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What is the Role of Local Government in Delivering Infrastructure?

John Keyes • 29/07/2020

Dear Chancellor… 

…You’ve never needed effective, well resourced, local government more than now! 

Build, build, build… level up, level up, level up… Brexit, Social Care, more money for a very different NHS... and a £350 billion annual budget deficit in 2020. To these challenges, add zero carbon, planning reform, high street re-purposing, the funding of public transport, devolution, housing delivery, significant unemployment, re-training and apprenticeship programmes… while still dealing with the pandemic and local lockdowns. 

It’s an understatement to say the Chancellor has a full “in tray”.   

The in tray for local authorities is equally overwhelming and this is without mentioning the challenges faced by the private sector. 

One thing is clear - a positive, mutually respectful, appropriately balanced relationship between local government, central government and the private sector is essential to our recovery and could also produce positive, long term and overdue changes. Without this constructive relationship, the depth and length of the COVID-19 impact will be even more severe.  

Physical, economic, social and community infrastructure – it’s all about delivery 

The pandemic has tested our infrastructure. Repairs and new infrastructure are both needed across broad categories. These include including major projects heralded as part of the government’s “build, build, build” programme (40 new hospitals, new and refurbished schools, road and rail investment) but also local facilities and support networks – perhaps best highlighted by the Marcus Rashford campaign to feed vulnerable children. When this local infrastructure performs poorly, it creates greater cost to all of us in the longer term. 

Delivery of strategic and local infrastructure is about people, resources and organisations being aligned and being clear on purpose with a local perspective to deliver effectively. There need to be tailored local solutions to capture the economic potential of High Speed 2 at hub stations; to secure community support for new housing developments and to ensure community support programmes target the most vulnerable in each and every location. 

What does local government need from the centre? 

Local government spending on services has fallen by an average of 21% in real terms since 2009–10. However, those cuts have not been equally distributed across the country, and have been larger in more deprived than more affluent areas” (Institute of Fiscal Studies). 

The pandemic has further impacted Council finances. Short term “emergency” spending has increased whilst revenues – from town centre car parks to property investments to stakes in airports like Manchester and Luton – have declined.  

To support the recovery, local government needs money from the centre and more freedom to develop bespoke solutions to local problems. Is there a danger that the Treasury seeks even greater control over how every £1 is spent, creating centralised “one size fits all” solutions, when devolution of funding to the local level is what will produce more effective results that could be better value for money? 

What does the centre need from the local? 

The quality of the response to the pandemic from local councils has been widely recognised; and is all the more impressive because of the years of austerity. It has been possible because councils know their communities better than anyone.   

But this doesn’t mean Councils don’t need to change – sometimes radically. Local government cannot expect further financial support and more devolved powers without providing something in return. Funding support from the centre will come with conditions – and this is already happening on funding discussions that Ministers are having with the NHS and with the University sector. 

The Chancellor should insist on further local government re-organisation. There are still too many very small local authorities with small budgets and constrained management capacity. Some authorities have been resisting for too long and need to be compelled to merge and create more sustainable organisations with appropriate capacity. 

This is an opportunity to  lift the quality of local government management and decision-making. Rather than the last decade of managing decline, enhanced funding and further devolution can create an environment that attracts talented people to serve local communities with all interests aspiring to be involved in decisions that are best for the local area. Local authorities need to modernise, be more effective and embrace change, moving from ideological approaches to putting places and communities first, driven by data, evidence and an assessment of local economic and community needs.

The Trinity of local, central and private 

Effective working between local and central government must also establish better relationships with business to deliver infrastructure and nurse the country back to economic health.  

Good models already exist. Whilst challenges still remain, Manchester has been an economic and physical regeneration success story. The City Council established effective working relations with the private sector more than 25 years ago. The private sector engages because it realises that the Council puts the needs of Manchester’s economy and community before ideological politics. And Manchester has worked effectively with governments of all colours because it has been ahead of the curve in making the strategic case for change and investment. 

To repeat these successes across the country in the face of the current crisis, more central government funding is badly needed. But money alone is not enough – it must be accompanied by greater local devolution to allow communities to shape solutions that meet local needs. The onus is then on Councils to modernise to deliver effectively and give the private sector the confidence to respond.  

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