community

Openness of council finances is key for a functioning democracy

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Matty Edwards, Research For Action

Local authorities are under immense pressure to find savings whenever they can. After more than a decade of austerity, the collective deficit in the sector is expected to reach £9.3bn by next financial year. Local authority finances have also become increasingly speculative, as budgets are prepared on the basis of unpredictable grant allocations and single-year financial settlements, sometimes without audited accounts. Pressures to find new sources of income through commercial investments and private sector partnerships have also increased the complexity of council funding.

This creates a challenge: scrutiny of local government finance is more important than ever. Yet even with the best intentions, local authorities struggle to produce open and accessible financial information. 

In a research collaboration between Research for Action and the University of Sussex, we set out to explore how financial information — such as council budgets and accounts — could be made more accessible to the public. Our research found that even experienced researchers, accountants and councillors struggle to find and understand local authority financial information.

We spoke to 26 people from the local government sector over three months this spring to examine barriers to making local authority financial information accessible to councillors and the wider public. Interviewees included councillors from a range of authorities, council officers, academics, accountants, journalists and key sector bodies like CIPFA. 

Our key findings were a lack of standard reporting requirements, strained council capacity after years of austerity and a fragmented data landscape with no standard formats for publishing financial information. These barriers make it difficult to understand a single council’s finances and make comparisons across the sector, hindering effective scrutiny by councillors and journalists, and democratic participation by the public. 

Some interviewees argued that accessibility was less of a priority in the face of a mounting crisis in local authority finances, but in our view, openness is not a luxury. It is key to effective local democracy. 

How to improve open up council finances

Based on our findings, we set out a series of recommendations for greater transparency and openness. 

The government should introduce new data standards for local government to improve accessibility, potentially via a Local Government Finance Act. This should include making financial information machine readable where possible and using accessible file formats. An easy win in this area would be to create a single repository for all local government financial information.

Local audit reforms are also an important piece of the puzzle. The new Local Audit Office (LAO) should be made responsible for local government financial data, including making it publicly available with tools to enable comparison and oversight. A more ambitious idea for the new LAO could be to create a traffic light warning system for the financial health of local authorities based on indicators that are timely and easy to understand, taking inspiration from Japan. 

Council accounts were highlighted as a particularly technical and opaque part of local government finance. That’s why councils should be mandated to attach a narrative report to their annual accounts, as previously recommended by the Redmond Review.

We think that the Local Government Data Explorer, recently scrapped, should be replaced with a data visualisation that is genuinely accessible and interactive, perhaps taking inspiration from a dashboard created by academics in Ireland. There should also be funding for local open data platforms, because there have been isolated examples of successes, such as the Data Mill North. 

The other part of the problem is that councillors often don’t have the knowledge and skills to properly scrutinise the complicated world of local government finance. That’s why we’re calling for greater support and training for councillors to enable better financial scrutiny, as well as public resources to improve literacy around local government.

While the sector faces great upheaval in the next few years through local government reorganisation and English Devolution, these reforms also present an opportunity to improve transparency – whether that’s at unitary or combined authority level. 

We believe that greater openness will ultimately facilitate better public participation and healthier local democracies.

Matty Edwards is a freelance journalist based in Bristol who also works for Research For Action, a cooperative team of researchers that in recent years has investigated PFI, LOBO loans, the local audit crisis and scrutiny in local government.

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

Equipping local government to deliver_WEB_singlesDownload

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.

Rewiring local government for citizen engagement_WEBDownload

How can the 21st century public servant survive an era of perma-austerity?

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Catherine Mangan

We are launching the first theme from our 21st Century Public Servant project – the need to survive a seemingly unending period of austerity – to coincide with the Local Government Association conference, where austerity is a central theme.

Our research with local government and other public service delivery organisations found that ‘perma-austerity’ is both inhibiting and catalysing change, as organisations struggle to balance short-term cost-cutting and redundancies with a strategic vision for change.

In our interviews with people working in public service delivery and in national stakeholder organisations (more details on research design are here) some talked about the current ‘narrative of doom’ is preventing progress – some talked about a sense of loss and grief for the past; with organisations paralysed by the impact of the cuts, and unable to provide a new vision to work towards. As one put it, ‘No message of hope – leadership is putting council into survival mode by the language they’re using. Nobody is planning for post austerity.’ One interviewee spoke about the effect of losing large numbers of staff: ‘You hear the language of loss everywhere. I get affected by it.’

Although interviewees accepted that the financial context offered opportunities for doing things differently, some commented on the challenge of moving forward whilst dealing with the reality of the impact of large scale redundancies: ‘The cuts are forcing us to confront change. In public service, change doesn’t necessarily happen unless there is a crisis or a disaster, or it happens very slowly. But think tanks and consultancies can find it exciting, for them it’s a massive playground. We have to remind them that people are losing their jobs, services are being cut. There has to be a balance.’ Others commented that the enormity of the challenge needs to be recognized and responded to: ‘It’s not salami slicing because you wouldn’t have salami that big, it’s hacking things off. It’s about rethinking the role of the state in light of the changing economy, technology, the changing ways that people live their lives. The cuts are so big that we have to confront the questions we have been putting off: what is a library service, what is a leisure service?’

The biggest shift being driven by austerity is developing a different relationship with citizens: ‘We won’t have the money so we will have to focus on the enabling and facilitating, enabling the rest of community to do it.’ As one interviewee put it: ‘You can only get so far by being a supply side mechanic, cutting and slicing. You need a better sense of what your people are like, who they are, what their networks are, how they can do more not for themselves but how they can be more a part of the value that you create about what you do as a council.’

However another interviewee described the difficulties she encountered in reconciling the austerity agenda with more relational ways of working: ‘There is a complicated tension between the desire on the one hand for efficiency and rational processes versus the expectations and needs of customers which is more relational and focused on the personal and local. We are expected to do both, to move to the more relational in the government’s commitment to localisation and neighbourhoods. But elsewhere we are moving to customer relationship management and call centres. You phone or visit a call centre, pick up a ticket, it’s not a holistic relationship with the person on the other end of the phone.’

The 21st century public servant will have to ‘find a way through that knot’.

Portrait of OPM staff member

Catherine Mangan is a Senior Fellow at INLOGOV.  Her interests include public sector re-design, outcomes based commissioning and behaviour change.  Prior to joining INLOGOV she managed the organisational development and change work for a not-for-profit consultancy, specialising in supporting local government; and has also worked for the Local Government Association, and as Deputy Director of the County Councils Network.  She specialises in adult social care, children’s services and partnerships.

Building communities to bridge the gap

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Daniel Goodwin

England is around halfway through significant reductions in public expenditure and heading for a ‘new normal’ at much lower levels, whilst seeing demographic and other pressures rise. Local Government is currently projected to see a £10.5bn funding drop between 2010
and 2020. Pressures on services are projected to rise by around £6bn, resulting in a £16.5bn total gap, under-resourcing services by around 30%. This average masks a wide variation – the LGA predicts that some of the poorest areas are projected only to be around 55% funded by 2020, whilst some shire districts will be 100% funded.

This shortfall is highly unlikely to be closed by efficiencies, voluntary redundancies, shared services, linking up with other parts of the public sector, outsourcing, or other changes on the supply side alone. New ways of thinking about the demand for public services are therefore needed. This challenge is political because it derives from what politicians and the media consider to be an acceptable level of taxation and the public service priorities of the national government; and it is cultural because it reflects the changing assumptions that people make about what it means to be a citizen, our overlapping roles as patients, taxpayers and citizens, and the ability of public service institutions to completely reconsider how they operate.

For ‘the gap’ is actually in the operation of society as a whole and what constitutes public service need. In looking to unlock resources to bridge the gap we should not just think of local government finance, but of the wide range of financial, logistical and human capital resources available in the public, private and civic spheres of society. That means that we cannot consider local government, or even public services in isolation, but we need to think more widely about the social contract and to look at what everyone’s contribution ought to be to the community. It’s a clear choice: personal tax to pay for services or time spent to build more resilient communities that need lower public service levels.

The big question for the future is therefore not simply about public services. In fact, there is a range of questions we need to answer about the deal between people and state. Who is really talking about it? How does it translate into personal, household, neighbourhood, city, regional or societal rights, responsibilities and realities? What are the respective (and respected) mandates of politicians at the national, regional and local level? How does all this relate to ideas of a good life in a good community in a good place? If it works at the individual level why should I engage at all? Isn’t that what politicians should be stewards of? Can we use the democratic system and the resources of the community to change the point at which publicly funded services intervene? Are we scared of having a view about what ‘good’ means, or of having a debate in a pluralist culture on what our underpinning societal values are?

Local government has a vital role to play in shaping this debate. For the responsibility for the development of a new discourse on the strengths, warp and weft of a community and its public service needs (and responsibilities) must surely be with its leaders and set within the political mandate. I consider that this mandate should logically extend to all public services and other activities that impinge on the locality.

Such a mandate also carries with it the responsibility to ensure that a community is in turn playing its part in wider society. A traditional view of the role of the politician is one of holding public services to account on behalf of the community. And yet the value of what people should be bringing through their own strengths and abilities, to benefit the common good, suggests that there is a need for politicians to engage in new ways and to develop a dialogue with the community to hold it to account too. That is the trickier dimension of the political mandate, one which is perhaps understated. It is a very tall order for the many politicians of goodwill who came into local politics to sort out bad planning decisions or because they were the only one prepared to be a communication link with the council.

These thoughts point me towards some new form of social settlement based upon ideas of community and prosperity, which is adaptive, emergent, co-produced, strength- or asset-based, and where local government is not a byword for the dead hand of bureaucracy. This cannot be a technocratic solution – it requires astute political and managerial leadership which helps to form truly meaningful communities that play their part in national life, and public services which support the development of social strengths rather than papering over the gap.

Know your local Councillor Photographs - St Albans - May 2008

Daniel Goodwin’s career has mainly been in local government, starting in libraries and cultural services and progressing through policy and corporate services. He is particularly interested in policy into practice issues, largely relating to local leadership and the politics of communities and place, and is a regular contributor to journals, conferences and seminars. Daniel was chief executive of St Albans City & District Council for 2006 to 2012 where he oversaw significant corporate improvements and budget reductions. He was Executive Director of Finance & Policy at the Local Government Association from January 2013 to March 2014, where he oversaw the LGA’s Rewiring Public Services campaign and the refinement of its public finance strategies. He is currently on sabbatical having decided to return to an operational leadership role and is pursuing personal projects, consultancy assignments and writing. He plans to return to a chief executive role in 2014.

 

 

Doing local politics differently: learning from an inspiring community campaign against the cuts

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Catherine Durose

For the second time in as many years, the south Manchester neighbourhood of Levenshulme where I live, has faced the closure of vital public facilities. This time, the library and swimming pool have been targeted. Both these facilities are community hubs which bring people in a diverse, and in many ways disadvantaged, community together. To continue to build cohesion and understanding in our community, we need these spaces. In an economic context, where literate, educated, skilled people are the key to our future growth as a city, closing the library seems a perverse decision. In an area with some of the worst health outcomes in the city, where health services are stretched and we desperately need to encourage people to take responsibility for their own health, closing down the swimming pool seems obscene. The context of these closures is that Manchester is facing one of the toughest and most unfair financial settlements for local government which has been compounded by the loss of substantial deprivation linked funding. Many in Levenshulme feel that the proposal to close our local facilities is not only short-termist, but is self-defeating.

The anger in the community has been directed in a sustained, vibrant, thoughtful and provocative campaign to save our facilities, which has engaged hundreds of people. Yesterday, a flash mob of dancers from Levenshulme wearing masks of council leader Sir Richard Leese’s face performed a routine outside Manchester Town Hall proclaiming a ‘Lev-olution’. Last week, local people held a ‘beach party’ protest outside the pool before occupying it into the night. These actions followed months of well-attended demonstrations, occupations, vigils, petitions, fundraising events and public meetings which have attracted extensive local and national media coverage. These actions reflect the importance not only of persistence – a similarly vital community effort saved the swimming baths and sports hall in 2011 – but also of a sense of humour in mobilising people. We documented similar approaches in our recent INLOGOV pamphlet, ‘Beyond the State – Mobilising and Co-Producing with Communities’.

Today sees both – in a timetable which has generated a somewhat cynical interpretation in the community – the ending of the consultation by Manchester City Council on proposals for a new community hub in Levenshulme to open in Autumn 2014 and the debate of these proposals in full council. These proposals now have an amendment, tabled by local councillors following local pressure, to work with community groups to explore whether a viable business plan can be developed to allow our existing facilities to remain open until replacement facilities are available. Teams of local people are actively working to find a way to make this happen.

The council has been unable or unwilling – until demanded to by the community campaign – to communicate with the communities in Levenshulme and unable to – until led by the community –find a way to work in collaboration to find community-based solutions to dealing with unprecedented cuts to public services. Hopefully, the inspiring community campaign in Levenshulme adds another example of how local authorities can begin to learn to do local politics differently.

durose

Catherine Durose is Director of Research at INLOGOV. Catherine is interested in the restructuring of relationships between citizens, communities and the state. Catherine is currently advising the Office of Civil Society’s evaluation of the Community Organisers initiatives and leading a policy review for the AHRC’s Connected Communities programme on re-thinking local public services.

Roaming Buffalos, High Speed Trains and Localism?

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Ian Briggs

As the government seeks to develop measures that stimulate the economy through the relaxation of the local planning processes, should we stop for one moment and think about some pretty fundamental issues about the relationship that we, as citizens, have with the locality where we reside – issues that localism may be ignoring?

The predominant notion we have in the UK is that (with due respect to women) an ‘Englishman’s home is his castle’ – however, as the details of the 2011 Census are eagerly awaited we are aware that we have a society that is perhaps more geographically mobile than ever before – mobile through commuting to work or mobile though national or international migration. For most communities today, even those that have relatively fixed populations, the proportion of those who have been domiciled in one locality for more than one generation is shrinking. This means our emotional connectivity to place is changing – this is not to say that many localities have populations that don’t have a strong commitment to place. Rather, it implies that we see connectivity to place through economic factors more than any other. However, many communities have powerful and longstanding psychological commitments to the locality where they reside going back generations and generate fierce local loyalties that policy makers and politicians often find hard to recognise.

The concept of land ownership is not always recognised in other societies. Throughout the world there are examples of where the concept of ‘ownership’ is reversed – it is not the fact that the landowner actually has titled deed to the land where they reside but the land has ownership of the very people who reside upon it. This has been often misunderstood in places such as Australia, New Zealand and certainly parts of North America.  Where indigenous populations have been resettled there are numerous occasions where the sense of displacement is cited as the root cause for various social problems. The Native North American notion of the ‘Washee’ is not a catch all term for white North Europeans – it is a term better translated as a ‘trespasser’, as someone who this land does not recognise as within its own ownership.  This notion that the people belong to the land is more important than we have perhaps recognised – the sense of belonging to ‘place’- despite how challenging it may be to quantify or measure – is a key factor that local councillors have to account for, and a mistake that government at local and national level seem to continue to make when decisions are made that fundamentally impact upon communities.

People do have a sense of belonging to locality and this is now being demonstrated through the rather extensive and turgid consultation processes around HS2. As a resident who is impacted by this development I have been active in a number of local and regional meetings, where the debate is moving from the awareness of the economic advantages and disadvantages associated with building the railway to one of a strong sense of hurt caused by politicians’ failure to recognise the desire that many local people have to hand down the ‘belonging to the land’ from one generation to the next.

The sense of betrayal that many in the North American Native self governed communities feel is often characterised not by a sense of loss of entitlement to the land but that the land has something missing – it has lost its people and the arguments are less economic and more socially psychological and spiritual. The deprivation and social problems in many of the Native American self-governed communities is plain to see and has been overlooked for far too long by Washington.  It is only now that steps and measures are being taken that make better connectivity between these communities and the land they occupy. So, what relevance does this have for us in the UK? Perhaps, HS2 can be used as a litmus test and a broader set of parameters applied to considering its worthiness?

The tone of many of the public meetings and consultations around HS2 is starting to open this debate up – however strong the economic arguments are or are not as the case may be, the feelings of hurt and imposition by a government of a rail line is an issue that local councillors are going to be left to deal with for potentially generations to come. Government can perhaps be a ‘trespasser’ and impose things on the land and the people but where that strong link between place and people is broken other problems always seem to follow. If HS2 is to be completed then there could be major economic gains.  Whilst this is questionable to some it is indeed possible – the local building industry could be stimulated through a relaxation of local planning regulations – there could be a higher price to pay that may take time to emerge and leave us with many more problems to solve.

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Ian Briggs is a Senior Fellow at the Institute of Local Government Studies.  He has research interests in the development and assessment of leadership, performance coaching, organisational development and change, and the establishment of shared service provision.