Back to the drawing board: localism and economic growth

The clocks have gone back, plunging the nation into self imposed darkness at 4.30 kicking off the annual, “Greenwich Mean Time, what’s that all about then?”

And a similar debate is emerging as worried local authority chiefs, business leaders and even Coalition ministers wonder if the government’s plans to stimulate regional economic growth will be able to lighten the darkness of public sector job losses and spending cuts.

Local government is undoubtedly one of the least sexy topic in politics, especially when it comes to the issues of……YAWN, administrative structures. Please bear with me now, because the radical reorganisation of local government currently taking place will have a very real impact on the biggest issues facing the country, deficit reduction and the Coalition’s economic holy grail, private sector growth.

The Coalition’s embrace of localism is not just about the devolution of political control, it is a promise of a new era of economic growth lead by a new spirit of private enterprise in towns and cities across the country. This spirit is typified by the noise about decentralisation and a new era of civic radicalism at the Conservative Party conference in Birmingham, replete with references to the great figurehead of that city’s original municipal revival “radical Joe” Chamberlain. The Coalition’s plans to create modern day Chamberlains; executive Mayors in the 12 largest regional cities have been undermined by local opposition over the confused details and contradictory nature of the proposals and have been described by one council leader as “totally undemocratic.”

The Coalition’s policy for local economic growth has been defined in the Comprehensive Spending Review and the recent BIS White Paper on Local Economic Growth.

The Comprehensive Spending Review has reshaped how local government will operate in Britain; the eye watering cuts of 51% to the Department of Communities and Local Government and the annual 7.1% reductions in Local Authority funding are going to have a profound affect and lasting affect on how councils operate, and the relationship between central and local government. For most departments the CSR was a struggle to minimise their losses, fighting for every line of expenditure, but for Eric, if not his department it has been welcomed as the start of a bold new experiment in localism.

There are two forces at work in this experiment, and it’s a potentially volatile mix; firstly local authorities have been identified as a major source of readily available spending cuts. This is local government as a land of town hall fat cats, equality and diversity bureaucrats, health and safety jobsworths, environmental enforcement non jobs, all with their gold plated public sector pensions. They are bloated bureaucratic organisations that grew fat under the Labour tax and spend years, riddled with duplication and inefficiency that have become a burden, crowding out private sector growth.

But there is another local government, a local government that is a potential source of dynamism and innovation that was strangled under Labour’s central control. Freed from the tyranny of Whitehall councils will be free to create innovative solutions to local problems that reduce the costs of central programs like welfare, criminal justice and health service by taking on a greater responsibility for commissioning of local services through place based budgeting. Councils can also drive local economic growth by cooperating with each other and private enterprise to coordinate local economic growth.

Localism is an attempt to balance these contradictory visions of local government. Deep spending cuts will force to make very difficult decisions about what services to prioritise and where to make inevitable cut backs; in effect they will decide who losses out. This will involve stark and painful choices.

In exchange for taking a big slice of the pain of public spending cuts councils will have an increased scope to respond in their own way, with less responsibility to meet targets from central government and less restrictions on how they spend their money as the level of ring fencing by central government is slashed. As Eric Pickles sets out in his letter to Local Authority Chief Executives, this is an era of “new financial freedoms and flexibility” for councils.

The upcoming Localism Bill will build on this trend, and while the finer details aren’t yet clear, the drive towards will be towards increasing powers and competency of councils while reducing their statutory responsibilities to provide some of the services that at the moment they have a legal responsibility to deliver.

As councils cut back on services, as they make redundancies, as unemployment increases the government is banking on a new era of private sector growth to compensate for the contraction in the public sector economy. BIS’s White Paper on Local Economic Growth has set out the Coalitions strategy of rebalancing local economies and stimulating private sector growth using the tools Regional Growth Fund and Local Enterprise Partnerships (LEPs) to fill the void left by Regional Development Agencies

However there are big questions marks over the whether this approach can really make a substantial economic impact given the lack of funds and strategic coordination. The confusion around the creation of LEP’s raises a number of serious questions about how such an uneven group of organisations, with no additional funding will be able to coordinate an economic miracle on the scale that the Coalition is banking on to absorb the impact of public spending cuts.

These problems are a telling illustration of tensions in the government’s localism approach, as a total of 62 proposals were submitted to fill the void of the 9 Regional Development Agencies, a number that far exceeded the Coalition’s expectations. The 62 bids were a motley assortment; some are fully formed proposals building smoothly on existing city regions and multi area agreements began under the Labour government.

Other proposals were hastily constructed, with squabbling local authorities unable to come to an agreement, resulting in a number of contradictory and overlapping bids disgruntled partners in the local private sector and no clear mechanism for local accountability. The White Paper approved 24 of these proposals, while the remaining areas have been sent back to drawing board by the government, to produce proposals that reflect both local priorities and the requirements of the national government. The map of current LEP proposals makes an interesting jigsaw, with the North East conspicuously blank.

As yet no functions of Regional Development Agencies have been transferred to LEP’s, either they have returned to BIS or they will just cease to function, LEP’s will have the right to bid for greater powers but given the early experiences this is far from guaranteed.

LEPs are backed up by the Regional Growth Fund, a transition fund to help areas bridge the economic chasm opening up as the public sector economy contracts, but will it have a significant impact? The RGF will allocate £1.4 billion over 3 years, which is less than the annual budget of the RDA’s, and while the Conservatives have incessantly criticised RDA’s as wasteful and bureaucratic repeated evaluations demonstrated they were among the most cost effective government organisations, spending less than 10% of their budgets on administration. It’s hard to see how a three year fund will be able to compensate for the impact of public spending cuts, let alone kick-start a dynamic economic miracle in areas where the existing private sector is correspondingly weak.

The scale of the economic challenge facing many regions is set out in a recent report by Price Waterhouse Coopers that painted a grim picture of the impact of the public spending cuts on employment and economic growth, especially in the North of England:

“Whilst symbolically important, we also question whether on its own the Regional Growth Fund (RGF)… will provide enough incentive or access to funds to make a material difference, as the proposed scale of the RGF is less than 25% of the annual Regional Development Agency (RDA) outturn for 2009/10. We also question whether local authorities and the newly created Local Enterprise Partnerships (LEPs) will have the resources, fiscal powers and capacity to mitigate the impact of cuts and promote growth locally.” 

This is the challenge facing the Coalition’s strategy for economic growth outside London and the South East, an entire administrative layer of well funded government bureaucracy devoted to stimulating economic growth has been removed, replaced with a temporarily funded collection uncoordinated bodies.

In setting out its localism agenda the Coalition has recognised that devolving power will be unpredictable, even messy. This is either a deliberate strategy to avoid responsibility for the ensuring mess as councils “slash and burn” services and local economies decline, or it is a genuine willingness to let go of the reins of political control in order to allow different areas to try substantively different approaches to suited to their areas, or most likely, a bit of both.

Whose big society is it anyway?

Now that the Coalition, led by human wrecking ball in chief Eric Pickles, has finished tearing down the last vestiges of regional government by removing the regional government offices they’re turning their attention to what will take their place.

And guess what folks; it’s that panacea for all society’s ills, the “Big Society”…. again.

Eric’s Department of Communities and Local Government has published it’s very own structural reform plan; the document that sets out the department’s new rasion d’etre; “Making localism and the big society part of everyday life.”

So it seems when Eric isn’t stomping around in his hard hat demolishing Quangos, he’s going to be using that hammer to hammer out the gospel of the big society. In recognition of this Eric has been made joint chair of the government’s big society ministerial committee, taking his place alongside Francis Maude, after all its going to take a big man to build the big society.

The structural reform plan sets out a series of reforms to deliver localism agenda and support the big society, with a big focus on getting rid of those horrible rules and regulations that force local authorities to fill out forms about how many people they employ to fill out the forms they have to fill out to satisfy the latest government directive about form filling. Instead local councils, and communities, that’s us by the way, will be liberated from this paper based oppression and allowed to rule ourselves using common sense.

This involves increasing local council’s independence by cutting the inspection and guidance regime including the Comprehensive Area Assessment and devolving greater control over local spending by phasing out ring fencing for high performing councils. There are also plans for 12 directly elected city mayors, proposals to give local residents the power to institute referendum on any local issues and extremely vague pledges to let local community groups take over the running of local public services.

This big society check list is not a coherent vision or set of policies, it is a pick mix of familiar sound bites and easy sentiments; anti-state, anti-bureaucracy and greater efficiency all timeless aspirations for every incumbent government, including the previous administration.

And from these meagre acorns will the tree of the big society grow? Well no because that’s not how grass roots work. While volunteers and charities can do fantastic work they can’t do it for free and are often dependent on contracts to deliver services or local authority grants for their premises, their part time staff, to pay the bills. The Coalition knows this, but the big society is not about expanding the New Labour formula of increasing government funding to the voluntary sector to deliver public services. Instead there will be the double impact of spending cuts as council services get cut, followed by the disappearance of charities that support people who relied on that state support.

 It’s all part of how the coalition envisages the big society, it’s not about altering models of state support, it’s about self reliance of groups that are independent and self financing, untainted by financial reliance on the state. Think of the big society as a village fete, locally organised by those with requisite social capital to do a bit of fund raising and a bit of do gooding, all under the patronage of the great and the good of the shire.

This is most clearly articulated in their plans for a mini army of 5000 self sustaining community organisers, who will train local people to… errm probably clean up parks and that, but hopefully they won’t get around to organising their communities to protest against cuts to huge job losses and closure of vital services.

In practice the big society is an idea that can only be defined negatively, and the only thing Coalition Minister’s seem to agree on is that it’s not the state. So to make room for the big society the state must be rolled back, and this has major implications for the state at the local level where the big society must be seen in the context of huge, and if the Conservatives get their way, permanent, public spending that will decimate local council services.

To ensure the big society is effective window dressing for compassionate conservatism it has to be everything to all people everywhere. This pandering is perfectly captured by David Cameroon every time he opens his mouth on the subject, like in Liverpool recently where he offered this precise definition.

“You can call it liberalism. You can call it empowerment. You can call it freedom. You can call it responsibility. I call it the Big Society.”

Well you probably shouldn’t Dave, because it doesn’t quite have the same ring to it. “Give me big society or give death” or “big society, equality and fraternity.” I don’t think so.

Goodbye Regionalism, hello….?

Did you see it, tucked away, deftly disguised in the small type, you know, the same small print the Chancellor promised we wouldn’t need to read? There it was, bold as brass: “Regional Development Agencies (RDAs) will be abolished” as part of the transition towards new “Local Economic Partnerships (LEPs).”

This is a momentous step, in Eric Pickles’ hyperbolic words, “in wresting control from the bureaucrats, stopping the top down diktats and axing unelected, ineffective Quangos. It’s the nail in the coffin of the unelected, unaccountable and unwanted Regional Assemblies”.

In other words the Coalition has won the greatest victory for democracy since Lando nailed the Death Star mk II reactor core.

Few people will mourn the passing of regional government agencies; they have become poster boys for inefficient and wasteful big government despite two independent studies found they were among the most efficient and economically productive of all government agencies. And while it is true that the North and Midlands have fallen further behind London and the South East RDA’s were never formulated in a way that could meaningfully reduce these inequalities, and in fact their approach continued to perpetuate their underlying causes.

Regional governance had serious flaws and was fatally strangled from birth by a dual lack of political legitimacy and the lack of power to make real political or economic decisions that could shape the development of their regions.

RDAs operated along a neo-liberal view of the world as a global market place and the result was a focus on making the region as attractive as possible to private investment to power economic growth. But each region has an RDA playing the same zero-sum game, all trying to make their region as attractive as possible to private business through identikit business parks, urban redevelopment schemes, research and development zones and water front development schemes.

Long-term plans for environmental sustainability and social inclusion were marginalised by a self-defeating attempt to attract private capital to drive economic growth. The logic of this competitive regional model ensures that London and the South East will continue to experience the greatest investment, building on their already privileged position and comparative advantage in terms of concentrations of both economic and social capital.

In place of genuine democratic decisions shaping the regional agenda, there was an imposition of a one-size-fits-all model that was overly concerned with structures and functions rather than real human outcomes; and an overemphasis on private enterprise driven economic growth over socially and environmentally sustainable development. In many ways regional government was a metaphor for the whole New Labour project, except Yorkshire Forward didn’t invade a Middle Eastern country.

So now that regional government is dead what alternative is the Coalition offering to reinvigorate local democracy? Well, the joint letter from Pickles and Cable, sent out to all local authority leaders the week after the budget, gives some indication of what their plans may look like.

This letter set out the vague outline of the new LEPs: lightweight and pro-business. So pro-business, in fact, they should have equal representation from the private sector and be chaired by a suitably worthy local big wig, which is an interesting take on democratising local government.

But at the same time as asking for ideas on what these LEP’s should look like, the letter announced the renationalising of a whole swath of decision-making areas that had previously been exercised at the regional level. So despite the “Localism, Localism, Localism” mantra, it seems that power and authority is flowing upwards towards the centre, not trickling down to local communities.

And while local authorities may, and it’s a big ‘may’ at this point, be permitted a greater degree of discretionary control over local spending priorities, the bigger, more strategic planning clearly cannot be trusted to the oiks in the regions.

So what possible reason could they possible give for this apparent contradiction to mask the political wrangling between Cable and Pickles?

Well, it’s because “we believe some of these [policies] are best led nationally.” Well, why didn’t they say so? That’s perfectly understandable, say no more. As the Tories have consistently claimed: a distant Quangocrat in Sheffield cannot not understand the situation on the ground in Rotherham, and an RDA in an office in Newcastle is an albatross around the neck of the struggling small business man in Middleborough.

However, the Whitehall civil servant deciding investment policy in the North West, like the man from Del Monte flying into some small Latin American country to pick oranges and install a military regime – well, it turns out that he knows best, after all.

Revolution begins at home: the coalition’s localism agenda

“Localism, Localism, Localism” is the rallying cry, well rallying wisecrack, of the figure implementing the coalition’s new local government strategy and, my oh my, what a figure it is. If the coalition is a love-in threatening to turn sour, like a hastily arranged shotgun marriage, then Eric Pickles is the uncle noisily elbowing his way to the front of the buffet queue.

While Pickles doesn’t fit (or even fit in) the mould of the identikit, slim and Southern, public-school boys that dominate the coalition, that may be a distinct advantage.  A brusque, working class Northerner with solid Labour credentials from way back, with a background in the humdrum world of local politics (no hedge fund manager or PR consultant he) he’s been picked as the perfect Tory candidate to usher in this great local government revolution. And revolutionary fervour is nothing new to Eric who, as a school boy, could be found running round with Das Kapital under his arm and inciting his fellow classmates at Keighley Grammar to throw off their chains. Then one day it all changed: the Soviet tanks rolled into Prague and Comrade Eric put away his little red book and joined the Conservative Party.

So what can we expect from this impending local government revolution? Are we to see Eric return to his revolutionary roots to let a thousand flowers of democratic devolution and citizen empowerment bloom? Or is he relishing the opportunity to finally achieve his dream of “destroying municipal socialism forever” and finally laying the ghost of dear old great granddaddy to rest.

What is clear is that the politics below the national level is going to experience a major reorganization with potentially far reaching consequences.

The architecture of Labour’s regional government experiment will be dismantled, with government offices and Regional Development Agencies (RDAs) both increasingly looking like they’ll be taking their place alongside regional assemblies and regional ministers in that great quango bonfire in the sky. Even if the northern RDA’s remain on a voluntary basis under St Nick of Halham’s protection, and ask the steel workers of Sheffield or nurses of Hartlepool how that’s worked out so far, their functions will be stripped with the focus firmly on promoting private sector growth, none of this reducing inequalities malarkey.

To fill the void left by demise of regional government, the Coalition has promised to reinvigorate local politics by: devolving greater power to local authorities, including greater control over local spending priorities; removing much of current central government inspection regime; and setting out hazy plans to give local communities a greater say in how services are delivered, including the right to “take over local state run services.” However, in the context of the most server public spending cuts in a generation how much freedom will councils actually have to shape a local, democratically driven agenda?

Already it is the treasury dominating the shape of local government reform, with £1.2 billion of the £6 billion in announced cuts coming from the Department of Communities and Local Government (DCLG) budget, and the freeze on council tax increases for the next year undermines the talk of greater financial autonomy.

In practice it seems local councils will have the freedom to carry out the coalition program of cuts and the Big Society agenda of public service reform. However these two policies may not be easily sit together, as the Free School reforms; where local authorities will lose their ability to shape education policy in the interests of the community in the name of consumer choice, demonstrate.

The shape of DCLG cuts is also a worrying trend that belies Boy George’s “We’re all in this together” message. By raiding £446m from area-based grants, the funding targeted at areas with the highest levels of deprivation, the DCLG is placing a disproportionate burden on those communities least able to bear it.

These are the communities that were largely excluded from the benefits of the previous decade of economic growth, that have already been hit hardest by the recession, that already have the highest levels of poverty and highest rates of unemployment. They are the people and communities that need the greatest protection from the affects of cuts. But they are not protected. Instead, they are the most vulnerable. These areas, more likely to be Northern and Labour, areas where the Conservatives don’t have to worry about a middle-class backlash because funding for supported living has been cut, or unemployment continues to rise because the Working Neighbourhoods Fund is slashed.

This risks repeating the mistakes of the 1980’s, beginning another cycle of Cameron’s broken Britain, but still, it’s better that than telling Tory shires that they’ve got to reduce bin collections to twice a month, then Eric really would have a revolution on his hands.


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