When I was director of strategy and communications at the LGA I was frequently criticised, by the late professor John Stewart among others, for issuing press releases “cautiously welcoming” one Blairite initiative or another.
The criticism was probably justified, but I would definitely have deployed that phrase in response to the government’s recently published devolution white paper.
There is undoubtedly a lot to welcome, not least the stated commitment to devolution, the additional powers for metro mayors, the revival of strategic planning, its reference to struggling small unitary councils and the focus on audit and standards.
There are, however, at least four reasons to be cautious.
First, every serious reformer of local government since George Goschen in the 1860s has argued that local government finance and structures should be reformed together. No government has ever had the political will or energy to do so. This government has also ducked the opportunity. As a result, this white paper will not fulfil its potential.
Second, the current mess and confusion in the structure of English local government is the result of incremental change. Just think of Peter Shore’s “organic change” and Michael Heseltine’s ill-fated Banham Commission. There is a real danger that this government will run out of restructuring energy or time. The contrast with Scotland and Wales, where local government was reorganised in one go, could not be starker.
Third, the effectiveness of the structures being proposed will depend on the quality of the relationships between mayors and councils, between councils and parishes and between ministers and mayors, councils and parishes. In England we are not good at relationships like these and there is precious little in the white paper to signal the trust, effort and imagination that will be needed to make these relationships work better than the previous ones did.
Finally, key to the revival of local government and effective devolution is a revival of citizen engagement in local politics and local governance. Word has it this will be addressed in a forthcoming white paper, but it should be central to this one.
So, a very cautious welcome it is.
Phil Swann is studying for a PhD on central-local government relations at INLOGOV.
This blog was prompted partly by Vivien Lowndes’ and Phil Swann’s recent INLOGOV blog giving “Two cheers for combined authorities and their mayors”. Substantively, anyway, although the decisive stimulus was the realisation that most, if not all, of those present at the relevant ‘Brown Bag’ session would probably have been unaware that seated among them was the co-author of almost certainly the most comprehensive examination of this topic by any INLOGOV colleague over the years.
I refer to the appropriately labelled ‘long-read’, also masquerading as an INLOGOV blog and entitled Briefing Paper: Elected Mayors, published shortly before the 2017 elections of what I think of as the second generation of elected mayors – and produced by Prof Catherine Staite and a Jason Lowther.
Catherine, nowadays an Emeritus Professor of Public Management, had recently stepped down as Director of INLOGOV, in which capacity she had, among numerous other initiatives, both launched and regularly contributed to our/her blog. And, while I certainly recalled reading the Briefing Paper, I confess that, with his name meaning little to me at the time, I’d forgotten her co-author. Apologies, Jason.
He claimed, moreover, that he himself had “forgotten” it (email, 14/5), which I didn’t, of course, believe … until, a few days later and following some ‘research’, I discovered one of my own INLOGOV blogs, on the Magna Carta and 800 years of Elected Mayors, which I really had totally forgotten. Whereupon I realised too that I couldn’t actually recall much of what Catherine, I and other colleagues contributed to that decade of debate on elected mayoral evolution.
So, the remainder, the structure, and – I fear – the length of this blog were prompted, yes, by much of the media coverage of this month’s elections, and the sense that the spread and substance of mayoral government over the past decade aren’t fully recognised even by those who supposedly follow these things; and also by the notion that it would be a pleasing mini-tribute to Catherine to do so by identifying and italicising particularly some of her and colleagues’ INLOGOV blog contributions on these mayoral matters over the years.
We start, however, for the benefit of comparatively late arrivals, at the beginning of not the blog, but the concept. Mayoral government is a postulation you might expect to have found a supportive, even enthusiastic, reception in an Institute of Local Government Studies and it mainly did, albeit with perhaps a certain reservation. Directly elected mayors (DEMs) had played a fluctuating role in the Blair Government’s local government agenda from the outset. London, noted in Labour’s 1997 manifesto as “the only Western capital without an elected city government”, would have a “new deal”. Which took the form in 2000 of the creation of the Mayor-led Greater London Authority – in the manifesto, so no referendum required. Probably no reminder required either, but they’ve been: Ken Livingstone (Ind/Lab; 2000-08), Boris Johnson (Con; 2008-16); Sadiq Khan (Lab; 2016- ).
The Local Government Act 2000 then provided all English and Welsh councils with optional alternatives to the traditional committee system. Chiefly, following a petition of more than 5% of their electorate, they could hold a referendum on whether to introduce a directly elected mayor plus cabinet. There were 30 of these referendums in 2001/02, producing 11 DEMs – plus Stoke-on-Trent’s short-lived mayor-plus-committee system – three in London boroughs, but most famously Hartlepool United’s football mascot, H’Angus the Monkey, aka Stuart Drummond (Indep).
Ten referendums over the ensuing decade produced a further three mayors, prompting the now Cameron-led Conservatives to pledge in their 2010 manifesto to introduce elected ‘Boris-style’ mayors for England’s 12 (eventually 11) largest cities, with significant responsibilities including control of rail and bus services, and money to invest in high-speed broadband.
Birmingham voted 58% against, despite Labour’s having in Liam Byrne a candidate raring to go, and Coventry 64% against. There was speculation over whether the addition of a well publicised mayoral recall provision(CG) might have swung some of the lost referendums. But it was what it looked: an overdue, and to some welcome(Andrew Coulson), end of an episode(Karin Bottom);arguably “the wrong solution to the wrong problem”(Catherine Durose).
Since then, the referendums successfully removing elected mayors (Stoke-on-Trent, Hartlepool, Torbay, Bristol) have exceeded those creating new ones (Copeland, Croydon) – though, in fairness, those four removals were more than matched by five retention votes.
A ‘mayoral map’ at the end of that first decade would have looked something like the inset in my illustration of in fact the first 20 years of referendum results – numerous splotches of red for Reject, a few smaller green specks for Accept, and overall a patchy, somewhat arbitrary, experiment that on a national scale never really took off.
The mayoral concept, though, had also generated interest outside local government – the Institute for Public Policy Research (IPPR), for instance, advocating Mayors for Greater Manchester, the West Midlands, and Liverpool City Region to take the required ‘big’ decisions on housing, transport, and regional development. Prime Minister David Cameron too was a ‘city mayors’ fan, although what scale of ‘city’ wasn’t initially clear, until in 2014 what became known as the first ‘devolution deal’ (Catherine Needham) was announced with the Greater Manchester Combined Authority. Headed by an elected ‘metro-mayor’ (CG), comparable to the Mayor of London, the GMCA would have greater control over local transport, housing, skills and healthcare, with “the levers you need to grow your local economy”.
New legislation – the Cities and Local Government Devolution Act 2016 – was required, allowing the introduction of directly elected Mayoral Combined Authority or ‘Metro Mayors’(Vivien Lowndes & Phil Swann) (+ Catherine Staite) in England and Wales, with devolved housing, transport, planning and policing powers.
The Combined Authority elections were held in May 2017 – not coinciding with the General Election(CG) as PM Theresa May had contemplated but, in contrast to Rishi Sunak, chickened out of – with perhaps usefully split results(CG). Elected were Andy Burnham (Lab, Greater Manchester), Steve Rotheram (Lab, Liverpool City Region), Ben Houchen (Cons, Tees Valley), Andy Street (Cons, West Midlands), Tim Bowles (Cons, West of England), and James Palmer (Cons, Cambridgeshire & Peterborough) – followed in 2018 by Dan Jarvis (Lab, Sheffield City Region). The map had started to change – even within the first hundred days (CG) – stutteringly under the less committed Theresa May and/or in several cases where groups of local authorities failed to agree – but eventually dramatically, as evidenced in the larger illustrated map. The Staite/Lowther ‘Briefing Paper’ was well timed.
A few years on, mayoral devolution has trailblazed across the country (CG) to a greater extent than even some commentators on this year’s local elections seemed to have difficulty grasping. As of March 2024, devolution deals had been agreed with 22 areas, covering 60% of the English population – most recently, in late 2022, North of Tyne, Norfolk/Suffolk, East Midlands, York & North Yorkshire; in 2023 Cornwall, Greater Manchester and West Midlands (‘Trailblazers’), Greater Lincolnshire, Lancashire, Hull/East Yorkshire; and so far in 2024 Buckinghamshire, Warwickshire and Surrey.
From next year, if you draw a straightish line from, say, Ipswich in South Suffolk up through about Alvechurch in South Birmingham, heading for Shrewsbury, at least five-sixths of the bits of England to your north will be under mayoral devolution. Which, to me anyway, seems pretty dramatic news, and considerably more interesting than the endless General Election Date speculation that passed this May for ‘Local Elections’ reporting.
Chris Game is an INLOGOV Associate, and Visiting Professor at Kwansei Gakuin University, Osaka, Japan. He is joint-author (with Professor David Wilson) of the successive editions of Local Government in the United Kingdom, and a regular columnist for The Birmingham Post.
Our two main political parties are locked in a strange debate about the next budget, on 6 March. The elephant in the room is the underfunding of local government.
In the nearly 14 years of Conservative government, the core spending power of local authorities has been cut by 27% in real terms.[1] The County Councils Network has “warned that its members are under extreme pressure, and that the authorities they represent are set to overspend by almost £650m this year due to spiralling costs, particularly in children’s social care and home to school transport, which was contributing to a £4b funding deficit for those authorities over the next three years”. In addition an increase in the National Living Wage is expected to costs these councils £230m next year.[2] This has happened at a time when the ability of councils to raise their council taxes has been held down, for 2024-5 to below 5% for all but a tiny number of councils.[3] One of its consequences has been the inability of the employers in local government and the NHS to negotiate pay settlements which reflect the rate of inflation, or anything near it.
My reading of the present position is that Gove on the one hand and Rachel Reeves on the other are playing chicken. Each are waiting for the other to move first. They both know that after the general election a new government will have to settle the long-standing pay disputes in the public sector, and that it is not possible, year after year, for the pay of staff employed by local government and the NHS to rise by less the rate of inflation. The consequences are visable: depressed morale, a haemorrhage of experienced staff, and dependence on immigration to employ new staff. Rachel hopes that the Conservatives will be forced to confront this before the election. Gove wants the Labour Party to commit to doing it, because as of now any settlement is unfunded.
My view is that the understanding of inflation both by the two main political parties and the Bank of England is naive, especially as it relates to government policy. The starting point should be that inflation affects the distribution of income. It is an intrinsically political process. Most large companies and the richest people have means through which they can compensate for any inflation. Those who do not have the power or muscle to do so pay the price. Thomas Piketty[4] showed that inflation was the main means by which the middle classes paid for much of the costs of two world wars.[5] In those inflations, and in the last significant inflation in the UK, which followed the OPEC hikes in oil prices in the 1970s, the trade unions were strong enough to ensure that wages rose at around the rate of inflation. This is no longer the case.
Yet the recent inflation has given the Government unprecedented increases in tax, which means that, if they so choose, they can afford wage increases. Most of this extra income arises from not raising the ceilings on higher rates of tax. Jeremy Hunt would like to use it to lower rates of income tax. The IMF (no less!) has told him that it is not appropriate to do so at this time.[6] The main reason, not always clearly stated, is that there are many unfunded challenges, but of these the public sector pay disputes (and perhaps the need for additional spending on defence, where difficulties in retention and recruitment are also partly a matter of pay settlements not keeping up with inflation) are top of the list.
Economists in the UK, the USA and other developed countries have had little to say in recent years about inflation. As if it is no longer a problem, which it probably isn’t if inflation stays at around 2%. But the present inflations, driven by wars, the climate crisis and the lockdowns, are another matter. Economic theory is little help. All the traditional theories have been shown to be false. It is not true that inflation and unemployment are opposites: we can have both together, so-called stagflation. Or that it can be controlled by limiting the supply of money, which is not possible when most of it is created by banks which lend far more than they hold in deposits. Or that it is either created by unexpected demands or by unexpected costs.
The British Government urgently needs to resolve the disputes about pay in the public sector, and to do so recognising that most local government employees are substantially worse off than they were before. The Labour spokesperson Angela Rayner has made the practical proposal of negotiating a three year settlement.[7] It cannot come soon enough.
Andrew Coulson is a nationally-recognised expert on scrutiny in local government and is particularly interested in governance by committee.
[3] A prescient academic law professor, writing as long ago as 1984, wrote “It seems to me that the provisions for rate-capping … are little removed from a proposal to replace elected councils by administrative units. For a very long time, local inhabitants have enjoyed the right to elect local representatives with the power to tax, and so to determine, within modest political limits, what level of services shall be provided in the locality. … I have no difficulty in saying of an Act to put a limit on the rates leviable by a local authority that it is politically unconstitutional”. John Griffiths, in the Preface to Half a Century of Municipal Decline 1935-1985, George Allen and Unwin, 1985, p.xii
[4] Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, 2014
[5] The point was also made by one of his critics, Joseph T Salano, “War and the Money Machine: Concealing the costs of War beneath the Veil of Inflation” in John V Denson (ed.) The Costs of War, Routledge, 2nd edn. 1999
Young carers provide unpaid, and often unacknowledged care, usually for parents or other family members. While caring may be viewed as a health and social care issue, most young carers who are under 18 will spend much of their time in full-time education. So it is critical that education professionals are ready and able to support young carers to achieve at school.
This study explored how a multi-agency approach could improve the educational experiences of young carers in Northern Ireland through a survey of teachers and interviews with professionals in education and health and social care. Young carers are often unseen by medical and educational professionals, who may be unaware they are providing care or unaware of what support may be needed.
Key findings
Young carers and their experiences are routinely overlooked and unseen in educational and health care settings.
The lack of legislative recognition for young carers has created a policy void, despite input which has explicitly identified the need to support and care for this group of young people.
Existing guidance which outlines ways to support young carers in school has not been routinely implemented in schools or shared with school staff
A combination of a strengths-based model, combined with existing protective factors for young people has the potential to provide appropriate care and support, promote positive self-worth and improve educational outcomes for young carers.
A systematic failure of planning contributes to patchy and inconsistent partnership approaches which are overly reliant on individual commitment to change, rather than systems change
Background
While my study focused on Northern Ireland, many of the issues faced by young carers are universal in nature. The literature review highlights the unseen nature of young carers as a key barrier identified by researchers and young peoples’ experience across cross-national researchers
Teachers’ understanding of impact and role of young carers is variable, and at times, dismissive. The age at which young carers may begin their caring role is often at primary school, which is unexpected by teaching and medical professionals. The study highlighted a willingness to help but also a reliance on parents or young carers disclosing their status.
Reaching out to young carers is essential
Teachers acknowledged the difficulties of identifying young carers; other research has established that young carers may be reluctant to self-identify or to ask for support if they feel they have not been listened to. Teachers felt that parents only disclosed when they felt forced, often during a crisis.
Transition points provide an excellent opportunity to encourage disclosure. Updating contact information each year, conversations about the transfer to post-secondary school and when young people enrol in a new school are ideal opportunities to ask if a child is undertaking caring responsibilities. This can help start the conversation about how to support them in school. Schools can include information on their websites, on posters, and use Assemblies to recognise the contribution young carers make.
The policy deficit contributes to suffering
Resources and initiatives have been identified, but never implemented, which is both disappointing, but also provides an opportunity for change. Guidance without legislative protection is unlikely to be prioritised. Young carers are less likely to take up further education and more likely to live in poverty, and more likely to experience poor mental health.
The sustained lack of policy attention is an issue which requires urgent redress. Existing guidance includes specific, practical examples of ways to support young carers emotionally and practically to achieve at school, and many of the suggestions require time and planning, not financial costs. A renewed effort to share and monitor this guidance, using a policy lever, could make a powerful impact on young carers.
Shifting the focus from harm reduction to promoting wellbeing
Professionals described a system which considers young carers primarily in terms of harm reduction. Despite the challenges, many young people are proud of their caring role and display outstanding qualities and strengths.
There is insufficient focus on working collaboratively to provide proactive support to young carers to achieve in school, take up opportunities to socialise, and enjoy breaks from caring, or to share information about this support to young carers.
Education Authority guidance, with input from young carers, highlights that what they often want most is practical support to help them get through the school day and for their teachers to show understanding of their reality.
Conclusion
This study highlighted that there are pockets of good practice and existing multi-agency working which have contributed to collaboration, but these are exceptional rather than routine.
The study concludes that there is a need for greater legislative recognition, including a statutory responsibility on key agencies in health and social care and education to provide support for young carers.
Agencies should be more proactive in seeking out young carers, by including information on school enrolment and admissions forms, asking during clinical admissions and review medical appointments, and signposting to young carers’ projects and other partners.
Young carers are being failed; they deserve better, and the answers are already there. What’s needed now is the impetus to follow through and deliver.
Elaine Campbell was awarded an MPA in 2023. Previously an Assistant Director at children’s charity Barnardo’s, Elaine is currently Head of Service Enablement and Improvement at Alzheimer’s Society. She is also a Chair of Board of Governors at a primary school. She can be contacted at [email protected]
If you wanted some serious reader attention for something West Midlands local governmenty, you really, really wouldn’t have chosen this past November. The war in Gaza was seriously hotting up, there were the COP 28 talks in Dubai, Christmas was coming, and Aston Villa were en route to becoming the Premier League’s “foremost home team”, whatever precisely that means.
Serious distractions, but competition for headlines was only part of the challenge facing the Resolution Foundation’s early November release of its In Place of Centralisation report setting out a proposed and far-reaching Devolution Deal for London, Greater Manchester, and the West Midlands. There were other diversions and potential confusions too.
It was barely a month since Birmingham City Council – the principal West Midlands local authority involved in this proposed ‘Devo Deal’ – had issued not one but two Section 114 notices, reportedly declaring itself doubly “bankrupt”, unable to meet the Council’s financial liabilities relating to Equal Pay claims and an in-year financial gap within its budget, and handing over its governance to Communities Secretary Michael Gove’s appointed Commissioners.
And, if that wasn’t potentially complicating enough – for those directly affected as well as onlookers – in that same previous month representatives of the West Midlands Combined Authority (WMCA) had ratified the “Deeper Devolution” aka “Trailblazer” deal announced in the Chancellor’s March Budget.
That deal, comparable to that agreed by Greater Manchester back in March, but relatively little of which we’d heard in the meantime, would devolve more powers to ‘Metro-Mayor’ Andy Street (or, given the May Mayoral elections, potentially his successor), the 30 WM local authorities (7 met boroughs, 4 unitaries, 19 districts) and their 6 million population, and simplify funding arrangements, with £1.5 billion to spend on long-term infrastructure projects and services such as transport, skills, housing and regeneration. A key element is a single block grant negotiated with the Government, like a central government department, as part of next year’s Spending Review.
Key ‘highlights’ include:
A ‘landmark’ housing deal worth up to £500 million, offering greater flexibility to drive brownfield regeneration and funding to deliver “affordable housing at pace”;
Greater control over local finance, including retention of an estimated annual £45 million of business rates for the next decade [hold on to that version of ‘local financial control’!];
Up to six ‘levelling up zones”, backed by £25-year business rate retention, with an estimate total value of at least £500 million, to target investment and encourage regeneration in areas agreed with the Government;
Measures to tackle digital exclusion, including greater influence over high-speed broadband investment across the region and a £4 million fund to get more people online.
In anywhere other than one of the most centralised governmental systems in the developed world, describing this package as ‘trailblazing’ would be wildly OTT. Here, though, it was rightly welcomed as constituting serious devolutionary progress, and Mayor Street, not surprisingly, was enthusiastic, seeing it as “marking the beginning of the end of … the ‘begging bowl culture’ where we must regularly submit bids for various pots of money on a piecemeal basis.”
Here’s the thing, though – well, two things, actually. First, the really rather big thing. The leading West Midlands council in this new ‘Trailblazer’ era is currently, following the issuing of those Section 114 notices, (a) in severe financial straits, and (b) being run until quite possibly 2028 not by elected councillors, but by Lead Commissioner Max Caller, his associate commissioners and political advisors – none of whom have ‘Trailblazing’ as a core part of their brief.
The second and, in Birmingham’s current circumstances, almost other-worldly thing, is the Resolution Foundation’s In Place of Centralisation report which is, incidentally, not the first RF report to be covered in these pages. It’s other-worldly too in the sense that it’s just one, albeit important, product of a bigger, wider-ranging academic project: The Economy 2030 Inquiry – a Nuffield Foundation-funded collaboration between the Resolution Foundation, an independent think-tank, and the LSE’s Centre for Economic Performance.
UK economic growth is their primary project – not boosting local democracy – one persistent obstacle to the attainment of which they identify as “the decades of underperformance of the big cities of Manchester, Birmingham, and more recently London” – the key cause being, they reckon, the centralisation of the British state. No startling news to INLOGOV blog readers, but a contrasting starting point to, say, that of the authors of Trailblazer deals, and their prescriptions go a good deal further.
They start (p.4), unsurprisingly, from a different array of statistics, demonstrating the extreme centralisation of the British state.
Only 5 per cent of the UK’s tax revenues in 2019 were collected by local government, compared to 14 per cent in France, 23 per cent in Japan, and35 per cent in Sweden. Accordingly, local government relies ongrant funding,with only 19 per cent of all local spending in the UK funded locally, comparedto 37 per cent in the average OECD unitary state.
They concede that “recent advances in devolution have begun to unwind this”, but, following a decade of austerity, significantly further fiscal devolution is required to improve growth without increasing inequality – in the form of a ‘triple deal’ negotiated between the Government and the Mayors of Greater Manchester, the West Midlands, and London as a trio, going “beyond the recent ‘trailblazer’ deals” and into which other mayors would be able to opt in the future.
The core of the triple deal would be fiscal devolution, “which would help to end the centrally-imposed local government funding crisis for the three cities by widening the local tax base, and resourcing improvements in the local economy.” Everyone would be a winner – the mayors, borough and Exchequer all benefiting from a new revenue-neutral fiscal settlement, including (pp.4-5):
A local share of income tax receipts, with Greater Manchester and West Midlands keeping a larger share than London;
Complete retention of business rates, and control over the ‘multiplier’;
A single grant to the mayors distributed on a per person basis;
The ability for mayors to reform council tax.
It would then be up to the mayors, in negotiation with the boroughs, to distribute this revenue across local government’s various responsibilities across their city. And in the medium-term?
Well, big IF … but the higher growth in the three cities that would be “likely”, if this fiscal devolution were accompanied by other policy changes, would then translate into higher local tax revenues for the mayors – with, by 2038, Greater Manchester raising between £49 million and £230 million, and the West Midlands between £40 million and £187 million beyond their current level of funding.
That was from p.5 of what is a 64-page report, so there’s a very great deal more explanation and explication. But the key, and hopefully obvious, point of this blog is to enable you, if it crops up in conversation, to disabuse anyone of the notion that the Resolution Foundation’s contribution to this debate is just ‘Trailblazer deals’ writ large.
Our view is that the current local government finance system is bust. Business rates penalise high street shops, the council tax is regressive with hopelessly outdated valuations, and councils spend too much energy chasing central government largesse through competitive funding pots. Democratically elected councils rely on a begging bowl and lack basic revenue raising powers that are commonplace internationally. We will be saying more on this as the General Election approaches…
Chris Game is an INLOGOV Associate, and Visiting Professor at Kwansei Gakuin University, Osaka, Japan. He is joint-author (with Professor David Wilson) of the successive editions of Local Government in the United Kingdom, and a regular columnist for The Birmingham Post.
Jason Lowther is Director of the Institute for Local Government Studies (INLOGOV) and Head of the Department of Public Administration and Policy at the University of Birmingham.
In English local government, the issuance of a section 114 notice is often perceived as a dire financial omen, signalling a council’s descent into insolvency. While financial stability is undoubtedly a cornerstone of effective governance, it is crucial to recognize that section 114 notices reveal more than just a precarious financial situation. They serve as a beacon, illuminating underlying issues that extend beyond the confines of spreadsheets and budget projections. Either way, the government’s Department of Levelling Up, Housing and Communities (DeLUHC) tends to respond with intervention and the imposition of commissioners to direct the authorities concerned.
The poor financial position of many authorities may be the direct result of years of underfunding by central government and we can expect many more councils to serve section 114 notices, but it would be improvident to assume there are no further underlying causes.
Nottingham City Council’s recent declaration of a section 114 is a clear indication that some authorities are simply folding due to a broken funding formula, but this is not the sole cause of failure in all cases. When looking at other authorities, alternative underlying causes are present. Further examples include:
The BBC Panorama programme highlighted how Thurrock Council was rendered bankrupt following a series failed investments in a solar farm, highlighting disastrous procurement practices, lack of accountability, poor governance, and inappropriate delegations to officers.
Birmingham City Council’s problems did not emerge overnight and were a culmination of challenges created by a historic equal pay-claim and botched procurement a new IT system, Oracle. Underpinning this was poor financial planning, governance, accountability, and a failing internal culture.
Woking Borough Council racked up a deficit of £1.2bn following the building and acquisition of major property portfolio. Against these investments, the authority had acquired loans from the Public Works Loan Board and other local authorities, accumulating debts that it could not service.
Liverpool City Council’s woes are not confined to finances. Government commissioners were appointed to Liverpool City Council in June 2021 following a damning Best Value inspection by Max Caller CBE on matters pertaining to poor leadership, unacceptable performance, poor resource management and a failure to engage with citizens.
Government appointed commissioners tasked with overseeing councils in financial distress must adopt a holistic approach, venturing beyond the immediate financial crisis to uncover the root causes of the council’s predicament. This requires a comprehensive examination of the council’s structural framework, external environment, performance management and internal governance practices.
Structural Challenges: A Precarious Foundation
English local governments face a unique set of structural challenges that can hinder financial stability. The relentless rise in service demands, coupled with a funding system that often fails to keep pace, places immense pressure on council budgets. This mismatch between resources and responsibilities can lead to a cycle of overspending and financial strain.
Commissioners must delve into the council’s structural framework, assessing whether the current allocation of resources aligns with the council’s responsibilities. They must also evaluate the effectiveness of the council’s revenue-generating strategies, ensuring they are maximizing their income potential without overburdening residents.
External Factors: Navigating Turbulent Waters
Local governments are not immune to the vicissitudes of the external environment. Economic downturns, shifts in government policies, and natural disasters can all have a profound impact on a council’s finances. Commissioners must assess the council’s vulnerability to these external factors, evaluating its risk management strategies and identifying potential contingencies.
Internal Governance: Cultivating a Culture of Accountability
While structural challenges and external factors can undoubtedly contribute to financial distress, internal governance failures often play a pivotal role. Poor financial planning, inadequate risk assessment, and a lack of transparency and accountability can erode a council’s financial stability.
Commissioners must scrutinize the council’s internal governance practices, ensuring that financial decision-making is sound, risks are appropriately assessed, and accountability is firmly established. They must also foster a culture of transparency, empowering residents to hold their council accountable for its financial stewardship.
A Holistic Approach: Beyond the Financial Storm
In the aftermath of a section 114 notice, commissioners must resist the temptation to focus solely on immediate financial stabilization measures. Instead, they must adopt a holistic approach, addressing the underlying structural, external, and governance issues that contributed to the council’s financial crisis.
By adopting a comprehensive view, commissioners can guide councils towards long-term financial stability, enabling them to deliver essential services to their communities without succumbing to the pressures of insolvency. Only by addressing the root causes of financial distress can we ensure that section 114 notices no longer serve as mere harbingers of financial doom, but rather as catalysts for positive transformation.
Speculating on further interventions
Speculation is precisely that. Estimates vary widely in terms of how many further councils are anticipated declare section 114 notices, but a clear signal of further failures exists:
The Institute of Government has estimated that 10% of councils are at risk over the next two years.
The Special Interest Group of Municipal Authorities (SIGOMA), a representative body for 47 municipal authorities, published a survey in June 2023 which showed that five of their members were at risk.
A Local Government Association Survey conducted in November 2023 revealed that almost one in five local authority leaders and chief executives believe that their authority may have to declare a section 114 notice.
Whilst estimates vary, there is evidence that further authorities will become vulnerable to government intervention via the imposition of DELUHP appointed commissioners. This raises a final question; can the predicted number of authorities realistically be serviced?
INLOGOV Blog 