent planned increases and frequent prioritisation above other universal services. This reflects a dramatic rise in the number of cases where councils have become directly involved in a child’s life because of safety and wellbeing concerns. In Collaborating for Better Outcomes: the Final Report of the Children’s Services Taskforce (2014) we highlighted the importance of flexibility and strategy, balancing protection of the most vulnerable with the need to support families to prevent children from entering the care system. The Troubled Families programme has been running for a decade, and our recent briefing on the programme highlighted areas of success and areas that still need improvement. Many of them families in the programme have parents that are poor, unemployed, physically or mentally ill and the pandemic is likely to see the number of families with these conditions rise.

There are new risks to children, too. Although thankfully serious illness from the Covid-19 virus is relatively lower for children, the effects of the pandemic can and will have a significant impact. As well as disruption to education, domestic abuse has been scarring for some and children. Young people’s mental health is suffering and the services that can help have long been under resourced. Our recent bundle covered an overview of the crisis as well as some of the innovative responses public services are making.

Better life chances for children

Disparities in education continue, but in addition to issues of school and care, as funding cuts hit vital community amenities like parks, libraries, children’s centres and youth services, we need to remember the broader needs of children and families in their local neighbourhoods, and empower councils and people to improve life chances for every child. The pandemic has highlighted and exacerbated the gaps between children and their life opportunities. In our work on social mobility we looked at the impact of a variety of factors and how these differences can last a lifetime. This included a briefing on a child’s rights approach to local government policy.

Sufficient and sustainable funding for local services

Fighting a pandemic is not cheap, as we now know first hand. Governments the world over have faced up to the enormous challenge of helping their communities stay safe, housed and nourished while jobs disappeared overnight and health systems buckled under the pressure. But this increased demand for support, alongside the fall in tax revenue, has exacted a heavy toll on the public purse. Despite additional funding from central government in recognition of the essential services councils have been delivering, and to compensate for losses in locally-raised income, local government has not been immune from the financial impact of the Covid-19.

Local businesses and the high street have been hit hard by the pandemic, meaning that non-domestic rate income is down for councils. Many councils have made the decision to freeze council tax in recognition of their residents’ financial situation, and are offering more exemptions, so income from this source is also lower than expected. Income from things like parking and leisure facilities has dried up. And councils that became involved in commercial activities to boost funding for services have been affected by the wider economic downturn.

For many councils, the pandemic is just the latest in a series of financial problems. Councils are constrained by outdated and regressive mechanisms of taxation which fall unfairly within and between communities and businesses, and unnecessary interference from central government dictating how they spend their money. At LGIU we have long argued for a sustainable funding settlement for local government; one which fully recognises the cost of high quality and democratic local services, and which gives councils the flexibility to raise money locally, and the freedom to spend it according to the needs of their residents. Once again, councils are dealing with short term budget settlements that do not give them the resources to deal with the pressures at hand or invest in long term recovery. (Swift Read: Provisional local government finance settlement 2021-22)

In the difficult road to recovery that lies ahead, where we face the mountain of public debt and an economic impact likely to be felt for many years, central governments may feel the temptation to centralise, to ‘simplify’, to micro-manage spending more closely than ever. We argue that this is the wrong instinct. The pandemic has shown that councils are efficient, adaptable, effective, trusted and can tailor the right response for the right place. In the recovery, these traits will be invaluable. But that will not be enough.  Our Local Government Finance Survey has shown that sustainable local finance has been a worry for years and finance chiefs have been saying for a long time that local government funding in England is not fit for purpose.

Other reading:

• How effectively are New South Wales councils delivering growth infrastructure?
• Beyond the council plan: creating impact with a corporate plan
• A more inclusive approach to economic strategy for local communities
• The Covid-19 recession: back to the future?
• A shopping centre too far?
• Covid-19: Local government finance

The pandemic has changed everything. It’s becoming clear that in many areas Covid-19 has, in fact, acted as an accelerant, turbo charging changes that were already underway: exacerbating existing inequalities in health, access to education and employment; quickening the impact of technology on how and where we work, live, shop or meet.

It’s still not clear how many of these shifts will be permanent and what their final form will be.

In the initial stages of the pandemic there was a degree of optimism that for all the suffering involved we could “build back better”, that we would see more and smarter state investment, an increased valuing of key workers, a recognition of the importance of social care and a reset on social values and sustainability, with new thinking about growth and what really matters to us. But this optimism is also tempered: by a fracturing of the common purpose that characterised the early stages of the pandemic, by compliance fatigue and most of all by the scale of the looming economic crisis. It has also been anchored to the reality that the unfinished business of the previous decade still needs addressing and that we need that solid base of finance and policy to truly build back better.

As we move into 2021, with the advent of vaccines and mass testing, we will see the balance shift from dealing with the immediate health crisis of Covid-19 to dealing with its enormous social and economic impact and its long-term effect on people’s wellbeing.

This journey – not of recovery, but of adaptation – will be a central purpose for local government over the coming years.

There’s no roadmap for what lies ahead, so our framework is intended to help local authorities ask a set of structured questions that will help them begin on this path.