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09.06.17

‘Rocky ride’ ahead as devolution risks slumping to bottom of to-do list

Council experts have predicted a “rocky ride” ahead as further devolution of English regions hinges almost entirely on who will champion it as chancellor and communities secretary – while putting a pin on the project in the wake of Brexit will leave local government “more fragmented than ever”.

In its election round-up after today’s shock announcement of a hung Parliament, the Local Government Information Unit (LGiU) argued that local government is “rarely front and centre of a new government’s priorities”, especially with the looming Brexit negotiations due to start in under two weeks despite no party having secured a majority in the Commons.

But dismissing local government decisions “as a sideshow” would be a mistake, argued the LGiU’s head of projects Lauren Lucas.

“All indications suggest we’re in for a rocky ride over the next few years and in the absence of a strong national government, local government will be essential in ensuring communities work, local economies grow, people are housed and cared for and infrastructure is delivered. It cannot do that from a position of uncertainty,” she wrote.

Devolution in England is of particular concern. Originally a pet project driven by former chancellor George Osborne, the flagship decentralisation programme risks grinding to a halt as parties shift their focus to pressing national concerns.

The existing – and largely metropolitan – devo bids have continued to move forwards, especially with the election of six metro mayors in May, but the rural two-tier devolution model “appears to have foundered”.

“In several two-tier areas, a shuffle towards reorganisation has replaced devolution talks, with places like Hampshire, Buckinghamshire and Oxfordshire putting forward – sometimes competing – bids for reorganisation,” argued Lucas. “Like the devolution deals, there has been very little in the way of open co-ordination from DCLG and the announcement of the general election has paused decision making on the future of these areas.

“With this in mind, the future of devolution depends largely on who is selected as the next chancellor and secretary of state for DCLG. If devolution is abandoned in the wake of Brexit negotiations and a hung parliament it will leave local government more fragmented than ever.

“Retrospectively, it may be seen as one of the biggest missed opportunities in the history of local governance and whoever becomes secretary of state needs to provide clear leadership on devolution and on reorganisation.”

Another key priority for the incoming government, which is currently expected to comprise the Conservative Party propped up by Northern Ireland’s DUP, will be business rates devolution. Councils currently have “very little certainty” as to how they will be funded beyond 2020, and despite a pledge to allow authorities to retain 100% of business rates growth, progress on local government finance “has been complicated and slow”.

“In our annual State of Local Government Finance survey, nearly 80% of respondents said they had ‘little or no’ confidence in the sustainability of local finance, while over 80% said the current needs assessment formula is not fit for purpose,” explained Lucas. “With the fall of the Finance Bill, which contained the proposals for business rate devolution, the future of local government finance is even more unsettled.

“The new administration must decide quickly if they are committed to the bill in its current form, and if it can be passed.”

But even if the flagship pledge is given the go-ahead, using business rates growth to fund public services is nevertheless a controversial policy across the board, and has been forecast to “create winners and losers”.

“We would like to see a rethink about how we broaden the local tax base to create a sustainable way of funding services in the long-term,” she argued. “More creative approaches to fiscal devolution were ruled out of the initial round of devolution talks: it’s time to revisit them. If business rate devolution does not proceed, then an alternative model must be established to provide some level of stability in the sector.”

Lucas conceded that local government may not be at the top of the to-do list at the moment, but in the absence of a strong central administration, “it will be an important partner” in meeting future challenges.

“Weakness in a national government will make strong leadership at a regional and local level ever more important,” she continued. “We are in a period of almost unprecedented levels of uncertainty about the future of the sector – and of the country as a whole. Time to put councils back on the agenda.”

Social care’s murky waters

A third and obvious priority for the next government would be social care, which lies on “already murky waters” made even darker by Theresa May’s unprecedented manifesto U-turns on the sector’s funding. While she promised to consult on a cap on care costs to appease disgruntled voters, it is yet unclear what this cap will be, or if there will be one at all.

“What is absolutely certain is that it cannot go on as it is,” Lucas pointed out. “According to the LGA, social care faces a £2.6bn funding gap by 2020, and our most recent report on social care, Paying For It, illustrates how the social care ecosystem is crumbling because of a lack of investment. Unless this crisis is given immediate priority, the system will continue to fall apart, leaving vulnerable people in need of support.

“All these issues were urgent before the announcement of a general election pressed the pause button on the business of government: they have only become more urgent over the intervening weeks.”

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