Make It Local

By the start of 2025, we will have had a general election.

This is a moment of opportunity.

A moment to look to the future and honestly question what local communities need, and how we could do things differently. This isn’t a time for top-down solutions. It is a time to listen to our communities and let them shape the agenda.

Our communities and our residents will, rightly, have high expectations. They will want to see positive change to their daily lives and to their family’s prospects. Above all, every person and every community will want to feel hope for their future.

To do this we need to reshape and reset how we deliver on public policy.

Recent polling (Ipsos Issues Index 25 May 2023) tells us that the public – our residents, our voters – already have clear priorities for the General Election:

• Growing the economy
• Improving our health and care services
• Acting on climate change
• Tackling the rising cost of living
• Building more houses
• Improving life chances for all children
• Making our communities safer
• Building strong local politics.

Councils are integral to getting these issues right for residents – homes, jobs, basic public services like roads and parks are all core to what councils provide for their communities. National policy alone cannot make effective change. It is only at a local level – with local knowledge – that services are effectively delivered.

Over the next five years, we will continue to be faced with unprecedented challenges:

• competing for scarce resources
• dealing with rapid technological advances
• fighting to preserve democracy on the international stage.

Government will only be able to tackle these challenges and achieve the ambitions of the electorate if it resets the relationship between national and local government. National government will need local government. But local government needs this relationship to evolve and improve, it will need a local focus.

Councils touch the everyday lives of people and places. They have experienced first-hand the way in which these national and international pressures impact on communities, arranging accommodation for those fleeing conflict in Afghanistan and Ukraine, supporting people and businesses through the pandemic, and planning for climate resilience.

Local leaders also understand that you cannot build a safe and thriving high street from a desk in Whitehall, you cannot tackle multi-generational health and income inequality through departmental silos and short-term funding pots, and you cannot drive prosperity and growth without power and resources aligned to the different opportunities and challenges of the towns, cities, and villages across England.

What matters most is the bespoke needs of families and communities in each of our cities, towns and villages.

There is an opportunity now to fully empower communities through local government. This would mean trusting that communities, through their local councils, are best placed to take decisions on how front-line services are delivered. 

There are lessons from the pandemic. Councils had the legitimacy to work with residents and across public services to find ways to best meet communities’ needs, to drive change and make service better.

We must build on those lessons. Councils shape their local areas, convening local systems but they are also providers of key services. Public services can be delivered faster, better and more efficiently at a local level. For example:

• Local climate action could hit net zero by 2050 while saving taxpayers around £140 billion when compared to national approaches and returning an additional £400 billion in wider co-benefits.
• A cost-benefit analysis shows a place-based, Work Local approach has the potential to increase by 15 per cent the number of people improving their skills or finding work at lower cost, just by using a limited amount of existing investment more effectively.
• Every £1 invested in a new social home generates £2.84 in the wider economy with every new social home generating a saving of £780 a year in housing benefit.
• £1 spent on alcohol treatment services locally provides a return of £3, with local addiction support services saving our overstretched health and social care system a staggering £2 billion every year.

But our offers require a brand new central-local partnership in which local government can work to its full potential. The relationship will need to be made local.

Our offer requires a reset of the national local relationship in England. This will require:

• fully empowered local government
• resetting the culture of Whitehall
• a new approach to funding and resources.

If government is to truly make a commitment to relationships with local government, so that in partnership we can deliver for the public both nationally and locally, it needs to: 

• Build on momentum of the devolved powers and place-based budgets of the devolution trailblazers. Government should swiftly empower those devolution deal areas ready to go further and set out a clear pathway for all council areas to follow when ready, based on the governance structures that suit the locality.
• Crystalise the trust and local convening role demonstrated by councils in delivering for communities throughout the pandemic by giving them a statutory right to convene national public services delivered locally. In doing so allow local leaders to bring together public services as the first amongst equals, cutting out duplication and creating preventative and targeted interventions that improve the lives of the most vulnerable. It can do this by piloting a new approach to public service investment, by asking areas to come forward with radical proposals to bring together budgets and public services under the leadership of local government.
• Strive for better politics through a world-standard in local democracy, enshrining for the first time the principles of 'the Charter of Local Self-Governance' in UK law and devolving powers where  places are under-powered compared to the towns and cities of our post-Brexit competitors in Europe, Japan and the USA. 

The general election is an opportunity to reset the way in which central government departments based in Whitehall work with local government: 

• Provide better and more transparent advice. An acceptance that Whitehall’s one size fits all, just-in-time policy model has often provided poor advice to ministers. We need a new code for ministerial advice – what do our local front-line services say. The interventions needed to spark a place back into life are not going to be the same for an inner-London borough as they are for a coastal town, or a rural village or a deindustrialised region in the northeast.
• Save money through fewer initiatives. Compared to our international neighbours the relationship between central and local government is opaque, asymmetrical, and unwieldy. We need a new approach.  We can look at simpler international models. In Denmark, there is an annual framework agreement between national and local leaders. It provides scope for setting total expenditure levels for local governments, as well as identifying and mainstreaming the political and economic priorities of local communities. This would simplify existing administrative systems, make decentralised arrangements more efficient and provide the basis for a culture rooted in value for money, innovation and public facing outcomes.
• End the costly and fragmented funding regime. A system where millions of pounds of taxpayers’ money are spent by local councils to chase down new sources of investment from Westminster and Whitehall, at a time when people are struggling to afford necessities is inefficient and unfair. Local is not lesser: we need a more unified and preventative approach to public services, where national government invests in local communities to make sure that local councils have the skills and resources to build resilience and boost opportunity.

Recent spikes in inflation, the National Living Wage and energy costs have placed further pressure on council finances still feeling the effects of the loss of £15 billion in government funding from 2010/11 to 2019/20. We estimate that the cost to councils of delivering their services at current levels will exceed their core funding by £2 billion in 2023/24 and £900 million in 2024/25. If inflation fails to fall in line with the forecast at the March 2023 Budget, and instead is in line with more recent inflation projections from the Bank of England this would add £740 million in cost pressures in 2023/24 and £1.5 billion in 2024/25. Our analysis of funding pressures relates solely to the funding needed to maintain services at their current levels. It does not include addressing existing underfunding in areas such as the adult social care provider market, children’s social care and homelessness, nor does it include funding to improve or expand council services.

Financial pressures tend to concentrate council spending on services such as social care where there are clearly defined statutory responsibilities and regulatory oversight, as opposed to services where there is more local discretion. Between 2010/11 and 2019/20 councils’ net revenue spend on services (excluding education, public health, fire and police) fell by 10.6 per cent in real terms. But this was the net outcome of an 8.9 per cent increase in social care spend alongside a reduction of 32.9 per cent for non-social care services.[1]

In addition, councils’ ability to mitigate the funding and demand pressures they face has been hampered by a financial framework characterised by one-year funding settlements, the proliferation of one-off funding pots and repeated delays to funding reforms. Councils need greater certainty around funding through multi-year settlements and more clarity on financial reform so they can plan effectively, balance competing pressures across different service areas and maximise the impact of their spending over the medium-term.

In this context not only is there a case for ensuring councils have sufficient funding, but there could also be clear benefits from reforming the wider local government financial framework to ensure that councils have the right mix of certainty and flexibility to plan effectively and to be able to improve the lives of their communities.

• More than nine in 10 councils are experiencing staff recruitment and retention difficulties across a diverse range of skills, professions and occupations. While councils are using a range of tactics to address these challenges with support from the LGA and professional bodies, they need long term, sustainable funding settlements so that they can confidently make plans to recruit and develop the workforce they need.  
• Deliver efficiencies to the public purse by ending the costly fragmentation of funding – with nearly 250 grants provided to councils in 2017/18, almost a third of which were awarded on a competitive basis. We need to explore cross-departmental, multi-annual, placed-based funding settlements for villages, towns and cities. If budgets were brought together in a place, it would lead to services that better align with local priorities and the elimination of any duplication of efforts. Multi-year and timely settlements would allow councils to plan and make meaningful financial decisions that improve value for money and financial sustainability. 
• Make the flexible use of capital receipts arrangements permanent and available to fund all transformational and savings projects. 

Local leaders are under no illusions about the scale of the task ahead and the need to ensure that every penny of taxpayers’ money is targeted in the most effective way. A reset of the national local relationship, along the lines suggested above, will bring all communities closer to tackling their priorities.

Now is the time to embrace the opportunities ahead.

If central government truly commits to finding efficiencies in funding, to fully empowering local leaders and to new working relationship with councils, the benefits will be felt in every local area, by every family and every business. 

Each of the following briefings shows how local government is key to delivering solutions to the biggest issues for the public. Local government can deliver faster and more efficiently: 

• Growing the economy
• Improving our health and care services
• Acting on climate change
• Tackling the rising cost of living
• Building more houses
• Improving life chances for all children
• Making our communities safer
• Building strong local politics