At a time of prolonged cuts and fears about the future, Labour policies to promote growth and jobs, tackle inequality – or and save threatened services – will generate widespread support and public trust, but only if we first have a credible analysis of the public finance challenge the country faces.
Simply put, social justice must be founded on greater fiscal reassurance – but for this to happen there needs to be a new conversation and alignment between what we say nationally and what we are doing locally.
Labour can really build a compelling narrative and defence of active economic policies from studying what we are doing where we are in power – in local government. No one can accuse Labour here of ducking hard decisions or not coming up with inventive social justice solutions, especially when most of our authorities have suffered more than Tory or Lib Dem councils in funding cuts.
I believe the experience of Labour councils is translatable to the party nationally: Labour Town Halls are in many ways the front line of these debates and can contribute ideas and examples for the party to take forward in this important national argument.
Below I set out why we need a new approach based on fiscal reassurance, and then set out the steps Labour councils can take to assist the national party in rebuilding key elements of economic credibility.
Why we need a fiscal reassurance strategy
The fiscal assurance approach recognises:
•The ‘no Tory cuts’ mantra directed towards councils during last year’s budget-setting carries less and less traction with voters than it did even then in the face of growing realisation about the economy and public finances.
•People want greater confidence that we have solutions to increasingly long-term problems and are willing to countenance more radical solutions if it helps in the long run.
•Residents are not convinced of the government’s rush-to-cut but feel public services could do more to reduce costly overheads.
•There is very real worry about the lack of growth and action to ameliorate the impact of economic uncertainly on their local economy, but they want to be more certain that steps proposed are effective ones.
•Finally, people are suspicious when their local public services are forced to change for seemingly ideological reasons – such as NHS reforms or nebulous ‘big society’ outsourcing.
Steps we need to take
Labour local authorities have a role in building reassurance, signalling credibility by making choices to build certainty and trust with local people. Every Labour financial plan should clearly set out how we are going to save money through more prioritisation, more institutional innovation and reform. This will require discussions about more difficult decisions about where we spend money.
1. Reduce costs outright
We must first start by setting out bold public statements on how we are going to reduce costs. Each council will have their own pressures, but it’s important our councils start to give cast iron assurances that town hall overheads will be reduced as far as they can.
Pay restraint is a sometimes-necessary trade-off against further job losses, but can’t be just for some and not for others. In Camden, spend on external consultants has been cut by 37 per cent from a high in 2009-10 (under Tories and Lib Dems), senior pay reduced by 17 per cent and the new chief executive is taking a 20 per cent pay cut. All directly employed staff are now paid London Living Wage and we are pursuing extension to private contractors with workforce savings made elsewhere, in consultation with unions. Incremental pay increases will be replaced with performance-related pay, with a special emphasis on rewarding staff identifying tangible long-term savings.
2. Embrace and promote transparency
Labour in power should follow the principle that if-you-spend-it-you-should-be-able-to-defend-it. Transparency is a no-brainer and we should all make up for lost ground and go further and be better than Tory councils.
3. Delayer middle management
Labour was elected in 1997 with a pledge to reduce bureaucracy, but somehow we lost focus. Labour loses if it allows itself to become labelled – which it has – as the party of managerialism and the machinery of government. Public services need excellent managers to succeed – and infamously fail when they don’t – but when public services grew, we did not necessarily grow them in a lean way.
We need to set tough new targets to reduce the number of managers, replace old-school incremental pay systems and reward quality work by introducing performance-related pay far lower down the pay grades. My authority is cutting manager numbers by at least 20 per cent, bearing down on pay while other cost reductions include reducing back-office functions like administration, finance, human resources, communications by up to 40 per cent in some areas.
4. Build community partnerships, not an ad hoc ‘big society’
Labour councils don’t need to be told that collaborative solutions with the voluntary sector can deliver better solutions at lower cost to the taxpayer: we know from our own experience. However, this doesn’t mean that we don’t have to look again at refreshing our relationships with the sector. Rather than a series of ad hoc of ‘big society’ initiatives – Labour councils should create new corporate governance structures to enable more community-run services.
Old ways of working must be re-examined in the light of new challenges and smaller budgets. Councils still have a crucial role to play as the central public service provider – but where they can no longer do this, they have to bring necessary elements together by brokering relationships and setting a new strategic direction through partnerships – community providers need to be at the heart of this.
There is risk, and it can’t happen overnight, but where we can do this successfully far better solutions can be achieved than with the outsourcing operations undertaken by Conservative authorities. In Camden we have substantially reduced costs for popular afterschool and breakfast clubs and helped library users groups and community centres set up community libraries and run local markets.
5. Plan for the long term
In order to secure consensus Labour’s fiscal approach should set out as long-term an approach as possible. Cuts to local public services will be with us for most of the decade: while the government gets its figures wrong, Labour locally can try to provide more certainty for residents while the government demonstrates its failure by reopening the books – as it is likely to do for the 2013-14 funding – and imposes even further cuts.
Three-year plans, rather than year-on-year budgets, enable councils to realise savings early, freeing up ‘one-off’ sums for capital investment, ‘invest-to-save’ or to ease transition from reliance on council funding to self-sufficiency for community services we have been forced to cut.
People want to know where they stand, and we should try to give them peace of mind. Councils (as several have done in London) should therefore consider setting long-term council tax rates, either by freezing or setting a low baseline target. We should also consider whether there is scope for other measures – for example, three or four year deals on rents for council tenants.
Longer-term budgeting also enables better planning to anticipate future challenges – such as digital – to drive more costs out of the system and get better results for residents. Following the August riots, our long-term planning should also continue work to tackle issues such as child poverty or long-term youth unemployment – as these are themselves long-term and need to be approached accordingly. Labour’s criteria on long-term social justice initiatives should be how the ‘marginal pound’ will be spent better and in the most effective way – so people don’t just focus on the cost of doing, but the damage and long-term burden of not doing.
6. Repair and modernise our infrastructure
The Tory blind-spot on investment that depleted our schools, housing and transport in the 1980s and 1990s can’t be repeated. Camden’s Community Investment Programme involves the biggest reordering of our publicly-owned assets since the 1970s.
The programme involves sale or redevelopment of underused properties owned by the council over the next five years will enable the council to invest over £100m in primary and secondary schools, starved of funding by the new government, as well as modernising our public buildings to provide more cost-effective services. A further 700 council and affordable homes will be built by our measures by 2017 as well as £135m in capital works to existing homes.
This investment not only spurs jobs, local contracts and apprenticeships – it also saves money on repairing old buildings. This is because we know that neglecting public works is inefficient, and the bills will only get higher in the long run.
7. Align local priorities with growth policy
We need to align financial assurance measures with practical examples where we are making a difference to growth: nationally and locally.
The ‘passive state’ approach of the coalition wastes lives and talent on the dole and taxpayers’ money on welfare payments. Councils therefore need to ask if our services are configured to support people finding work, or keeping them in jobs. Do we support enough childcare or afterschool clubs, compared to other services? Do we provide enough subsidies for parents on back-to-work programmes or retraining? Are our policies designed for a period of abundance, or should we time limit help, in order to help more people?
In Camden, like Waltham Forest and others, we made choices to shield early years work from the brunt of the cuts because we saw how preventative work now helps fix broken lives now and saves on the costs – social and financial – of neglect.
We also asked whether the local economy works for local people and established our ground-breaking Education Commission, chaired by Sir Mike Tomlinson, former head of Ofsted, to develop policies to bridge local schools and employers here in inner London. Our aim is to ensure we give every child in the borough an education which expands their horizons and aspirations as well as prepares them for the world of work.
These are a few examples of where we could provide fiscal reassurance from the bottom up – a basis for a further discussion on how we better align national economic policy with local decisions in order to develop a practical reputation for driving growth in a way which brings assurance to the public.
There are alternatives and – unlike our Whitehall mandarin – we have choices. We can show that the Labour way of running public services is based on sound finances and aligned with national Labour growth policy. We can drive investment, target measures to tackle inequality at its worst and promote social mobility.
Through partnership we can also provide leadership, stability and consistency in an increasingly fragmented health and education system.
The hollow Tory conception of public services, on the other hand – ‘no frills’ and basic – will have largely rejected these goals, representing little more than ‘shell’ public services run by low-cost, low-wage, low-quality contracts with little remaining public service ethic.
There are tough decisions to make, but Labour has an opportunity here to re-establish trust firmly rejecting the ideological, ‘creative destruction’ approach to public services the Tory-Lib Dem government is pressuring us to implement. Our experience in local government shows that the Tories don’t hold a monopoly position on taking long-term decisions in the national interest – the behaviour of Eric Pickles’ Department for Communities and Local Government shows otherwise – and certainly lack solutions.
After six years of cuts there is no doubt that the state will be smaller and may provide services in different ways, but it is within our grasp to provide alternatives to the negative, minimalist and insular view of public policy that the current coalition represents.
Theo Blackwell is cabinet member for finance and personnel at the London Borough of Camden
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