Key principles for Labour’s localism

‘Trust and empowerment’ should be key principles for Labour’s new agenda for public services. Trust and power should be spread downwards and outwards to citizens, employees, public service institutions and sub-national government. Each level, from Whitehall to the frontline employee, needs power and a commitment to empower others – not like the coalition’s school reforms, which have given power to schools but stripped it from councils, parents and employees.

Elected sub-national tiers of government should aim to create the conditions in which citizens, employees and public service institutions can achieve positive results for themselves. This means ‘letting go’ and not imposing too much from above. But it also means having sufficient authority and capability to provide local leadership, accountability and support. So subnational government should not be dismantled or by-passed in the name of frontline autonomy. Instead it should play two key roles, which individual services cannot do for themselves and which central government lacks the capacity, local insight or joined-up perspective to perform:

1. ‘Whole place strategy’: Elected sub-national authorities should apply their understanding of local needs and preferences to drive strategy for all public services in their locality. This starts with democratic political leadership, but also relies on authentic community engagement and professional evidence-based analysis. Local leaders should set ambitions for service outcomes in their area (to sit alongside a short national list of government improvement priorities and guarantees); and they should have the ability to steer service budgets and goals in order to meet them. Elected authorities should be able to steer the local institutional ecosystem, working with providers, but they also need to be prepared sometimes to drive through significant reconfigurations of services. And they should champion local collaboration across institutional boundaries, with the aim of achieving inclusion and fair access to services, a shift to early intervention and seamless services for citizens.

2. ‘Driving performance and value’: Elected sub-national government also has a critical role to play in supporting and scrutinising efforts to improve the performance and value of local public services. Unlike Whitehall or national inspectorates, subnational administrations are close enough to services to offer informed scrutiny, advice and challenge. Local or regional authorities should provide hands-on support for service improvement and facilitate local networks of peer-to-peer support. They should contribute to the robust monitoring of risk and have the ability to trigger interventions within services. Councils should operate evidence-based scrutiny mechanisms looking at value for money and performance for all local public services; and as part of this they should test the impact and value of services, taking a whole-place perspective that looks across organisation silos.

As things stand, many local authorities risk being left without the capacity and expertise to carry out these functions adequately. A strategy is needed to build up capacity and expertise, with national improvement agencies and inspectorates redefining their role, so their mission is to support local action. The new ‘what works’ centres provide a model for this. However, this is ultimately down to money as well. Elected authorities can only direct and support public services in their communities if they have sufficient funding.

Statutory change is also needed. At a minimum this means a new Localism Bill which should give authorities the power to:

• Set area-wide strategies for the work of all local public services.
• Direct collaboration across local institutional boundaries.
• Sign off the budget and performance goals set by other funding bodies and satisfy themselves that sufficient resources are pooled to take joint action.
• Establish robust local scrutiny committees to monitor all public services in the locality.
• Supervise or deliver arrangements for local challenge and support of each service

All public services operating in each locality would also have matching obligations placed on them to cooperate with the authority.

Setting ‘whole-place strategy’ and holding local services to account for their performance and value is not a technocratic task. The local tier should be the key vehicle for democracy and participation in the leadership of public services: strong local democracy should bring political leadership to bear on services; authentic and inclusive approaches to citizen participation should be used to inform key area-wide decisions; and sub-national government should be a champion and channel for citizen participation in the operational decisions of all local public services. This democratic dimension is one of the main reasons why elected local government should take the strategic lead for all public services in each locality. Unelected bureaucracies, such as local branches of government departments or NHS clinical commissioning groups cannot play this democratic role.

The need for democracy poses a difficult question of scale and geography which Labour in opposition has been reluctant to confront. Some local authorities are too small to efficiently exercise their duties and should logically merge or pool functions with their neighbours. The next government should offer to fund all the one-off costs of integration, to make rational reforms possible. In some places the quality of local democratic control may also be affected by continual single-party control or by the low status of councillors (in some contexts having fewer, better rewarded councillors would make more sense). A Localism Bill should also permit councils to quickly introduce local democratic reforms.

Labour also needs to tackle the major democratic deficit that sits above local authorities. For many of the public services which need enhanced democratic oversight are best steered at regional or sub-regional level, where there is no elected political tier outside London. Examples include fire services, probation, employment support and transport. This sort of democratic deficit led the coalition to create Police and Crime Commissioners. However the flaws in this model and the reluctance of cities and city regions to support elected mayors means Labour has barely mentioned directly elected politicians in its push for new powers for city and county regions. The recent Adonis Review is a prime example. This is unacceptable: unelected bodies like combined authorities, Local Enterprise Partnerships and Labour’s proposed directors of school standards should not take on more powers, without direct democratic accountability as is now being proposed in Greater Manchester. Labour should include in its manifesto a national commitment to elected regional or sub-regional government, but leave the form this should take in each area open for local debate.

Enhanced local and regional democracy is challenging to the silo mentality of Whitehall, because major departments like Health, Work and Pensions (DWP), Business, Innovation and Skills (BIS) and Justice today commission local services exclusively through their own structures, with barely any local democratic oversight. Broad-ranging democratic leadership would help tackle the fragmentation that bedevils public services. A whole-place approach means that a single administration – the local authority – is ‘ringmaster’ for all public services. This is not to say that each council should run or even commission all the public services in their patch. They would have the power to influence and call-in decisions, but not to set budgets, with sufficient responsibility and power to ensure that all local services are responding to area-wide priorities, working together in collaboration and focusing on performance and value. These shifts would break down the silos between different service budgets and represent a big shift forward in the ‘total place’ or ‘community budgets’ philosophy.

As part of this agenda a number of specific responsibilities should be handed to local or sub-regional elected authorities, in the fields of health and skills for example. Local government-led health and wellbeing boards should take on responsibility for funding and directing health and care services (with clinical commissioning groups becoming advisory and operational). As part of this reform some or all of councils’ adult social care budgets should be transferred into the local health budget, in order to commission integrated services under local government oversight. Similarly local or sub-regional authorities should acquire budgets and responsibilities for commissioning skills training for young people and adults. Central government should also permit experiments in places where there is appetite to go further. On a case-by-case basis elected authorities could take over the responsibilities of other agencies or assume additional powers from Whitehall. For example, elected authorities should be able to take on responsibilities for commissioning services like welfare-to-work and probation in some areas – either at sub-regional or local level.

Initially some of these budgets would need to be ring-fenced to the specific activity, along the lines of the Housing Revenue Account, to provide reassurance to national departments and the Treasury. The elected authority would have commissioning control but only limited ability to pool or reallocate budgets. Councils’ core budgets would actually shrink as a result of adult social care responsibilities transferring to Health and Wellbeing Boards. As a by-product this would force a resolution to the problem of the ‘graph of doom’ (where spending on children’s and adults social care is expected to consume an ever higher share of authorities’ falling budgets). By shifting adult services into a ring-fenced account, ministers would be forced to address the question of how much funding councils need to adequately undertake their remaining responsibilities.

These fragmented budgets might not need to be a permanent fixture, however. A handful of areas may already have the capacity to commission all local services using a single public services budget. From the government’s perspective this is a risky move, with huge cultural as well as accountability and financial implications. National government will be particularly wary of un-ring-fencing NHS spending, even within the context of the NHS England commissioning framework. But in cases like this, the best approach is experimentation not ‘big bang’ reform. A handful of councils with the appetite and capability to commission all local services should be given this power as a pilot – and their experience would inform the future of national policy making. This should be the signature policy of Labour’s Localism Bill.

Finally, there is the question of local revenue raising. These reforms do not sit easily with England’s highly centralised system of funding local services, where only a tiny fraction of local public service spending is financed by local taxation. However Scotland has proved that autonomous democratic government can still flourish in a context of block grants from above. Reform of local taxation is required for many reasons, but has the potential to derail more urgent priorities. Local taxation reform is needed in the next parliament, but it need not hinder progress elsewhere towards Labour’s localism.

This article first appeared in the  joint NLGN/Fabian Society essay collection ‘Labour’s local offer: Ideas for a radical local manifesto’. The collection is free to download here.