Local government is the key to solving some of our biggest national challenges. With the General Election taking place in July, now must be a time for change and new hope.
There has never been a more difficult time for local government. Rising demand and costs have meant the toughest of choices, with less to spend on the services that communities value. Yet the sector continues to show great resilience and continues to innovate.
Local government is the key to solving some of our biggest national challenges. We work at the front line of people’s daily lives. We shape places, provide vital services which hold our communities together, keep people safe, and create the conditions for prosperity and wellbeing.
Now must be a time for change and new hope.
Our priorities for resetting the relationship with national government
Local government can make a big difference more efficiently. We are best placed to make the biggest and fastest difference to the prosperity and wellbeing of citizens, both as providers and convenors of key public services, and as place leaders who hold the keys to local inclusive economic growth and community wellbeing.
Addressing these challenges requires a fundamental reset of the relationship between local and national government. We would like the next government to commit to our priorities to drive inclusive growth and ensure future sustainability. Our focus is on the priorities below.
It is time for a new, equal and respectful partnership between local and national government, drawing on the best international practice. We are an outlier in the OECD, heavily reliant on national decisions for funding and powers. As a result, at a time when people are struggling to afford the basics, millions of pounds of taxpayers’ money is spent by local government to chase down new sources of investment from Whitehall. If we are to meet the challenges of the coming decade, we need a joined-up and strengthened system of governance that has a sharper focus on outcomes for the people we serve.
To ensure this partnership has genuine resilience we want to work with government to explore the codification of the Congress of Europe’s Charter of Local Self-Governance – which sets out basic rules guaranteeing the political, administrative and financial independence of local authorities and has been ratified by 46 states across Europe. While the UK is generally compliant; the autonomy of our local councils is not protected (Article 2) and neither is their ability to receive adequate financial support for the services they provide (Article 9). Enshrining these principles in statute would strengthen the place-leadership credentials of local government and bring decentralisation much closer into line with the experience of our international peer group.
We want to work with government to create a non-bureaucratic and agile forum for local and national government to discuss forthcoming legislation, aggregate expenditure levels and emerging areas of joint priority. This would ensure local government is able to bring its frontline expertise and experience to the heart of national policy development, drawing on the experience of systems which do this well, such as the Danish Annual Framework Agreement.
Local councillors are the life blood of local democracy, but 7 in 10 councillors reported experiencing abuse or intimidation in the 2022. We recognise this is national challenge and we are calling for a joint campaign for respect in public life to ensure best use of resources and cement the sense that local and national leaders stand together in democratic debate free from abuse and hatred.
Current and future demand
Cost and demand pressures are rising faster than funding. To meet these pressures and enact reform, councils need a significant and sustained increase in overall funding that reflects current and future demands for services. This has the potential to reduce costs falling on other public services and to support the more efficient delivery of key government agendas such as economic growth and increased housing supply. Ensuring local government is financially stable is also fundamental to any government being able to deliver its wider policy objectives.
Longer-term financial planning
However, this is not just about local government having enough money to provide services in line with current and future demand. The potential to deliver maximum value for money is held back by financial uncertainty and a limited ability to plan for the future. Councils may end up planning on the assumption that they will have less funding available to them than is the case, needlessly scaling back non-statutory services and making redundancies.
A single-year planning horizon is an obstacle to councils to making innovative and meaningful decisions, limits their ability to focus on long term strategic and economic planning and undermines their financial sustainability. Councils need multi-year and timely finance settlements, and greater certainty over financial reforms, to enable them to plan ahead and make meaningful financial decisions.
A clearer, fairer funding system
The current system of funding local government is out of date, opaque, overly complex, and limits the ability of councils to be more self-sufficient by raising income from other sources. The system needs reform urgently.
The LGA, will be producing a paper on reform of the local government finance system later in 2024. This will set out how a new government can put local government on a more financially sustainable footing, make recommendations for short-term actions that can be taken to improve the local government finance system and call for a cross-party review of, and debate on, options to improve the local government finance system. This is likely to include a focus on:
Providing sufficient funding and greater certainty for local government through multi-year and timely settlements.
Updating the formulas and the underlying data used for the assessment of relative needs and resources. Transitional mechanisms should provide sufficient funding to ensure that no council experiences a loss of income in the move to a new system for assessing relative needs and resources.
Reform of and freedoms and flexibilities over council tax, business rates and sales, fees and charges.
Assignment to local areas of a proportion of nationally-collected taxes paid by citizens in a given area. It would be for local politicians in partnership with local providers to decide on priorities and the allocation of funding.
Freedom to collect different taxes in different ways to support local priorities, or introduce new local levies, such as a tourism tax, an e-commerce levy, and the power to introduce a workplace parking levy.
The LGA is also considering how pension funds can be harnessed to enable local investment.
Bold and creative action will be needed on finance to ensure that local government is placed on a sustainable footing for the future.
We are the democratically elected leaders of local places, and uniquely positioned to bring agencies together around the needs of residents. You cannot build a safe and thriving high-street from a desk in Whitehall and you cannot tackle multi-generational health and income inequality through departmental silos. We know too that the hollowing out of councils’ ability to regulate local educational and children’s care provision is leading to higher costs and more challenging outcomes.
To fully unlock the potential of people and places we need a new conversation between national and local government about how funding for one place can be combined, rather than being divided into different pots, in order to improve outcomes and drive efficiency. This should apply the lessons of successful approaches, such as Total Place and Whole Place Community Budgets to the challenges of the coming decade. To support this, we need a radically improved approach to collecting and sharing data so that the interactions between different public services, expenditure and outcomes are mapped and aligned. This will ensure services are designed in partnership to meet the needs of communities, not organisational silos.
The devolution framework and the renewed push towards further and deeper devolution deals across the country is welcome, but still falls short of our ambitions for genuine devolution underpinned by local government’s pre-eminent place-shaping role.
To help build thriving local economies where people want to live and work and where employers want to invest, we need a coherent, locally led employment and skills offer attuned to the challenges and opportunities of people and place. The gains to be had from a fully devolved and integrated Work Local model are considerable, delivering better outcomes for our residents, communities and employers.
A more integrated approach where local government is empowered to lead work with schools and other providers would enable councils to better meet the needs of young people, especially those with SEND or who are in social care.
A strong partnership between NHS Integrated Care Systems and locally elected leaders is also fundamental to improving the health and wellbeing of local communities. We want to see a mandatory requirement on Integrated Care Boards to involve elected local leaders in resource allocation and commissioning decisions, and ensure decisions reflect the mandate of local communities.
A preventative approach is essential to deliver the best outcomes for people, and to avoid spending more later when people’s needs escalate. The NHS Confederation rightly argue that the next government must enable local health systems to proportionately increase investment upstream into community-based services, mental health and social care.
As a nation, we waste public money by not providing the right support at the right time. The Early Intervention Foundation estimated the costs of late intervention for children and young people total £17 billion a year across public services. There is clear evidence that targeted intervention from the early years, and before birth, works in delivering much improved life outcomes for children at risk.
Vibrant local economies depend on a healthy, skilled and well-educated workforce. Ill-health, not just among older workers but among younger ones as well, is increasingly putting a brake on local economies. This reflects decades of underinvestment in prevention and rising mental health problems.
Preventive services investing in the wellbeing of whole communities, including culture, sport and open spaces, have been cut disproportionately. It is only by tilting the balance towards prevention that better outcomes for people and more sustainable public services can be delivered. LGA research in 2015 demonstrated how local authority prevention work can deliver strong return on investment over a 5-year period.
Preventive services need to form part of overall service design for local communities, adopting person-centred approaches across the age range. A comprehensive approach includes:
Targeted support from the early years, and before birth, for children and young people at risk, with effective, sustainable support for children and young people with SEND
Prevention of criminality, the biggest driver of costs to the public purse, and anti-social behaviour through effective youth services and better support for young people at risk
Public health interventions, which are well-evidenced to prevent ill-health, support a healthy, productive workforce, and significantly reduce future health and social care costs
Prevention in housing, homelessness and supported housing services, to avoid the serious health impacts of poor-quality housing, and the very high costs associated with temporary accommodation and emergency service access by rough sleepers
Support for financial hardship and debt, enabling people to meet their essential living costs and alleviating the stress and social exclusion that accompany poverty
Culture and sports activities, which promote good physical and mental health, community cohesion and resilience, and support a healthy workforce
Adult social care, where the right community support at the right time can prevent the need for intensive and expensive intervention at the point of crisis
Asset management, with preventive maintenance before longer-term costs mount.
Despite financial pressures, local government continues to invest and innovate in their prevention work across the country, ranging from Doncaster Council pioneering community-based approaches to mental health in a former mining town to person-centred approaches to homelessness prevention in Leeds and Cornwall that have reduced pressure on Temporary Accommodation.
It is time to pivot towards prevention, investing in healthy communities and a healthy workforce to make public money go further. We want to see as a first step immediate implementation of the Hewitt report recommendation that the share of total NHS budgets at ICS level going towards prevention increase by at least 1per cent over the next 5 years.
Local government is constantly innovating, developing new solutions to some of the biggest challenges facing citizens and their communities. We share insights and learning so that, rather than ‘reinventing the wheel’, local government moves cost-effectively and at pace.
We work together to enable local authorities to address the biggest challenges facing the sector. Peers with ‘real-world’ experience support performance improvement at lower cost than intervention by regulators and government.
While we respond rapidly as new challenges arise and continue to focus on delivering efficiencies and transforming services, there are many blockers that get in the way or add cost – further limiting the resources available to meet local needs.
Government research has shown that organisational barriers across different government departments when working with local government result in a lack of coordination, duplication of efforts and missed opportunities for collaboration.
Local government brings together all partners in their local place to work on tackling the most difficult issues, but multiple funding and commissioning processes result in duplicated and complex funding flows, requiring significant time and resources for councils and their partners to meet reporting requirements. Barriers to data sharing get in the way of multi-agency working and local coordination.
There are currently many inspectors and regulators of local government services: they – and the central government departments they relate to – largely work in an uncoordinated way. This adds to the burdens on councils which are already working to address significant challenges.
We are calling for:
Better learning from inspections: we will work with the relevant inspectors and regulators to identify common themes, share learning and minimise duplication.
Action on unnecessary burdens and barriers: we will work with government to remove reporting that doesn’t add value and develop new, more efficient ways of working with central government.
Development of a complete picture of the local spend of all public sector organisations and the aims of that spend: working with government to achieve this will help our work with local partners to target resources for the benefit of local communities.
A Local Government Centre for Digital Technology: usingtechnological innovation to deliver reform and promote inclusive economic growth across councils.
Working together for change
To address the longer-term issues we are facing we need an honest and open dialogue about what local government needs to be in the future. What is the scale of support we want to be able to provide and how should it be delivered? Are we to be the local safety net or is our future role broader than this? Now is the time for radical thinking to prepare for a new future.
To support this dialogue we want to work with the next government on three new opportunities to take the thinking forward:
New equal and respectful central-local partnership: the next government should establish a new partnership model for working with local government and delivering the recommendations set out in this paper.
Review of place-based public service reform:the next government should commission a major new review of how public services can work together to transform places, including through invest-to-save models of prevention.
Further improving cost-effectiveness and innovation: the next government should work with us to bring together learning across government departments on ‘what works’ to increase cost-effectiveness and innovation, enabling the development of cross-cutting solutions. We will support this by contributing learning from existing sector-led improvement support and best practice from local government.
