Whitehall needs to butt out if we’re going to really change Britain for the better

I wrote recently about how councils have largely coped well with massive cuts from the Tory-led Government, but that a future Labour Government had to break away from seeing councils as the easiest way to cut spending. Councils are now at a cliff edge and won’t be able to manage even more cuts by making efficiency savings. Those easier options are fast running out.

Councils have already taken out layers of senior management, sold-off or improved the management of buildings, and asked staff to do more with less administrative support. Such efficiency savings can usually only be made once and most of them have already been made.

Labour’s Zero-Based Review of local government recognises the limits councils face, but it still asks local authorities to find cuts from efficiencies and the ‘back office’. Despite talk of integration, prevention and early intervention – all things that local councils are already doing – it’s not clear there is a grasp of the damage a further round of deep spending cuts to councils will bring.

More cuts will probably cost the state more in the not too distant future. We’re seeing the impact of the £6 billion that has been taken out of councils’ social care provision since 2010 in the queues outside A&E. Similarly, London has seen a steep rise in youth crime in the last year, perhaps exacerbated by cuts to youth services, that is straining the budgets of the police, the courts and prisons. These kinds of deep cuts to front line services will become more common as councils run out of efficiency savings to make. The false economy of further cuts to local government will become clear.

The challenge the next Labour Government faces is to make our country a fairer place with less money to spend. It’s possible, but only if Labour can get to grips with the fact that in Britain, too much public spending is spent managing the costs of preventable problems. For example, we know that effective care services reduce demand for more expensive acute health treatment – yet the Tories are cutting care to keep funding (inadequately) the expensive stuff. Bonkers.

Reactive spending on services and benefits when problems have been allowed to escalate is expensive and often does little to actually address the problems people face. Early intervention from local councils, working with partners in different public sector organisations, can tackle issues before they become intractable and can save money in the long-term. This is harder to do in Britain than anywhere else because we have one of the most centralised states in the developed world.

In practice, positive spending to tackle complex problems is best done locally. Whitehall cannot possibly design and control national programmes that understand the different challenges that face people in Islington with those in Suffolk or Salford. The people best placed to understand and tackle those challenges are the residents, staff and local representatives working on the ground in their communities, talking to each other and designing systems that work.

The Labour-initiated Troubled Families Programme has, despite its awful name, shown what can be done through trusting local areas. An estimated £9 billion is spent on 120,000 families every year, £8 billion of which is spent reacting to problems and treating symptoms of wider issues, such as police call-outs and A&E admissions. But by bringing services together to look at the different challenges facing families and what interventions are needed early, councils have been able to really make a difference to people’s lives. By freeing local government to work across different services and organisations – and with funding given to support this work – we’ve been able to address long term problems for families and save other services money.

Getting people back to work is another example. As the Local Government Information Taskforce found, there are as many as 35 different national schemes seeking to address youth unemployment, costing around £15 billion a year. But since 2009, the number of young people starting nationally-funded programmes has dropped by 10%. New approaches pioneered by local councils, offering the tailored support that these national schemes don’t, are getting more people back to work sooner.

Again, in housing, councils like Islington have been able to build new council and affordable homes and this helps save money on paying out expensive housing benefit to private landlords. But to go further and help more people (and save more money), local government needs Westminster to give power and control away by allowing councils to realise the investment power of their housing assets to build more homes.

To be fair, Labour’s Zero-Based Review of local government at least pays lip service to the kind of radical devolution needed if Britain is to develop public services that actually work in tough times. It’s just the policies in the document still see Whitehall as guiding much of what happens on the ground, when it really just needs to butt out.

Richard Watts is leader of Islington Council