The costs of housing benefit for families in B&Bs and other temporary accommodation is so high that it in some parts of the capital it would be cheaper to build new social housing for them. As councils pay for private rents at market level, the rent for each household in social housing would be much cheaper.

As ministers prepare to cap the amount of housing benefit families can receive – potentially leaving 64,000 people who currently reside in London unable to afford to continue living there – NLGN calls for the government to examine new house building as a partial alternative.

The report argues that this will be less disruptive to peoples’ lives while also meeting the government’s aim of building more properties and providing a short term fillip for the capital’s economy. This new housing could be built using a combination of housing benefit set at social rent and block grant from the Department for Work and Pensions to repay the development costs. Alongside the cashable long term savings, the capital’s housing supply would be increased by 9500 units.

Simon Parker, Director of the New Local Government Network, stated:

“We recognise the need to contain housing benefit costs, but the idea of building new homes represents a win-win solution for the government, councils and families. Our analysis suggests that 10 boroughs might be able to save money while providing more properties.

With a predicted shortfall of 750,000 homes in London by 2025, there has never been a more vital time to pursue this approach.”

The collection is an uncompromising analysis of where the District Councils’ are currently and crafts a vision for where they need to go. Contributors included, Manjeet Gill, Chief Executive of West Lindsey District Council, Ruth Marlow, Managing Director at Mansfield District Council and Sandra Whiles, Chief Executive of Blaby District Council.

Working together with the District Councils Network we hope this collection is the start of a much broader conversation about the future of District Councils.

Local government used to be able to borrow cheaply from the Public Works Loan Board, but a recent increase in PWLB rates means that it could now be more cost effective for councils to issue their own bonds. The recent GLA bond issue suggests that, in the right market conditions, this financing option could save councils up to 20 basis points on their borrowing costs, amounting to millions of pounds on a large bond issue.

Against the backdrop of a 22% cut in central government funding for local infrastructure, the research shows that an astonishing 84% of councils surveyed face a capital funding shortfall. This translates into crumbling schools, potholed roads and slower economic growth for many parts of the country.

Nearly two thirds of the councils surveyed for the new research say the PWLB rate rise will change the way they borrow, suggesting that bond issuances will come back onto the local agenda for the first time in 17 years.

Capital Futures was supported by a Taskforce made up of experts from across the local government finance sector.

Report author and Taskforce member Tom Symons said:

“Councils must explore a completely new landscape of financing options to survive this Spending Review. Issuing bonds on the capital markets could enable vital investments to be saved, assuming the right market conditions. As a result of central government cuts we need to see a much more ambitious approach from the sector if our infrastructure deficit is to be addressed”

Chair of the Taskforce Paul Woods (and Finance Director at Newcastle City Council), said:

“The responsibility for driving economic growth and responding to the demands of communities in an uncertain and difficult climate has fallen largely on councils. Councils have a vital role to play, and it is important that as a sector we optimistically grasp this time as a moment of opportunity.”

The report warns that without these reforms, social care in England risks ending up in the same situation as the Netherlands, where cost inflation and austerity measures have led to the scaling back of the Dutch equivalent of personal budgets.

The think tank’s new analysis of council cost data shows that each additional direct payment issued to someone with a learning disability, between 2002-10 adds between £15-25,000 to a council’s overall expenditure on learning disability services. This may reflect the fact that personal budgets are identifying new and previously unmet needs, and it is possible that the new system will save money for other sectors such as the NHS. The finding should nonetheless ring alarm bells in Whitehall about the pace of change.

This means embedding new measures such as “Social Care Related Quality of Life” (SCRQoL) that assess the quality and impact of social care services. If councils are better able to manage the contribution a service makes to a person’s wellbeing, and use that information to create a vibrant, competitive market that delivers best value for money. With a robust outcomes measurement system in place, emerging commissioning tools such as payment by results and social impact bonds could be developed within social care.

To reconcile the shift in relationships that outcome-based commissioning implies, commissioners will need to play a greater role in developing the market and “place shaping”. This will ensure that people with learning disabilities have a real choice between a wide range of services, so that people are able to access wider public services including employment and leisure as well as residential services and day services.

Report author, Daria Kuznetsova said: “We need to make a decisive shift away from managing outputs and instead develop new metrics and commissioning approaches based on outcomes. This will drive a focus on value for money, rather than simply cost, and it will help commissioners identify effective forms of intervention that help people with learning disabilities to live the lives they want to lead.”

Care for people with learning disabilities accounts for more than 23% of the adult social care budget, and represents the fastest growing part of that budget in last five years.

The report was launched following the coalition’s planned introduction of a package of decentralist policies to designed rebalance local-decision making in favour of economic development. The Local Government Resource Review will allow local authorities to retain increases in business rates generated in their area. This represents a fundamental change in the way local government in England is financed. The report makes recommendations to ensure this business rates retention model achieves goals and reinforces a council’s ability to secure economic growth.

The report is guided by two principles.

• Firstly, if the government is going to move to a system designed to incentivise business growth, then the system must be geared towards this goal. A change in the system should not become a complex replication of the current grant settlement.

• Secondly, whilst we believe that a system of redistribution and equalisation is essential, we argue that it must operate outside the business rates retention scheme. We call specifically for a capital fund to be accessible by areas of lower business rates growth.

As citizen demands change and cuts start to bite, NLGN’s research shows that, while the average cost of borrowing a book is around £3.50, in some areas it can be as high as £8.00, largely due to a 13m decline in the number of issues since 2005/6. While this figure does not capture the full value of all the services a library provides – such as free magazines, community space and internet use – it does highlight important changes in the ways people use these community facilities.

NLGN argues that the best way to democratise book access in future will be to make a radical shift to e-readers, online ordering and book vending machines in public places. This would make it much easier for the public to access books while freeing up library space for use by families and communities. Libraries would still hold the most popular titles and children’s books and act as a crucial community hub.

The new report, Transforming Universal Services, supported by May Gurney, also sets out the case for major reform of transport and environmental services beyond the next election. Proposals include:

• The increased use of congestion charging and adoption of road user pricing by central government
  
• City-wide cap and trade schemes for business waste using new variable charging technology, with any profit being used to reduce the business rate
  
• New green bonds allowing local people and businesses to invest in energy from waste plants and to receive a dividend from their operation

NLGN researcher Daria Kuznetsova said:

“We need a radical discussion about how public services need to change over the coming decade. Our proposals envisage a world in which citizens and businesses get far more choice about how they use and access key services. We envisage libraries that are accessible online and through vending machines in train stations. We call for businesses to refurbish old furniture and computers to avoid landfill taxes. And where citizens and businesses can help local authorities make savings, they should get a share back through council tax or business rate discounts.”

The publication, entitled The Next Question: The future of local leadership, includes a cross party collection of local government leaders who each contribute their thoughts on what the key challenges for council leaders will be in the future.

Head of External Affairs at NLGN and editor of the publication, Liam Scott-Smith, said that:

“The Government is right to acknowledge the crucial role played by council leaders in delivering on the localism agenda. To ensure that leaders can continue to play an important role Whitehall needs to make an extra effort to engage with them.

With local government going through a period of unprecedented change we need to open a discussion about what the future role of the council leader, and by extension all local councillors, will look like.”

Contributions to the collection come from Cllr Mike Whitby, Leader of Birmingham City Council; Cllr Simon Henig, Leader of Durham County Council; Cllr Claire Kober, Leader of the London Borough of Haringey and Cllr Jeff Reid, Leader of Northumberland Council.

One scenario outlined in the ‘Future Councils’ report suggests that a lack of funding and new rights for citizens over planning and service delivery could by 2020 leave local authorities in the same kind of position as the Californian state government: struggling to provide services in the face of high demands, low income and increased direct democracy.

Drawing on an analysis of anticipated and emerging trends across the sector and in national politics, the report predicts that councils of the future will take on substantially less direct responsibility for service delivery. In particular the report suggests there will be an increasing emphasis on commissioning services and more devolution of power to neighbourhoods and individuals.

NLGN Director and report author Simon Parker, said:

“Local authorities are quietly preparing to transform the way they work in response to budget cuts. Some services will change radically as councils become commissioning hubs. Expect councils to redesign everything from social care to street cleaning, more delivery by the private and voluntary sectors, and an increased reliance on personal budgets.

“This is a time of risk and possibility for local government. Town halls could find themselves becoming less relevant as direct democracy and consumer-led services start to bypass local democracy. The key for councils who want to remain at the heart of their communities is not just good service delivery, but strong political leadership to drive economic and social growth for their residents.”

In a foreword to the report, Northumberland County Council Chief Executive Steve Stewart said:

“The scenario-based approach taken here is essential. It’s not just the preserve of think tanks and academics. It’s essential for practitioners, especially over the next few years if we are to sustain any kind of economic and social resilience in our places. None of these scenarios might actually materialise, but is likely that elements of all of them could.”

Based on a scenario planning exercise involving senior figures from local government and an analysis of existing council plans for change, ‘Future Councils’ highlights a number of ways town halls could be transformed over the next eight years to 2020 as the cuts bite. These include:

1. Councils in areas such as the north east clustering together into new regional federations to manage economic growth and share their services – with some having Boris Johnson-style ‘metro mayors’

2. Councils introducing ‘pay as you go’ public services for residents and selling their services to neighbouring boroughs, allowing them to cut council tax and perhaps even pay dividends to poorer residents

3. A handful of local authorities that try to commission most of their services might become ‘residual councils’ – a commissioning hub that directly delivers almost no public services.

The innovation undertaken earlier this year by a Dutch organisation, Met de Stroom Mee, yielded a 20% saving in energy costs for households. If councils imitate this model in the UK, even a 10% equivalent efficiency would result in a £125 reduction in costs to consumers.

The media reports in recent weeks that more households in the UK could be dragged into fuel poverty over the coming years, highlights the need for more effective measures to reduce energy costs for consumers. The report, ‘Going Dutch’, suggests that a local authority advocating on behalf of a group of citizens can result in drastic reductions in costs to consumers.

Author of the publication, Liam Scott-Smith, said that:

“Government data show that a 1% increase in fuel costs causes another 40,000 people to go into fuel poverty. Costs are constantly increasing and show little sign of slowing down. With money tight, we need more radical solutions than just asking the state to give a handout to the poorest”

“By ‘going Dutch’ and clubbing together to buy in bulk from energy suppliers, consumers can drastically reduce their costs. This model means that UK consumers could save around 10% on energy bills – that’s £125 back in the pockets of every participant. Local authorities are ideally placed to negotiate on behalf of local citizens”

“The beauty of the model is that the more people councils can get to participate, the cheaper fuel becomes. A 10% saving means a £125 cashback and 20% means a £250 rebate for consumers. If councils fully buy into this new model, the potential for savings is massive”

The model of bulk purchasing, as used by Met de Stroom Mee in The Netherlands, offers a vehicle for councils to support their citizens without increasing financial outlay. The report shows that by taking the lead in ‘aggregating and negotiating’ for the services that constituents receive, councils can remain at the heart of their communities despite serious financial pressure as a result of spending cuts.

The report will show that:

• There is no strong link between a community’s wealth and its ‘Big Society’ resources, with some deprived areas comparatively rich in community wealth. A poll of local authorities suggested that even in areas facing the steepest budget reductions, ingredients of the Big Society are often strong.

• In new heat maps illustrating Big Society resources, Barking & Dagenham and Harlow councils are least well placed to benefit from the Big Society, with the South West and North of England regions faring strongest.

• Communities faced with ‘double deprivation’ – those lacking both financial wealth and community resources such as volunteering – should be targeted for extra help to cope with the withdrawal of traditional state services

• In a boost to the Government’s agenda, new polling by Ipsos Mori shows that there is an untapped well of people willing to get more involved in community work through staffing libraries, sharing skills or mentoring children.

  In advance of the launch, NLGN’s Director Simon Parker said:

  “The big society agenda has lost its way, with many people seeing it as little more than a cover for cuts. But almost everyone can agree the UK would be a better place if we had stronger communities that could do more for themselves, especially at a time of severe cuts”

  “Whilst there are areas at risk – those facing funding cuts and with little social wealth to plug the gap – our statistical analysis provides grounds for cautious optimism, suggesting that poor areas don’t necessarily have low social capital and that there might be untapped reserves of voluntary activism, especially among the baby boomer generation”

  “But our research also suggests that alongside community activism, a big society needs an active local state. To create a big society, councils must learn to value social wealth – trust, engagement and belonging – just as much as more tangible financial assets.”

  The report will recommend a much clearer role for local government in helping the Big Society grow from within localities. The authors also suggest that Whitehall should do more to understand the social complexities of communities and use that knowledge to better inform policy formation and resource allocation.

  
  Below is NLGNs interactive map to illustrate a ‘Big Society score’ across England. (click and drag to move the map around, click the different layers to compare heatmap scores):

  View Full Map

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