Paul Scriven: We need to fund Councils properly and give them the powers to create great communities

Local Government is an issue of paramount importance to Liberal Democrats. Last week in the Lords, Liberal Democrat peer Paul Scriven led a debate on the essential services that local authorities provide. He outlined how chronic underfunding of local government, combined with rising demand for services was creating unsustainable problems.

Here is his speech:

I am very pleased to be leading this debate because to me it is a vital issue that affects every village, every town, every city and every region: local government has a positive power to change people’s lives. Just think of the older person who is becoming vulnerable and possibly losing their independence. With good public health, good housing services and good social services that person can continue to lead an independent life with dignity. Just think of the young man who might be on a crossroads between violence and going forward to have a fulfilling life. With good youth services and education services that young person can be supported to make the correct decision and have a successful life.

Local government can facilitate enterprise and business locally with good business development services, planning and support services provided by local authorities. They can help to create vibrant, successful and sustainable communities: libraries, parks, clean air, shared spaces and bringing people together to give them opportunities to achieve. That is the vision that I think most people have of a good local service: bottom up and delivering for people—not just a service provider of last resort but a local democratic hub that facilitates and brings opportunities for people and businesses to succeed.

I will mention my own journey in Sheffield in the local authority, first as a back-bench councillor helping individual constituents, then as leader of the opposition, ​many times clashing with the then chief executive, the noble Lord, Lord Kerslake—I am not sure whether he will raise that—then as chair of scrutiny, holding the executive to account, and then having the great pleasure of leading that great city and that great council. I was then put on early retirement when I lost my seat and am now back again as a local councillor. I saw the power that local authorities can have to affect individuals and communities and make a real difference to people’s ability to succeed in their life.

That is what the situation should do, but we must look at what it has now become in many cases. Sadly, in some cases local authorities have not just become the provider of last resort but are struggling to be even that—we only have to look at Northamptonshire, Somerset, Norfolk and Lancashire County Councils, and the National Audit Office warning that reserves are running out. In some cases they are not just unable to provide the opportunities that I talked about but are unable to provide the very statutory services that they are there to provide in an emergency as a safety net.

In 2010, as leader of Sheffield City Council, I was not in total opposition to some financial reductions. At the time, I did see wiggle room and that changes could be made. I must say, it has now gone too far and is damaging not just institutions but the very people in those communities whom local authorities are there to serve. Some local authorities are finding it nearly impossible to keep their head above water, and are struggling to provide the minimum statutory services. This is not good for local communities; it is not good for democracy; and it is not good for either the people or the country.

The Local Government Association predicts a £3.1 billion shortfall by 2019-20, rising to £8 billion by 2024-25. Adult social care will see a £1.3 billion shortfall, predicted to be £3.6 billion by 2024-25. Children’s care—some of the most vulnerable young people in our country—will see a £949 million shortfall, predicted to be £3.1 billion in 2024-25. Homelessness support is predicted to have a £110 million shortfall in 2019-20, looking to rise to £241 million by 2024-25. SOLACE, which I thank for its briefing, has said that one in three councils in the country has had to make a reduction in the minimal statutory service offer. Two-thirds of social care authorities have drawn down reserves since 2016—if they keep doing so at the same rate, the reserves in the system will last only three years. We are talking about being at the bone, and in some cases going into the bone.

This is coupled with rising demand and need: 1.27 million homes for those in greatest housing need; 1.17 million homes for young families who cannot afford to buy; 690,000 homes for older private renters struggling with high housing costs beyond retirement. One thousand new children’s cases are on the desks of social workers every day. Looked-after children’s demand is up 11% over the last few years. The demand for homelessness services is up by 34%. The need for care of the over-65 year-olds is up by 14%. The areas in which councils can make a huge impact—helping create economic growth and vibrancy—are the ones that have been hardest hit, because in many cases they ​are not statutory. Transport services are down 37%. Housing services are down by 46%. Planning services are down by 53%.

I must tell the Minister that back in Sheffield and across communities north, south, east and west, the situation is becoming untenable and unsustainable. Warm words from the Dispatch Box that reserves are there will not help young men needing youth services. It will not help elderly mums needing social care services. It will not help families going into homelessness to get a roof over their head. It will not help local businesses get the support they need to create enterprise and jobs in their area.

It is time to stop the short-term sticking plasters, and to start thinking about what is needed strategically. We need a much more long-term and strategic partnership of equals between Whitehall and local government if the latter is going to return to its true role in communities—unleashing the opportunities of businesses and people across the country. This must start with more direct cash to local authorities’ budgets to deal with the higher demand. It must be able to concentrate on the here and now in basic services. The £8 billion gap will not be closed by council tax and business rate changes.

We must accept that the council tax model is not fit for purpose and needs change. We need to look at other forms of wider tax revenue-wielding powers that local government has, and look at money that is held by Whitehall which should be devolved by design and right down to local authorities, not held with strings by Whitehall while it tells them how and what to spend it on.

The new fairer—or rather very unfair—funding formula must not be driven by political dogma but must be based on need, including a deep and central place for deprivation at its very heart. It cannot just be on a per capita basis. You cannot solve the economic and social problems of the UK if you leave the left behind even further behind.

The jiggery-pokery of social care precepts and referendums on council tax show why Whitehall has got this wrong. Financial freedoms to raise what is needed locally should be the norm, with local people deciding through the ballot box whether a local authority is doing the right thing and charging the right amount, not an official or Minister sat in Whitehall. This must be backed up by a strong and fair tax distribution system from the centre—again, driven by deprivation and need.

We need a social care funding solution which deals with the issue of an ageing population. We cannot leave it to short-termism or in the “too difficult” tray. The dignity and independence of too many of our older people rely on that—and we all have a vested interest to make sure that that happens.

We clearly need a proper, open and transparent discussion about social care funding, including looking at models such as those of Japan and Germany to see how this can be done. We also need to have clear, open and transparent five-year funding deals for local government, with no extra strings attached, which will allow local government to plan with some stability for its local area. As I said, we need to move away from ​the strings-attached Whitehall model of funding that stifles local innovation and undermines local democracy and accountability.

We also need a new partnership between local and central government on housing. The housing crisis is a national disgrace. The new homes bonus needs to be stable, not short term. We also need to build a large number of social homes—3 million, according to the latest report by Shelter, produced just a few days ago. This will not be done just by raising the borrowing limit for local authorities. A new style of partnership is needed between local and central government and the private sector which delivers good, stable, well-designed and environmentally friendly housing. This cannot be done with a silo approach and different departments working in different ways.

Local authorities also need to be involved much more in Brexit planning. We feel as if we are on the edge, completely ignored, yet we will have to deal with some of the major issues that a no-deal Brexit will potentially cause, and some of the social and economic problems that it will cause for local people—and the £35 million mentioned by the Secretary of State is not enough to deal with the problems.

In the long run, rather than devolution to local areas by consent, we need devolution by design: a new system of federal government in the UK where we have devolution, with power and money nearest to the people at a local level so that they can design local solutions. The power of Whitehall should be about key strategic issues. We need to move to a much more bottom-up, democratic way of allocating resources and governing the country and rise to the challenge of improving local economies and dealing with social or cultural advancement.

After all, it is only back to the future. We can see from previous generations how local authorities can and do shape areas, improve people’s lives and create a system and a framework for enterprise and local businesses to flourish, deliver vibrant local areas and offer opportunities and hope to local people and businesses. We must stop talking about local authorities in silos and stop talking about them being just the provider of last resort. We should fund them properly and give them the powers and the space to create great communities.

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  • Joseph Bourke 29th Jan '19 - 1:31am

    A very good speech from Lord Scriven on the vital and pressing subject of local authority funding.

  • Peter Martin 29th Jan '19 - 9:50am

    “We should fund them properly and give them the powers and the space to create great communities.”

    I would agree with the general sentiment but I’d say there needs to be some clarification on the word ‘we’. Is Lord Scriven asking for greater powers for, say, Sheffield council to collect taxes locally or is he saying there should be a restoration of proper funding from central government. It sounds to be the latter with phrases like “The power of Whitehall should be about key strategic issues.”

    But why does this translate into more direct funding?

    In any currency union it is an observable fact that money gravitates to other money. Therefore in the UK, ie £ currency union, we see ££ gravitate naturally in the already wealthy area of London and the SE of England. The job of government is to push that money back out into the English regions and the other countries of the Union. If it didn’t do that there would be far too much inflation in the South East and far too much recession /depression elsewhere. I’d argue that we see too many signs of that happening anyway which would indicate insufficient fiscal equalisation. Just how much there should be has to be a matter of political opinion but in general I would say it should be sufficient to prevent significant and continual population shift from one part of the Union to another.

    We can make the same argument for the eurozone of course but that’s another story.

    Obviously, an increased level of direct funding of councils is a good way way of achieving better fiscal equalisation.

    Probably this policy wouldn’t immediately please those who live in London. They’d point to higher than acceptable levels of social deprivation in parts of the capital. So fiscal equalisation isn’t the complete answer. But there is a difference in the causes of social deprivation in different parts of the UK.

    In some places it is caused by a lack of spending in the local economy and in other parts it isn’t. It can be caused by too much spending if local families are priced out of the home areas by high house prices. So one parameter which governments should look at is relative housing costs in different cities. In this way everyone would benefit and it wouldn’t necessarily be the people of the SE who would lose out.

  • Speaking from my experience in a Conservative controlled unitary, we also need to improve the governance of local councils, providing mechanisms by which they can involve all councillors meaningfully, increase transparency and accountability and improve oversight. We seem to have lost the ethos of public service amongst the ruling group with an obsession of political and cost reducing decision making while being oblivious to public and opposition criticism. More money would help but is not sufficient on its own.

  • John Marriott 29th Jan '19 - 2:51pm

    From my experience as a councillor for 30 years (1987-2017) what local government needs is more power, or, should I say, real power. That is power to raise taxes, power to make some decisions without interference from central government – in other words, the ability to make a real difference to people’s lives.

    That means, as far as England is concerned, scrapping the remaining District and County Councils and replacing them with Unity Authorities, offering more powers to Town and District Councils and reforming local government finance (please, Mr Bourke, spare us another lecture on LVT).

    If we can get this far, then we can consider moving towards a truly Federal UK by exploring the possibility English regional assemblies and creating a Federal Parliament and Senate at Westminster.

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