The Chartered Institute of Public Finance and Accountancy conference
Draft text of the speech - may differ from the delivered version. I’m very pleased to be here today at the CIPFA conference. We already …
Draft text of the speech - may differ from the delivered version.
I’m very pleased to be here today at the CIPFA conference.
We already reached a100 days of the coalition. Hard to believe how fast time flies when you’re busy. Over that period, the Government has demonstrated its determination to get public finances back into good shape.
At CLG we’ve done a lot too. Scrapped HIPs and housing targets to free the housing market. Set about replacing RDAs with local enterprise partnerships to reopen the country for business. Stopped the bureaucratic reorganisation of Devon and Norwich councils and those unfair bin and port taxes.
And we are putting councils and communities back in control of their own destinies.
Of course, the actions we have taken so far are just the start. And there will be more difficult decisions ahead because that economic situation.
Funding, Emergency Budget
The most urgent issue facing the country is the need to reduce the deficit, put finances back on a stable footing and ensure economic recovery.
Today I want to talk about how we make those necessary decisions together.
The reductions announced in the Emergency Budget made clear our resolve to reduce spending whilst minimising the impact on essential frontline services.
This included steps to limit the impact on local authorities and make savings proportionate.
To help cope we are transferring more power to councils that will mean more local decisions can be made with greater local flexibility.
Many councils are already taking steps to make their own efficiencies through innovative and effective working. I want to see more - sharing management, expertise and resources.
Not only can this save money, but it can support local priorities and can also deliver better access to good legal advice, or better careers for employees.
Spending Review/Efficiencies
The Spending Review will establish Government’s long term plans for public spending, and our expectation about the level of savings that the public sector can make.
But we are embedding our new politics by working in an open, transparent and collaborative way.
The Chancellor recently met with local government to discuss how we can increase productivity by reducing unnecessary waste and costs on things like reporting to Whitehall and the ring-fencing of grants.
We are committed to a phasing out more ring-fenced budgets. We have already cut the centrally-imposed burdens on local government like the Comprehensive Area Assessment and will cut local government inspection further across Whitehall.
We are engaging and involving the whole country in the difficult decisions that will be needed through the Treasury’s Spending Challenge.
The Spending Review will drive decentralisation across all areas that fund local government.
Departments are considering issues beyond their traditional remits including those that cross administrative boundaries.
Future of Local Audit
For example last month Eric Pickles announced plans to disband the Audit Commission and refocus audit on helping local people hold councils and local public bodies to account for local spending decisions.
However, independent audit of public bodies remains absolutely critical - we are disbanding the organisation, not the requirement for an annual audit of accounts. That will continue.
The Audit Commission has helped raise the standard of local authority financial management. It had early success in rooting out scandals.
But times have changed. Increasingly it has become an agent of central bureaucracy reporting to Whitehall.
It was behaving as a large corporate but it’s in the public sector, and in the current circumstances that’s really not acceptable. By stripping out those corporate costs we can save the public purse about £50 million.
Let me be clear - no-one questions the quality of the in-house audit practice. It did, does, and can continue to do a good job.
The audit function can be carried out perfectly sensibly by being moved to the private sector. It is something which they were going to do themselves and is not in dispute.
We do question why the Government runs the fifth largest audit firm. We do question why councils pay inflated fees to support a central commission reporting to Government that we don’t believe we need.
We believe we should trust councils to make independent audit appointments and trust local people to hold councils to account.
Transparency
It is vital that we all look at where every penny is spent and that citizens are engaged in making these decisions.
Whilst councils have already delivered significant efficiencies, there is still waste to be driven out - greater transparency and accountability will help identify this potential.
This is why we want all spending over £500 published online by January.
It will root out overspends, mistakes and waste that could save millions.
The public are saying “show me the money”. CLG has already done. The LGA are going to. And 45 councils are already setting the example too.
Localism
We want to help local people hold councils to account for local spending decisions. Localism is central to our thinking.
By shifting power and funding to the most appropriate local level, communities and councils can take more responsibility for local spending decisions.
This will increase the accountability to citizens and lift the centrally-imposed bureaucratic burden which has emerged over the last few years.
By asking councils to publish online we can have a more open form of local government that answers to the public not Whitehall.
Localism will help local authorities to make the savings necessary to live within the fiscal constraints facing us all free from central government interference.
Government’s role is in the opening up of public services so they can be locally-driven services and meet local needs.
Big Society
What is clear is that we need a radically different approach - which is where the Big Society comes in.
Big Society is about fundamentally changing the way Government and citizens interact where individuals and communities have more power and responsibility and use it to create better neighbourhoods and local services.
In July, the Prime Minister launched four vanguard areas where local people are taking the lead, and taking on responsibility for shaping the decisions that affect their local area.
They are helping to build the Big Society.
And will pursue their projects, taking on a blend of powers and responsibilities they need.
The Big Society is about turning government on its head.
We will get out of the way of citizens and neighbourhoods by helping people to bulldoze the barricades and get rid of the regulations and red tape that gets in their way.
Localism Bill
Our Localism Bill will help set the foundations for the Big Society.
It will radically transform the relationships between central government, local government, communities and individuals.
It will devolve greater powers to local authorities and neighbourhoods to give local communities more control over decisions that impact on their local area, like housing and planning.
It will give communities better opportunities to bid to run state services and take over local assets. It will unleash the voluntary and community sector. We want:
- to make it easier to set up and run a co-operative, mutual or social enterprise
- to get more resources into the sector through the Big Society Bank, and opportunities to take over services and assets
- and to make it easier for voluntary and community sector organisations to run public services.
Local people will have more power over how local government spends public money, ensuring that councillors are more directly accountable to them.
And it will free local authorities from central and regional control, so that they can ensure services are delivered according to local needs.
Local Government Action
Of course, local government and its partners have a vital role in identifying the areas where working together - and working differently - can reduce unnecessary costs and focus resources on where they make the biggest difference.
Incremental changes won’t be enough. Councils will need to think about how they work with delivery partners to radically reconfigure services.
Councils will need to take a twin track approach - identifying and delivering quick wins to create space to deliver longer-term transformational change.
I don’t for a minute believe that this will be automatically painless. But the sector recognises that there are savings to made to focus resources on the front line through better procurement, greater collaboration and sharing of services.
A few weeks ago I went to Dartford to see how the council went about keeping its weekly bin collection. First it asked the public who voted overwhelming (94.5 per cent) in favour of weekly collections. Then they looked at how they could afford it and developed a plan to share some services with Sevenoaks to cover the cost. Sounds simple but I can’t think of a better example of cost saving to maintain a frontline service resident want.
Other councils are thinking innovatively too. Already there are 11 shared chiefs in place and twenty other district councils are discussing whether to share their chief executive and senior management teams.
Leicestershire and Melton are planning to share offices. West Oxfordshire and Cotswold District Councils have agreed to share a Chief Executive and other key posts.
Holland and Breckland district councils are poised to establish the first cross-county shared chief executive post between two authorities that do not share a border.
Their savings are expected to be around £330,000 a year. And plans for shared services are expected to save a further £390,000.
Councils in the North East are working to roll out their successful recruitment portal. It will deliver savings of £12.5 million by reducing the costs of recruitment (such as by through reduced advertising).
Councils in the North West are saving £1.2 million each through a joint tendering processes known as ‘Chest’ that lets them to access a wider range of competitive suppliers. To date over 16,000 businesses have registered nearly 60 per cent of which are small and medium enterprises (SMEs).
And in London councils have saved over £11m using a ‘care funding calculator’ which makes sure social care services meet individual needs through transparent pricing.
All of local government needs to start now thinking like this to maintain services, and CIPFA has an important role to play in supporting local authorities.
LGA Place Based Productivity
The Local Government Association is showing its leadership and commitment.
Their Place Based Productivity will help councils improve performance, make savings and respond to agreed budget cuts, whilst protecting front-line services.
This programme will help councils develop tools to deliver local solutions, building on good practice on a range of priority areas, from procurement to democratic leadership, from data and transparency to adult social care.
This is all about local government leading the way.
Of course, central government is fully behind it. And there’s huge interest in Place Based budgets right across Whitehall. From the Prime Minister, the DPM and the Chancellor.
And we stand ready to work with the LGA. In other words, how can we move further and faster to promote localism, decentralise, and increase transparency to citizens?
Indeed, we are committed to tackling central government barriers and burdens. And have been asking local government workers to help us cut red tape.
We anticipate that the programme will identify future models for driving greater productivity, as well as better service outcomes for citizens and neighbourhoods.
However, identifying areas of potential savings will mean nothing unless the sector embeds and drives change.
Knowing that economies of scale are possible from collectively buying common commodities like tarmac or paper will not ease the pressure on front line services if local authorities don’t establish collaborative processes.
CIPFA’s own ‘Sharing the Gain’ report shows the benefits of sharing services and offers support authorities thinking of taking this approach.
It is important that councils get the financial and legal support needed around transformational change.
You and your members are well placed to do this at this crucial time. When there is less money to go about better financial management is essential.
Conclusion
So, there will be real challenges as we face the future.
But there are many things we can do to ensure that frontline services are protected, and that local people are able to hold local government to account.
We know that a big part that will only happen if councils can be driven by outputs and local priorities, instead of artificial reporting requirements from the centre. So we are removing those.
But we are keen to hear from you about what should include on our hit list.
We are also keen to hear about local innovations that we can champion.
I urge CIPFA and its members to engage with this agenda wherever they can - helping local authorities to join up with partners, highlight good practice, and help the LGA improve productivity.
This is not about central government imposing solutions. It is about taking a localist approach, and trusting local authorities and local people to know what is best for their area.