The law of unintended consequences is a new government’s nightmare, and to mix metaphors, the chickens usually come home to roost a year or two after it has been in power, invariably as a general election looms.
In making its combination of sudden policy shifts, scrapping of quangos and CSR cuts, the coalition has opened itself wide open to the law of unintended consequences (LUC). For example, the abolition of the regional development agencies has raised a sudden question mark over the future of the unallocated EU regional funds, worth a hefty £1.3bn. If the RDAs are going, which organisation is, therefore, placed to assume the regional mantle that EU rules require for the receipt of funding?
The word ‘region’ has been banned from the CLG, to be replaced by ‘localism’, but unfortunately, the news has yet to percolate to Brussels. Watch this space, for negotiations are ongoing between UK officials and their EU counterparts, as you can be sure the coalition will not want to lose £1.3bn of funding when it is busy slashing elsewhere.
Welfare, of course, is the worst area for the LUC. The coalition has already faced flak over the abolition of child benefit for upper taxpayers with one parent at home. But take the ceiling on housing benefit. It is understandable ministers want to impose a cap. But the LUC means that families living in expensive houses in central London will, therefore, move out to cheaper boroughs, thereby placing new burdens on schools and social services there, the tab having to be picked up these councils.
As for giving local authorities control over council tax benefit, while also cutting the amount by 10%, the LUC means many councils will have to pick up this bill as well, on top of the CSR cuts. And the funding of next year’s council tax freeze means those local authorities planning modest rises to maintain their tax base in future years will lose out.
Ministers can only hope that announcements made during weeks of sleepless hyperactivity in their first months in power do not come back to haunt them.
Wednesday 27 October 2010
Thursday 21 October 2010
The Review
Local government senior managers and councillors knew the Spending Review would be bad news for them – and so it has proved. In that sense, there are few surprises. Most plugged-in chief executives have been working on the assumption of about 30% cuts over the four-year cycle.
The actual figures announced this week by the chancellor envisage cuts of 28% in local government, with 30% in overall capital spending. The Communities and Local Government department’s ‘overall resource’ will drop by 51%.
Curiously, the CLG, announcing the 26% cut, notes that if taking council tax rises into account, the total real-term cut comes down to 14%, which suggests that council tax may not be quite so frozen in the future as ministers have suggested.
There are some chinks of light for local government, such as ending ring-fenced grants, giving them greater powers over benefits and, in particular, providing new funds to boost joint working with the NHS. Indeed, there have been suggestions that the only way the NHS will get through the next four years will be by reducing costs through more joint care and health provision. Equally, some health bodies have already expressed concern that the unring-fenced £1bn given to councils to boost more joint working with the NHS may well disappear to meet their other unm
Local government senior managers and councillors knew the Spending Review would be bad news for them – and so it has proved. In that sense, there are few surprises. Most plugged-in chief executives have been working on the assumption of about 30% cuts over the four-year cycle.
The actual figures announced this week by the chancellor envisage cuts of 28% in local government, with 30% in overall capital spending. The Communities and Local Government department’s ‘overall resource’ will drop by 51%.
Curiously, the CLG, announcing the 26% cut, notes that if taking council tax rises into account, the total real-term cut comes down to 14%, which suggests that council tax may not be quite so frozen in the future as ministers have suggested.
There are some chinks of light for local government, such as ending ring-fenced grants, giving them greater powers over benefits and, in particular, providing new funds to boost joint working with the NHS. Indeed, there have been suggestions that the only way the NHS will get through the next four years will be by reducing costs through more joint care and health provision. Equally, some health bodies have already expressed concern that the unring-fenced £1bn given to councils to boost more joint working with the NHS may well disappear to meet their other unmet needs, such as filling winter potholes.
And it is particularly good news that the offspring of Total Place, community-based budgeting, is back on course, with 16 pilots and a hint these could be rolled out. This initiative was unnecessarily delayed because of a change of government and 12 months – and a heap of efficiency savings – have been wasted.
But the real impact on communities will not be truly felt until the detail of the Spending Review has been applied to each council’s budget. In the meantime, anyone scrutinising the announcement would, as ever, be well advised to apply the three essential safety checks, namely, examine the small print, watch out for the law of unintended consequences, and keep an eye on the mischievous work of those favourite Treasury aides, Smoke and Mirrors.
The actual figures announced this week by the chancellor envisage cuts of 28% in local government, with 30% in overall capital spending. The Communities and Local Government department’s ‘overall resource’ will drop by 51%.
Curiously, the CLG, announcing the 26% cut, notes that if taking council tax rises into account, the total real-term cut comes down to 14%, which suggests that council tax may not be quite so frozen in the future as ministers have suggested.
There are some chinks of light for local government, such as ending ring-fenced grants, giving them greater powers over benefits and, in particular, providing new funds to boost joint working with the NHS. Indeed, there have been suggestions that the only way the NHS will get through the next four years will be by reducing costs through more joint care and health provision. Equally, some health bodies have already expressed concern that the unring-fenced £1bn given to councils to boost more joint working with the NHS may well disappear to meet their other unm
Local government senior managers and councillors knew the Spending Review would be bad news for them – and so it has proved. In that sense, there are few surprises. Most plugged-in chief executives have been working on the assumption of about 30% cuts over the four-year cycle.
The actual figures announced this week by the chancellor envisage cuts of 28% in local government, with 30% in overall capital spending. The Communities and Local Government department’s ‘overall resource’ will drop by 51%.
Curiously, the CLG, announcing the 26% cut, notes that if taking council tax rises into account, the total real-term cut comes down to 14%, which suggests that council tax may not be quite so frozen in the future as ministers have suggested.
There are some chinks of light for local government, such as ending ring-fenced grants, giving them greater powers over benefits and, in particular, providing new funds to boost joint working with the NHS. Indeed, there have been suggestions that the only way the NHS will get through the next four years will be by reducing costs through more joint care and health provision. Equally, some health bodies have already expressed concern that the unring-fenced £1bn given to councils to boost more joint working with the NHS may well disappear to meet their other unmet needs, such as filling winter potholes.
And it is particularly good news that the offspring of Total Place, community-based budgeting, is back on course, with 16 pilots and a hint these could be rolled out. This initiative was unnecessarily delayed because of a change of government and 12 months – and a heap of efficiency savings – have been wasted.
But the real impact on communities will not be truly felt until the detail of the Spending Review has been applied to each council’s budget. In the meantime, anyone scrutinising the announcement would, as ever, be well advised to apply the three essential safety checks, namely, examine the small print, watch out for the law of unintended consequences, and keep an eye on the mischievous work of those favourite Treasury aides, Smoke and Mirrors.
Wednesday 13 October 2010
Time to change the Green Book
One of the reasons why private sector jobs during this latest recession did not plummet at the rate they had done in the 1980s and early 1990s was because many employers and their staff reduced payroll costs to avoid lay-offs.
Apart from well-known examples of car manufacturers closing plants for three months, there were numerous cases of workforces taking reduced hours and benefits to cut their costs, but save their jobs.
Such initiatives are spreading to local government as the recession moves from the private to the public sector. Increasingly, council employers are unilaterally negotiating changes to terms and conditions such as sickness pay, car allowances and bonuses, to reduce costs, but avoid expensive and unsettling redundancies. Generally, staff understand the logic since, clearly, it is preferable to be in work but without some of the often-generous terms and conditions offered by local government than to be on the dole.
Of course, there is a political imperative, as it helps reduce redundancy and unemployment costs. And, undoubtedly, there is an element of employers not wasting a good crisis to address expensive working practices no longer sustainable in a recession.
So, it is logical for Local Government Employers to try and formalise the ad hoc revision of what is known as part two of the Green Book, by making it part of national pay negotiations. If it can conclude a deal with unions in which pay in some areas goes up, but overall costs reduce, then both sides benefit. Although the unions have regarded the Green Book as sacrosanct, the reality is that on the ground, it is already being torn up by councils acting unilaterally.
As Lord Hutton said about public sector pensions – there is no case for a race to the bottom. Council employers should not create terms and conditions which are worse than the private sector or are likely to make recruitment in the future difficult. But it is reasonable that as they seek to reduce their staff costs, they look at staff overheads and bring on flexible working, rather than reach automatically for the P45s.
Apart from well-known examples of car manufacturers closing plants for three months, there were numerous cases of workforces taking reduced hours and benefits to cut their costs, but save their jobs.
Such initiatives are spreading to local government as the recession moves from the private to the public sector. Increasingly, council employers are unilaterally negotiating changes to terms and conditions such as sickness pay, car allowances and bonuses, to reduce costs, but avoid expensive and unsettling redundancies. Generally, staff understand the logic since, clearly, it is preferable to be in work but without some of the often-generous terms and conditions offered by local government than to be on the dole.
Of course, there is a political imperative, as it helps reduce redundancy and unemployment costs. And, undoubtedly, there is an element of employers not wasting a good crisis to address expensive working practices no longer sustainable in a recession.
So, it is logical for Local Government Employers to try and formalise the ad hoc revision of what is known as part two of the Green Book, by making it part of national pay negotiations. If it can conclude a deal with unions in which pay in some areas goes up, but overall costs reduce, then both sides benefit. Although the unions have regarded the Green Book as sacrosanct, the reality is that on the ground, it is already being torn up by councils acting unilaterally.
As Lord Hutton said about public sector pensions – there is no case for a race to the bottom. Council employers should not create terms and conditions which are worse than the private sector or are likely to make recruitment in the future difficult. But it is reasonable that as they seek to reduce their staff costs, they look at staff overheads and bring on flexible working, rather than reach automatically for the P45s.
Wednesday 6 October 2010
Blue sky thinking in Birmingham
On Monday this week, at the Conservative Party conference in Birmingham, the sky was a deep blue, which is highly unusual for the Midlands in October.
But if the Conservative right wing took this as a sign from the heavens, they were sadly mistaken.
Inside the heavily-fortified conference hall, Tory blue was almost non-existent, right down to the logo. This was a coalition conference, and each minister’s speech, for the first time at a Conservative conference, was aimed not only at their delegates but at another party nowhere to be seen in the hall, namely, the Liberal Democrats. Indeed, health secretary, Andrew Lansley, in his speech, even gave credit to the Liberal Democrats for insisting on a stronger local government role in his health reforms.
But there was certainly plenty of blue-sky thinking, reflected in the huge number of fringe sessions, many of them dealing with pretty heavyweight issues, from welfare reform, family deprivation to criminal justice, schools and the third sector.
The Big Society fringes – indeed, most of the local government fringes – were invariably standing-room only, although no-one, as far as I could ascertain,was any clearer after them about just what Big Society means in practice.
What, however, came over strongly was that for the current period leading up to the end of the year, everything is up for grabs. At the conference itself, there was almost a post-revolutionary zeal, as if the old order had been swept away, like the Bourbons or the Romanovs.
Politics is in a state of flux, ministers are still susceptible to new ideas – indeed, are not even clear of their own. Policy is still being developed. Think-tanks are in an unprecedented position of influence.
There are big opportunities, too, for local government, nervous about its future, although aware that localism is the flavour of the month, and on the fringes there was much talk of new and wider powers for it across welfare reform, health, social policy.
The current post-revolutionary state will not last much beyond next spring. The Comprehensive Spending Revue and budgets will focus minds on grim, practical realities, and the limits to what governments can achieve.
Michael Burton, Editor, The MJ
But if the Conservative right wing took this as a sign from the heavens, they were sadly mistaken.
Inside the heavily-fortified conference hall, Tory blue was almost non-existent, right down to the logo. This was a coalition conference, and each minister’s speech, for the first time at a Conservative conference, was aimed not only at their delegates but at another party nowhere to be seen in the hall, namely, the Liberal Democrats. Indeed, health secretary, Andrew Lansley, in his speech, even gave credit to the Liberal Democrats for insisting on a stronger local government role in his health reforms.
But there was certainly plenty of blue-sky thinking, reflected in the huge number of fringe sessions, many of them dealing with pretty heavyweight issues, from welfare reform, family deprivation to criminal justice, schools and the third sector.
The Big Society fringes – indeed, most of the local government fringes – were invariably standing-room only, although no-one, as far as I could ascertain,was any clearer after them about just what Big Society means in practice.
What, however, came over strongly was that for the current period leading up to the end of the year, everything is up for grabs. At the conference itself, there was almost a post-revolutionary zeal, as if the old order had been swept away, like the Bourbons or the Romanovs.
Politics is in a state of flux, ministers are still susceptible to new ideas – indeed, are not even clear of their own. Policy is still being developed. Think-tanks are in an unprecedented position of influence.
There are big opportunities, too, for local government, nervous about its future, although aware that localism is the flavour of the month, and on the fringes there was much talk of new and wider powers for it across welfare reform, health, social policy.
The current post-revolutionary state will not last much beyond next spring. The Comprehensive Spending Revue and budgets will focus minds on grim, practical realities, and the limits to what governments can achieve.
Michael Burton, Editor, The MJ
Subscribe to:
Posts (Atom)
