The recent Local Government Association report Under Pressure highlights the scale of the crisis facing local government in 2015 and beyond, revealing that 60 per cent of councils say they will not be able to cover their budget gap next year without cuts to frontline services. We have reached the point when the cuts are having a real impact on local communities. But Labour’s task and that of local leaders is not just to protest but to build an alternative vision for our public services and our local democracy.
In Birmingham we have already had to make over £450m of cuts (taking into account service pressures) and we expect that to rise to £822m by 2018 under current plans. That will represent about two-thirds of the controllable budget we had in 2010. The room for efficiency savings is running out but we face a further cut of £150m in 2015-16.
But the real tragedy is that if spending had been reduced at a sensible speed there would have been the opportunity for reforms to make services work better at lower cost. False economies are being made across the country as rapid cuts lead to cost-shunting because the preventative services that can save money tend not to be statutory.
So Labour’s answer – the progressive answer – must be to reform services, not just to reduce spending more sensibly. I have said many times that cuts of this scale will mean ‘the end of local government as we know it’. But that should not mean the end of local government.
In defining a new role for councils, our focus must be on the outcomes we want to achieve not the existing services or the buildings they use. Much of that structure goes back many decades and even to Victorian times. Even before the financial crisis and the cuts, there was plenty of scope to reform local public services to achieve better outcomes for the people we serve. Opposing the current approach to cuts must not mean that we ignore the long-term need for reform.
One key feature of the local government landscape in the years ahead will be a greater diversity of roles and functions. The large cities and their city-regions have a particular national role, both in terms of economic growth and tackling social problems.
New forms of governance are emerging for city-regions and it is vital that we retain the notion of local councils as ‘place shapers’ and place leaders. We are the government of our city not just a local service provider or commissioner. Our New Model of City Government is based on two overriding changes: devolution and integration. We need greater freedom and flexibility to meet local needs and to join up services so that they are focused on ‘whole places’ and the ‘whole person’.
We believe that city government needs to bring together activities at three levels – the city-region, the city and the neighbourhood – accompanied by a ‘triple devolution’.
Such a framework will empower local leaders to drive economic growth. It will enable the integration of local public services, such as family support and health and social care and it will support neighbourhood management and neighbourhood hubs.
We need to be open to new service models that will achieve the outcomes we seek. For example, we are shifting the focus of council leisure services to the provision of health and wellbeing centres in our most deprived areas, while providing £32m of investment to provide new privately operated facilities elsewhere. We are also looking to housing associations to make a greater contribution to local neighbourhood management. We are rethinking our role in supporting schools by developing our Birmingham Schools Partnership as a service provider and helping schools to collaborate and thereby improve.
But this vision cannot be realised through local action alone. We need government to fully understand the need for reform and to drive through the changes in Whitehall that will enable us to deliver it. That means devolving funding to a serious city-region ‘single pot’ and creating long-term ‘whole place budgets’ for each local area. It means taking forward the integration of health and social care across the country, while enabling local leadership of these services. And it means at last reforming the local government finance system and giving us greater freedom to raise and invest money locally.
As Under Pressure shows, we face our most difficult year in 2015-16. But we must also keep our eyes on the longer-term changes that we need to make if we want to offer a brighter, more positive future to our cities and our communities.
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