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Making Local the Answer

Date of speech	21 October 2009
Location	RSA House, London
Event summary	Lecture to the Royal Society for the encouragement of Arts, Manufactures & Commerce (RSA)

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Draft speaking notes - may differ from the delivered version.

One of the great challenges facing the country is how, at a time of tight public expenditure restraint, we can still deliver high quality public services; services which for the individual user, look, feel and are as good, indeed better, than the ones they enjoy today.

My argument is that, done properly, effective devolution of power, leadership and accountability to strong elected local authorities will be key. And I want to set out how this might be done, and what it would look like.

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Of course money is going to be tight. But that is no reason for lowering our sights.

It simply makes it even more important that we make the right choices to best tackle the challenges we face.

We will still want to house everyone well. We can still tackle inequality if we want to. We will remain a society where the public realm and a decent environment are the right of everyone. And we will be a society which can continue to tackle climate change, if we choose. Indeed, we have no alternative.

The way we organise our public services and the way we use our resources will be crucial.

And, ultimately, almost all services are delivered at local level. And it is at local level that we need to make the best arrangements.

Over the past twelve years the Government has driven improvement and public service reform through each of the main public services. After a period of intense and centrally directed targets - aimed at focusing services which often had little clear notion of quality - Government policy in each series has increasingly involved consumer choice, slimmed down and more strategic performance measures, diversity of providers and a renewed emphasis on local decisions and leadership.

The results are clear. School standards up - with 65 per cent of students now getting five good GCSEs - in 1997, it was just 45 per cent. Services for patients are improving, with over 89 000 more nurses and 44 000 more doctors. The British Crime Survey shows that overall crime is down 36 per cent.

It's not just within individual public services that progress has been made. Much productive effort has been put into the development of local partnerships across services. From crime reduction partnerships onwards, it's been clear that success depends on services working well together.

But the challenge of making the best use of all public service spending in each local area is still the real frontier territory of public service reform. It will only be conquered by effective, strong and accountable local government.

Last July, in Strengthening Local Democracy I began to outline the crucial role local authorities could play in doing just that.

Today I want to confirm that direction of travel. And to outline some of the next steps.

Over the past decade, there has been a steady and sustained transfer of power to local authorities which has included

• cutting the red tape that came attached to ring fenced money;
• giving greater stability and certainty through the three year financial settlement;
• cutting the number of targets and rationalising inspection regimes to focus on delivering what really matters;
• extending financial flexibility through prudential borrowing; giving more freedom and flexibility to innovate;
• ensuring local authorities have expansive powers to promote the economic, social and environmental well-being of their areas;
• and giving local authorities power and responsibility to shape more of the issues which matter to local people.

For example, in my previous department, I oversaw the transfer of over £0.5bn of funding each year and responsibilities for young people's education, for informal adult learning, and for English as a second language - all enabling councils to shape educational opportunities for everyone in their area.

Over the summer, we took steps to give councils a greater role in meeting housing needs in their area - with greater flexibility to fund housing, and a revitalised role in actually building new homes. 47 councils have already benefited from a share of £127 million which will finance the first significant council house building programme in over two decades - as part of our £1 billion investment into new housing since June.

And most recently we made a major announcement about the future of social care in the UK - with the biggest shift in funding -around £450m a year - from health to local government since 1948.

All these have confirmed the importance of elected local authorities to the Government.

We are clear that the foundations of their importance lies with individual citizens, not with the institutions themselves. The founding principle of local government is that citizens have the right to influence the decisions that affect their lives and their communities. Sometimes they may exercise this right through personalised services and sometimes by influencing local services - for example, by having a direct say over how their neighbourhood is policed. And sometimes it will be through lobbying their council. But a key way in which local citizens are able to exercise that right is their ability to elect a strong local council which can lead and shape their area.

That is why the role of councillors and councils, with their unique democratic mandate is critical to making sure that local services are responsive to the needs of their local communities. Citizens have a right to have their voices heard, and to expect those delivering services to care what they think.

So councils must be fully equipped with the powers they need to act decisively and effectively on behalf of their citizens: the powers and ability to scrutinise, influence and shape other services. This is a much stronger role for local government, placing it firmly at the centre of decision making in their community.

The commitment to strong local government is part and part of our commitment to personalised services, to a strong local voice, and to entitlements for key public services.

But if that is the case, why should those rights stop arbitrarily at the services delivered by local authorities themselves? Why shouldn't the citizen be able to elect councillors who can report back to them on every aspect of public services in their area? Why shouldn't their rights to challenges the quality of local services apply equally to the delivery of school and health service entitlements? Why shouldn't it be possible to have a more open debate about the best ways of providing local services, and of switching resources from one service to another to achieve better outcomes?

Well, of course they should.

And there are now, in the pipeline, five significant developments which taken together, have the potential to transform the delivery of local services. And to make each taxpayers pound work as hard as it can. These five strands of reform have developed from different starting points. It is only when you put them together that you understand how radical the government agenda is.

The first is the approach of 'Total Place'. A willingness to map all of the public service spending going into a local area. And then to ask hard questions about the best use of that money.

There are thirteen formal 'Total Place' pilots underway. Each is concentrating on a particular theme in their area, such as children's services, anti-social behaviour or social care. The mapping exercise is already confirming the sheer scale of total public service spending in each area - £7.5bn a year in Birmingham, £3.4bn in Central Beds and Luton, and £4bn in Worcestershire.

The circumstances for areas are different, and more needs to done to enable us to get to definitive figures but even if we take a one percent saving and start thinking about what that will mean - say, for example in Birmingham, potentially £75 million - then this begins to explain why we are so interested.

A one percent efficiency saving across the Local Government budget for 2010/11 alone could see a saving in the order of £600 million: by bringing together all local services, Total Place has the potential to go much further.

In each area, service providers are working collaboratively to identify how a 'whole area' approach bringing together all the different services in a joint effort to respond to local needs, with local authorities taking on a unique leadership role can deliver better outcomes for users. Then you can cut out waste, overlap, duplication of effort: all helping to make sure that every pound of taxpayers money is working as hard as it can. And by putting democratically elected councillors in the driving seat, you make sure that local needs and views are being properly served. This approach to public services can lead to better services at lower cost.

Our aim is that across the country, it should be possible to identify exactly how much could be saved through more effectively targeting resources at the needs of people who rely on them - especially important in the tighter financial climate. For example, investing in preventing drug and alcohol misuse at an early stage, could cut later spending on anti-social behaviour, crime and offender management services. Investing more in reducing unwarranted teenage pregnancies could reduce cost right through the rest of the health, education and child welfare systems. And looking at where all the money is being spent on supporting the youngest children will make sure that preventative services are really reaching out to those who most need them - cutting out the need for spending on more intensive support at school later on. Not only does it cut costs, more importantly, this approach delivers better outcomes for the people actually using those services.

We are due to get an early report in November, with a full analysis by the budget. But it is already clear, from the ministerial coordinating group I chair, and from the meetings of senior officials across Whitehall that the real potential of a whole area approach is increasingly recognised.

This, of course, has major implications for central government's involvement and relationship with local government. It will require major change in the way that Government manages and inspects different public services - as well as how we set targets for performance. It could mean greater alignment of performance frameworks of major services so that bodies like the NHS, the police and local government were all working towards the same goal. And Government would also need to resist the temptation to tell councils how to spend lots of different pots of public money. The pilots will give us some insight into the scale of change which could be needed.

But just as importantly, this will require major cultural change among the public services involved - supporting closer working than has ever previously been achieved at all levels throughout the services. Greater use of shared services, of more innovative procurement models, and joint commissioning will lead to operational efficiencies at the front line - and vice versa.

At a more strategic level, councils could lead other services in join assessment and planning to make best use of capital assets. This would mean that capital investment in schools, hospitals, housing and so on would better reflect a strategic vision for the place: led by the council and properly influenced by what citizens want.

And there is ministerial backing for reforms that will make this easier to deliver. While we don't want a top down reorganisations, Andy Burnham and I have given our backing to closer working between local authorities and PCTs including the sharing of staff and the development of joint accountability and scrutiny arrangements. Now London Councils and PCTs are embarking on just such a programme.

But total place is unlikely to be fully effective if it is seen primarily as a managerial exercise; an upgraded approach to partnership working. This will be essential. But it most be challenged, be gingered up, by effective scrutiny.

The second element transforming local public services will be the explicit extension of local authority scrutiny powers to all local public service spending in each area.

This proposal has been strongly supported in our recent consultation and has won the support of ministers across Government.

While much scrutiny is good - remember the recent report on Birmingham's children's services was a councillor led scrutiny report into their own services - it remains a lion that has not yet roared. Part of the challenge function is the ability to scrutinise effectively the delivery of all local public services.

People individually often feel that they don't have the power, or the detailed knowledge, to tackle service providers like the police, utility companies or transport bosses on their own. Councils should be able to fight their corner on their behalf. Not as a complaints service, but as the body which has responsibility for all overseeing expenditure on delivery of local public services in an area, and has the democratic authority to challenge unelected bureaucrats.

So done properly, effective scrutiny is an important driver of improvements in public service delivery. The aim then should be two-fold - to make sure that all councils are utilising their powers of scrutiny effectively, coherently and systematically. And making sure that citizens are confident that their councillor is able to report back to them on all the public spending in their area.

The third strand of reform will be driven by the tightest of public expenditure itself. The drive for value for money will be at the top of local authority chief executives' agendas. Here there are both opportunities and threats. The opportunity is to promote and open and innovative approach to commissioning services.

One that sets out the outcomes to be achieved, rather than the precise service to be delivered. The threat is to go the opposite way, focusing solely on the cheapest delivery of a bog standard service. Indeed, this approach will run entirely counter to the total place approach; to the need to look at services and spending as a whole and ask how they could be delivered better.

I've established a small innovation commissioning unit in CLG and will be making it clear to Regional Improvement and Efficiency Partnerships that they should eschew the temptation to promote the route of narrow cheapest and unimaginative standardisation.

So, in future, we will look at the whole of local public service spending. We will equip local authorities not just to lead and to deliver but to scrutinise the effectiveness of spending. And we will promote the managerial cultures and commissioning practices needed to deliver real

The fourth strand of reform is to develop and enhance new roles for local government, including the ability to generate new income.

That is not about local authorities introducing new or higher taxes.

However, if money is going to be tight, local councils need to be able to generate new sources of income.

There is significant room for local authorities to expand and grow their role in municipal enterprise. Stockport Council is one council already doing this by taking advantage of its 'powers to trade' in waste and recycling facilities. But though councils doing these sorts of activity have so far generated around a billion pounds, to date, only a quarter of councils are doing so.

I would like to see a renaissance of municipal enterprise. Such services could increase competition, delivering a better deal for consumers. And councils could use surpluses from commercial local authorities need to be able to generate additional sources of income.

We might also explore more innovative ways of funding investment - and considering new vehicles for local government to invest, for example, in social housing.

There are, I believe, significant opportunities for local authorities in the transition to a low carbon economy in generating energy from renewable sources. As well as playing a bigger role in the provision of infrastructure for low carbon district heating and transport schemes, and coordinating the best use of energy efficiency measures. It's also interesting to ask whether some form of local carbon budget, perhaps an extension of the existing carbon trading schemes, could provide further financial incentives to low carbon councils.

We are currently exploring the feasibility of a range of options with DECC. But while we work through the detail, I know Ed Miliband shares my enthusiasm for the leadership role of local authorities in a low carbon economy.

The low carbon challenge is just one area where we have asked local authorities what additional legal powers they need. We are already legislating in response to the LAML judgement, in order to make it clear that local authorities can enter into mutual insurance schemes. Our general invitation to identify and further areas has drawn a mixed response. Many have called for a so-called 'power of general competence', but there is a question of whether once inevitable prudential restrictions are applied, this would look very different to the current power of well-being. Some have said the solution is a greater clarity over existing powers. Others, however, have given examples of where they have concerns - whether in relation to shared services, driving innovation and efficiency or in wanting to enable councils to be more entrepreneurial.

These are complex issues that need careful consideration - which I am committed to taking forward as a matter of priority. What is pleasing, however, is the degree of commonality there is between central and local government on concerns, issues and thinking.

Up until this point, I have described processes which are all within the world of public service delivery.

But even with real enhanced powers of scrutiny by elected local councillors we can ask whether these changes will be sufficient to drive the public service reform we need. It remains a challenge to ask people to reinvent in a fundamental way the current work they do. So the fifth strand of reform must be open these processes outwards. To allow those outside public services as well as those inside to examine what is happening and to propose alternative ways of doing things.

This can only happen if the necessary information and data about what is currently delivered is easily and readily available.

The Prime Minister has highlighted the importance of an open data policy as part of our broader efforts towards democratic renewal - creating a culture in which Government information is accessible and useful to as many people as possible in order to help build public trust in the way that information is used.

Public data is an essential tool in creating pressure to drive improvements in public services - on the old principle that knowledge is power. It puts all the information, and therefore the power, in the hands of users, service providers, and would be providers - including social enterprises. People can compare the outcomes and the costs for their own local services with the services delivered elsewhere, and suggest means of improving and driving change. There are obvious close links with the concept of total place here - helping to cut out duplication and waste, and making sure that every pound of public money is working as hard as it can.

Making public data available enables people to reuse it in different and more imaginative ways than may have originally been intended. Estimates suggest that this could generate as much as a billion pounds for the UK economy.

Public data can ensure consistency - so that residents in Hackney can compare their services with Kent and Lancashire as easily as with their neighbours in Haringey. Making public data public should not be optional for local authorities - it essential to their role as accountable leaders in modern, democratic institutions.

Openness of data is as important for local government as it is for national government - making people more connected to their community and giving them the tools to demand action on issues that matter. Digitalising council records could mean that citizens can find out everything from the council accounts to the number of streetlights and community wardens, to when the rubbish is collected and the hedges trimmed. The work Sir Tim Berners-Lee and Nigel Shadbolt are doing needs to extend across the whole public sector. And I am working with them to ensure that their work embraces local government and local services and that local government responds quickly, consistently and effectively to the challenge.

Finally, there's been strong support for the concept of a Joint Committee of both Houses of Parliament to keep central-local government relations under regular scrutiny. This idea was first proposed by the CLG select committee. It's establishment would, of course, be a matter for Parliament, not Ministers, but there is clearly a lot of sense in it.

That then is the landscape of local reform.

A willingness to look afresh at all local public services spending in each area.

To create, between central and local services, the culture which enables real innovation and change.

To ensure that strong, accountable, local councils are at the centre of leading, delivery, shaping or scrutinising local services.

To enable councillors to scrutinise every aspect of local pubic service provision.

To open up the information about local services to public scrutiny, and to enable those outside to propose new ways of doing things.

To give local councils the powers to innovate, and be entrepreneurial and develop new sources of income.

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The starting point for all this is the individual citizen and the service they will receive.

In our vision, powerful local government will play an essential role in ensuring that citizens receive their entitlements to a consistently good standard of public services as articulated in Building Britain's Future. The aim is to move away from a system primarily based on central direction and targets, to one where citizens have enforceable entitlements to public services and means of redress where these are not delivered.

The scrutiny powers of councils would play a critical role here - recommending support or intervention where entitlements are not being delivered by service providers. Through petitions or other means, citizens should be able to demand actions from their council if they believe those entitlements are not being met. As we start to develop the concept of entitlements in practice, we will need to go further still in freeing councils from targets and inspection, to give them the flexibility they need to respond locally.

The first test of this will be in delivering the vision for social care which the Prime Minister has set out. Where people - wherever they live in the country - should have their needs assessed, and met appropriately through high quality public services. But how those services are delivered may vary - reflecting the fact that delivering social care or other service is very different in a rural setting than it is in a very dense inner-city. In that way, it is possible to promote innovative and creative approaches to service delivery - but without resulting in an unacceptable 'postcode lottery' because of the universal standards of service..

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My vision of strong local government at the heart of providing innovative and better value public services is not an end in itself. In the context of tighter public finances, it offers the best opportunity of delivering better services for less public money. But as I have described today, that will mean a radically different role for local authorities in future - and I look forward to working with them as we realise this vision.