Government 'to learn from councils'

Thursday, September 10, 2009

Central government could learn a lot from local authorities, the Tory shadow chancellor George Osborne has said.

Admittedly he was only talking about Tory councils and there was a heavy element of him buttering them up when he told the Conservative Councillors' Seminar: "I want the Conservative Party to learn from what local Conservative councils are doing right now [because] they are dealing with many of the constraints that we may face very soon."

Osborne added: "While we develop our policies for improving public services in an age of austerity, local councils have got on with doing it. When it comes to rooting out waste and cutting costs, or improving services through innovative new policies, Conservative councils are showing us that it can be done. In short, Conservative Whitehall will have much to learn from Conservative town halls.

"Across the country, councils have actually put into practice some of the ideas and policies we hope to introduce nationally if we form the next government. It shows how all the innovative new policy ideas are now being generated in the Conservative world.

"So Boris Johnson in London has led the way in publishing detailed online information about the Greater London Authority's spending and costs. Other councils are finding ways to save money by sharing their services or overheads. High Peak Borough Council and Staffordshire Moorlands District Council are sharing senior management positions across the two councils. As a result, they now only have to fill 21 management positions – instead of 37. Still others have taken the decision to reduce costs and improve services by outsourcing some of their activities or improving their use of information technology. Lincolnshire County Council has been working in successful partnerships with the private sector for the last nine years, starting in the back office and now covering social inclusion projects and the delivery of critical services such as children's services. And Kent County council has massively reduced their transactional costs by leading the way in E-government."

Osborne said that many of the councils have demonstrated the importance of financial grip, setting clear spending priorities, controlling costs and holding people accountable for performance and there were important lessons for central government as it looks to spend tax payers' money more effectively. It's not just about saving money, he said, it's about improving public services by changing how the money is spent.

"In Britain," Osborne said, "over three quarters of government spending is spent by central government. In Germany, the figure is 60 per cent. In Canada it is less than 40 per cent. To take just one category of spending, less than a tenth of the money spent every year on regeneration is spent by local government. The rest is spent by a complicated alphabet soup of quangos, regional agencies and central government department. But the problem is not just that local councils don't get the money that really should be spent locally. The problem is that too often local councils don't even have the power to choose how to spend the money that is actually allocated to them. The proportion of local government expenditure that is ring-fenced by central government has nearly tripled from 5 per cent in 1997 to 14 per cent last year.

"If that were not enough, Labour ministers are constantly looking over the shoulders of elected councils, and the cost of monitoring local government has ballooned to £2bn. This central bureaucracy makes it much more difficult for councils to innovate. Councils lack the freedom to take decisions that could improve their local communities – such as stepping in to save post offices or small shops, or controlling late night drinking. All this has contributed to a regrettable decline the control people feel they have over their local area. Only 38 per cent of people feel they can influence decisions in their local area. And turnout was only 30 per cent at the last set of local council elections."

Osborne said the Tory party wants to give councils more power and more responsibility to unleash their potential, which is why they have plans for a radical decentralisation of power, why they will devolve down the funding and powers of Regional Development Agencies to local councils and local businesses, and why they will abolish regional assemblies and hand control to local authorities.

"Regional government will have no more planning or housing powers," he said. "Local authorities will now have the power to establish their own local enterprise partnerships. And they will have a new 'general power of competence', giving them more freedom to act in the best interests of their residents."

Osborne concluded: "Yes we will reduce the costs of central government. And yes we will reduce the Whitehall headcount. But this is not just a cost-cutting exercise. It is about changing the role of central government – and making local government powerful again. The result will not just be money saved for the taxpayer and debt reduced, but a fundamentally better government with better and more productive services. That is what Conservative Whitehall can learn from Conservative town halls."