What can local gov expect from 2018?

Jonathan Carr-West, chief executive at the Local Government Information Unit, looks at the likely trends for local government in the new year, including a shift away from central government and instead sideways to the communities it serves

What can local government expect from 2018? The short answer is more uncertainty. In all key areas of government policy that effect local government, 2017 has been a year of drift and there’s little reason to think this will change.

The most obvious examples of this are in the reform of local government finance, the funding and delivery of social care and devolution to English regions. The reform of local government finance has started to take on an almost surreal aspect. There’s a consensus now that 100 per cent retention of business rates - announced with great fanfare by George Osborne in 2015 and, in principle at least, the cornerstone of government policy - is not going to happen any time soon.

There were always unanswered questions about how this was going to work in practice: what level of failure would be tolerated, what sort of tariffs and top ups would redistribute funding, and how often the whole system would be reset?

But as the Local Government Finance Bill fell before the 2016 election and has not been reintroduced into the legislative programme, it’s hard to see how 100 per cent retention could now be made to happen even if there was clarity on the detailed mechanics of the system.

What we do have is a series of pilots. The first tranche began in Liverpool, Greater Manchester, West Midlands, West of England, Cornwall and Greater London in April this year and a new set of pilots will be announced shortly to begin in April 2018. For councils it clearly makes sense to get in on the pilots and retain more of their local business rates revenue but it is odd, to put it mildly, that we have pilots continuing while the policy they were meant to be piloting no longer exists. This feels less like a coherent process of governance and more like a scramble for resources.

And while this goes on councils are still completely in the dark as to how the sector will be financed beyond 2019/20. There are lots of more radical options for financing local government: from a wider range of local taxes to social financing but there’s little engagement with these at government level and many, such as hotel taxes, appear to be formally off the table.

Under the current government, we can assume that the direction of travel will remain towards greater fiscal self-sufficiency. Of course, given the turbulence of the last couple of years of British politics it would be a brave pundit who would bet the farm against a change of administration. It’s fair to say that local government finance reform has not been the manifesto top line for the Labour Party. They have committed to extra funding in the short term and a fundamental review of council tax and business rates, but we are unlikely to know more about that unless or until they are in government and, as we know these sorts of reviews take time.

So the prudent expectation is that there will not be any immediate support or action from central government and that councils will continue to be more reliant on generating revenue locally. This is not always without controversy. There’s been a lot of discussion about councils investing in commercial property, for example, and there were rumours that the Treasury would seek to lamp down on this at the budget though under pressure from the Department for Communities and Local Government they eventually pulled back.

But this to and fro points to confusion at the heart of government and perhaps a wider uncertainty. We want councils to be self-sufficient and for local areas to be enabled and incentivised to drive growth. But we worry about giving them a free hand to do so. What if some places fail? What if some mess it up? At some point we will have to choose. Until then local government will just keep managing as it can.

In adult social care - in which we have a £2 billion a year funding gap - we’ve also seen many major decisions deferred. The March budget made available an extra £2 billion over three years: helpful in the short term but not nearly enough money in the long term. We were also promised a Green Paper ‘later this year’ which would address more strategic questions around the financing and delivery of care. Like many in the sector, we welcomed this commitment but pointed out that such a paper needed to cover a lot of ground. We need to think not only about direct funding of the system, but about support for self funders and help for people to invest in their own care. We need to address failures in the care market and we need to support more innovation in service delivery.

Unsurprisingly perhaps, by the time the November Budget rolled round, it was announced that the Green Paper would be delayed until summer 2018. It would probably be wise not to hold your breath. In the meantime though there are things that councils can do to manage and mitigate provider failure, to focus their commissioning on outcomes and to use technology more effectively to support care recipients and help care workers to co-ordinate their work.

Devolution dilemmas
The final area of government policy in which local government may be hoping for more clarity in 2018 is around devolution. Without rehearsing the ins and outs of the last few years, we have seen successful devolution in the shape of combined authorities with elected metro mayors in several major city regions but we have not seen much in progress in non-metropolitan areas of the country. Several devolution bids in two tier areas failed and although the government’s position remains that it is open to discussions, there appears to be little energy or resource behind this.

At times, this debate has threatened to morph into a dispute about local government reorganisation. County unitaries, the two-tier status quo and new smaller unitary councils, based on clusters of districts, all have their supporters. And in some parts of the country such as Buckinghamshire, there are competing proposals on the Secretary of State’s desk. No decision has been made about these or looks imminent; so for now this remains a phony war.

There were announcements in the Budget of new metro mayors in Sheffield and North of the Tyne, but this gives no sense of a wider policy direction. It would be good to see a wholesale reboot of this policy area to provide a renewed impetus to devolution and continue devolving power to the cities and regions of England.

So in all these areas we have seen minimal progress in 2017 and anticipate minimal progress in 2018. For a government that is long on challenge and short in political capital, these are not going to be priorities.

For local government and its leaders, the ability to operate effectively in conditions of uncertainty has become an essential skill. And while central government pursues its own agenda, local government has priorities of its own.

The broad outline of public service reform is clear. We need to move from a system that is geared towards acute intervention to one that is characterised by demand management, prevention, integration of services, multi-agency working and which is co-produced with, and designed around, the needs of service users.

But that’s a very different vision of what a council does. It’s a convener, it’s a facilitator, it’s a catalyst of civic action. And that’s why, though it is frustrating that there is a lack of policy direction from central government, it is not, in the end, crippling. Because the change in how local government needs to operate means that its primary relationship is not upwards to the centre but sideways to the communities it serves and with whom, increasingly, it must work together around a shared civic vision that is generated locally.

That’s the real priority for 2018.