April newsletter: saving for a rainy day
Risks ahead
Author: Jack Airey |
As the Budget illustrated, there is unlikely to be any let up in neither the Government’s austerity nor devolution agendas over this parliament. Local authorities up and down the country have been through a lot of change in the past few years and given the extent of this ongoing transformation, predicting what local government will look like in five years’ time is near impossible. But as Localis chief executive Alex Thomson writes in his latest column for the MJ, we can be sure that there will be plenty of need for reserves:
‘A great deal has been written and said about local authority reserves in the past few years with, to put it politely, some pieces of commentary better informed than others. As an issue it has been thankfully rather less high profile in recent months. But for local authorities reserves of all kinds are now more vital than ever. With more power to shape local circumstance than at any point in the last three decades yet much depleted budgets, the landscape in which local authorities operate has become a whole lot riskier.
The case for having a prudent level of financial reserves is unarguable. The move from grant to business rates, while welcome, automatically increases the variability of projected income. And judging whether offering to offer discounts in an attempt to encourage and catalyse additional local growth adds further risk.
Also playing into this equation is many local authorities’ increasing reliance on commercially generated income. Entrepreneurialism offers large potential upsides but such revenue streams – from trading services, joint ventures or property investment – are inherently uncertain. And of course cash in the bank is vital in case of unexpected rainy days, and to allow ‘invest to save’ projects in various services.
But looking beyond pounds and pence, intangible but hugely important political reserves will also be crucial. As recent devolution deals and those in the pipeline have proven, agreeing on a viable geography to devolve to is not easy. The rewards available are considerable – as Greater Manchester has proven, devolution begets devolution – but local leaders and chief executives need to employ their diplomatic and deal-making skills to the utmost to secure them.
And the need for collaborative leadership doesn’t stop there. Across the country the opportunities to forge a new far more integrated and effective model of public services are unprecedented.
The benefits of this for local residents would be huge, but working with other public sector bodies that operate in an entirely separate governance and accountability framework is undoubtedly a challenge. In many cases, the time, effort and tact required to bridge these cultural divides will be substantial, and it will be a risky process.
However I’m optimistic, because local government can draw on another reserve – the vast fund of talent, compassion, perception and wisdom that characterises the people within the sector. No-one would suggest that next few years won’t be tricky, but that’s not to say there aren’t glistening prizes within reach.’
Localis goes European
With the EU referendum debate hotting up, what better time for a trip to the continent? Our chief executive Alex Thomson recently attended a localism conference in Budapest, organised by the European Conservatives and Reformists (ECR) Group, along with MEPs and national politicians from across Europe. The aim of the event was to develop a European localism agenda, exploring the role of local government in delivering jobs and growth for their local areas. During the conference, Alex gave a speech on the benefits of devolving more powers to local councils, such as rebalancing our economy, plugging local businesses into the public service supply chain, offering more place-based and outcome-focused services and, most importantly, reinvigorating local democracy by allowing local areas to make decisions about what is best for their areas rather than people sitting in a room in Whitehall – or Brussels.
On the back of the Localism conference, the ECR Group invited Alex to speak at a meeting of its Policy Group on Subsidiarity and Localism in Brussels. Alex spoke about how many local authorities have undergone a fundamental change of mindset by looking to bring in additional resources through trading services and making more effective use of land they own, as shown in our Commercial Councils and Public Land, Public Good reports. Armed with additional powers, such as the full localisation of business rates, local authorities will over the next few years begin to play an increasingly important role in attracting new businesses to their local area.
Localis in the news
In a recent article for LGC, Alex Thomson considered the tessellation of local government and the sector’s increasing likeness to Lego bricks: “While no-one would ever claim local government to be simple, it does seem increasingly analogous to Lego.”
Writing for the MJ, Localis research fellow Jack Airey considered Scottish Labour’s council tax reforms and what the national party could learn from them: “the proposals are reflective of a debate on local taxation that is in a very different place to that which we have in England.”
In an opinion piece for the LGA, we were asked to consider which powers we would like to see devolved to local authorities and why.
Alex Thomson recently gave comment to the MJ on the role he thinks councils and other public bodies should play in the EU referendum: “Chief executive of think-tank Localis, Alex Thomson, agrees with the LGA’s neutrality, arguing that it ‘wouldn’t be wise’ for bodies to ‘tell people what to do’ on issues such as the referendum.”
In his column for the MJ, Alex Thomson considered what the rise of non-traditional political figures might mean for localism: “If the backdrop to the next set of local elections is a mixture of a stuttering global economy, an opposition mostly interested in itself and inevitable mid-term blues for the Government, it could provide fertile ground to elect unexpected candidates.”
New Localis website
Those of you with a keen eye will have noticed that we recently launched a brand-spanking new website. The new design is much easier to navigate and includes pages about our latest research, news and events. It also has information about the benefits of working with us to deliver high-quality research and events, as well as how you can get in touch with us. Please do check out the new website by clicking here.
Works in progress
Local housing markets
With Lloyds Banking Group we are currently embarking on a new research project which will consider the variability of housing markets in the UK, and examine what a more local approach to housing policy could look like. The project will include several roundtable events across the country and a report to be launched later in the year.
Healthcare reform
We are partnering with KPMG on a major piece of thought leadership looking at what a more local healthcare system could and should look like. This agenda-setting research project will analyse how such a system in England will be managed and will culminate in a major report to be published in the summer.
Future of London essay collection
We are currently working with the think tank Bright Blue to produce a collection of essays, which will consider how changes in transport, culture, family life, finance, housing, health and a whole range of different areas will alter the way Londoners live their lives in the middle of the twenty-first century. We have recruited a number of high profile people to contribute to the essay collection, which will be launched in the coming months.
The importance of cash to local economic growth
In conjunction with Cardtronics, we are currently investigating the importance of cash to local economies and communities, culminating in a report to be published in the coming months. With the increasing prevalence of online shopping and new payment methods, we are focusing on the role of cash now and in the coming decades and what options are available to policymakers to help maintain the availability of cash.
Whole-council approaches to transformation
On behalf of the Local Government Association (LGA) we are currently conducting a research project on the variety of models councils have used when taking a whole-council approach to transformation. This includes models such as cooperative, commissioning and entrepreneurial approaches. The project will culminate in a short report to be published in the next month.
Upcoming events
Future of London conference
In the next few months we and Bright Blue will be hosting a half-day conference to launch an edited collection of essays from a stellar line-up of major public figures. The conference will consist of a keynote speech, several break-out panel discussions (on London’s economy, infrastructure and life) and a networking lunch.
Conferences
With conference season soon approaching, we are currently putting together our programmes for the LGA and party conferences. If you are interested in working in partnership with Localis at these events, please click here to read about how you can work with us further or email info@localis.org.uk to discuss potential collaboration.
Flying blind
In May we will be hosting a roundtable in Manchester which considers whether the North West is being ignored in the aviation capacity debate. The event will bring together senior stakeholders drawn from the region’s business community, local government and MPs.
Look out for announcements of more exciting events for 2016 in the coming weeks.