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.

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.”

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 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

  ]]> http://www.nlgn.org.uk/public/2011/realising-community-wealth-local-government-and-the-big-society/feed/ 0 http://www.nlgn.org.uk/public/2011/show-me-the-money-accounting-for-localism/ http://www.nlgn.org.uk/public/2011/show-me-the-money-accounting-for-localism/#comments Mon, 04 Apr 2011 08:48:38 +0000 editor http://www.nlgn.org.uk/public/?p=6614 As Communities Minister Grant Shapps launches plans for the future of local government audit, a new report from localism think tank the New Local Government Network (NLGN), challenges government to avoid a dangerous decline in public trust in councils by letting citizens take the lead in auditing local government finances.

  Based on extensive research across the sector, Show Me the Money: Accounting for localism is the first comprehensive analysis of the future of local government audit and warns that the abolition of the Audit Commission could have a disastrous effect on public faith in local government if ineffective safeguards allow council finances to fail. To prevent this, the government must actively encourage the public’s involvement and allow a ‘Citizen Right of Appeal’ in circumstances where auditor independence may be compromised.

  The report also calls on government to avert the dangers of an uncompetitive audit market and higher costs to councils. NLGN recommends that the Audit Commission Practice is rolled out as a mutual, to create another ‘player’ to compete with existing providers and drive market competition and quality.

  Report author Olivier Roth said:
  
  “We’re pleased to see that the government has recognized the need for a more open and less centralized system for auditing local councils, but if the new model doesn’t work and we see the deterioration or collapse of some councils’ finances, then public confidence in localism will be seriously undermined. With the audit landscape and public finances in turmoil, the best way to reassure citizens is to let them take the front seat in the drive for stable council finances.”

  “We recommend giving citizens real power in auditing councils’ finances through measures such as independent, citizen-led auditor appointment panels, and a ‘Right of Appeal’ when auditor independence is compromised.”

  “Without the Audit Commission Practice acting as an additional player in the market, there are real concerns that the market could become a closed shop, barring new business entry and raising the costs faced by councils. NLGN’s new model of audit would not only reinforce local accountability but also provide a unique chance to ensure an open, competitive and inclusive audit market”

  Show Me the Money also argues that barriers to entry for small and medium tier firms should be removed by reducing the complexity of audit requirements and clear guidance introduced to guard against appointing on current ‘experience’.

  Below researcher Olivier Roth discusses the details of his new report on the proposed shake up of local government auditing and accounting.

  ]]> http://www.nlgn.org.uk/public/2011/show-me-the-money-accounting-for-localism/feed/ 0 http://www.nlgn.org.uk/public/2011/shared-necessities-the-next-generation-of-shared-services/ http://www.nlgn.org.uk/public/2011/shared-necessities-the-next-generation-of-shared-services/#comments Tue, 01 Mar 2011 00:01:24 +0000 editor http://www.nlgn.org.uk/public/?p=6269 A new report from localism think tank NLGN has this week revealed the tough challenge facing councils that are sharing services in order to fill the gap caused by the government’s spending cuts. But the report also warns that councils must be more innovative and ‘boldly go beyond the back office’ if sharing is to deliver significant efficiencies while protecting frontline services.

  Councils are looking at grant cuts of 26% in the period to 2014, with some expected to save as much as 8.8% of total expenditure in the first year, and a median expectation of 5.8%. The NLGN report, Shared Necessities: the next generation of shared services, concludes however, that even in a best case scenario, sharing back office services will limit savings to 3.6% of expenditure; with a more realistic expectation of 1.8%.

  The report, carried out by the think tank’s research unit, recommends councils adopt a presumption in favour of sharing services, incorporating the concept within service redesigns and all transformations being used to manage the impact of cuts.
  
  Launching the report, NLGN’s Tom Symons said:

  “These are tough times for local authorities but a narrow focus on how best to make efficiency savings will be insufficient if they are to handle the lasting impact of spending cuts. Those councils that boldly go beyond the back office when considering shared service agreements will emerge in time as leaner and sharper organisations better able to deliver the services people need.”

  The report authors conclude:

  “New models of shared services, from sharing chief executives and senior management teams to virtual centres, are aimed at helping local authorities with the practicalities of sharing, as well as fitting them into much broader strategies for organisational change. There are implications for the nature of local authority workforces, and potential for reform of organisational structures to more generalist pools of employees, coupled with targeted incentives, to help combat the ‘human’ barrier to sharing.”

  “Sharing services also brings questions about the nature of local authority boundaries to the fore. We are keen to preserve existing democratic structures but there is a vital debate to be had about the potential for the majority of council services to be merged together across economic geographies. It is also apparent that the ‘market’ for shared services is underdeveloped.”

  The NLGN report also includes a toolkit for local authorities and their partner organisations looking to embark upon the shared services journey; and recommends the development of an ‘eHarmony-style’ market place for councils looking to share and trade services, as well as the piloting of ‘invest-to-save’ bonds to finance wide-scale transformation and service redesign.

  The NLGN shared services survey results can be downloaded HERE

  This report was kindly supported by Bevan Brittan, Capgemini and SAP.

           

  ]]> http://www.nlgn.org.uk/public/2011/shared-necessities-the-next-generation-of-shared-services/feed/ 0 http://www.nlgn.org.uk/public/2010/5477/ http://www.nlgn.org.uk/public/2010/5477/#comments Mon, 22 Nov 2010 10:30:41 +0000 editor http://www.nlgn.org.uk/public/?p=5477
  • Social housing accounts for disproportionate growth in fuel poverty
    
  • Government urged to use energy company obligations to support fuel poor households
    
  • Tenants need right to demand green deal improvements

  The New Local Government Network has published a report suggesting that the government’s flagship ‘Green Deal’ programme will be in danger of failing to reach the households most in need of more energy efficient homes across the social housing sector.

  The Green Deal allows households to install home energy efficiency improvements with a value of up to £6,500 at no upfront cost, with the cost paid back by the householder over a period of 25 years. But for many of the 1.4 million social homes classified as ‘hard to treat’, the efficiency measures would cost more than would be saved in reduced energy bills.

  Our research, supported by British Gas, also raises concerns about whether those in fuel poverty would be helped by the scheme. A household is considered to be in fuel poverty if they need to spend more than 10per cent of their income on energy costs in order to achieve an adequate level of warmth. The most recent available figures from 2008 recorded 628,000 social homes in fuel poverty, an increase of 134,000 on the previous year. This accounts for 26 per cent of the growth in fuel poverty across England, despite the fact that social housing only makes up 18 per cent of the housing stock.

  The report also finds that the current schemes sometimes fail to reach those people most in need of assistance because of a narrow focus on particular areas and demographics. NLGN argues that this funding should be directed specifically at alleviating fuel poverty and supporting those homes which the Green Deal will pass over.

  Further measures are also required to ensure take up of the Green Deal. The report argues for a prominent role for social landlords in co-ordinating Green Deal measures across their estates on an area wide basis, with pilots suggesting that costs can be reduced by as much as 20 per cent per home when whole streets are improved collectively. Around 300,000 social homes have an Energy Efficiency Rating of F or G for the least efficient properties, however NLGN’s report identifies challenges in convincing tenants to sign up for the Green Deal. To encourage local authorities and RSLs to promote the scheme across their communities, the report recommends that:

  • Local Authorities and RSLs should form partnerships with energy suppliers to deliver the Green Deal to both social homes and to those in the private sector
    
  • Tenants in the private and social sectors should have the right to demand energy efficiency improvements from their landlord, funded by a Green Deal arrangement
    
  • The proposed £6,500 limit on the Green Deal should be lifted, in order to allow the scheme to cover more expensive measures that will also deliver long-term savings on energy bills
    
  • Discounts and incentives should be offered to neighbourhoods when they take up the Green Deal offer as whole streets
    
  • The scope of the Green Deal be expanded to encompass microgeneration of renewable energy, enabling social homes to benefit from the Feed-in Tariff and Renewable Heat Incentive
  
  Report author, Luke Hildyard said:
  
  

  “The general principal of the Green Deal is a sound one, but the scheme’s application in the social housing sector will be fraught with difficulties. Many low-income households cannot currently afford to heat their homes, so improved energy efficiency will not result in savings on their fuel bill. A revised supplier obligation needs to be targeted at those fuel poor households who will not be able to take advantage of the Green Deal.”

  
  Gearoid Lane, Managing Director of Communities and New Energy at British Gas:
  

  “British Gas is committed to the Green Deal, which promises to be a transformational policy in improving the energy efficiency of Britain’s housing stock. But this report shows that the Green Deal is not a panacea – especially for the most vulnerable in our society including many in social housing for whom simple energy efficiency measures can permanently improve quality of life and help eradicate fuel poverty. We would support a revised and more flexible system of supplier obligations post-2012 that helps us to quickly and effectively target those households in partnership with local authorities and housing associations.”

  
  The report also states that:
  

  “The growth of fuel poverty in the social sector is outpacing that in private housing. Recent housing policy changes have the potential to exacerbate the situation, thereby heightening an already disproportionate increase in the number of fuel poor social homes. Pre-emptive action to prevent this is vital”.

  ]]> http://www.nlgn.org.uk/public/2010/5477/feed/ 0 http://www.nlgn.org.uk/public/2010/through-the-looking-glass-putting-citizens-at-the-heart-of-the-assessment-process/ http://www.nlgn.org.uk/public/2010/through-the-looking-glass-putting-citizens-at-the-heart-of-the-assessment-process/#comments Tue, 20 Jul 2010 23:01:44 +0000 editor http://www.nlgn.org.uk/public/?p=4668 In the wake of the Coalition Government’s decision to scrap the Comprehensive Area Assessment (CAA), NLGN is today calling for remaining inspection regimes to be slimmed down and for local citizens to play a greater role in driving up standards. It also called for greater responsibility for local government in improving its own performance.

  Publishing a on the future of public service inspection, NLGN warns that wholesale abolition of assessment regimes could risk “throwing the baby out with the bathwater” and instead suggests that inspections of key services should move to a ‘risk-based’ weighted approach that would offer intensive support to underperforming councils but much more infrequent and lighter inspection to those performing well.

  Having only been in place since 2009, CAA has been criticised for being too expensive and overly burdensome. A number of local authorities have publicly announced that they will limit the amount of time afforded to collating data for the inspectorate. Government plans to scrap CAA may lead to local authorities only being held to account through elections and through more transparent listing of their spending and decision making.

  Under NLGN’s model, citizens would be encouraged to take a greater role in service provision and in holding their public services to account. They would be able to petition the LGA if they feel that the quality of a specific local service is declining or is not up-to-standards and if the internal procedure of the council or service is not satisfactory. Citizens would also be given access to more transparent information on how council money is spent, as a means of strengthening local democracy, and be invited to act as “bare-foot” assessors of local services.

  The report also points towards a redefined role for the Audit Commission, which would focus more on financial auditing functions and on being a gate-keeper for other inspectorates such as OFSTED and the Care Quality Commission.

  The local government family, led by the LGA, would take on a greater role in supporting underperforming councils and providing peer-led reviews.

  Author of the report and NLGN Researcher Olivier Roth said:
  

  “Each year local authorities spend around £150 billion of public money and it is therefore fundamental how we assess our public services and allow citizens a fair voice in monitoring them. We should enhance the role that citizens can play in holding their local public services to account through transparency and increased citizen engagement. Transparency and clear accountability must sit at the heart of the response, so that citizens have the necessary tools with which to hold elected politicians and officials to account. Effective assessment can underpin local democracy.

  “One of the lessons of CAA is that adversarial and external inspections can only take improvement so far. For improvement to be real and lasting, it has to be embraced by the organisation attempting to improve. It is local government that possesses the experience, the skills and the mindset to identify possible improvements, and to find the right solutions to enable them. The assessment process should be owned by the local government family, as it possesses the required democratic legitimacy, buy in, and know-how needed to implement real and substantial changes.”

  At the report launch, Cllr David Parsons praised the report as “a timely contribution to the debate on the future of audit and inspection.” Gareth Davies affirmed the report’s thesis that “independent local audit is fundamentally important” and Dr. Ita O’Donovan declared that we need to be “much more imaginative at the local level” as we decide upon the future of audit and assessment.

  ]]> http://www.nlgn.org.uk/public/2010/through-the-looking-glass-putting-citizens-at-the-heart-of-the-assessment-process/feed/ 0 http://www.nlgn.org.uk/public/2010/scanning-financial-horizons-modelling-the-local-consequences-of-fiscal-consolidation/ http://www.nlgn.org.uk/public/2010/scanning-financial-horizons-modelling-the-local-consequences-of-fiscal-consolidation/#comments Wed, 07 Jul 2010 10:28:46 +0000 editor http://www.nlgn.org.uk/public/?p=4562
  
  
  • Local Government likely to lose at least a third of Central Government funding over next four years
    
  • New polling shows public opposition to service cuts
    
  • Council chiefs predict that significant services may have to be scrapped
    
  • Treasury urged to give councils greater financial freedoms

  Local councils could be hit with funding cuts of at least a third from central government according to new research from the think tank New Local Government Network (NLGN).

  Analysing figures from the recent Budget, NLGN is predicting that this could leave councils with a funding reduction of over £12 billion, which could lead to services being cut or charges for local services increasing.

  The report, Scanning Financial Horizons, warns that councils must be given greater financial certainty from Whitehall and greater flexibility to raise local revenue if it is to cope with the cuts. NLGN recommends the introduction of new “Place Agreements” of shared public spending across the local state and for local authorities to have full discretion over Council Tax levels as well as the ability to retain a slice of business rates locally to incentivise economic growth.

  The Chancellor George Osborne has already announced reductions of £1.165 billion to local authority budgets for this year but NLGN predicts that these will be “relatively small compared with the tsunami of funding cuts that will hit councils over the course of this parliament”.

  Scanning Financial Horizons also publishes polling evidence showing that councils are already preparing to cut the range of services they provide whilst the public are not prepared to accept service cuts. In a survey of council Chief Executives and Finance Directors the report finds that the majority are expecting to cut their budgets by between 20-25% and almost a third anticipating the gap to be wider than that.

  

  Those surveyed also said that environmental services such as street cleaning and waste collection were most likely to be cut alongside cultural services such as parks, museums and libraries.

  In a separate poll of public attitudes to service cuts, conducted by Populus, the results showed widespread opposition to local service cuts, particularly to areas such as waste collection and social care. The survey showed a lack of support for any cuts to local services and a preference for increased taxation rather than service cuts to maintain local service levels.

  

  

  Author of Scanning Financial Horizons, Nick Hope said that councils are due to face unprecedented fiscal challenges over the next few years:
  

  “A tsunami of funding cuts will hit councils over this parliamentary term. If demands on local government expenditure were to remain static in this period then meeting them would be tough, but demands on expenditure such as in social care are likely to grow, making the scale of the challenge even greater. Local government will have to climb up a downward moving escalator if services are not to hit rock bottom.

  With some areas of Government spending protected, our research indicates that the burden of cuts placed on councils will be substantial, meaning that local authorities are having to explore tough choices about how finances are allocated and how to cut services and increase charges.

  Our research shows significant public opposition to reduced services, meaning that councils may be stuck in an impossible position of having to match high public expectations without the financial means to do so.

  A full and public debate should take place and the fundamental role and purpose of the local authority should be reassessed, in order to redefine and renegotiate the relationship between councils and the public. Local communities must arrive at a feasible new service settlement about what councils can provide and what citizens and community groups could take on themselves, with proper support, in the future.

  Radical efficiency options are being explored by many councils, but they must be given additional fiscal tools, such as greater funding certainty and financial flexibility from the Treasury, if they are to minimise the impact on frontline services.”

  ]]> http://www.nlgn.org.uk/public/2010/scanning-financial-horizons-modelling-the-local-consequences-of-fiscal-consolidation/feed/ 0