There is little doubt that the cuts imposed on local government over the next four years will be dramatic and deep. Many London boroughs and metropolitan districts face annual revenue cuts of nearly nine per cent up to 2013-14. Importantly, the cuts will be frontloaded, with 73 per cent of the total reduction concentrated into just two years: 2011-13. The impact will be even greater because £1.1 billion of NHS spending has been given to councils, but it remains unclear how much of this local councils will be able to spend, and many restrictions are likely to be attached. Local government now faces a period of sustained retrenchment following the biggest budget cuts since the second world war.

This will be a period of major upheaval with radical implications for the future of local democracy. It is partly about resources: not only is spending to be reduced significantly, but demand will continue to rise inexorably in services such as health and social care. There will also be radical structural change including major reorganisation in areas such as health through the abolition of primary care trusts, the development of free schools in education, and the creation of directly elected police chiefs. Existing structures are set to change profoundly in the years ahead through the twin drivers of greater localism and greater competition.

Labour councils need to work out how best to respond and adapt to the next wave of change imposed by the government’s austerity policies. On the one hand, it is quite legitimate to argue that such rapid cuts are hasty and have the potential to cause irreversible damage both to the public realm and to infrastructure and skills, weakening the productive capacity and long-term growth potential of the British economy. There are countless communities where ill-timed retrenchment will cause serious harm to the most vulnerable, and weaken the life chances of children and young people in the most disadvantaged households.

On the other hand, Labour needs a coherent strategy to manage the process of change under way in local government. Objection to the cuts must not become an objection to the redistribution of power. Labour councils have been at the forefront in determining how best to maintain effective services in a climate of austerity, accepting that rising demands and tighter budgets require new delivery tools and new models of provision. There is no alternative to innovation – namely, doing more for less and discarding the old ‘command and control’ approach. At the same time, local councils need to be hard-headed and realistic about what it is possible to achieve.

The first form of change relates to how local councils organise services. Ideas such as ‘joined-up government’ and ‘Total Place’ have been important in removing barriers to effective design, helping to drive cost efficiencies throughout the public sector. Local councils need to consider where services are located and how they might be organised to achieve the best outcomes for citizens. But institutional restructuring is only part of the answer. Transformation requires the relationship between service users and the organisations that provide and deliver public services locally to be recast.

The current government’s response is contained within the rubric of the ‘big society’. The state in Britain has grown too large, they claim, and needs to be reined in. The public sector in the future will be demonstrably smaller and leaner. Community-based organisations will supplant taxpayer-funded providers at the local level, ensuring provision for the most vulnerable.

Critics contend there is no guarantee that the ‘big society’ will step in to fill the void vacated by the state. The cultivation of self-organising institutions and networks that are capable of delivering high-quality public services requires decades of investment, as well as the appropriate cultural values, norms and levels of social capital, as is the case in the Netherlands and the Nordic countries.

The most fruitful territory for progressive Labour local authorities relates to the second form of change. This is the idea of jointly producing services and outcomes between users in civil society and the organisations charged with delivery. The term often used here is ‘coproduction’. It is a clumsy phrase, but it implies a cultural revolution in public services as Colin Talbot, professor of public policy at the University of Manchester, has recently argued. He says that shared responsibility means that the attitudes of providers to their users have to change, just as users have to relate very differently to local services. If reforms go further than simply passing more power to GPs and teachers, which might in itself result in producer capture, the potential for productivity gains is enormous.

There are a number of emerging models that seek to capture the benefits of coproduction, notably Lambeth’s model of a ‘cooperative council’. A host of local experiments are also under way including the Scallywags parent-run nursery in Bethnal Green, the Holy Cross Community Trust daycare service in Camden, and Southwark Circle which helps older citizens and their families, using social networks that enable people to share their skills. They offer the potential for a real transformation of services struggling with rising demands and shrinking budgets.

Mutualisation can be part of the answer, but the key is to change the relationship between service providers, users and the wider community, reshaping the production process within public services through shared responsibility which encourages autonomy and self-reliance. Transferring ownership to non-state, community-based institutions may be desirable, but it is hardly sufficient. The objective ought to be a local state in which power is shared between citizens, local services, and locally elected representatives, alongside public service guarantees that entrench rights of equity and access.

Labour must finally put an end to the ethos of post-1945 paternalism. The purpose of accumulating power in the form of the state is to redistribute it, while ensuring that people are never abandoned to fend for themselves. That means far greater involvement of citizens and communities in the development of services, with users taking responsibility for their own provision and treatment where they have the capability to do so. While condemning the ferocity of the cuts, Labour has to be at the forefront of putting greater power in the hands of local people.

Read also…

Blackpool Labour leader Simon Blackburn explaining how the finance settlement, beyond the current cuts, shows that the long-term situation for Labour-voting areas is grim

Anna Turley, deputy director of the New Local Government Network, on the LGA Labour conference and how winning locally can prepare Labour for power nationally

Patrick Diamond on how Labour councils must oppose the cuts but seize the oportunities presented by the localism drive

Lambeth leader Steve Reed on Labour leading the way against the unfairness of ConDem cuts

Dave Sparks, LGA Labour leader, correcting some of the myths peddled by Pickles

Photo: London Permaculture