Michael Burton reports on a conference last week which looked at the future pattern of public spending and councils’ own role in filling the budget gap
A radical appraisal of public spending allocation policy needs to take place to avoid a decade of cuts, a conference heard last week.
Stephen Hughes, chief executive of Birmingham City Council, told an MJ/NSA event on budgets and powers that his city received £7.2bn in public spending, which could be better used if all the various public organisations worked together on allocating it.
He warned: ‘The alternative, to go back to silos, means we’ll have a decade of cuts.’
The wider financial scene was set by LSE director, Tony Travers, who pointed out that, ironically, local authority budgets were ‘strangely isolated’ from the economic downturn because most of their income was centrally-funded. Were they to be dependent, such as councils in the US, on the local tax base, then their incomes would suffer.
However, he warned that while the CSR, technically, guaranteed local government budgets until 2011, there was increasing likelihood the Treasury would revisit the last year, because of the collapse in inflation.
‘If the Government believes inflation will be minus, then the local government settlement is equal to a 6-7% increase. My hunch is the Treasury will say to ministers it wants to keep its options open, and I wouldn’t assume, therefore, that the 2010/11 settlement is set in concrete.’
He also warned that local government faced zero per cent or even minus grant increases in the years afterwards. He predicted that if the total public spending budget rose by 1% in the next CSR round – negotiations about which are about to begin – then by the time health, education, adult care and welfare were taken out, there would be little left for local government.
He added: ‘The clear picture is zero or less, with some authorities getting zero and others a minus grant because the fact is, none of us have had to think about a world where prices and grants fall.
‘Ministers will be looking for 1% rises in council tax next year, and there’s a real chance capping limits could be pushed down. Public sector pay will be 1% next year.’
His gloomy forecasts were echoed by shadow local government spokesman, Bob Neill, who also predicted cutbacks in funding for as long as the next decade.
He said more councils needed to merge back offices to reduce costs, such as creating service centres in two-tier areas to manage both county and district services.
He also joked that, should he become minister after 2010, ‘I might lose some of my local government friends’.
Procurement specialist, Helen Randall, partner at Trowers and Hamlins, was optimistic that councils had a ‘fantastic array of powers’ under the 2000 and 2003 Local Government Acts to be entrepreneurial. She added: ‘Wellbeing is a forgotten tool in difficult times.’
She named a variety of councils with innovative projects, including Tunbridge Wells, Oldham, Swindon, Leeds and Barnet, and added: ‘We’re seeing a lot of interest in councils setting up wholly-owned or partly-owned companies.’ One example was Greenwich LBC, whose head of economic development, Trevor Dorling, was another speaker, outlining the council’s job agency, Gateway Employment Ltd.
A further practical case study came from Cambridgeshire CC’s director of people and policy, Stephen Moir, describing the back office partnership between his county, Northamptonshire and Slough and a private sector firm, as yet undecided, due to launch next year.
The deal will save money for all partners and the new venture will also supply back-office services, such as payroll and HR, to other councils within their areas.
Yet another example of municipal innovation came from Mr Hughes, describing his council’s moves to create a bank for wholesale customers.
Finally, Dermot Finch, director of the Centre for Cities, warned: ‘For the Treasury, devolution is about making efficiency savings rather than any ideological support. It will give more powers if these assist in promoting shared services.’
Stephen Hughes, chief executive of Birmingham City Council, told an MJ/NSA event on budgets and powers that his city received £7.2bn in public spending, which could be better used if all the various public organisations worked together on allocating it.
He warned: ‘The alternative, to go back to silos, means we’ll have a decade of cuts.’
The wider financial scene was set by LSE director, Tony Travers, who pointed out that, ironically, local authority budgets were ‘strangely isolated’ from the economic downturn because most of their income was centrally-funded. Were they to be dependent, such as councils in the US, on the local tax base, then their incomes would suffer.
However, he warned that while the CSR, technically, guaranteed local government budgets until 2011, there was increasing likelihood the Treasury would revisit the last year, because of the collapse in inflation.
‘If the Government believes inflation will be minus, then the local government settlement is equal to a 6-7% increase. My hunch is the Treasury will say to ministers it wants to keep its options open, and I wouldn’t assume, therefore, that the 2010/11 settlement is set in concrete.’
He also warned that local government faced zero per cent or even minus grant increases in the years afterwards. He predicted that if the total public spending budget rose by 1% in the next CSR round – negotiations about which are about to begin – then by the time health, education, adult care and welfare were taken out, there would be little left for local government.
He added: ‘The clear picture is zero or less, with some authorities getting zero and others a minus grant because the fact is, none of us have had to think about a world where prices and grants fall.
‘Ministers will be looking for 1% rises in council tax next year, and there’s a real chance capping limits could be pushed down. Public sector pay will be 1% next year.’
His gloomy forecasts were echoed by shadow local government spokesman, Bob Neill, who also predicted cutbacks in funding for as long as the next decade.
He said more councils needed to merge back offices to reduce costs, such as creating service centres in two-tier areas to manage both county and district services.
He also joked that, should he become minister after 2010, ‘I might lose some of my local government friends’.
Procurement specialist, Helen Randall, partner at Trowers and Hamlins, was optimistic that councils had a ‘fantastic array of powers’ under the 2000 and 2003 Local Government Acts to be entrepreneurial. She added: ‘Wellbeing is a forgotten tool in difficult times.’
She named a variety of councils with innovative projects, including Tunbridge Wells, Oldham, Swindon, Leeds and Barnet, and added: ‘We’re seeing a lot of interest in councils setting up wholly-owned or partly-owned companies.’ One example was Greenwich LBC, whose head of economic development, Trevor Dorling, was another speaker, outlining the council’s job agency, Gateway Employment Ltd.
A further practical case study came from Cambridgeshire CC’s director of people and policy, Stephen Moir, describing the back office partnership between his county, Northamptonshire and Slough and a private sector firm, as yet undecided, due to launch next year.
The deal will save money for all partners and the new venture will also supply back-office services, such as payroll and HR, to other councils within their areas.
Yet another example of municipal innovation came from Mr Hughes, describing his council’s moves to create a bank for wholesale customers.
Finally, Dermot Finch, director of the Centre for Cities, warned: ‘For the Treasury, devolution is about making efficiency savings rather than any ideological support. It will give more powers if these assist in promoting shared services.’
