Thursday 29 March 2012
I gave evidence in London today to Lord Whitty's inquiry on the affordable housing crisis.
My starting point was that to resolve this crisis local authorities need to play a key role again in providing a quality affordable housing option for all not just a safety net for some.
It's important to place where we have got too in a context, therefore I referred to the fact that the challenge for the new government of the day in 1997 was clearly about tackling the £22b backlog of repairs in council houses and bringing them up to the decent homes standard. However, the process which brought this about resulted in stock transfers, continuation of right to buy and demolitions. Ultimately this resulted in better quality social housing but with about 1m fewer social housing units. By the end of the last Government recognition was given to the massive waiting lists which had built up and a programme commenced once again to deliver new build council housing once again. If the dominant issue in 1997 was backlog of repairs, clearly now it had moved on to lack of supply.
APSE undertook research at this point on issues around creating a new generation of council homes and found that a large group of councils were trailblazing on this agenda, a significant amount of others were interested and a smaller group were unaware or were paying little attention to the issue. Those who were trailblazers had a vision built around delivering for their community’s not only affordable accommodation, but also about delivering on environmental concerns and for the local economy. We also found that most authorities were in a state of readiness to deliver on this agenda either by having the skills to deliver directly themselves or in collaboration with their partner organisations.
Unfortunately, over the past couple of years as a result of reduced budgets and a tinkering with form again rather than a concentration on need, this has not progressed as far as we would have liked. Most focus has been on the new self-financing regime with many considering carefully the implications of a 30 year business plan at present, with rumours of further restraints on borrowing limits emerging and recent controversy over enhanced discounts on right to buy also causing concern.
APSE would like to see a stronger recognition of the direct role councils can play in delivering on one of the major public policy issues of our time. We think new build should commence on a significant scale, we believe that borrowing limits should be opened up to facilitate this new build and that local government has the skills to deliver on this agenda. APSE believes that in order to solve the affordable housing crisis you need to increase supply; you have a sector that can clearly deliver on this and help address an ever increasing need for local communities.
Tuesday 20 March 2012
Having met with three very different local government chief executives recently I was struck by the commonality of understanding of the challenges that council’s face in the coming years. Fiona Lees from East Ayrshire, Manjeet Gill from West Lindsey and Carolyn Downs of the LGA all shared a vision that the answers to the tough times ahead would be found in working closely with and within local communities.
With demographic change towards people living longer we know that a smaller percentage will be working in the future and that there will be greater demands for care services amongst an increasing elderly population. With increasing social problems created by alcohol and drugs, the number of children being looked after is also rising.
A tough economic situation over the coming years will throw up further challenges around poverty and deprivation. Increasing unemployment will mean local government having to contribute significantly in terms of promoting local sustainable economic growth.
Demand for affordable housing is at its highest for a generation reaching crisis levels and now at the top of the political agenda. Energy costs and fuel poverty are also creating considerable worries.
So how are smart local authorities responding to these challenges?
Firstly, by redesigning services with users and communities, starting from the service interface and working backwards rather than top down. Secondly, by then reducing cost through stripping out unnecessary posts within structures.
Thirdly, by looking to focus on protecting and increasing local employment, the public sector makes significant spend, if as much of this as possible can be retained within the local economy then the multiplier in local supply chains will be significant. Never more so than in these times does every £1 spent have to be a £1 well spent, a message that APSE has pushed hard through our economic footprint work.
Fourthly, by reprioritising spend to focus on outcomes, with 80% of local government’s budget spent on 20% of the community; we need to think more strategically about how this cycle of dependency can be changed over the longer term. Perhaps a way of doing this is by reinventing relationships with local communities and working with them to develop the solutions to the collective problems faced.
Wednesday 14 March 2012
I recently gave evidence on behalf of APSE to the Associate Parliamentary Corporate Responsibility Group, chaired by Baroness Greengross, on the emergence of mutuals in the public sector - new ways to serve the public good?
It was an interesting debate with Professor Julian Le Grand, Head of the Government's Mutual's Taskforce, Peter Walls, CEO of Gentoo Group and myself. If you want to check the evidence click the hyperlink.
Friday 09 March 2012
With a huge amount of market volatility at present, is now really the right time for local government to be looking to the private sector for solutions?
The names Southern Cross, Connaught, ROK and Fountain have probably done more damage to the outsourcing agenda in local government than the collective writings of opponents of this approach since the dawning of Compulsory Competitive Tendering 30 years ago. Throw in recent headlines around A4e and you can see that for an industry that works so hard on its image, the last couple of years have not been a great time.
This is certainly not to say that all those involved in delivering outsourced public services are necessarily poor at delivery and teetering on the edge of bankruptcy. There are many companies out there that have built up excellent reputations for delivering services to councils. However, some of them have also faced significant organisational and financial restructuring in recent times.
When DeAnne Julius reported a few years ago on the burgeoning ‘public services industry’ she identified this had an annual value of £79bn. With profit expectation from the investment groups who own them, many contractors shaped organisational strategies on the longevity of growth and geared up accordingly. The recession arrived and public sector budgets were hit. A combination of diminishing growth, increasing risk and rising debt costs, resulted in the perfect storm for some contractors.
Some in local authorities will be familiar with tales of approaching partners and asking for help with 28% cuts that they faced, only to have a contract waved in their face. Where budgets were cut, contractors looked elsewhere to maintain their margins. Additional admin costs were levied, service levels suffered in other instances, as did staff terms and conditions. Key individuals whom long-term relationships had been built with during contract negotiations moved on.
So what does this market volatility mean for local government? It highlights the need to fundamentally reconsider the risk against potential benefit realisation, for proper forensic due diligence, to realise your worth and negotiate hard for the public purse. Recognise sometimes things can go wrong and you may need an exit strategy at some point in the future, it is important to understand that you are providing a revenue stream that has a resale value and you should gain some benefit from this if it is to be transferred on.
In these troubled times, local government should ensure that it has the commercial acumen to reset relationships in a way that maximises public value.