Caroline Spelman MP on the future of local government


Full Transcript below:

Ladies and Gentlemen

Thank you for inviting me here to address you today.

I was really pleased to accept this invitation because in the time I have spent in this brief I have enjoyed a very good relationship with NLGN – and I look forward to that remaining the case.

Now I’d like to cut straight to the chase if I may.

Today I want to look at the big changes that will take place in local government if the Conservatives form the next Government.

And I’d like to do so drawing on some of the findings in NLGN’s recent publication ‘Control Shift: Alt, Insert or Delete’.

I’m pleased that Control Shift has provided a stimulus for debate around the issue of localism.

I really think that it is a pivotal point in local government politics as it sets out in detail exactly what one of the main political parties would do to change our politics.

Let’s start with by agreeing on the main objective.

I think we all want to see local government given a shot in the arm.

For too long, and under various Governments, power has been drawn away from local government in favour of top-down, one-size fits all solutions.

Both have been to the detriment of local communities, local government and politics generally.

We need to reverse that trend and for our Party ‘Control Shift’ is the route map for doing that.

Let’s start with house building.

I’m really pleased that NLGN has welcomed our proposals to give local communities real control and real financial incentives when it comes to development.

Let’s face it the current system just hasn’t worked.

Centrally imposed targets, administered at an unelected regional level, have given the worst of all worlds.

No accountability, public alienation from the planning system, spatial strategies stalled by legal challenges and ultimately the lowest level of house building since World War II.

The fact is that if we’re going to get the level of new housing that our country needs, then we need to be honest enough to say the current system has failed.

Our alternative will make communities participants in the planning system, rather than just at the mercy of it.

Local Planning Authorities will have to work with the communities to develop plans for meeting housing need and as part of the negotiation they will have the incentive of council tax match funded for six years on new housing.

Given that most planning authorities already tendered for significant numbers of new housing under the original RSS offering, I would anticipate that being the baseline.

But we need to be bolder and more ambitious for the level of new housing we want to see built – which is why in addition to the cash incentives we are drawing up a Green Paper which will radically streamline the planning process.

We also plan to release public-sector held land which would prove suitable for development, and under our Local Housing Trust scheme communities would be able to grant themselves permission for incremental growth in local housing.

I agree with NLGN that there will need to be a degree of coordination in how development converges with neighbouring planning authorities and this will be addressed in our forthcoming Green Paper.

And as for a strategic minimum target – I have to say it’s the thin end of the wedge – local authorities have put forward reasonable proposals to start with and many are keen to go further.

We should give them that opportunity to define their own patterns of growth.

Chasing targets rather than reflecting market need is not going to get the right homes built in the right places.

It might get boxes ticked in Whitehall; it doesn’t necessarily get families into suitable sized accommodations

That core belief in giving communities a direct share in the proceeds of growth also underpins our proposal to let councils retain the business rates from increased growth for six years.

I’m very pleased the NLGN has also been encouraged by this proposal.

In this period of such grave recession, with the level of national debt forecast to hit £1.1trillion by 2011, the measures we take relating to the economy, enterprise and the success of local businesses are absolutely critical.

By tying local authorities so closely to the proceeds of the increased business activity in their area I think we will create a powerful tool to help stimulate business activity.

As councils compete with one another to offer appealing terms for businesses to invest they will all be forced to up their game in attracting and sustaining businesses, jobs and commerce to their area.

But securing new business activity is one half of the equation. The other half is helping to support existing businesses.

That’s why we would enable councils to levy business rate discounts where they see a local business in trouble and want to give it a temporary lifeline.

And that’s why we believe it is important to look afresh at how the RDA structure is working.

I know opinion of RDAs is mixed – varying from region to region. But I’m clear in my own mind that the current configuration is unsustainable.

The lack of accountability is one problem.

The mission creep which has taken their focus off economic development is another.

In a recession as bad as this, saddling development agencies with a whole myriad of additional responsibilities like planning and housing cannot be an effective use of resources.

So we would take away all functions not directly related to business growth and re-focus them so all their time and money is spent getting us out of recession.

To overcome the accountability problem they would have lines of accountability to the local authorities they serve.

Regional Development Agencies will therefore evolve into Local Enterprise Partnerships – leaner, more focused and adding real value to their community clients.

There will also be the opportunity for them to break out of the regional straightjacket and instead operate on the basis of where there shared strategic interested between commissioning local authorities.

The NLGN pamphlet terms it as sub-regional natural economic areas and that seems to me a good way of configuring the remit of new Enterprise Partnerships.

Whichever political party forms a Government next year will have to work hand in hand with councils to help rebuild our economic position after the recession.

Money is going to be tight.

But I want to give local government more imaginative ways of generating income than just the grant, taxes and charging.

I think people are coming to the end of their tether with direct and indirect tax-raising measures.

Last year the Audit Commission found that the average family is paying £1190 on charges for Town Hall services .

But the origin of this lies in Whitehall.

PPG13 explicitly directs councils to increase parking charges as a means of deterring people from driving.

Meanwhile in articles and speeches the Government has called on councils to charge for more services and has expressed concern that councils are not doing enough to charge for services

But as households tighten their belts the Whitehall ratchet of taxing and charging has to slacken.

Councils should not be coerced into putting up costs all the time simply to make ends meet.

We need to look at more imaginative and genuinely localist ways they can derive income.

As I’ve said earlier, revenue from new housing or new businesses is a powerful tool.

But we also suggest giving them the power to raise local bonds which can be used to finance infrastructure or regeneration investment.

We also want to give councils and communities the power to scrutinise and challenge governmental spending in their area by introducing the Local Spending Reports originally anticipated under the Sustainable Communities Act.

Those reports are vital for two reasons.

Firstly, I think everyone recognises that the days when taxpayer funded organisations can keep their accounts under wraps are well behind us.

This last year in Parliament has taught MPs a painful lesson in transparency, but it is one with implications beyond Whitehall.

And Secondly, it’s vital because getting the information about spending out in the open is vital to improving efficiency.

If communities and councils can look at all the streams of funding being spent in their area – they can identify where there is duplication, where there could be greater coordination and where the resources could be more effectively deployed in another way.

It would be remiss of me not to acknowledge the extent to which Total Place has delivered some of that capability in the various pilots, but we need to be bolder and move faster with it.

By lifting the lid on all the departmental spending I know we can get better outcomes in the way taxpayers’ money is spent.

I believe I am correct in saying both the proposal for bonds and local spending reports have been broadly welcomed by NLGN.

In addition I think the NLGN and Conservatives have a great deal of common ground on creating a general power of competence for councils and forging ahead with proposals for directly elected mayors.

On mayors I would simply add we are in the process of drafting a paper on directly elected mayors so that we can really show people what it would mean for them.

In as far as is possible we are seeking to give cities the option to replicate the success of the London mayoral model.

Ultimately it’s up to them if they want to do down that road, but there is certainly a lot to commend it in terms of providing civic leadership and direction.

Now, on the basis I’ve probably caused the NLGN enough unease at having highlighted so much that we agree on, it would be only fair to address some areas where we differ.

I know the NLGN has concerns about giving business the right of veto on supplementary business rates.

But I would take this opportunity to remind people of the toxic cocktail being served to businesses in April.

Following a revaluation which took a snapshot of commercial property values in April 2008, tax bills for businesses are going to rocket in April. The rateable values will be based on property prices at the height of the boom rather than the recession we are now in.

On top of that the Government’s deferral scheme for this year’s business rate increases of 5% will come to an end next year.

Add to the mix the end of transitional relief, new taxes on empty properties and punitive retrospective taxes on ports – and, I have to say, you fast have one of the largest impediments to economic recovery.

If you wanted to create a means of stalling recovery in the business sector that package put together by the Treasury would be the blueprint.

So in that context I think enabling businesses to veto additional rises is a reasonable measure, notwithstanding the broader ideological point the NLGN makes about special interest groups having rights of veto on public policy.

On council tax – the NLGN has expressed views about the wisdom of referendums to regulate council tax increases, and the need for a long-term solution to council tax rises.

I agree the level of council tax is a huge problem, from April the average Band D bill will be £120 each month

Pensioners have seen a third of the increase in their state pension taken back in council tax increases.

And generally there is a feeling people are paying more and getting less in return.

I have lost count of how many letters arrive on my desk saying, in one way or another, my council tax has doubled and my bin collections have halved.

The public are looking for action to stop what they see as a relentless upward drift.

So the opportunity to involve communities in determining the balance between service provision and council tax levels will have two benefits.

It will restore a sense of control and accountability over the process.

But just as importantly it will face people up to what council tax actually pays for.

By bringing them into the process and explaining that council tax pays for far more than bins collections and street lighting – then you start to dismantle the cynicism about council tax.

Another tool in combating public distrust about council tax is revisiting the grant formula – getting transparency and fairness into it.

And I think that issue of transparency is a good one with which I would conclude, because the key tenets of any reform to local government have to be, greater transparency, greater accountability and greater efficiency.

I firmly believe all three are inter-dependent.

Together they have the potential to transform local government and create a powerful driver in the race to get out of recession.

I’d like to thank once again NLGN for their work in appraising and responding to the contents of Control Shift.

The points raised are being given thorough consideration as we finalise the details of policy, and opportunities like this one today are vital in our quest to change the landscape of local government.


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