A message from Local Government – 3 urgent issues for Westminster governments

By Jim McMahon and Catherine West

Local Government cuts have finally made the news.  The difficult decisions that Eric Pickles has forced on authorities like Newcastle and Birmingham underlines the double unfairness of the Tory-led Government’s undeclared war on councils. First, council budgets – that pay for popular services like libraries, children’s centres and, crucially, social care – have been cut more than any other bit of the public sector.  Second, that Mr Pickles has chosen to cut councils in the poorest area far more than those in Tory-voting leafy shires.

As Labour council leaders get together for the party’s annual Local Government conference there is a growing consensus that the traditional model of local government is broken.  Unless there is a dramatic change of direction in Government policy, within a few years Councils will simply no longer be able to provide the services we are legally obliged to, such as decent care for the elderly and disabled children, let alone services like culture and youth clubs that we aren’t.

In the short term, a fairer distribution of the existing resources would help. More affluent areas need to shoulder their fair share of the cuts. But this is only a sticking plaster.  There are three fundamental challenges: 1) that the cost of social care, the largest part of local government spending, is spiralling upwards, 2) that many local councils are very heavily dependent on central Government for most of our funding, and 3) the Council Tax system is broken because the regressive nature of the tax means it is an invidious choice to increase it.  The last Labour Government ducked all of these issues. The next one cannot.

But there is more to this than doom and gloom.  On the whole, Local Government has responded very well to the scale of the cuts imposed on it. Already the most efficient part of the public sector, councils have found ways to save money and improve services that out-of-touch and sclerotic central government bureaucracies could never.

The last time Labour was in opposition some of its local administrations were an embarrassment to the party.  Now Labour in Local Government has become the most dynamic part of the labour movement at campaigning and developing policy. Our challenge is to show how local government can meet the interests of local residents and businesses.

Labour has to recognise that local areas are different. At times, we’re scared of the accusation of services being a ‘postcode lottery’, and lack the courage to argue that areas with different needs actually need different services.  Take housing: Islington as a inner London borough with a huge disparity in local incomes is concentrating on the creation of affordable rented homes to stop everyone other than the super-wealthy being forced out. In Oldham there is a greater need to encourage the local private housing market and concentrate on attracting aspirational families into the borough who will support the local economy, drive up standards in schools, and, bluntly, broaden our council tax base when we currently have 80% of our properties in the lowest council tax bands.

Both Oldham and Islington share an ambition to create more local jobs. However if we are going to make progress the Labour Party has to recognise a fundamental truth.  The Work Programme is failing not because it is a Conservative policy but because it is an over centralised and prescriptive programme that has no understanding of local labour markets. Sadly such programmes are the default position of central government, including Labour ones. Barely 20% of public expenditure is under the direct influence of local councils. The rest is controlled through a myriad of government departments, executive agencies and outsourced commercial interests all with competing agendas and little motivation to work together. Those involved barely understand any remit beyond a bewildering set of nationally imposed targets and there is absolutely no local accountability to local people either as citizens or consumers.

It will be difficult to reverse this tide of centralism and it has powerful friends in the vast army of lobbyists, advocates and national media who prefer the easy life of having all the decision makers concentrated in the Westminster village. There is also no desire on our part to return to a past when every local decision was made by a council committee. But as the Work Programme and the inability of the NHS to become anything like as efficient as councils shows the current centralisation of power leads to poor decision making and a massive waste of public monies. There are three urgent issues for this or future governments:

First; it is vital that the future way of funding social care is decided quickly with defined financial responsibilities for the individual and local government. Without this, all Councils will be bankrupt within a decade.

Second; recognise the limitations of national employment programmes and devolve the budgets and responsibilities to local councils either individually or as part of a consortium such as the Association of Greater Manchester Authorities.

Third; generate economic growth through much needed infrastructure projects.  But crucially, to allow more flexibility that the last Labour Government over the procurement of this work so all of the contracts don’t go to the usual same few major construction companies and myriad sub-contractors that leach money out of local areas.

Our task as responsible local leaders is to make this case before the next General Election and show that we have the knowledge and leadership to transform public services and the economic futures of our towns. We want to work with the Labour Party, cross party through the Local Government Association and with Trades Unions and businesses to make that case. As another politician once said there really is no alternative.

Jim McMahon is the leader of Oldham and Catherine West is the leader of Islington. Both are speakers at the Labour Party Spring Conference in Nottingham tomorrow