Andrew Stunell writes… Localism Bill and finance settlement are defining moment for local government

Yesterday was an important day in local government as I and my ministerial colleagues were able to announce the two big planks of our approach to local government over the coming years – the Local Government Finance Settlement and the Localism Bill. They are huge milestones in the Coalition’s programme of reform, and will impact on councils in many important ways.

The Local Government Finance Settlement was always going to be difficult. Cuts have to be made across all areas of government spending, and local government is no different. My top priority in this area has been to ensure that the local government finance settlement is fair, and as far as possible protects councils in the most deprived areas. And I feel I’ve been able to deliver on this. No authority will see its spending power cut by more than 8.9%. Whilst still a high and very challenging figure, this is nowhere near the level of cuts that Labour scare stories were predicting before the announcement.  Most authorities will have net spending reductions well below that figure; and you will see that the second year (‘12/’13) figures are in most cases a little better, and still with a ceiling of 8.9%.

Included in that is transitional support for all councils in receipt of Working Neighbourhoods Fund, to ensure that the reduction in spending power of the most deprived authorities wasn’t catastrophically higher. And by ensuring that the cuts are limited as a proportion of spending power, and not of formula grant, I’ve been able to ensure that those councils in deprived areas receiving most of their money through the formula grant get protection. Over the weekend how much each local authority will benefit from the pupil premium was also announced. This is additional money and will help some of the most deprived children get a boost to their education.

We have also published figures which clearly show how much grant per head each council will be getting.  This makes it explicit that even after these reductions those councils with the highest needs are getting several times more per head than those with the greatest resources. For example Newcastle will get five times as much per head as Buckinghamshire, and Sheffield four times as much.

The Localism Bill presents a lot of positive news for local government. We are devolving power back to local authorities, communities, and individual people up and down the country. Lib Dems have long campaigned for power to flow from the bottom-up not top-down. The “Man in Whitehall” doesn’t know best, and the publication of the Localism Bill marks the end of Labour’s top-down presumption they know more than local people about how their area should be run.

The Bill is the largest that will be introduced in this session, and contains over 40 separate proposals, including:

  • Councils will have a power of general competence, which will allow local authorities the freedom to innovate and be imaginative in the delivery of services. Gone are the days of slavishly following Whitehall diktats.
  • We’re democratising the planning system, scrapping the IPC, and putting power to decide the future shape of their area back into the hands of local communities.
  • We’re empowering communities with new “Community Rights” that will allow them to take over struggling services, and help save important local facilities, like pubs, post offices, or leisure centres when faced with closure.
  • We’re scrapping the Standards Board, and giving councils the power to set their own governance structures too.
  • When combined with the decision to end ringfencing on over £7bn worth of funds, councils will have much more freedom to go about the difficult task ahead of them as we manage the large reductions in public expenditure over the next few years.

As I’ve said before, business as usual isn’t an option any more. We have to do things differently. Whilst there’s no doubt this situation is tough, thanks to some very careful work with grant distribution, more spending flexibility, and power being devolved, councils are being given the ability to do just that.

Andrew Stunell is the Liberal Democrat Parliamentary Under-Secretary of State at the Department of Communities and Local Government

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23 Comments

  • Liberal Neil 14th Dec '10 - 2:46pm

    Andrew – I think there is a lot of genuine good in what the coalition is doing, despite the overall cut in grant.

    In particular I am delighted with the shift away from ring-fencing and the tendency of Government Ministers to dictate the detail of how local councillors should spend money locally. (I predict even a lot of lib Dem councillors will take time to adjust to this!)

    I am concerned though, that this principle needs to carry through consistently though. For example, it shouldn’t be up to the Government to impose an expensive refendum on a small district council simply because it wants to increase its Council Tax by £10 a year. It should be left up to local resdients to vote them out if they disagree with the decision.

  • Places like Hackney, Tower Hamlets, Manchester, Rochdale, South Tyneside, Sunderland, Blackburn, Hartlepool, Middlesbrough, Barrow-in-Furness seem to be hit very hard.

    Richmond-upon-Thames council and Surrey council have very modest cuts, and Dorset gets an increase in funding!

    You seem to deceiving yousrelf, as well the public.

    Take Barrow-in-Furness, as an example:

    Current spending power is £16.2m

    Next year reduces to £12.3m (23.8% cut)

    One-off transition payment of £2.4m for the next year only, brings reduction down to 8.9%

    In 2012/13 spending power reduces even further down to £10.9m

    In the space of two years, the council’s spending power will go from £16.2m per annum to £10,9m per annum (a 32.7% cut)

    I assume the one-off transition fund is for redundancy payments and closure costs.

  • .
    Comparing two authorities in a similar league:

    Over two years, Surrey’s spending power will go from £826.4m to £798.9m
    A loss of £27.5million, equating to a 3.3% cut.

    Over the same period, Manchester’s spending power will go from £623.9m to £514.7m
    A loss of £109.2 million, equating to a 17.5% cut.

  • roy's claret army 14th Dec '10 - 3:04pm

    So you cut the grant but tell the councils that they can take over failing pubs, shops and post offices!

    Are you nuts?

  • I have very mixed feelings about the Localism Bill and this notion of “devolving power back to local authorities, communities, and individual people up and down the country”. In principle this is all very good, however in practice I am not so sure. My fundamental concern is that of corruption, both explicit and implicit, which I suspect are not uncommon in local government.

    An example of explicit corruption is property developers giving ‘back-handers’ to local councillors and planners in order to get their plans passed. In the area where I live it is very noticeable that certain property development and building companies seem to get away with blue murder and all sorts of planning irregularities – I have long suspected that something is amiss.

    By implicit corruption I mean the situation whereby locals who have a vested interest in some course of action acquire positions of power which they then exploit to steer policy to their (financial) advantage. For example, I used to be a Town Councillor and I was disgusted that all the local shop-owners on the council would invariably vote for new housing developments no matter how unsuitable or unpopular because, as one of them stated to my face, “it will mean more people to spend money in my shop”! (Having a local estate agent or property developer on the council is a recipe for bad decisions.)

    Unfortunately, in many areas local democracy is very weak – relatively few people turn out to vote in district and county council elections and there is very little pre- or post-election communication between councillors and the public. Moreover, the actions of councillors have very little scrutiny or publicity from an ineffectual local press. The situation with town and parish councils is even worse – very often not enough people put themselves forward to even hold an election, and the existing councillors co-opt their buddies onto the council.

    My question to Andrew Stunell is what safeguards are to be put in place to ensure that there is no abuse of all these new powers and financial freedoms? Do the Bills to which he refers contain any new anti-corruption measures? If not, then I fear for the future!

  • “We have also published figures which clearly show how much grant per head each council will be getting.”

    Does anyone know where to find this? I can’t see it on the DCLG website.

  • There’s a fair amount of spin still alive and well, the 8.9% guarantee is dependent on health authority funding, in reality councils will see more than 8.9% cut in what they can actually spend and the pupil premium doesn’t, initially at least, seem to be providing any real additional money.

  • From BBC News

    “But the LGA, which represents councils in England and Wales, said once the police grant was excluded, central government funding for council services was being cut by 12.1%, from £28.3bn to £24.9bn.”

    http://www.bbc.co.uk/news/uk-politics-11990047

  • Yet again so called Liberals are backing up the Pickles’ cuts – why oh why are Liberal politicians supporting the government agenda – their real agenda of cutting the state and thereby undermining the universal welfare state in this country.
    Liberals breaking their election promise over charging student to go to university
    getting rid of the EMA and thus preventing poor students from going to college
    and now cutting money spent by county and town halls to provide services such as libraries, home help etc ie more liberal conivance in dismantling the welfare state.
    I have been a Liberal since 1974 but now again call on true Liberals to break from the Lib Dems and form a true Left wing and radical Liberal Party that believes in a universal welfare state.
    The first opportunity is to fight the by election coming up as true Liberals.

  • ‘Mr Firth said he has become disillusioned with the party and his ‘compass has not stopped spinning’ after they switched several of their policies after the election….’I think it is profoundly disillusioning if you are a student who registered to vote simply because of what the Liberal Democrats were promising, and many, many did and simply because of what the Liberal Democrats had to say about tuition fees and things. It is one of the reasons I went in that direction,’ he told the Guardian.’ Taken for a piece in the Daily Mail online.

    Read more: http://www.dailymail.co.uk/tvshowbiz/article-1338527/Colin-Firth-longer-supports-Liberal-Democrats-tuition-fees-backtrack.html#ixzz1875rhwAM

    Read more: http://www.dailymail.co.uk/tvshowbiz/article-1338527/Colin-Firth-longer-supports-Liberal-Democrats-tuition-fees-backtrack.html#ixzz18755WF6e‘ (http://www.dailymail.co.uk/tvshowbiz/article-1338527/Colin-Firth-longer-supports-Liberal-Democrats-tuition-fees-backtrack.html?ITO=1490)

    One of many abandoning the Lib Dems just as they abadoned their policies in order to effectively prop up (even legitimize) a Tory party. Most people in the last election voted for centre left parties so why do the Lib Dems persist in propping up this Right wing government.

    Well it makes people like me livid when I know I didnt vote Lib Dem to get a Tory government – i have fought the Tories all my life and hate them and appalling reactionary ideas. When will the Lib Dems understand this – you lot who support this awful so called coalition just don’t get it – until of course the party taking all the blame will lose all their seats in the next election

  • Liberal Neil 14th Dec '10 - 6:56pm

    @RichardSM – a ‘similar league’ excpet that Manchester is a Metropolitan Borough with a population of just under 500K and Surrey is a County Council with a population of 1.1 million?

    After two years Surrey will receive around £720 per head from the Government and Manchester around £1,110 per head.

    I guess different people will see this as being unfair, but possibly in different ways.

  • We have also published figures which clearly show how much grant per head each council will be getting. This makes it explicit that even after these reductions those councils with the highest needs are getting several times more per head than those with the greatest resources. For example Newcastle will get five times as much per head as Buckinghamshire, and Sheffield four times as much.

    Where is this?

  • “No authority will see its spending power cut by more than 8.9%.”

    As the LGA have no shown this is a bit of a falsehood. I doubt most Councils see police authority money as part of their “spendning power”.

  • @Steve – given the amount of joint funding for projects now in pace between the police and local council (and indeed between councils and NHS) it is more and more true.

  • Grants to local authorities from central Government are being cut by 10% in 2011/12 and by 18% by 2012/13 compared to now. These are just average figures. By focusing on “spending power” and including council tax receipts, the scale of the funding cuts is made to look lower.

  • The “Man in Whitehall” doesn’t know best, and the publication of the Localism Bill marks the end of Labour’s top-down presumption they know more than local people about how their area should be run.

    I hope that the Man in Whitehall ran things very badly, and that there is a lot of low-hanging fruit out there.

  • @Liberal Neil
    “After two years Surrey will receive around £720 per head from the Government and Manchester around £1,110 per head. I guess different people will see this as being unfair, but possibly in different ways.”

    You just cannot equate the two. Surrey with only marginal areas of deprevation and no major social issues does not need the same in £’s as Manchester. So unless your position is that Manchester was overfunded previously then the reductions should have been more proportionate.

  • Liberal Neil 15th Dec '10 - 12:38am

    @Steve Way – I was not equating the two. I was, in fact, pointing out that the two are not easily comparable.

    I happen to think it is quite right that the Government grant per head for Manchester is substantially higher than the grant for Surrey.

    However I also wanted to point out that the figures will be viewed differently by different people depending on their view of ‘fairness’.

    Deciding what is a ‘proportionate’ cut is also difficult. I saw in the news today that 48 out of 74 of Liverpool City Council’s senior managers are being cut to save £4.25m a year. That works out at a cost of £88,500 for each of those jobs. I would seriously question how any council needs to employ 74 senior managers at that level of cost. Does it suggest there is more fat to be cut there than in other councils with lower budgets? Yes it does.

  • I’m glad to see that liberals such as “david orr” are still alive & well and sticking to thier ideals and fundamental principles; the rest of you are just a shower of patsy’s and apologists.

    You can dress this round of LG cuts up any way you like, there is nothing fair about targetting and cutting the budgets of the most deprived areas of the England to this extent; anyone that attempts to see the fairness in cutting the budgets of the poorer and most deprived/problematic LA’s to the max whilst limiting the cuts to the nations Tory heartlands has crossed that ‘right wing’ line.

    When it’s all over you can all look back on this period with a sense of shame.

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