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Local Government has shown the way on coping with real spending cuts

The Chancellor of the Exchequer George Osborne has indicated that the Department for Communities and Local Government has agreed further spending cuts of around 10%. The BBC put this at another £2.3 billion. Actually so far it is the rather more modest bit of central DCLG spending which has been agreed. The main bit of spending - the money dished out to councils - has yet to be finalised. Still the example has been set. We can expect some more belt tightening in the town halls.

In a way I feel a bit sorry for the Local Government Association when it comes to their lobbying messages on spending. At any given time they have to combine two messages. First, that councils have coped very well with the spending cuts demanded so far. Second, that any further cuts would be a disaster.

If we take their submission to The Treasury for the spending review they say:

Local government has made a significant contribution to deficit reduction. We have also kept
council tax down helping households meet rising living costs for energy, fuel and other goods
and services. In doing so, councils have sought as far as possible to protect the frontline
services communities depend on and value.

Rather modest as the extent of what has been achieved. Residents satisfaction with council services has increased, during a period of spending cuts. The verdict of residents, which is after all the relevant verdict, is that services overall are better.

But let's also consider the views of council chief executives. This survey that faced with budgets cuts of around 10%-15% in 2011-12 and 2012-13 most of them found the impact neutral or positive. They rose to the challenge. They looked at how to organise better - not just cheaper but better services. Perhaps they are worth those six figure salaries after all. Let's hear it for "the sector"!

The tricky thing is the LGA can't celebrate too loudly. They quickly add:

If, as the government intends, the current trajectory of spending reductions is replicated in this
year’s spending review, some councils will not however be able to deliver the existing range of services.

In the current Spending Review period (between April 2011 and March 2015) local government
funding will fall by 33 per cent in real terms. Headcount has reduced by 312,000 in the two
years from October 2010.

Whilst the exemption from the additional 1 per cent reduction in 2013/14 is welcome, the additional 2 per cent cut to local government funding in 2014/15 (made in the Autumn Statement) is unsustainable without impacting on some services. It follows that further reductions in 2015/16 are equally unsustainable.

Further reductions in 2015/16 will require changes to public and statutory expectations about the services councils will provide.

At least the LGA doesn't follow the Labour Party in claiming any further cuts would mean civil unrest.

Not that it is only Labour councils that have cried wolf.

None of this alarmism has a shred of credibility. Firstly, there is far more that could be done in terms of efficiency - in shared services, for instance, most councils are doing something but they could be doing far more. Secondly, there are areas where local government could cease to operate and it would be beneficial. I recently offered the example of arts subsidies. Another would be a council closing a children's home and instead using foster carers. You can call that "cutting a service" if you like. Wherever it is possible it is something that provides a better service for the child.

Council spending has genuinely been cut substantially. That has made services better. Of course there must be a limit to how far that is possible to continue in that direction. But there is a long way to go. I offer examples on this site every week. The Troubled Families initiative offers the scope to save billions.

The points I mentioned above are not just about making local government cheaper but also about better outcomes. More shared services reduce costs and mean better services. Cutting arts subsidies means reduced cost and better artistic performances. Fewer children in care means reduced cost and better outcomes for the children.

So much state spending, locally and nationally, has not merely been wasteful but damaging. That is why we should support the cuts. Not just of necessity to help rescue the public finances. Not just to make room for lower tax for wealth creation and greater freedom.

It is also that spending cuts are forcing serious thought about the services the state provides so that a better way is found. Local government representatives have grumbled publicly but on the whole has then gone away and made a success of the new settlement where they have less money but more freedom and accountability. Sometimes I find the management jargon about "reconfiguration" and so on. Those of us involved are entitled to be proud of.

We could and should do more in local government. Much of central government has scarcely begun to try.


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