Public performance and delivery

Equipping local governments to deliver national and local priorities

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Jason Lowther

Today we launched our latest report, Equipping local government to deliver national and local priorities. Local government is critical to the delivery of the new government’s five key missions, and to improving life across the country. We argue that, once a series of critical reforms are in place, government should have confidence to equip local authorities with more power and (when public finances allow) prioritise additional resources there, enabling local and national priorities to be delivered. But critical reforms are needed in financial management, audit and performance management, and in community power and participation.

The new government inherited many challenges. Council budgets per person in England have been cut by 18% in real terms since 2010. Councils are hitting financial crises: twelve have issued section 114 notices in the last six years, compared with zero in the previous 17 years. Representative institutions at all levels of government are suffering from declining legitimacy and increasing polarisation. Local government plays a vital role in increasing democratic relationships and trust.

But councils’ wide remit, local knowledge, democratic accountability, public service ethos, and key roles in working with partners and shaping local places make them critical to the delivery of all five of the government’s key missions. Local governments are best placed to operationalise solutions to interconnected problems, for example, improving public transport and encouraging more cycling and walking helps meet net zero targets. It can also deliver health benefits, reducing the burden on the NHS, as well as increasing productivity by giving businesses access to a wider and healthier workforce.

Action is required to ensure that councils are fit for purpose to make the type of contribution that central government requires of them. Underlying this is a lack of confidence in local government on the part of ministers and civil servants.  We have identified three areas in which the government must be confident if it is to equip the local level with more power: financial sustainability, performance standards, and community power and participation. 

Policy recommendations

Financial arrangements

  1. Provide multi-year funding.
  2. End competitive bidding and deliver a “single funding pot” for each council/ local area that has been allocated fairly and sensitively to the needs and assets of the community.
  3. Abolish council tax capping.


Audit and performance management

  1. Strengthen the evaluation of councils’ performance management.
  2. Make OFLOG independent and extend its remit and approach.
  3. Reintroduce effective management and support of council external audit by independent bodies.


Community power and participation

  1. Strengthen the role of councillors as facilitators and catalysts of community-driven change.
  2. Embed participatory governance to ensure lived experience and marginalised voices drive policy and service delivery.
  3. Develop public-commons partnerships and community-wealth building to support community-driven sustainable economies.

As the Layfield Commission concluded 50 years ago, local government funding should promote responsible and accountable government. Beyond welcome recognition of acute financial challenges and commitment to multi-year funding settlements, there is a pressing need for additional immediate and longer-term action to improve Councils’ financial position and strengthen local accountability.

Local authorities have different needs for funding, depending for example on levels of population and its composition, deprivation, and spatial factors. Central and local government should develop updated funding formulae and funding models which are as simple as practicable whilst capturing the key elements of local need, and as transparent as practical in operation.  There are many reports researching available options for fairer funding, approaches to fiscal devolution, and local government funding options. 

Local audit, performance regimes and regulation each have a part to play. Both a parliamentary select committee and the Redmond Review into the Oversight of Local Government have sought to investigate the failings in local government audit.  The latter in 2020 critiqued market driven audits, stating that the new audit arrangements have undermined accountability and financial management. 

The adoption of the Redmond Review’s proposal for an Office for Local Audit Regulation would provide oversight on procurement, management, and regulation of external audits of local authorities. The government could extend the oversight of local government performance management processes while avoiding the creation of an overly powerful national regulator, by adopting key recommendations on the future arrangements of OFLOG (the Office for Local Government).

Proximity means that local government can play a crucial role in improving relationships between government and citizens. By creating conditions to mobilise the diverse expertise and resources of communities, local government can ensure that public policies and funding are informed by the assets, priorities and needs of local people and places.  There are already many examples where local government has made progress with innovations such as citizens’ panels and juries, the delegation of power to the hyper-local level and in building inclusive economies. 

We have over thirty years’ worth of research on deliberative democracy, social innovation, and co-production evidencing the value of collaboration with diverse communities and stakeholders. Participatory governance is less about finding perfect solutions and more about transforming organisations to engage with communities in processes of co-producing mutual understanding, shared solutions, and a sense of collective ownership.  

Our work on the 21st Century Councillor can help with enabling the role of councillors not just as democratic representatives but also as facilitators and boundary spanners between institutions, communities, civil society and local businesses.

Community-wealth building, pioneered in Preston and several London boroughs, can help strengthen the local economy with insourcing, linking public procurement to local cooperatives and social enterprises. These novel forms of governance can be formalised through Public-Commons Partnerships.

Equipping local government to deliver national and local priorities will leave a long-lasting legacy of a well-resourced, effective, accountable, and engaged local government.

The full report is available here

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The report was edited by Jason Lowther and Philip Swann, with particular thanks to the following contributors (alphabetically by last name): Dr Koen Bartels, Dr Sonia Bussu, Prof Nicole Curato, Dr Timea Nochta and Dr Philip Whiteman. With thanks to other colleagues and associates in INLOGOV.

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Why do philanthropic foundations engage with city governments?

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Dr Ruth Puttick

The fact that governments face an array of challenges is a well-rehearsed argument. City governments across the globe are tackling a myriad of social, economic and environmental issues, from trying to reduce homelessness, improving health and wellbeing, or increasing educational attainment.  In parallel, philanthropic foundations’ accumulated wealth and knowledge means they are increasingly welcomed as a government partner in addressing social needs. So why do philanthropic foundations engage with city governments?

The UK Association of Charitable Foundations defines philanthropic foundations as “charities with private, independent, sustainable income that supports individuals and/or organisations” (Pharoah and Walker, 2019, p. 1). In 2015, there were over 10,000 charitable foundations based in the UK and some of these are engaging with city governments.

In the U.S. context, philanthropic foundations have a long history of interacting with the government (Zunz, 2012) They have traditionally funded physical structures like libraries and opera houses, and in recent years, foundations have increasingly working directly with governments to tackle issues as diverse as climate change (Madénian and Van Nest, 2023), gun control, and poverty reduction (Barber, 2014; Nijman, 2009; Moir et al., 2014). Yet, there has been little exploration of this phenomenon in the English context.

Based upon the case study analysis of three contrasting English cities, Bristol, Manchester, and Newcastle, I drew upon qualitative interviews and policy reports to understand the interconnections between foundations and city governments.

Why do city governments and foundations collaborate

Philanthropic foundations can be a capacity-building partner of city government, providing direct funding and non-financial resources to help city governments solve problems.  Philanthropic foundations provide city governments with direct funding and non-financial resources, including data, research, events, and other outputs, such as toolkits.

Foundations are motivated to improve public services, develop new approaches to problem-solving, advocate on policy issues, and fill funding gaps left by austerity. Foundations select city governments based on personal rapport and perceived ease of working.

City governments are motivated to engage with foundations to access resources, for foundations to help amplify the voice of city governments, and because foundations are perceived as less bureaucratic and more trustworthy funders.

Barriers to city government and foundation collaborations

Foundation engagement with city governments is inconsistent. This study found that certain city governments (in this case, Manchester and Bristol) had more partnerships with foundations. The reason is that foundations often will not work with city governments when the city government’s priorities are unclear, if they are hard to engage, or when there is a perceived slow pace of change in city hall.

On the part of city governments, a scarcity of resources can prevent them from seeking foundation resources. With the impacts of austerity still lingering, it may have been surmised that austerity could prompt cities to seek foundation support, instead, this study has found that a lack of internal capacity can prevent the city government from seeking foundation involvement.

Implications for policy and practice

City governments interacting with foundations in England is a relatively nascent and under-explored phenomenon. As well as few academic studies, there is often an opaqueness in the nature of these collaborations. A lack of transparency can hinder scrutiny, which is problematic if city governments and their partners are to be held to account. Going forward, a key facet of city government engagement with foundations should be a commitment to transparency in the nature of the collaboration and an openness to sharing evidence of the impacts of the interactions on the outcomes that the foundation and city governments are trying to achieve.

Areas for future research

As a relatively underexplored topic, more research could usefully explore foundation engagement with city governments across England on a larger scale, particularly to understand the implications for accountability. Futuremore, future research could usefully explore whether philanthropic foundations prioritise collaborating with city governments over different types of organisations, such as charities, and if so, whether this is because city governments enable potentially larger degrees of policy influence than more “marginal” political institutions, such as NGOs or community groups.

To find out more about the research, please contact Dr Ruth Puttick, [email protected]

The full article is available here.

Picture credit: https://www.jolietymca.org/blog/the-significance-and-joy-of-giving/


Dr Ruth Puttick runs a research consultancy and is a Senior Research Fellow at the Institute for Innovation and Public Purpose (IIPP) at University College London. She has over 15 years of practical research experience in the public and private sectors advising on public sector reform, innovation and impact. She served as a Senior Policy Advisor in the UK Government’s Open Innovation Team, and before that, she worked at Tony Blair Associates, a global management consultancy, helping establish the policy and research team in the government advisory practice. Prior to that, she spent six years at Nesta, the UK’s innovation agency. Ruth is on X.com @rputtick and can be contacted at www.ruthputtick.com

Empowering Communities: How Councils Can Boost Wellbeing Amid Austerity

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Alice Munson

This is the first of two blogs resulting from this year’s INLOGOV undergraduate summer intern project, which examined how councils can boost wellbeing amid austerity. This first article summarises some of the key literature, the second article (next week) will explore practice examples.

In a period characterised by fiscal austerity, local governments confront major hurdles in providing basic services while working with tight resources. Spending cuts have far-reaching consequences for communities, frequently having a negative impact on the public’s well-being and standard of living. In response to these issues, community initiatives have arisen as viable mechanisms for minimising the harmful effects of austerity policies whilst also promoting community belonging in neighbourhoods. This paper will begin with a literature review surrounding the topic, examining studies that have demonstrated the impact of community initiatives.

This article starts with a literature review examining the potential for community initiatives to achieve wellbeing outcomes, emphasising how councils may successfully collaborate with communities to reduce the negative effects of budget cuts in an age of permanent austerity. Since the 2008 global financial crisis, several nations have undertaken austerity measures that have considerably impacted local government finances and services (Lowndes and McCaughie, 2013). This ‘age of austerity’ has caused councils to reassess their approach to providing public services and ensuring community well-being (Hastings et al., 2015). In response to the spending, councils can and, on occasion, have turned to community initiatives as a possible way to preserve or improve wellness within the community.

Research consistently demonstrates that community-led initiatives can effectively address service gaps resulting from austerity measures while enhancing local decision-making practices and overall community well-being. Crisp et al. (2016) believe that community-led alternatives can assist in addressing service gaps caused by funding reduction. Their research of community-based organisations in the UK revealed that these projects might assist in areas such as employment, training and social care. Evans (2008) and Fletcher-Etherington (2010) also draw attention to the advantages of community-led initiatives, particularly highlighting enhanced decision-making procedures. Building on this concept, Fung and Wright (2003) provide further empirical support through their examination of participatory governance cases. Their research demonstrates that including the community in the decision-making process can result in more successful and fair policy results, which are more likely to improve the community’s general well-being.

Community initiatives are vital for improving public health outcomes, with research consistently showing their positive impact on physical and mental well-being. There is a strong link between community initiatives, social capital, and health outcomes, as revealed in various studies. For example, Kawachi and Berkman’s (2000) research provides compelling evidence that social connections, cultivated through community efforts, are associated with better physical and mental health. This link between community involvement and health is further explored in specific contexts, such as mental health initiatives. Knifton et al. (2010) investigated community-based mental health programs in Scotland and found that they have the potential to reduce stigma, increase social support, and improve access to mental health services. Moreover, South (2015) offers a comprehensive guide to community-centred approaches to health and well-being, emphasising the crucial role of local government and the NHS in supporting these initiatives. South’s research underscores the importance of integrating community-led approaches into broader health and social care strategies, highlighting how such integration can lead to more effective and sustainable health outcomes for the community. Strong partnerships between the council and the community, along with insights from studies like Kawachi and Berkman (2000) and Knifton et al. (2010), are crucial in this process. These studies underscore the value of community-centred approaches in improving public health and suggest that policymakers and health professionals should prioritise integrating community initiatives into mainstream health and social care strategies to promote positive well-being outcomes.

Community initiatives provide significant economic and environmental benefits, offering viable solutions for councils to improve well-being within financial constraints. Imbroscio (2013) has found in many cases that locally-driven community initiatives can create more sustainable and equitable economic outcomes compared to top-down approaches. Krasny and Tidball (2009) examined community-based environmental initiatives. They discovered that these programs not only benefited local ecosystems but also promoted social learning and community resilience. These findings are consistent with a growing global trend in communities engaging in environmental stewardship (Bennett, 2018). Examples include community-based conservation and locally managed marine areas, which have emerged in sectors such as fisheries, forestry, and water management (Berkes, 2004). This shift recognises that community initiatives can address environmental concerns while also building social connections and, therefore, well-being.

Asset-Based Community Development (ABCD) has emerged as a transformative approach to community well-being initiatives, emphasising the inherent strengths and resources within communities. McKnight and Kretzmann (2005), pioneers of the ABCD approach, argue that sustainable community development must start with recognising the capacities, skills, and assets of local residents and their associations. Their work emphasises the importance of mapping community assets as a starting point for development initiatives. The methodology is driven by community members and focuses on harnessing the inherent strengths and assets of individuals, associations, and communities to promote social change (Mathie, 2003). ABCD represents a shift from traditional deficit-based approaches to community development. Instead of focusing on needs and shortcomings, ABCD emphasises the existing strengths and resources within a community. This approach is based on the principle that every community, regardless of its challenges, possesses a wealth of assets that can be mobilised to address local issues and enhance overall well-being. The effectiveness of ABCD relies on several key mechanisms. Harrison (2019) highlights the importance of building strong, trusting relationships within the community as a fundamental aspect of this approach. These relationships form the foundation for cooperation and collective action, which are essential for the success of community initiatives. Additionally, Harrison emphasises the role of reciprocity and accountability among community members in sustaining engagement and ensuring that initiatives are both community-driven and beneficial. While ABCD is fundamentally community-driven, the role of local authorities in supporting and facilitating this approach is crucial for its success.

Local authorities play a pivotal role in nurturing and sustaining ABCD initiatives through strategic support and facilitation. Forrester et al. (2018) identify several key strategies local authorities can employ. These include participating in appreciative inquiry, which is asking positive, strength-based questions to identify and build on community successes. Local authorities can also build social capital by developing networks of connections, which are critical for community resilience and well-being. Furthermore, sponsoring local economic initiatives can assist in establishing long-term economic prospects while improving general community well-being. ABCD emphasises empowerment. According to García (2020), empowering people in the community to identify their own assets and skills can help local authorities to establish long-term community initiatives. This empowerment boosts self-efficacy and gives community members a stronger sense of ownership and duty. ABCD’s success depends greatly on a supportive and trustworthy atmosphere. Harrison et al. (2019) observe that when community members feel supported and trusted, they are more likely to actively participate and contribute to the success of community efforts. ABCD offers a promising approach to community development by focusing on the positive aspects of communities rather than their deficiencies. This strengths-based approach can lead to more sustainable and impactful outcomes. However, it is important to recognise that the success of the ABCD relies heavily on the presence of a supportive environment and the active involvement of local authorities. Local authorities must adopt a facilitative role, providing necessary support and resources and allowing community members to lead (Forrester et al., 2018). ABCD represents a paradigm shift in community development, offering a promising framework for sustainable well-being outcomes when effectively supported by local authorities and embraced by community members.

Alice has recently graduated from the University of Birmingham with a first class degree in Policy, Politics and Economics. She was awarded the Jane Slowey bursary in her final year for her research on the Homes for Ukraine scheme. Alice is currently seeking further opportunities and can be contacted at [email protected]

References

Berkes, F. (2004) Rethinking community-based conservation. Conservation Biology, 18(3), 621–630. doi:10.1111/j.1523-1739.2004.

Forrester, G., Kurth, J., Vincent, P., & Oliver, M. (2018) Schools as community assets: an exploration of the merits of an Asset-Based Community Development (ABCD) approach. Educational Review, 72(4), 443–458. doi:10.1080/00131911.2018.1529655.

Fung, A. and Wright, E.O. (2003) Deepening democracy: Institutional innovations in empowered participatory governance. Verso.

García, I. (2020) “Chapter 4 Asset-Based Community Development (ABCD): core principles”. In Research Handbook on Community Development. Cheltenham, UK: Edward Elgar Publishing. doi:10.4337/9781788118477.00010.

Harrison, R., Blickem, C., Lamb, J., Kirk, S., and Vassilev, I. (2019) ‘Asset-Based Community Development: Narratives, Practice, and Conditions of Possibility—A Qualitative Study With Community Practitioners’ Sage Open, 9(1). doi:10.1177/2158244018823081.

Hastings, A., Bailey, N., Gannon, M., Besemer, K., and Bramley, G. (2015) ‘Coping with the Cuts? The Management of the Worst Financial Settlement in Living Memory’. Local Government Studies, 41(4), 601–621. doi:10.1080/03003930.2015.1036987.

Henderson, C., Evans-Lacko, S. and Thornicroft, G. (2013) ‘Mental Illness Stigma, Help Seeking, and Public Health Programs’. American Journal of Public Health, 103(5), 777-780. doi:10.2105/AJPH.2012.301056.

Imbroscio, D. (2013) ‘From Redistribution to Ownership: Toward an Alternative Urban Policy for America’s Cities’. Urban Affairs Review, 49(6), 787-820. doi:10.1177/1078087413495362.

Kawachi, I. and Berkman, L. (2000) ‘Social cohesion, social capital, and health’. Social epidemiology, 174(7), 290-319.

Knifton, L., Gervais, M., Newbigging, K., Mirza, N., Quinn, N., Wilson, N., and Hunkins-Hutchison, E. (2010) ‘Community conversation: addressing mental health stigma with ethnic minority communities’. Social psychiatry and psychiatric epidemiology, 45, 497-504.

Kretzmann, J. P. and McKnight, J. (2005) Discovering community power: A guide to mobilising local assets and your organisation’s capacity. Evanston, IL: Asset-Based Community Development Institute, School of Education and Social Policy, Northwestern University.

Local Government Association (2023) Working with housing association ‘Bolton at Home’ to reduce unemployment and deprivation – Bolton Council. Available at: https://www.local.gov.uk/case-studies/working-housing-association-bolton-home-reduce-unemployment-and-deprivation-bolton (Accessed: 20 July 2024).

Lowndes, V. and McCaughie, K. (2013) ‘Weathering the perfect storm? Austerity and institutional resilience in local government’. Policy and Politics, 41(4), 533-549.

Mind (2024) 5 ways to wellbeing. Available at: https://www.mind.org.uk/workplace/mental-health-at-work/five-ways-to-wellbeing/ (Accessed: 21 July 2024).

New Local (2024) Re-occupying Union Street: How we built back our neighbourhood. Available at: https://www.newlocal.org.uk/case-studies/re-occupying-union-street/ (Accessed 13 June 2024).

NHS Providers (2024) Co-production and engagement with communities. Available at: https://nhsproviders.org/media/698572/co-production-health-ineq-1e.pdf (Accessed: 25 July 2024).

Nudge (2024) Local love, local jobs, local spend, local change. Available at: https://www.nudge.community (Accessed 12 June 2024).

South, J. (2015) A guide to community-centred approaches for health and wellbeing. Project Report. Public Health England / NHS England.

Stirchley Baths (2024) https://stirchleybaths.org (Accessed: 22 July 2024).

Trup, N., Carrington, D. and Wyler, S (2019) Community hubs Understanding survival and success, Available at: https://www.powertochange.org.uk/wp-content/uploads/2019/07/Hubs-Report-FINAL-120719.pdf (Accessed: 24 July 2024).

We have to talk about OFLOG

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Jason Lowther

It’s been an exciting month in government, nationally and locally, since the General Election on 4th July.  As the new Labour administration finds its feet, somewhere on Ministers’ “to do” list will be local government performance and (the department formerly known as) DLUHC’s attempts to improve this through the establishment of OFLOG, the Office for Local Government.

The election marked the exact anniversary of Michael Gove’s statement setting up OFLOG through the policy document, Understanding and supporting local government performance.  Its remit was “to provide authoritative and accessible data and analysis about the performance of local government and support its improvement”. 

Gove was at pains to stress “this is not about recreating the Audit Commission”.  With that point at least, I agree.  Whereas the Audit Commission was fiercely independent, often willing to criticise government policy where it was a factor in poor performance, OFLOG was established as an office of the department within the DLUHC department itself.  Whereas the Audit Commission developed comprehensive performance measures which were rigorously audited to assure consistency, OFLOG picked 27 PIs and published these.  Whereas the Audit Commission provided detailed national studies to inform best practice in local services, sometimes leading to wholesale systems change such as around youth justice services, with the local implementation of recommendations then supported by local specialist value for money auditors, the nascent OFLOG offered to “continue a programme of webinars to share best practice”.

An early product of OFLOG, in July 2023, was its “Local Authority Data Explorer”, which now brings together PIs on waste management, planning, adult social care, roads, and corporate and financial issues.  For each service, users can select three comparison councils to produce scatter charts like Figure 1, which compares my local council’s waste management with that of three other big cities.  This led to some rather uninformed press commentary and a response from the LGA. One may also say this is perhaps not the most compelling presentation of data in the world, arguably significantly less clear or flexible than the LGA’s excellent Inform tool which has been freely available for several years and includes thousands of published metrics.  

Caution should be applied to OFLOG’s position within a ministerial setting and the potential for politicians to be selective in how they use data for judging local authorities that are not of their political persuasion.  Whilst some may argue that the former Audit Commission may have been too powerful, it did provide a greater degree of transparency and objectivity at interpreting performance data.
 
Figure 1:  Waste management



As my colleague in Inlogov, Dr Philip Whiteman, has recently argued, the new government should ensure that OFLOG is independent of government with a remit to focus on:

  • Working with the sector to identify councils at risk of failure to ensure that support can be provided from within the sector, minimising the need for government intervention.
  • Collecting, analysing, and reporting data to enable individual councils, groups of councils and the sector nationally to make progress with shared priorities agreed with government.
  • Developing intelligence from on-going engagement with councils.
  • Supporting improvement in local services and councils’ contribution to national outcomes through researching, synthesising, and disseminating good practice.
  • Working with academic institutions such as Inlogov to incorporate key lessons from existing and future research.

We can be confident that local government performance overall is strong, and sector-led improvement has demonstrated our collective commitment to continuous improvement.  But with so much of the new government’s ambitious “Missions” depending on highly effective local government, we need to take a fresh look at how OFLOG can be further developed to identify and propagate good practice across the sector.

Jason is Director of the Institute of Local Government Studies (INLOGOV) at the University of Birmingham and was employed by the Audit Commission from 1994 to 2004.  This article was first published in the August 2024 LARIA Newsletter. Email [email protected]

INLOGOV’s new report, Equipping Local Government to Deliver National and Local Priorities, is available here.

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Inflation and Local Authority Budgets

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Andrew Coulson

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.

[1] Local Government Association, https://www.local.gov.uk/about/campaigns/save-local-services/save-local-services-council-pressures-explained 2024

[2] https://www.countycouncilsnetwork.org.uk/councils-in-significantly-worse-financial-position-after-the-autumn-statement-with-seven-in-ten-now-unsure-if-they-can-balance-their-budget-next-year/

[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 

[6] David Milliken and William Schomberg,  https://www.reuters.com/world/uk/imf-cuts-uk-growth-outlook-2025-after-stronger-past-performance-2024-01-30/

[7] “Rayner floats three year pay deal”. Municipal Journal, 14 Feb. 2024

OFLOG: How not to correct a mistake

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Andrew Coulson

The decision to create a new public body to inspect and regulate local authorities is a recognition that it was a major mistake, made by David Cameron soon after he became Prime Minister in 2010, to abolish the Audit Commission. At the time, many of us thought that the government would come to regret it. It is much easier to reform an existing body that to create a new one.

The Office of Local Government will be a Departmental body within Michael Gove’s Department of Levelling Up, Housing and Local Government’.[1]  It will not, as was Audit Commission, be an independent public body. That leaves it wide open to the criticism that it is an extension of the process of central government bossing local government. The point has already been made in an influential report from the Institute of Government.[2]

OFLOG  has already published what it calls draft “metrics” (or performance indicators) for some of the main services.[3] The Audit Commission began identifying performance indicators soon after it was created in 1983. It published its first comprehensive set of indicators for local government in 1992. In 2001 it instituted a process of Comprehensive Performance Assessments for every council, eventually based on more than 1,000 indicators. It used these, along with some qualitative assessments which attempted to assess a council’s ability to plan in advance and respond to crises, to give each council a rating on a scale of 1-5. In 2007 this was simplified, with just 214 indicators and a streamlined assessment where seven separate inspectorates worked together.[4]

This experience showed that there were fundamental problems. Performance indicators give providers very powerful incentives to change their behaviour. But they also give them powerful incentives to game the services, often by increasing spending on aspects that are measured and lowering it for those that are not.

Here are some high-profile examples:

The Police. Former senior police officer Rodger Patrick, in a pathbreaking PhD thesis at the University of Birmingham[5], showed how the West Midlands and other Police Forces gamed the statistics used to assess them: not recording many crimes, increasing clear-up rates by giving favours to criminals who confess (who might or might not have committed the crimes), moving police to parts of the city where the crimes committed can be dealt with relatively easily, and even creating what they claimed was evidence. Crimes were reclassified to reduce the apparent number of crimes in targeted areas.

Hospitals.  Bevan and Hood used data from the National Audit Office to show that an unexpectedly large number of patients arriving in in accident and emergency departments were assessed just before they had waited four hours – thereby not contributing adversely to the per cent who waited longer. One way of doing this was not to record those waiting outside in ambulances or inside on trolleys. Another was to create Informal registers of people on long-term waiting lists, not putting many of them onto the official lists.[6]

Schools.  OFSTED ranks schools as Outstanding, Good, Requires Improvement, and Inadequate. A poor score on any part of the assessment will prevent a school from being recorded as Outstanding. This became very public after a primary school headteacher took her own life when her school was downgraded for failing in its child protection arrangements while scoring highly in nearly all the other parts of its assessment. This case has led to increased awareness that a single judgement on a complex organisation such as a school can often be unfair or misleading when a school is strong in some aspects but less so in others.

These are not the only kind of problem. Another issue is that what is achievable will often depend on the history and geography of a place. Thus an area with many rail stations, or with very wide roads where bus lanes can be created, will find it easier to achieve targets for public transport. Or a city which is a regional centre will have a history of supporting local arts organisations, more so than a district which is not.

The third problem is that there is often duplication with other inspectorates: the Care Quality Commission, Ofsted, the Planning Inspectorate, Police and Crime Commissioners, and many others. Should OFLOT trust these, and not duplicate their work? Or should it follow the practice of the Audit Commission in its later years and work jointly with them, with associated extra costs and hassle?

We illustrate the issues with longer comments on one service, planning, where OFLOG has already produced detailed proposals.[7] I wrote about this in 2007, and the proposals I discussed then are almost identical to those proposed now.[8]  These will judge the effectiveness of planning in an area by the number of planning applications dealt within a target number of days, and the percent of applications overturned after appeals. This does not recognise that the most important work is done well before an application is formally submitted, when an applicant or agent starts talking to officials in the planning department. This may well throw up problems with transport or access; lack of proposals for green space, community facilities or shops; environmental issues about trees or wildlife; and disagreements about densities. The Council will want as many units as possible on a site, and for an application to meet its requirements for social and affordable housing. Moreover, drawings are often inaccurate, computerised images misleading, surveys loaded to favour an application, and designs poor. Good quality advice can make a big difference. But if an application is submitted before these matters have been properly researched, or do not meet the council’s prescriptions (especially for affordable housing), it has to decide whether or not to take it to its committee recommending rejection, or to wait for a more comprehensive submission to arrive. The easiest way to meet these targets is for councillors to approve every planning application uncritically.[9] Developers frequently try to renegotiate targets for social and affordable housing units, on the basis that they cannot afford them. But with only very limited other funding for this type of housing, they are essential almost everywhere. This kind of stand-off will no doubt continue unless and until land values decline to the point where developers can both meet the targets and make money.

In short, the OFLOG draft targets for the planning function are a missed opportunity. What is needed is powers to refuse planning applications that do not include relevant evidence or meet the prescriptions set out in a council’s local plan without wasting the time of the Planning Committee. And targets which explicitly recognise the value of design and quality, and the need for social facilities and open space.

These issues are not confined to planning. At a time of austerity which especially affects the funding of local government, there will inevitably be many situations where councils are struggling to deliver services of the quality that they would like. In such situations, inspectors do not contribute much by pointing this out. Rather they need to act as advisors, or expert external friends, who assist councils making the most of what they have.

Andrew Coulson was an INLOGOV staff member for 25 years. For 14 of those years he was also a Birmingham City Councillor where for a time he was a member of the Development Control Committee as well as the Cabinet Member for Regeneration.

[1] Department for Levelling Up, Housing, and Communities and Office for Local Government Understanding and supporting local government performance. Policy Paper, July 2023

[2] Rhys Clyne and Stuart Hoddinott   What does the Office for Local Government need to succeed? Institute for Government, July 3023  https://www.instituteforgovernment.org.uk/sites/default/files/2023-07/What-does-Oflog-need-to-succeed.pdf

[3] Office for Local Government Next steps for OFLOG and draft metrics, October 2023 https://assets.publishing.service.gov.uk/media/653a74cf80884d0013f71be1/Office_for_Local_Government_-_next_steps_and_new_draft_metrics.pdf

[4] Andrew Coulson “Targets and Terror: Government by Performance Indicators. Local Government Studies Vol.35, No.2 pp.271-81, 2009

[5] For a summary, see Rodger Patrick,“A web of deceit: Police Crime Statistics for England and Wales”, in  John Eterno, Arvind Verma and Eli Silverman (eds) How Countries Count Crime: An Exercise in Police Discretion Taylor and Francis, 2022, pp.170-219

[6] Bevan, G and Hood, C “What’s Measured in What Matters: Targets and Gaming in the English Public Health Care System”. Public Administration Vol.84, No.3, pp.517-38

[7] Office for Local Government Next steps for OFLOG and draft metrics, October 2023, pp.5-7

[8] “Don’t Forget the Politics in Planning”. Local Economy Vol.22 No.3, pp.223-6

[9] “Targets and Terror: Government by Performance Indicators.” Local Government Studies Vol.35 No.2, 2009, p.279