As chancellor Rishi Sunak stood up to announce his replacement for the furlough scheme last week, The MJ’s first virtual Future Forum kicked off with a session on local government finance.
Institute for Fiscal Studies (IFS) director Paul Johnson’s overview of the financial state of the country served as a bleak reminder of the toll the coronavirus crisis has taken on the economy and on Treasury coffers. Claiming this was the worst year economically in our history, Mr Johnson pointed out the country was also at the point that debt was about to overtake GDP.
He told the Future Forum: ‘In a sense, the scale of the recession this year doesn’t matter – it’s the speed of recovery that matters.’ But here is the problem, he then warned us the economy is unlikely to bounce back soon.
The scars of the pandemic will be with us for a long time and Brexit is still to come. In a period of extreme economic uncertainty, economic pain – particularly hitting the young and low earners – is the only certainty.
Mr Johnson’s bleak outlook was topped with a prediction of further austerity or tax hikes to pay for the pandemic. ‘My betting is substantially over this decade on significant tax rises – not this year, not next year and maybe not the year after, possibly after the next election,’ he said. ‘If the 2010s were a decade of austerity, I fear the 2020s will be a decade of even more austerity.’
If the country’s economic outlook was grim, there was no respite when we turned to council finances. Chief executive of the Chartered Institute of Public Finance and Accountancy Rob Whiteman agreed that after a ‘difficult decade the next decade is not looking much brighter. The pre-COVID plans for business rate retention, a fair funding review and a resolution to the funding of social care were no closer to solutions than before – in fact, he suggested business rates were ‘doomed’.
As councils increasingly look to the Government for capitalisation dispensations as a ‘quick fix’ for their financial woes, Mr Whiteman warned any bailout would come ‘with strings attached’. Nevertheless, he cautioned councils against issuing s114 notices as freezing finances in the midst of a crisis ‘would be disastrous’. Instead, he called on finance officers to warn their councils, talk to Government and shore up their reserves. In a poll of the audience, however, an overwhelming majority said it was highly unlikely their council would issue a s114 in the next year.
A theme running through the second session’s presentation by Gareth Davies, comptroller general and head of the National Audit Office, was the often fraught relationship between central and local government which has been intensified by the pandemic. At the same time Mr Davies also praised the Ministry of Housing, Communities and Local Government (MHCLG) for ‘the step change in the quality of its information and its level of responsiveness’. Central Government, he added, was capable of reacting swiftly ‘where there is the will and the money’ such as in housing rough sleepers and creating the Nightingale hospitals. On the downside, the pandemic ‘exposed features we knew were there but not tackled’ such as social care whereas the Government’s focus was on protecting the NHS, just indeed as it had done the previous year when it prepared for a no-deal Brexit.
Mr Davies, equally sympathetic to – or indeed critical of – both central and local government tried to explain the former’s scepticism of the latter’s abilities. There was, he said, ‘an instinct in government for centralised solutions’ which was down to lack of understanding about considerable local capacity. He added: ‘Where response [to COVID] has been poor it is down to a lack of mature dialogue between central and local and it needs a co-ordinated response.’
With Whitehall under pressure, there was a tendency to turn to big organisations for answers, sceptical that councils could provide what was needed rapidly. During questions Mr Davies said that ‘civil servants tend to respond to convincing solutions which have capacity such as global companies’ which was attractive when decisions had to be made instantly. In contrast, local government ‘doesn’t convince and is too complex with divisions between tiers.’ He added: ‘Local government has to present itself as a solution to people who want a solution that day.’
Mr Davies also warned Whitehall not to downplay transparency which he said had ‘suffered a bit in the pandemic and we don’t want that to become a bad habit’ citing contract awards and the Towns Fund. He also said that while councils might have had a pandemic on their risk register little was done in preparation. The lesson was to be ready for every eventuality especially disasters arising from climate change, adding: ‘The unthinkable has happened. We need a much better plan than we had for this one.’
Fellow panel speaker Dr Carolyn Wilkins, chief executive of Oldham MBC and lead on contain for NHS test and trace, felt that local government was being ‘done to rather than done with’ by Whitehall. There were, she added, seven sets of guidance on social care alone. Nonetheless, during the lockdown ‘people have discovered the value of local government services.’
The forum’s third session was on the future of social care with a high-level panel of practitioners from the health and care sectors. Saffron Cordery, deputy chief executive of NHS Providers, set the tone by saying ‘we are likely to furiously agree’ about the dire state of the sector.
Dr Jennifer Dixon, chief executive of the Health Foundation, said that life expectancy had stalled since 2011 though whether this was down to austerity or globalism no one was certain. However the pandemic ‘has torn at the fabric where it is weakest.’
Stephen Chandler, vice president of the Association of Directors of Adult Social Services, agreed that the virus had highlighted inequalities and that the system was too often based around buildings, not the individual.
Professor Martin Green, chief executive of Care England which represents the providers, said the system had to revolve around the user so the gap between the NHS and care was seamless ‘just like the gap between different air spaces when you fly.’
The only contention was whether or not social care reform kept being postponed because it was not a priority for the public and therefore not an issue for MPs. Prof Green said that ‘people with dementia don’t write to their MPs. This is about showing political leadership.’
In the final session on future challenges and opportunities facing the sector Local Government Association deputy chief executive Sarah Pickup, in reference to the forthcoming Spending Review, said the association’s submission focused on rewriting the central/local dynamic, on what local government offered over its asks.
‘The relationship is not what it should be,’ she said. ‘There is a lack of trust and a desire to hold all the levers.’ Not only does it impact on service delivery, it also hits on the funding as central government found it easier to cut councils than the services they deliver themselves.
Fellow panel speaker Gavin Jones, the chair of Solace and chief executive of Essex CC, warned councils need sustainable funding, but for the moment all the solutions were being deferred and delayed while councils faced a ‘near impossible task of producing a balanced budget in a previously unimagined levels of uncertainty. Everything is promised but we continue to get one year settlements and short-term funding. Many of our challenges stem from an inconsistent and parent child relationship between central and local government.’
However he added that ‘local government must also take responsibility. We have to hold the mirror to ourselves. There’s too much inconsistency in service quality. There’s infighting that goes on within our sector – why don’t we work together more effectively as well?’
In a presentation that looked at how the public view future service delivery, Bexley LBC chief executive Jackie Belton suggested the pandemic had forced the council to rethink its website and technology offer. She continued: ‘Our residents’ appetite for change is there now and they’re actually more confident.’ They are also more appreciative, as ‘I’ve never had so many thank-you’s sent in from residents.’
Chief executive officer of Capita Government Services, Andy Start, agreed there had been a huge shift in technology, both in terms of public communications and staff work practices saying that ‘without COVID I’m not sure that shift would have been made in a decade, let alone a year.’
In the final presentation, MHCLG, director general of decentralisation and growth, Emran Mian, was keen to highlight the positives between central and local government. He praised the sector for its speed of response and the impact it makes on the ground, adding: ‘The crisis we have been in has highlighted how things come together in a locality. The insight that comes from that connection has been incredible.’
He acknowledged there were improvements to make, but he vowed to help councils get ‘in the room’ at senior levels with other Whitehall departments, ending The MJ’s first virtual Future Forum on a high note.
A recording of all the sessions at The MJ’s Future Forum on 24/25 September is available online
- In an online article in The MJ this week reflecting on the Future Forum, Jonathan Flowers says councils could lead by example by tackling their own localism issues.