The "best value" regime – the requirement for a constant cycle of internal evaluation of the effectiveness of services based on the requirement to produce strategic plans – proved onerous and bureaucratic. It was policed by an army of inspectors co-ordinated by the Audit Commission. Stephen Byers has now accepted that the volume of inspection has to be lightened.
The capping regime was changed, but Whitehall retained the power to impose fierce caps on recalcitrant councils. Worst of all from local government's point of view was the mandatory sweeping away of the traditional architecture of committees in the name of modernisation, to be replaced, for the most part, by cabinet-style local authority leadership.
Local government's real preoccupations are in much more traditional territory – funding. The characteristic of the Labour Government has been to direct an increasing proportion of money for local government in the shape of specific grants. Where money has been allocated under the non-hypothecated standard spending assessment (SSA) system it has sought to bludgeon and cajole councils into ring-fencing money for particular services, notably education. This has left many councils facing a real financial crisis in social services departments, most spectacularly in the funding of elderly people in residential and nursing homes. The Local Government Association – still Labour-led – is already reacting strongly to rumours that the education white paper due in the autumn will formally ring-fence the education grant. Latest indications are that the Government has retreated from this notion (perhaps taking a reserve power analogous to that applying to police funding) and is trying to improve the SSA formula.
The new team at the Department of Transport, Local Government and the Regions, faces some difficult decisions. Its predecessor, under John Prescott, froze the formula for calculating local authority grant barely into the old Parliament, pending an overhaul of the entire funding system. That reform is now due although the freeze has been extended for a year.
The Government may be listening to some of the criticisms about the prescriptive nature of its controls. The local government white paper could suggest some liberalisation of local authority borrowing. At present the Government sets credit approvals authority by authority. This looks like being replaced with a system which retains some government support for capital expenditure but allows local authorities to borrow and pay for capital expenditure without a superimposed limit subject to a prudential code. The Treasury will certainly want a long-stop control both to deal with the transition period and as a means of restraining expenditure in the event of an economic downturn. The new system requires primary legislation: it was not in the Queen's Speech so Byers will be lobbied to keep the proposals warm.
The radical option for revenue funding – that it should be based on local authority plans rather than be formula-based – is believed to have bitten the dust. The word is now that the emphasis is upon simplification of the system. The test will be the Government's success in finding a replacement for just about the most controversial aspect of the present funding formula – the Area Cost Adjustment. This directs substantially enhanced grant into some councils in the South East on the basis that they have to cope with more expensive labour costs. Successive governments have tried, without success, to reform a mechanism that, because it has to draw a boundary somewhere, can mean schools on opposite sides of the road but in different counties getting radically different levels of cash per pupil.
Promises of a lighter government hand are welcome, but there is as yet little evidence that Whitehall is ready to abandon its penchant for prescription, one-off initiatives and constant policing of local authority actions on the implicit assumption that councils only deliver if they are under constant supervision. All Government needs to focus on are outcomes, not on the mechanics which deliver them. Heaven knows, perhaps some councils might even want to deliver efficient services all by themselves…
Source
Building Homes
