Close calls

The role of local councils in improving the country’s infrastructure is being brought into sharp focus by a new Government report and the Lyons Inquiry. Guy Hinchley and Nathan Holden report

The Government’s long-awaited proposals for change in local government had originally been earmarked for a summer white paper. However, following the ministerial reshuffle in May the timetable has slipped and it is anticipated that a green paper-style discussion document is likely to be published in October, followed by a white paper in the New Year.

Local government in England and Wales has a long and proud history from its earliest beginnings in the 9th and 10th centuries to arguably its heyday in the late 19th century, when Joseph Chamberlain, Mayor of Birmingham, and others like him began the process of municipalising, or bringing into local authority ownership, the supply of water, gas and electricity. The world was very different then: councils had the power to raise taxes, make laws, run and manage the provision of utilities and were largely responsible for the provision of a welfare state. However, since 1945 many of those powers have been removed. The privatisation of water in the 1980s and removing the power of local councils to set business rates both illustrate how powers have been progressively taken away. Cynics would argue that all that is left are the grand municipal buildings and mayoral chains, because the real decisions are made in Westminster.

But what, you might ask, is wrong with that? There is clear evidence that the provision of council services has improved in the past 10 years and that a strong central government is achieving the objective of providing uniform services for us all.

That may be true, but the real problem is that people no longer care about local government. For many, their local council only registers in their consciousness when their bins are not emptied or when a Council Tax bill drops on the mat. It is not even possible to say that voting enters into the equation, with only 37 per cent of the electorate turning out to vote in the May elections. The sad truth – and it has been the case for some time – is that for most of us, who we elect is perceived as being largely irrelevant to our daily lives.

To its credit this Government has tried to reinvigorate local government by shaking up the existing committee decision-making structure and replacing it with a menu of options, including US-style elected mayors. Although these changes have arguably made local authorities more efficient, the downside is that councillors no longer have a meaningful voice.

Drivers for change
We all need local government to work a lot better. We live in a rapidly changing world in which the one-size-fits-all approach to the provision of services does not work because it is already, or at least is likely to become, unaffordable.

In the next 10 years an increasingly elderly population, together with a greater demand for childcare and other services, will place huge strains on public services without the prospect of increasing resources to take up the slack. In practice, some form of rationing will have to be introduced and this can only legitimately be managed locally.

At the top of the list is the funding of local government. Sir Michael Lyons is currently considering this issue under the auspices of the Lyons Inquiry and he is due to issue his final report and recommendations in December.

Well-publicised prosecutions of pensioners for not paying their Council Tax has brought into sharp focus its inherent unfairness. The fixing of business rates nationally deprives local authorities of a valuable means of regulating their income. Councils have effectively become the instrument of a central government policy. The imperative of maintaining funding streams means that local authorities have focused on priorities set by central government for improving efficiency and the quality of services rather than necessarily addressing the wants or needs of their electors.

Changes suggested
The Local Government Association (LGA), a trade association and lobby group for local authorities, has recently published its ideas for change. These focus on devolving national and regional powers and resources to local governments, including housing, transportation, planning and economic development, strengthening neighbourhoods through the devolution from local authorities and enhancing the roles of local council members.

The LGA is not alone in making recommendations. In his report, Lyons suggests “national prosperity, local choice and civic engagement”. He suggests that effective local government is essential for national wellbeing, prosperity and competitiveness. We should move away from assuming that each area must have the same range of services delivered in the same way. There should be a degree of local variation to meet people’s preferences, with the result that local authorities become more inventive in the approaches they adopt and thus more effectively meet the needs of their residents.

Lyons also considers that there should be more clarity around what central and local government are responsible for and more recognition that local authorities have a role that goes beyond simply providing services.

The autumn discussion document
Among the proposals likely to be included in the discussion document, the following will be key: This is probably the most controversial of the new ideas that are currently doing the rounds. By dividing established neighbourhoods by ward boundaries served by councillors with no real power to represent their neighbourhoods’ interests, it is argued that the current structure of local government does not reflect the communities they serve.

Empowering local residents by giving them a real say in deciding which services are important to their neighbourhoods and why is a positive movement away from the one-size-fits-all approach.

While this has the potential to deliver more, it risks creating a new tier of local government that needs paying for. This means either diverting resources away from existing councils or alternatively new money from central government. The latter seems very unlikely. The alternative is that central government is weaned off its habit of interfering in local government and councils are allowed far more freedom and devolved powers. It is now widely recognised that, in the technology-dependent age in which we live, our cities are the engine rooms of economic growth. There are strategic issues that cut across traditional local authority boundaries, for example the provision of public transport, economic policy and planning. It is thought that these might be managed better on a regional basis by a regional body, possibly led by an elected mayor.

It is highly unlikely that the proposals that emerge in the autumn will return to local councils the powers lost in the course of the 20th century, but at least it is now recognised that strong local government is vital to the economic and social wellbeing of the nation, and for that reason alone local government may be in for a bit of a renaissance and, hopefully, this time not just a makeover. n
Guy Hinchley is a partner and Nathan Holden is an associate at Mills & Reeve