Friday, 29 July 2011

Straws in the wind or thin ends of potentially big wedges?

There has been the usual pre-Recess semi-deluge of papers and reports issued by Government and committees. On occasion one hovers over statements or suggestions which do not seem to have been the subject of much commentary (often for the perfectly good reason that there are many other noteworthy and more immediate things on which to respond). Yet some of these are potentially highly significant in terms of the role and powers of local government. Quite how significant is moot but here are just two:

(1) Buried within the Allen report on early intervention is a proposal on restarting a local government bond market. The basic argument being that (a) some of the expenditure involved in early intervention is on human capital and should be reclassified through a capitalisation direction as being of a capital nature thereby allowing borrowing to fund it and (b) that as a result of interest rates for PWLB borrowing moving closer to market rates there is more scope than has been the case in the past for local government bond issues to be competitive in vfm terms if some standard products can be produced reducing the transactional costs involved in issue.

Clearly as Allen himself says a more straigthforward way would be to allow borrowing to fund the investment and issuing bonds does not avoid the fact that the additional borrowing would continue to score in terms of the PE measures used to assess the deficit. Allen argues for a limited bond issue on this basis consistent with deficit reduction. In other countries, bonds are of course a major part of the financial package for local government (some of which are now coming under intense strain in the US as it teeters on the brink of budget catastrophe).

Allen has already been pushed back on some of the other proposals in his paper, notably on cash for his proposed Foundation, but will this one fare better in a world in which TIF is now on the resource review agenda?

(2) In the Open Public Services White Paper, there is a surprisingly extensive description of the role of local government and a commitment to working with local authorities (rather than, intriguingly and perhaps deliberately, local government collectively) to develop a shared vision about the new opportunities for it in the post OPS world.

I hadn't been expecting to see this and whilst one can certainly debate the nature and ambit of that role, previous papers from both this Government and its predecessor have more frequently been characterised by either a complete absence of discussion about such a role or one which eschews any structured description in favour of an emphasis on opportunity to occupy space (usually with copious references to the general power of competence) and the potential for variable geometry (which may be where the reference to working with 'local authorities' rather than 'local government' starts to bite.

I will be writing shortly about the arguments for a more codified and embedded description of the role of local authorities. However, for present purposes, the interesting point is how that role when expressed in more concrete terms might start to affect the rest of the OPS white paper arguments. When the White Paper starts to list some of the opportunities to be explored with local authorities it includes:

'be able to integrate the full range of public resources to solve complex social, economic or environmental issues, such as the needs of people on housing estates who have multiple disadvantages'.

At one level, so far so unexceptional. There is clearly a strong connotation of community budgets and the approach to commissioned services described elsewhere in the paper.

But at another, this rather blows the gaffe. Or rather has the potential to do so. Many of the people on 'housing estates' (and one might venture quite a few not on them) will be the recipients of services which are in OPS terms, 'individual services', sometimes involving significant sums. Their quality of life will be influenced by the operation of 'neighbourhood' services. And the ability to integrate some of the 'commissioned' services will be affected by the emphasis placed on 'opening up' functions such as housing management and family support.

As ever, it all comes back to who decides. If a local authority is to be able to integrate the full range of public resources on some of the most intractable problems that they face, it looks as though one of the opportunities that needs to be seized is to resolve the balance between what are, one senses almost deliberately, competing elements in the paper.

This 'who decides' question is another to which I will be returning.

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