My latest column from MJ

The recent LGA report into future financing signalled that the very role and shape of local government in the UK is hurtling towards a significant crossroads. What it showed was that based on current projections there will be a £16.5bn shortfall in council budgets by 2020.

It predicted that 45% of budgets will be spent on social services by the end of the decade due to increased need and with waste collection also creating significant cost pressures, services such as road maintenance, libraries and leisure could see their budgets eroded by 90% compared to present comparative levels.

The 28% cuts between 2010/11 and 2014/15 have impacted heavily on council finances and combined with growing demand it really does leave councils staring into a financial abyss.

Some of the very services that the public value the most will come under serious threat if this funding chasm is not bridged. Local government could be left denuded of any capacity to be the main catalyst for the social, economic and environmental wellbeing of the local area. The ability to join up partnerships through place leadership would be nothing but a distant memory.

Without reform of adult social care funding soon, this financial Armageddon scenario is likely to become a reality. That is why, in APSE, we are calling for an all-party parliamentary commission to consider this issue as an urgent priority. This needs to not only consider how additional revenue can be raised but also if earlier preventative spending on public health, through local government, can reduce the cost of NHS treatment in later life. If this is the case then a realignment of funding needs to take place.  

At a time when local economies are suffering it is more important than ever for local government to provide local leverage, as well as provide community leadership on major socio-economic issues such as tackling youth unemployment, climate change, housing need and public health.

For those who believe in local government as a force for good in wider society it really is a scary thought that its role could be no more than that of an insignificant bystander within the local community, unable to have influence over the major public policy issues of the day, due to its lack of any meaningful involvement in the services that the public consume on a daily basis.

The latest funding crisis report has brought into even sharper focus the debate on what future role and shape local government should have.

Should it play a meaningful role in acting as a catalyst for local society and the local economy or should it play a passive role emasculated of any real capacity to influence and shape with regard to the dominant public policy and social issues of the day?

This is a debate that is often played out in the offices of a handful of think-tank’s congregated in a small but powerful area of the country but what do those elected members and officers who are actually involved at the coalface of local government across the country think?

APSE’s latest research through its knowledge transfer partnership with De Montfort University aimed to find this out. The Ensuring Council: An alternative vision for local government is the report that emerged from this work.

What it found was that despite concepts such as the ‘enabling council’ or ‘commissioning council’, which would strip away much of local government’s service delivery role, being heavily promoted, many in local government do not share this vision. There view was that there is very little evidence to support assumptions that strategic objectives can be achieved by merely acting as an ‘enabler’ or ‘commissioner’.

Our researchers found the majority in local government do not wish to divest themselves of capacity to deliver for their communities. The ensuring council model starts to articulate an alternative vision for the future of local government. This is built on the principles of democratic accountability, stewardship, public value, social justice, civic entrepreneurship, financial capacity and empowering local communities, underpinned by a core capacity of in-house services delivered in collaboration, not competition, with other providers.

My view is that the ensuring council model resonates with those who are passionate about local government because it means councils are ‘doers’ locally, rather than handing over responsibility to others. This enables them to join up strategic thinking with operational efficiency and gives greater flexibility in responding to ever increasing demands.

So what’s it to be, local government playing an active role in local communities or stepping aside passively to let others fill the void?  

There was a real feel of local government being at a crossroads around the LGA conference in Birmingham this week, particularly as the LGA launched its report into future financing to coincide with the start of the event. What it showed was that based on current projections there will be a £16.5b shortfall on council budgets by 2020.

It predicted that 45% of budgets will be spent on social services by the end of the decade due to increased need and with waste disposal also creating significant cost pressures, services such as roads maintenance, libraries and leisure could see their budgets eroded by 90% compared to present comparative levels.

The 28% cuts between 2010/11 and 2014/15 have impacted heavily on council finances and combined with growing demand it really does leave council’s staring into a financial abyss. Without reform of adult social care funding soon this financial Armageddon scenario is likely to become a reality. That is why in APSE we are calling for an all-party parliamentary commission to consider this issue as a highest priority.

Conference week is always a great chance to catch up with some of the key players in the local government family in its widest sense and capture the mood music. On the way into the venue I stopped to chat with 4 very different council leaders in the first 20 minutes and there was over 200 visitors to the APSE stand over the course of the 3 days. The topic of finance wasn’t far from most peoples lips.

For those who believe in local government as a force for good in wider society it really is a scary thought that its role could be no more than that of an insignificant bystander within the local community, unable to have influence over the major public policy issues of the day due to its lack of any meaningful involvement in the services that the public consume on a daily basis.

APSE has welcomed the debate about school meals that has been opened up as a result of schoolgirl Martha Payne's blog.

The 'Never Seconds' blog by the nine-year-old from Lochgilphead, Argyll has put school food under the media spotlight. We have campaigned for the highest standards in school food and believes that opening up debate will give school meals the importance they deserve politically.

Martha's blog takes a balanced view and her experience of food at school is positive overall. Though some meals appear less appetising than others, her latest ‘food-o-meter’ score rated her school lunch 10/10.

APSE's data shows that nutritional standards and uptake of primary school meals have risen over the past five years despite the fact that funding has not kept pace with food costs and pressure on education caters' budgets has increased.

Every day, school catering staff freshly prepare, cook and serve thousands of meals for children. The meals are delivered to strict nutritional standards, within a very limited budget and a short timeframe. For some children, school lunch may be the only hot cooked meal they get each day. Whilst there may be variation and caterers don't get everything right all the time, we should applaud their hard work and dedication in delivering school meals to high standards with decreasing budgets. Martha's blog has highlighted that school meals really do matter. Getting children to take an interest in their meals can have positive effects and Martha's blog has given us an opportunity to keep school meals firmly on the political menu.'

Scotland has been in the vanguard of implementing positive school food policies. The Hungry for Success initiative introduced a radically different school meals service that is envied by many other countries. This allocated £137m Government funding between 2003 and 2009 and was backed with robust legislation for food and nutrient standards. This commitment was recently reinforced by its ‘National Food and Drink Policy’. Linking school meals to Scotland’s Curriculum for Excellence is at the heart of the drive to tackle the nation's health challenges. School caterers who are sourcing locally are also opening up the supply chain to hard pressed Scottish food producers and suppliers.'

APSE’s data shows that in Scotland's school meals are of a high standard. We continually collect data on good practice and measure performance throughout the UK, so we know that the quality is there and services provided are both innovative and highly rated.

School meals should be fully supported by Ministers and headteachers. Heads need to consider the impact on school food when timetables are condensed leaving less time to serve pupils and for pupils to eat their meals, as this can impact on presentation. Political parties need to understand that school meals should be integrated into school improvement and health measures.

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.

Copy of an article Neil McInroy from CLES and myself recently did for Public Finance magazine.

Councils should be leading the way with renewable energy schemes. They can reap important economic and social rewards as well as environmental benefits

A report published this week by the Association for Public Service Excellence (APSE) suggests there is still a business case for local government-led renewable energy schemes.

We are finding that many councils around the UK are pushing ahead with the renewables agenda and would urge others to do the same. Our new research provides evidence as to both the business case and broader impacts of renewables for local economies and communities.

APSE commissioned the Centre for Local Economic Strategies (Cles) to examine the issue. Our report, Powerful Impacts: Exploring the economic and social benefits of renewable energy schemes, assesses the benefits of projects in terms of: payments from Feed in Tariffs (FiTs); number of people employed; value to supply chains; training and skills development; and savings in carbon emissions.

Cles researchers found that £1 invested in local renewable energy schemes that were early to get off the ground could deliver an average £2.90 in cashable benefits. They also found that a scheme fitting solar panels to 500 homes can create 12 full-time equivalent jobs and save 650 tonnes a year in carbon emissions.

The model built in sensitivity tests for factors that are liable to fluctuations, principally FiT rates, borrowing rates, equipment costs and energy costs. While government proposals to cut FiTs for solar schemes might have dented confidence, public sector decision-makers are now recognising that lower tariffs can be offset by falls in costs of equipment that are forecast.

Researchers re-calculated the return on investment in light of the latest information on reductions to FiTs. Based on reducing the tariff from 43.3p per kWh to 21p for solar schemes, they found this falls to £1.50.

A return on investment of £1.50 is obviously a drop compared with rewards for those trailblazer projects. But £1.50 can still be a healthy return and the predicted fall in the cost of solar panels also means the initial outlay is reduced.

The report features case studies demonstrating how forward-thinking councils have not only developed renewable energy projects as a way of cutting energy bills, enhancing energy security and reducing emissions, but also used them as a catalyst to stimulate jobs, skills and supply chains locally.

It must be remembered that solar is just one element of renewables. While the authorities discussed in our report have used solar technology, we believe similar benefits can be derived from other projects such as wind, biomass, electric fleet and energy efficiency schemes.

APSE’s previous publication, The Virtuous Green Circle, set out how a ‘revolving fund’ for investment in sustainable energy can operate in local government. Cles researchers found critical success factors are to deliver schemes at minimum cost and risks to the local authority and to ‘lock in’ economic benefit – and that a direct local authority approach offers most ability to control these factors.

Our new report argues that impacts of renewable energy on local economies should be fully recognised in local decision-making and national funding mechanisms. To this end, we are pleased that the Department of Energy and Climate Change appears to have recognised the need to differentiate between schemes that provide a community benefit and those driven by profit and will consult to protect social landlords from an additional cut for multi-installations.

This distinction is an important one. If cuts to FiTs make commercial rent-a-roof schemes less attractive to those seeking purely to maximise profits, there is all the more reason for councils that can make a sound business case for renewables but also have broader environmental, social and economic ambitions, to take a direct approach.

Fortune has most definitely favoured the brave and pioneering authorities have seen the best return on investment in renewables schemes. We suggest that others should push ahead as a matter of urgency.

If local government thought 2011 was tough, 2012 may be about to get a whole lot tougher. With an estimated 145,000 job losses in councils over the previous 12 months, some may have thought the heavy lifting had been done. However, my fear is that whilst many have made significant progress in efficiency programmes, this may prove difficult to sustain – and the knock-on effect for councils that didn’t quite get there in year one could be catastrophic. With ongoing redundancies, wage freezes, rising pension payments and inflation remaining relatively high, morale will be near the floor.

Local government will be asked to question its very role as a place shaper as it struggles to cope with social problems created by unemployment, crime and disenfranchisement. Paradoxically, in the midst of this it will continue to be asked to retrench in terms of service delivery, whilst localising and fragmenting provision. Towards the end of the year Ministers will begin more ‘guided localism’.

Further changes in political control will take place at May local elections as the four yearly cycle comes around again and Labour moves away from its historic low of 2008. This could play out differently in Scotland as the SNP’s popularity continues.

The future will remain bleak as on-going economic problems in Europe feeds through as further pressure on public finances from national government level.

Many local authorities are considering the alternative models of service delivery that exist as part of their on-going plans to deal with the financial austerity they face over coming years. Issues that should be close to the top of any list when weighing up the pros and cons of each option are governance and accountability.

One fundamental lesson learned by many local authorities over the last decade or two is that the more contractualised a service delivery mechanism is, the less governance control and local democratic accountability you will have over it. This does not necessarily absolve you of blame either should things go wrong. I only need to think back to last winter when local authorities were getting a roasting from the media and public alike for not responding quickly enough in gritting roads  ­– despite the fact in some instances responsibility for the roads had been outsourced for over a decade.

Of course many authorities have been shying away from wholesale outsourcing as a result of the immediacy of cuts and the length of time large-scale procurement exercises take to deliver. Some, however, have looked towards wholly owned arms length companies to give themselves the reassurance that if things go wrong they can still bring the service back in-house. Despite this, representatives of the council who sit on the boards of these organisations are legally bound to act in the interests of the organisation rather than the council. It is therefore of vital importance to get the heads of terms correct when setting up any such company.

With the Localism Act recently passing into law the ‘right to challenge’ may lead to further fragmentation of services through a variety of different approaches including social enterprise, mutuals and co-operatives. In the current financial climate is it really the right time to be handing public funds over to small groups of individuals without any recourse or on-going scrutiny? APSE's recent research surveyed more than 1,600 sources and found a lack of evidence as to the benefits of this model for local service delivery.

Looking to the future, it is likely that local government will have a whole variety of arrangements when it comes to service delivery. Will elected members have a significant level of influence and control in this brave new world or will they be reduced to the role of the favourite old uncle at family gatherings who regales everyone with tales of the good old days whilst no one really pays much attention to them.

A huge debate is taking place at present about which are the best models available to divest public services through. I have got to say I remain to be convinced. Whatever service options local authorities decide to pursue in future the benchmark against which to appraise the options is the existing in-house service. Does any alternative form of provision meet or surpass the benefits that managing services directly yourself brings.

These benefits are:

Firstly, high quality, value for money, service provision.

Secondly, the retention of public resources within the local economy and the avoidance of leakage from the local area. This point was covered extensively in our Economic Footprint research in Swindon that showed for every £1 spent by the council on services £1.64 circulated in the local economy.

Thirdly, the ability to act as a market regulator to ensure the Council achieves a fair price over the long term.

Fourthly, being an employment standard setter in promoting fair employment practice, skills training and apprenticeships. 

Fifthly, joining up wider public policy and council corporate objectives by integrating this into and across service delivery, an example of this being responding to climate change.  

Sixthly, the contribution made to financing and supporting the democratic and corporate core of the council.  

Seventhly, the flexibility to change priorities and reduce budgets without having to revert to a contract. 

Eighthly, being responsive in a crisis such as the recent riots, the vast majority of councils street cleansing teams had already returned the streets to normal by the time the public had arrived the following morning.  

Ninthly and finally, being democratically accountable to elected members and being focused on the community because the workforce from top to bottom are predominately from the community. 

In my view this list is non-exhaustive but is an important contribution to the debate on future service delivery models and is one that cannot be ignored. A number of elected members have remarked to me in the past that you often don’t realise the value of what you had, until it’s gone.

The housing crisis is back. For many in local government dealing with the consequences of homelessness, overcrowding and poor stock condition, it has never really gone away. The difference is that the problem is now reaching previously untouched sectors of society – and it's about to get worse.

Home ownership is predicted to drop to 63%, its lowest level since the mid 1980s, a whole generation are 'locked out' of the housing market, and there is chronic lack of supply of new homes, according to the Oxford Economics' report that recently hit national headlines.

The National Housing Federation is calling for greater Government investment in affordable housing and points out that this would stimulate economic recovery. I couldn't agree more.

With rents also predicted to rise by 20% over the next five years, investing in affordable housing is a glaringly obvious win-win solution. The market is unable to meet people’s needs at present and stimulus is required.

Investment in additional affordable homes would be welcome regardless of the provider. But we at APSE believe local authorities are geared up to deliver as house-builders alongside their strategic housing role.

Councils of all sizes, locations and political colours have risen to the challenge of building environmentally friendly homes to tight deadlines in ways that have benefited their local economies in the past two years, using short-lived HCA Local Authority New Build funding.

The HCA's latest affordable homes programme acknowledges the local authority development role and the forthcoming self-financing regime will allow councils more local control over housing resources – thus strengthening the potential for councils to build.

Association of Retained Council Housing earlier this year looked at the sums. Firm Foundations shows councils can borrow at Public Works Loans Board rates and recoup the money from rents.

It must also be remembered that homelessness and poor housing is costing £2.5bn a year for health services and £1.8 bn a year in policing. On the plus side, £1 investment in new housing can generate £3.51 of economic output.

There is a strong business case for Government investment in housing to give the ailing UK-plc a much-needed boost. Not to mention avoiding the misery of people living in inadequate housing or without homes at all.

I made the same point in this column a year or so ago, but it's a point we obviously need to keep repeating. Putting a decent roof over your head is no longer just a problem for the poorest people and the councils that support them. It is a problem for everyone – and addressing it pragmatically would surely be a vote-winner.