Director of LSE London, Professor Tony Travers, spoke to the annual ADEPT conference about going back to the future with commercialisation, the golden age of local government and the changing face of delivery.
The Budget and planning ahead
In the wake of the Budget, Mr Travers warned local authority directors that analysis from the Institute for Fiscal Studies (IFS) suggests there will have to be a cut of 6.5% per capita in non-NHS revenue spending over the next five years so 'the squeeze on local government spending is not going to stop'.
Prof Travers said: 'Local government should probably plan on the basis of at best flat cash for the years ahead and even that disguises the fact that adult social care spending is rising and therefore for all other services there may well be further reductions in real terms and possibly even in cash.'
He went on the outline the financial challenge as 'unprecedented' and one that was bringing about a change in the very role of local government.
Commercialisation
Professor Tony Travers
'What we have also seen is that local authorities in many cases are beginning to invest in assets of various kinds, some in property, one in a bank, in an attempt to create a longer-term revenue stream to support day- to-day spending - using capital receipts and reserves to try to turn them into a revenue stream of the future to support spending,' he said.
'This is controversial. Some people are less than happy about it. There is evidence that local government is becoming vastly more entrepreneurial both in its own terms and in terms of being the local underpinning economic planning authority for the area.'
Prof Travers described how the role of councils had changed substantially from the 1970/80s when funding was issued almost on an annual basis and local government was seen as simply a provider of public services.
'What we have moved to now, because of business rates retention and systems like the New Homes Bonus, Section 106 agreements and the Community Infrastructure Levy, is a situation where local government is incentivised to build up its tax base by development.
'This is a remarkable and I think perhaps unremarked change to the role of local government.'
Dangers ahead?
Prof Travers remarked that as local government builds up its tax base the risk is that central government will feel tempted to take more resources away.
'Local government finds itself filling up a bucket, which the Government then drills a bigger hole in the bottom of. If local gov is successful that would be a bad signal to send. Local government needs to feel if it invests and develops the economy locally, then the benefits are held locally to improve local services and allow capital investment to secure higher productivity.
He pointed out that in the 19th century - 'local government's heyday' - it was 'very entrepreneurial, allowing cities to invest in public services to allow businesses to expand'.
'I think the advantage of consistent local decision making about investment is we get more and better targeted investments that work for the local economy and fewer mega projects. I think we need vastly more local projects that deliver inside localities and slightly fewer projects that can be seen from the moon.'
Prof Travers did not mention which specific project 'mega project' he was referring to. Transport Network could not possibly comment either.
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