Three years in to the austerity programme and with the Department for Communities and Local Government (DCLG) already having experienced a 40% or higher reduction in staffing, we might expect that the civil service would be adjusting how it operates to an era when there is not – or should not be – the capacity to indulge in unnecessary bureaucracy.
The consultation documents published on 25 July do not suggest that localism is well embedded in the culture of DCLG and Whitehall, or that civil servants and their ministers understand that we need ever simpler processes – and even fewer staff in Whitehall.
The dead hand of the Treasury is still evident. Leaving to one side whether DCLG ministers have broken a promise to councils about providing the new homes bonus as a non-hypothecated grant for six years, the proposals for pooling of £400m of the bonus will involve unnecessary bureaucracy and audit costs. Making each council's grant under section 31 of the Local Government Act 2003 subject to a condition that a specified amount should be pooled is likely to attract checks by internal and external auditors that the condition has been complied with.
For councils that are in two local enterprise partnerships (LEPs), the grant letter will need to specify conditions about two amounts that are to be pooled and double the work for auditors. The Government's approach also involves at least two sets of payments – from DCLG to the council and from the council to the lead authority for the LEP.
Why not cut out the middle man and avoid unnecessary bureaucracy? The Government will know what sums are to be pooled and how much is being taken from each council. This pooled element should be paid as a specific grant direct from DCLG to the lead authority for the LEP. There are only 39 of them, and therefore there would be a need to check compliance with grant conditions for only these 39 cases – the balance should be paid to all councils as non-hypothecated grant, as it is now.
This alternative approach would not affect transparency. The Government can still publish information showing how each council's allocation has been calculated by reference to new homes created, and how the allocation has been split between a hypothecated pooled grant and the non-hypothecated element that would be given to the council to use how it sees fit.
The proposals for complicated mechanisms for councils to access permission to use capital receipts to invest in reforming services are even worse.
Ministers can't break the habit of wanting to announce things that they have done, so that they can take credit for them. But their officials seem oblivious to alternative mechanisms that would deliver what ministers want without unnecessary bureaucracy.
The Treasury is going to limit how much revenue expenditure can be capitalised in 2015-16. Let it specify the total now. The Government will also soon be able to tell the value of each council's capital assets (excluding assets and liabilities in pension funds) based on the audited 2012-13 accounts. The value at 31 March 2012 was £233bn. Instead of a competitive process – which requires effort by council staff to write bids, and time for Government officials to assess them and rank them (and no doubt ask a few questions about them), before ministers are advised which bids to support – why can't we have a simpler approach?
The Government could calculate a figure for each council based on its share of the limit pro rata to its capital assets. A simplified, hypothetical example illustrates the point:
? Capital assets at 31 March – £250bn
? Capitalisation limit for 2015-16 – £250m
? As a proportion – 0.1%
? Council A, capital assets at 31 March £100m
? Council A's capitalisation limit £100m x 0.1% = £100,000
Each council should automatically receive a direction allowing it to use capital receipts to invest in reforming services, drawn from asset sales between August 2013 and March 2016. It would be fairly easy for the DCLG – working with the treasurers' societies, CIPFA and the Local Government Association – to specify categories of expenditure that would be covered by the direction (such as staff termination costs, consultancy or staffing costs for redesign of services etc).
Councils that did not wish to use the permission that they had been allocated, either in full or at all, could transfer the unused part to another council. There is nothing new in that: there used to be a healthy mechanism for transferring unused credit approvals.
The Government's directions could also include a requirement for any council that actually used capital receipts to invest in reforming services to provide information about the amount and the nature of the reform that had been supported – this would then still allow ministers to announce how they had helped council ‘X' to spend ‘£Y' on reforming services using capital receipts.
The alternative approach would minimise the work that needs to be done in Whitehall and would adopt a localist approach for councils to address questions of value for money if they wish to proceed. The process of transferring unused permissions among councils will involve some work within the local government family but it would be far less onerous than the centralised bidding system proposed by the Government.
Isn't it time for the leopard to change its spots?
Ian Miller is chief executive of Wyre Forest DC but writes here in a personal capacity
