Progress | Centre-left Labour politics

Freeing local councils from the SW1 straitjacket

On 1 April 2015 councils up and down the land will announce another round of budgets cuts reflecting the austerity settlement which will last until 2018 at least.

The cuts have gone on longer than they had to, because the economy has not grown like it should have.  Of course, this was partly due to the crisis in the eurozone, but also because the Coalition choked the economy just at the time when it was healing – particularly by cutting capital projects.

The Tories promised to sort things out in one term of parliament and here we are, approaching a new parliament with another round of cuts that force councils to take even tougher decisions about local services. This round of cuts promises to be more punishing than the last because most of the early efficiencies have already been taken.

On top of that many inner city and urban areas that elected Labour councils are suffering more thanks to a Tory funding formula weighted against areas with high levels of poverty. A first step for a new Labour government must be to reinstate fairer funding.

The reality is that an incoming Labour government next year will not be there to ‘turn the taps back on’ to 2007 levels. Why? Labour has clearly and prudently committed to spend within its means, seeking to prioritise spending, develop long-term plans and ‘zero-base’ budgets in Whitehall. An incoming Labour government will, in any case, have to deal with a range of issues meaning that local services will have to compete with other priorities, such as the NHS, for funds.

‘Bringbackism’ also implies that all spending under previous Labour government is either sacrosanct or desirable, when in fact we know that resources could have been spent more effectively and more purposefully to make a difference.

As local councillors know, only a small proportion of local spending is controlled locally. Councils are hampered in doing more by traditional Whitehall processes where town halls administer but do not direct spending. If councils had more control over spending locally, taxpayer money could be used to more effectively tackle inequality or reduce welfare bills by getting people into jobs.

Here are my seven proposals to free local councils from the grip of Westminster:

  1. Overhaul the current funding system to make the system much more transparent and easier for the public to understand, and recognise need within the system to allow councils to plan for the long term.
  2. Retain more business rate growth and be better protected from the vagaries of the system that leads of unexpected shortfalls and forces councils to keep reserves that could be used better elsewhere.
  3. Boost housing by lifting the unfair Housing Revenue Account borrowing restrictions to allow councils to borrow prudently within the HRA to build homes, in line with housing associations and other areas of council expenditure.
  4. Keep more receipts raised locally through right-to-buy and give councils more freedom to apply these in line with their own aims, like building or repairing homes.
  5. Devolve funding for skills from Job Centre Plus to local authorities or sub-regions – local authorities know more about clients, especially vulnerable ones, than remote Whitehall bodies do and can make every pound spent, count more to help people into work.
  6. Greater control over areas of Department of Health expenditure linked to social care expenditure so it can be delivered more efficiently by councils.
  7. Free local democracy by abolishing the council tax ‘referendum limit’, allow councils to invest more of the taxes raised locally including stamp duty, lift statutory limits on fees and charges, introduce European-style tourism levies in London and increasing the discretion councils have over setting council tax for empty furnished homes and the other exemptions. Local taxes are not popular but let local people decide that – councils have elections more regularly than parliament does now.

These are all practical, tangible measures that will address the shift of power from local to central government since rate-capping 30 years ago in 1984. They should be deliverable first steps in the first term of a Labour government rather than the limit of our aspiration and vision to decentralise power from Whitehall and SW1.

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Theo Blackwell is Labour’s cabinet member for finance on Camden council

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The seven steps set out form part of Camden’s submission to the independent Singh Commission of Local Government Finance

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Photo: James Stringer

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Theo Blackwell

is a councillor in the London borough of Camden

1 comment

  • My worry is if the Tory’s wins the next election, as day follows night they get rid of the public sector in favour of the private sector. The Northeast Council’s are been hit the hardest with budgets cuts.

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