Councils in financial distress demand different dialogues; here comes co-prevention!

This is Blog No 59

Something deeply dangerous is happening in English local government, and the evidence is well documented this week in a worrying report from the Levelling Up, Housing and Communities Select Committee

First, the salient facts. The 317 English councils deliver 136 different services and spend approx £100bn. Over a decade, in real terms they lost 26% of their core spending power. Because of a deliberate switch to a greater dependence on council tax receipts, the poorer the council, the more it has lost. Meanwhile, inflation and delivery costs have increased massively, and whilst only eight Councils have issued the dreaded ‘Section 114’ notice, the queue of authorities worried that they might have to do so now stretches as far as the DLUHC can see ahead.

Everyone seems to agree that the entire basis of Council funding needs a complete re-think, but over recent years, no-one has had the appetite to tackle such a ‘wicked issue’. In his evidence to the Committee, the Local Government Minister, Simon Hoare MP was quite candid, saying: “On the rocky road of recovery post-covid, given the scale of demands that were placed on local government, I honestly do not believe that fundamental root and branch reforms in a whole set of areas would have been either welcome or productive …”

In contrast, other witnesses pointed out that there are all sorts of things done routinely around the world, including comparable economies like France, the US and Germany including local sales taxes, local environmental taxes, tourism taxes, local shares of income tax or municipal bonds. We have just become stuck with an unworkable system and huge pressure-points that threaten to destroy many local services.

The Report highlights three areas where there are intractable problems:

• Social care – where the demand for children’s services has increased dramatically, due, it is believed, to reductions in early years interventions. With a chronic shortage of residential children’s homes places and 83% provided by the independent sector, costs have risen well beyond any form of funding. Adult social care is in an even more parlous position with successive governments failing to address the well-known problems.
• Special Educational Needs (SENDs) – where Parliament’s good intentions in the 2014 Children and Families Act have been frustrated by having underestimated the demand for individual education, health and care plans (EHCs) and systematically under-funding them. A succession of financial fudges have excused Councils from some of the effects of large SEND deficits, but they remain on the books as a horrible problem awaiting the next Government!
• Homelessness – a growing social, human and financial tragedy, aggravated by a Government’s decision to freeze local housing allowance rates in April 2020, preventing many people from being able to pay rising rents at a time of high inflation. Apparently, the number of households who are homeless and living in temporary accommodation is the highest since records began, with inevitably dire consequences for Council finances.

The bottom line is this. We are in a situation where local government delivers a vast range of services, but two of them - social care and children’s services - are now consuming well over two thirds of the entire budget.

What will happen to the rest?  Will they deteriorate or disappear?

First and foremost, we must engage honestly with local people, and tell them the truth. End the cake-ism whereby we are told that great things can happen, and we won’t need to pay for them.

I say this because too much of this disaster is presented as an issue between big bad Government and plucky little old local authorities, and they just need to sort out who pays for what. In reality, it is far more damaging to the relations between local communities and their Councils. If people lose faith in their abilities to deliver essential or highly desired local services, they will see little point in voting in local elections and elected members will wonder what on earth will induce anyone to support them.

Fortunately, Armageddon has not yet arrived, and there may still be time to salvage something from this mess. Here are three things, I think, progressive Councils should do:

1. Learn how to engage honestly with local people – without destroying their confidence in local government. We can’t expect to make many experts in Council finances. But we need to explain the situation rather better. Council Comms departments can be very effective at ‘spinning’ good news, but maybe need to get better at managing bad news. Councillors elected anew in 2023 may be reeling from discovering how the giant social care bill is overwhelming their desire to take other initiatives on critical issues like climate change and net zero. They need to be helped to think creatively about alternative ways to fund services – and to gather around them the best, most imaginative brains of the local community to figure out new ways to deliver such services
2. Develop co-production-style dialogues to safeguard priority activities. With Council budgets so severely constrained, now is the time to think ahead. In the past we saw ‘aspirational’ consultation – finding out what local people most wanted Councils to do for them. Today the question is: What of today’s services and facilities do you most want to retain? It may be parks and leisure activities; libraries; subsidised bus routes; senior citizens clubs; the local theatre – or that plan to renew the dangerously-damaged pavement. There may be new and innovative ways to deliver these services. But don’t rely on Governments. Find them yourselves. Use in-house skills – or employ specialists to facilitate deliberative events and consultations to identify solutions before they are imposed upon us. Think of this as analogous to preventative medicine. We need preventative consultations – dialogues that will anticipate what might be stopped, closed or curtailed and find ways to save them. Let’s not wait till the consultation on cessation of service – by then it might be too late. Use co-prevention instead.
3. Engage with the business community. Just as the Select Committee published its Report, the excellent Centre for Cities published its latest snapshot Cities Outlook 2024.

       It tells the tale of how the 63 largest towns and cities have fared    

       since 2010 by looking at job creation, productivity, income and

       housing affordability. There is good and bad. Jobs growth is up, but

       productivity growth is very slow. We are weaker than we should

       have been, but the Centre strongly endorses the idea of levelling-up

       and urges politicians of all parties to ‘stick with it’.

       On any reading of this – and other analyses, the one thing we need

       our Councils to do is to spearhead economic development. Listen to

       Andy Burnham from Manchester or Andy Street from Birmingham.

       They all want to motor ahead on significant infrastructure, housing,

       and employment projects. They want greener economies. But with

       the cash catastrophe that looms for Councils, it won’t happen. That’s

       why new forms of engagement with business and industry is  

       imperative.