Article

Five priorities for the new communities and local government secretary
Jessica Studdert, published in Public Finance, 15 July, 2016

As Sajid Javid moves to Marsham Street, he’ll need to get up to speed with the local government agenda. Here are five priorities to concentrate on

Welcome Sajid Javid. He joins Team Local Government at a pivotal moment for devolution. He’ll be inundated with meeting requests and briefings on the finer points of local government finance – so to helpfully add to his inbox, here are five top local government priorities.

  1. Invest in relationships: Greg Clark commanded respect from the sector, and cross party. His style was the opposite to his predecessor who relished goading councils. Pickles was petty and tactical, Clark had vision and was strategic. Due in large part to the tone set by Clark, the relationship between the centre and local government is maturing, but there is a way to go before it is a partnership of equals.

    As the sector grapples with business rates retention and the fallout of Brexit it needs more than just a seat at the table, but an ongoing relationship built on active trust, communication and respect. Choppier economic waters are ahead and as local government braces itself for the Autumn Statement, Javid will need to understand the impact of any further reductions on local government budgets and fast become an advocate of the sector with the chancellor and within Whitehall.

  2. Renew the devolution agenda by shifting the focus from form to function: Since the last election, devolution has blasted ahead, with ten deals completed and a few more nearing the end of the pipeline. Yet in many areas negotiations have got bogged down by local politics and territorial disputes. Some pace has been lost as disagreements over governance structures have distracted from the principle of devolution. Meanwhile for those who do have deals, there is an appetite to do more than just assume responsibility for the riskier ends of poorly performing national schemes like the Work Programme. There is an opportunity now to push ahead with devolution on a more ambitious scale (we have some ideas in our recent report here). In fact, if the prize at the end was bigger, some areas might resolve their local differences more willingly.

  3. The type of growth that devolution drives matters: The vote to Brexit laid bare the divide in our country between those who feel connected, open and positive towards international cooperation, and those who feel the shut out of the opportunities globalisation brings. It is clear that growth built on cheap labour and low skills is not benefiting people in the long run. So we need a renewed focus on what type of growth devolution will drive.

    Business rates retention will consume much energy over the coming months, but Javid will also need an eye on how the system by 2020 incentivises particular priorities. Because business rates are based on the floor space of premises, councils will find it more financially beneficial to permit the expansion of large, out-of-town retail units, that bring mostly minimum wage jobs, than to encourage dense clustering of high value SMEs, which have higher productivity. Further fiscal devolution of revenue will need to create a stronger foundation for local growth strategies to drive productivity. NLGN has proposed that a third share of corporation tax should be devolved to city and county regions to give them a direct stake in growing their business base. With Greg Clark now secretary of state at the new Department for Business, Energy and Industrial Strategy, there is an opportunity for some interesting cross-departmental collaboration to create stronger local levers to drive growth.

  4. Don’t forget public service reform: It is the other side of the coin to growth, but to date it has proved harder to infuse through devolution as the large spending departments at Whitehall guard their territory and protect their separate service accountability. Yet unless local public services begin to work to shared objectives across a place, money will continue to be wasted through silos that work separately (think decreasing social care budgets and rising pressure on NHS beds). And people will not be sufficiently equipped to access the opportunities of growth.

    The NHS is pursuing its own “place-based” approach through STPs, but any alignment to devolution is only coincidental in places. The skills system works largely to its own priorities and is almost entirely decoupled from local labour market requirements. And employment support is unresponsive to the particular circumstances of people and places. This all needs to shift to create coherent local economies that match growth and opportunity. Success here will rest on forging a common agenda across Whitehall about how scarce resource can be best invested for impact.

  5. Grasp the democratic opportunity of devolution. With mayoral elections due next spring in the devolution deal areas, a more devolved system of governance will soon have new faces and voices, which will contribute to a shift in the political centre of gravity away from Westminster. Yet democratic engagement through devolution should not begin and end with mayors. The speed of the process has created little space for democratic innovation to accompany reform, but there is an opportunity now for a richer democratic discussion, already being led by councillors, to take place. The next phase should be much more directly shaped by local people who need to feel more connected to the tangible opportunities reform can bring – open policymaking, citizens juries and using digital tools to reach people in new ways.

    Above all, the new secretary of state shouldn’t think of devolution as giving power away, but as enhancing his own ability to get results. We live in an age that respects networks, not hierarchies. Some of the shocks convulsing through the institutions of Westminster and Brussels are the effects of this. The traditional clunking levers of Whitehall machinery struggle for impact in a complex, interdependent world. So use devolution as an opportunity to create a different model of governance – where influence and relationships are prime.

We look forward to seeing where Javid takes devolution next.