Public sector reform: How Cameron is succeeding where Blair failed and Brown didn't try

It used to be said that reform of the public sector would involve increased spending, at least in the short term, and that it would not be realistic to seek to reform at a time of cuts. That would certainly be the pitch from the bureaucrats to the politicians.   But compared to the last 30 years, the Cameron years stand out for combining a (small) overall reduction in state spending with more radical public sector reform than seen for a long time.

I have been reflecting on this after reading The Politics of Public Sector Reform: From Thatcher to the Coalition by Michael Burton (Palgrave Macmillan £26.29).

Mr Burton is a non-partisan figure. As editor of the Municipal Journal he certainly allowed plenty of space for those "forces of conservatism" wishing to "defend the sector."

With Tony Blair there was the aim to achieve reform. A performance unit, a delivery unit, a strategy unit. The intensions were good but the results were derisory. There was "a huge increase in public spending" which Mr Burton feels ""led to improved public services. However, this was not matched by proportionate increases in public sector productivity."

To take schools, as an example, the general picture was of reverse. There was more bureaucracy. Ofsted lost its edge. The Assisted Places Scheme was scrapped. Grant maintained schools were replaced by the emaciated foundation school status. On the other hand, league tables for exam results continued as did the City Technology Colleges. Indeed there were more CTCs - renamed academies. By the time Tony Blair stood down as Prime Minister in 2007, after 10 years,  there were 47 of them. (There are now 3,086.)

Mr Blair's successor Gordon Brown "was less enamoured with public sector reform."

Of the coalition, Mr Burton notes the significant reforms in health, education, local government and welfare and adds:

The changes occured against a backdrop of sharply reduced spending which put pressure on public sector management to opt for 'transformational' rather than incremental change. The long-term squeeze on their budgets means public service providers must reconsider how they deliver services in order to maximise efficiencies, and early pooled budget pilot studies show evidence of major savings.

The Troubled Families Initiative has generally passed the media by but Mr Burton rightly spots its importance. While there has been much talk of different bits of the public sector being in "silos" rather than "joined up" the Troubled Families initiative is proving an effective way of doing something about it. Far from it meaning more spending for the 400,000 families concerned, it is about breaking their dependency on welfare and involvement in crime.

Mr Burton adds:

The Coalition's Universal Credit and Work Programme are highly ambitious reforms, brought in quickly. If they achieve their goals of reducing welfare costs and long-term benefit dependency against the backdrp of a sluggish economy they will prove to be one of the most successful public sector reforms of the past three decades.

Just as Margaret Thatcher's reforms - including privatisation - were followed around the world, Mr Burton says that:

The UK government's efforts to reduce its deficit and change the public sector are being closely observed by other nations with similar challenges.

This is a cautious account. Lots of provisos. Mr Burton is not a man to swing from chandeliers. There are plenty of people who think the cause of reforming public services is hopeless or undesirable. However, for those who believe the cause is worthwhile, fair minded observers would surely conclude that Mr Cameron has achieved more in two years - without an overall majority for his Party in Parliament - than Mr Blair did in ten years with landslide victories and money coming out of his ears. Pretty extraordinary. Mr Burton doesn't make this conclusion explicit but I suspect he believes it - so even may Mr Blair.

Using Zipcars is saving Croydon Council £756,000 a year

I have been critical of Conservative-run Croydon Council for increasing Council Tax this year.

However the council are to be commended for their review of staff transport which has produced considerable savings.

Cllr Sara Bashford, the Cabinet Member for Corporate and Voluntary Services, says that in 2010 the Council switched from the traditional fleet approach and started a pilot scheme with the UK's largest pay-as-you-go car network, Zipcar:

The idea is simple: rather than owning a car outright or leasing a fleet, we have exclusive access to 23 vehicles during standard working hours, which is when we actually need them.

Cllr Bashford adds of the results:

• Annual travel costs were cut by 42% from £1.3m to £756,000.

• Employee business miles fell by 42% each year, from 1.1m to 642,000 miles.

• We encouraged more of our employees to use public transport or walk to work and council employee car users have fallen by more than half.

• The pay-as-you-go approach has also proven to be more sustainable, with council employee's Co2 emissions footprint decreasing by more than a third.

As well as saving money and proving more environmentally friendly, we were also able to use the cars to help out local residents. The additional 23 vehicles were available outside of council working hours to Croydon's 1,300 Zipcar members. Using the cars for both public and private use is a great example of how a single investment in an innovative service can bring about benefits that go beyond the council to directly help the community we serve.

Something for other councils to look at.

Doncaster Council tops the league for zero hours contracts

Yesterday Mark Wallace reported on the hypocrisy of the Labour MPs denouncing zero hours contracts - while taking money from the Co-Operative Group which makes extensive use of such contracts.

There is a further hypocrisy involving Labour councils. Andy Sawford, the Labour MP for Corby and East Northamptonshire, says his private members bill would ban zero hours contracts. That would be a problem for Labour-run Corby Council which has 151 staff on such contracts.

Perhaps the Labour leader Ed Miliband might like to take the matter up with his local council, Labour-run Doncaster? They topped the league according to the recent IBT report with 2,759 staff on zero hours contracts.

Other Labour councils with high numbers mentioned by IBT were Preston with 175 and St Helens with 300.

There are some more examples from the BBC who carried out FOI requests to London councils. While Lib Dem-run Kingston had the highest ratio of staff on zero hours - with 37% - the runners up were both Labour councils: Merton has 14 per cent while Brent has 18 per cent.

I don't think zero hours contracts should be banned. As Nick de Bois has argued a better way is liberalise employment law so that better alternatives are more attractive.

If Labour disagree that they don't have to wait for a General Election. They can order their councils to cease providing them - as well as refusing to accept any more tainted money from the Co-Op.

Oxfordshire County Council proposes new bus lanes to raise revenue from fines

Oxfordshire County Council, a Conservative/Independents alliance, is proposing new bus lanes with the explicit intention of increasing revenue from fines. There are already far too many bus lanes. They are imposed to punish motorists rather than with a balanced view of whether they reduce overall journey times. Where bus lanes are in place, the damage they cause by increasing congestion could at least be limited by allowing taxis, motorcycles, and cars with two or more passengers to use them - a policy that Conservatives have considered in the past.

The proposal from Oxfordshire is particularly dubious after the ruling for Barnet Council that reinforced the existing law that councils can not increase fines on motorists in order to subsidise spending elsewhere. Not even other transport spending - for example a contribution to the Freedom Pass for pensioners using the bus or the tube.

In her ruling on the Barnet case, Mrs Justice Lang said:

"Where a public body uses its discretionary powers to levy taxes, the courts will strike down demands which are unauthorised by statute. In Vestey v Inland Revenue Commissioners [1980] AC 1148, Lord Wilberforce said at 1172D/E: "Taxes are imposed upon subjects by Parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is clearly defined."

Sounds right to me. It's a great thing about the British constitution that we have the rule of law rather than a bunch of state gangsters helping themselves to our money whenever they feel like it. It goes back a bit further than 1980. The Magna Carta of 1215 said "scrutage" - as tax used to be called - could be taken having "obtained the common counsel of our Kingdom."

In 1689 the Bill of Rights added:

"That levying money for or to the use of the crown, by pretence of prerogative, without grant of parliament, for longer time, or in other manner than the same is or shall be granted, is illegal."

I am pleased that Cllr Arash Fatemian, the Cabinet Member for Finance in Oxfordshire, is open-minded about finding ways to reduce costs and raise revenue. Renting out the County Hall as a wedding venue sounds good. I have already offered his council some other ideas that could be used instead of putting up Council Tax. The council leader dismissed criticism of the Council Tax rise saying this was "London/urban myopia." Then the council elections in Oxfordshire saw the Conservatives lose 14 seats and overall control of the council. Perhaps rural voters don't like tax hikes either.

But when it comes to imposing taxes without the authority of Parliament, under the pretence that they are fines, I part company with Cllr Fatemian. He is right to seek to avoid further Council Tax rises. But at least that tax is honest, legal theft. Stealth taxes are a poor alternative. Clogging up the roads of Oxfordshire with unwanted bus lanes as a brazen revenue raising scam is liable to land him in court. Perhaps the verdict will take a couple of years - which would be appropriate, offering a chance to uphold the Magna Carta on its 800th anniversary.

I urge Cllr Fatemian to look at other options.

Councils "face further 10% cut in central government grant"

The BBC are reporting that councils are facing a further 10% cut in their budget. I don't quite recognise the BBC's figures of total council grant being £21 billion currently. I understand that it is £24 billion. Though it is bit complicated what to include. There is the Formula Grant but there are also other odds and ends - a billion here, a billion there...

There is still a bit of haggling, we are told, over the size of the cut. We are given to understand that the Communities and Local Government Secretary is being asked to accept an 11% cut.

The good news for councils is that some ring fencing is likely to end. I've already called for this with the £2.5 billion on public health. It seems to crop up quite often. Highways is another example. Spending money messing the roads up with humps - on the grounds that the council doesn't have to pay for it but cna get funding from some transport authority, etc.

The BBC report says:

Council leaders should keep calm and carry on cutting

There is a letter in The Observer this morning from a group of council leaders from different parties:

It says:

By the end of this parliament, councils' funding from central government will have been cut by 33%. In comparison, Whitehall departments will have faced average reductions of 12%.

That is a strong start. The letter goes on to imply, while not quite boasting, that councils have coped pretty well. They have the letter notes "saved hundreds of millions of pounds by teaming up to provide both back office and frontline services." The letter also makes a sensible call for "devolving budgets away from Whitehall to increase co-operation between public agencies, save money and improve services." 

Then it all goes wrong. The intelligence of the Observer reader is insulted by the implication that while these huge cuts have been absorbed with great effectiveness any further cuts would be a disaster:

This pattern cannot be repeated without it having a serious impact on local services and people.

Furthermore:

Local government bore the brunt of cuts in the last spending review. For the sake of the public it cannot afford to do so again. 

To take just their chosen example of savings through shared services it is ludicrous to pretend no more can be done. Even my council - with a triborough arrangement with Westminster and Kensington and Chelsea - could and should be doing far more joint working - in areas including planning, housing and legal services. For most other councils progress might well be significant in ths savings achieved but still derisory in comparison to the potential.

Council spending £347 million a year in fees to investment managers for Pension Funds

While generally councils has been finding savings one area of increased spending has been highlighted by the Daily Telegraph. The fees paid to investment managers rose last year to £347 million - up 9% on the £319 million the previous year.

The analysis suggests a wide variation often with fees being cut. But the examples used by the Telegraph suggest that it is Labour councils that are the most generous in handing over increased dollops of Council Taxpayers money to fat cat fund managers.

Lewisham Council's fees were up 85% to £3 million. Durham's were up by 41% to
£8.7 million.

The report adds:

Pension fund charges fell in other parts of the country, 39 per cent in Cambridgeshire to £2.8million and down 37 per cent in Richmond-upon-Thames to £675,000

There was also a big disparity between funds, with Kent paying out nearly £4million in fees to fund managers more than Lancashire, despite having a smaller fund.

A breakdown shows taxpayers in some of the country's poorest boroughs supporting payments to some of the City’s biggest fund managers.

Camden paid out £2.8million fund managers including £1.1million to Aberdeen Asset Management and £667,000 to Fidelity while Barking and Dagenham paid £2.2million to fund managers including Aberdeen Asset Management, Goldman Sachs, Prudential and Schroders.

The Pension Funds amount to £158.6 billion. So it makes sense to make some effort to get the best return possible. But it is not clear why the fees should have risen so sharply. Nor it is clear that having all these separate funds each with their own teams of advisers offers the best value for money.

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"!

Green Party civil war in Brighton shows the clash when the Left is faced with reality

George Grant,  a former foreign correspondent and think tank analyst, on the dispute between a Green MP and a Green Council. Follow George on Twitter

There’s trouble afoot down in Brighton, the super-lefty slice of England that’s home to the country’s only Green-led council and its only Green MP. The row has largely passed below the radar of the mainstream media, but it highlights a much bigger issue that merits more attention.

Several months ago Brighton & Hove council announced plans to overhaul special allowances paid to its workforce, a fancy way of saying it wanted to reduce the pay bill. About 6,000 council employees will be affected under the scheme, with union bosses claiming that around 1,000 staff are in line to lose as much as £4,000 a year.

The council says the move is necessary to prevent layoffs in light of the need to curb public spending.

Enter stage-left Caroline Lucas, the Green Party MP for Brighton Pavilion, who has denounced the plans as “unacceptable” and made clear her “opposition to any cuts in take-home pay”.

Bolstered by a local party vote last Tuesday evening to condemn the offer and express  “dismay that responsibility for the pay negotiations was handed to council officers”, Lucas has now pledged to join striking workers on the picket lines… against her own council.

Councils are spending over £3 billion a year on debt interest

The Government has released figures on the level of debt and the resulting interest bill for each local authority. The total spending on debt interest comes to £3.043 billion a year.

For many councils this is a huge item of spending, yet one where little effort has been made to reduce it. Routinely, high debt is combined with a long list of surplus or under-used assets.

Hull City Council has just increased the Council Tax by 1.95%. The council has debts of £454 million costing £8 million in interest payments.

It owns 670 works of art but the council doesn't know how much they are worth.

The response to my FOI request was:

The art collection has not been separately valued and is not separately insured.  It comes under the general insurance for the Museum collections.

How many of these works of art are on display?

The Borough does not have a separate permanent art gallery so few of the works are on permanent display (four currently at the Museum and a small number within the Guildhall) but there are temporary displays of material from the collection at regular intervals.