Yet again an outsider from the civil service machine has been hired to stir up the sleepy mandarins of Whitehall. Will this new appointment end up like so many before, shunted into the sidings?
For the appointment of ex-Kent CC chief executive Katherine Kerswell as the new director of civil service reform already follows a year of prevarication and foot-dragging in Whitehall about whether such a post should go ahead at all. This time a year ago the Commons Public Administration Committee was highly critical of the failure to find a candidate to lead the change programme expressing concern that 'it has not proved possible to recruit a director general to drive reform from the centre of Whitehall'. And it said this 'may suggest a lack of commitment to fundamental restructuring at senior official level.'
The Cabinet Office had apparently first advertised internally to fill the role,had no luck and then decided to downgrade the post by dividing it into two less senior positions at Senior Civil Service 2 executive director level. The PASC was not happy with this. Its report last September, Change in government: the agenda for leadership, stung Whitehall into readvertising the position, this time externally, last February 2012. A shortlist was drawn up, a very suitable candidate with a local government and Treasury background was offered the job only for this candidate to change their mind and withdraw. The process began again, this time ending in success.
Katherine Kerswell is certainly experienced and her departure from Kent reflected in no way on her abilities although her substantial pay-off has garnered unwelcome attention. More challenging will be helping to drive through a huge change programme, as outlined in the Cabinet Office Civil Service Reform Plan published in June. Katherine will remember the short-lived Office of Public Sector Reform led by Dr Wendy Thomson and set up by Tony Blair. Whitehall has form in politely but firmly sidelining outside change agents. Katherine would be well advised to spend some time over the next few weekend revisiting back DVDs of Yes Minister.
Wednesday, 12 September 2012
Tuesday, 4 September 2012
What does the reshuffle mean so far?
As far as the public is concerned the Cabinet reshuffle is about a bunch of nonentities replaced by another bunch of nonentities. Some might make reference to deckchairs and the Titanic. Either way it doesn't suggest any dramatic shift in policy direction mainly because there isn't much of a policy from whch to shift in the first place.
Ken Clarke's role is curious. Will he have a pass to get into the Treasury? What does this mean for Osborne's role? Is Ken Clarke there to placate the Lib Dems who are getting nervous that Osborne's Plan A is simply knackering the economy? Is Clarke going to put pressure on the Treasury to resist siren calls for tougher spending cuts, especially in local government?
It makes sense to keep Gove and Duncan Smith in their jobs. Whatever one's views of Gove he has been a one-man whirl of reform, far ahead of Cameron's own wishy-washy reform agenda. There is a real sense of direction of travel at the education department. Similarly Duncan Smith has made welfare reform his particular agenda and to move him now, just as highly complex welfare changes with the Universal Credit are being launched, would be madness.
What is much more puzzling is Lansley's replacement at health, Jeremy Hunt. He has one heck of a brief and is hardly a household name to be leading such a massive change in the NHS.
But unlike other PMs, Cameron has a very difficult task. Most governments are coalitions, of right and left. Cameron has to placate the right and left of his own party as well as those of the Liberal Democrats. Furthermore the appetite by the rank and file of both parties to carry on the Coalition is considerably less than those of its leaders. With its raison de'etre, reducing the deficit, on the rocks, the Coalition is drifting badly and it is hard to see the new line-up making much difference.
Ken Clarke's role is curious. Will he have a pass to get into the Treasury? What does this mean for Osborne's role? Is Ken Clarke there to placate the Lib Dems who are getting nervous that Osborne's Plan A is simply knackering the economy? Is Clarke going to put pressure on the Treasury to resist siren calls for tougher spending cuts, especially in local government?
It makes sense to keep Gove and Duncan Smith in their jobs. Whatever one's views of Gove he has been a one-man whirl of reform, far ahead of Cameron's own wishy-washy reform agenda. There is a real sense of direction of travel at the education department. Similarly Duncan Smith has made welfare reform his particular agenda and to move him now, just as highly complex welfare changes with the Universal Credit are being launched, would be madness.
What is much more puzzling is Lansley's replacement at health, Jeremy Hunt. He has one heck of a brief and is hardly a household name to be leading such a massive change in the NHS.
But unlike other PMs, Cameron has a very difficult task. Most governments are coalitions, of right and left. Cameron has to placate the right and left of his own party as well as those of the Liberal Democrats. Furthermore the appetite by the rank and file of both parties to carry on the Coalition is considerably less than those of its leaders. With its raison de'etre, reducing the deficit, on the rocks, the Coalition is drifting badly and it is hard to see the new line-up making much difference.
Thursday, 31 May 2012
The new local government pension deal
With perfect timing considering the threatened doctors' strike over their pensions the Local Government Association and the town hall unions have announced today at midday their own agreement over pension reform after months of negotiations.
On the face of it, it's a good deal all round especially for lower paid workers. The biggest surprise is that local government employers have agreed that council staff transferees can keep their pensions not just after transferring to a private sector or non-local authority employer but after further transfers as well. At the moment the decision to keep on paying final salary pensions is a matter for the employer.This flies directly in the face of attempts by the Cabinet Office to make it easier for private companiies, mutuals and the voluntary sector to take on council staff without being saddled with large pension liabilities. The impact of this could be huge especially for smaller companies and mutuals which may find the costs make any bid for services unpalatable.
But council employers don't do badly out of the new pensions deal either. From now on pensions will be decided on career average pay rather than final salary and based on the Consumer Prices Index. They will also be paid at whatever the state retirement age is, rather than 65. Contributions for the higher paid will go up.Overall lower paid employees come out well from the new deal. As their wages tend to rise far more modestly over a career than senior managers the career average criterion should make little difference to their final pension. If they transfer to a new employer their pensions are protected. And they will not be hit by having to make higher contributions.
On the face of it, it's a good deal all round especially for lower paid workers. The biggest surprise is that local government employers have agreed that council staff transferees can keep their pensions not just after transferring to a private sector or non-local authority employer but after further transfers as well. At the moment the decision to keep on paying final salary pensions is a matter for the employer.This flies directly in the face of attempts by the Cabinet Office to make it easier for private companiies, mutuals and the voluntary sector to take on council staff without being saddled with large pension liabilities. The impact of this could be huge especially for smaller companies and mutuals which may find the costs make any bid for services unpalatable.
But council employers don't do badly out of the new pensions deal either. From now on pensions will be decided on career average pay rather than final salary and based on the Consumer Prices Index. They will also be paid at whatever the state retirement age is, rather than 65. Contributions for the higher paid will go up.Overall lower paid employees come out well from the new deal. As their wages tend to rise far more modestly over a career than senior managers the career average criterion should make little difference to their final pension. If they transfer to a new employer their pensions are protected. And they will not be hit by having to make higher contributions.
Friday, 4 May 2012
What's concerning is the low turnout
So what are the headlines from these local elections? Is it that Labour has done surprisingly well in southern England and Wales. Or is it that the electorate has decisively voted against directly elected mayors? Or that the Lib Dems have been trounced? Or that the turnout is the lowest in 12 years? Or that :Labour is likely to lose what it should have expected to gain, namely the Mayor of London? Or that fringe parties and Respect have picked up votes but not the BNP?
All of these. But above all else the lack of voters' faith in politics to solve their problems anymore. After two years of cuts, rising unemployment and a squeeze on living standards, one would have confidently expected a voters' angry backlash against the government of the day, a wholesale slaughter of Tory and Lib Dem seats. It has happened to the Lib Dems but not the Tories. Labour has done well but half way through a government which has undergone a month of wobbles and bad management decisions on top of economic woes one would expect the opposition party to do well.
The electorate has expressed its discontent by abstaining. Some 70% of people did not bother to exercise their vote. The electorate appears to believe that however dire the economy it is beyond the power of politicians to make any impact. Ironically just as localism is being trumpeted as the next stage of involving people in decision-making the people have decided that decisions are being taken elsewhere globally over which they have little control.
All of these. But above all else the lack of voters' faith in politics to solve their problems anymore. After two years of cuts, rising unemployment and a squeeze on living standards, one would have confidently expected a voters' angry backlash against the government of the day, a wholesale slaughter of Tory and Lib Dem seats. It has happened to the Lib Dems but not the Tories. Labour has done well but half way through a government which has undergone a month of wobbles and bad management decisions on top of economic woes one would expect the opposition party to do well.
The electorate has expressed its discontent by abstaining. Some 70% of people did not bother to exercise their vote. The electorate appears to believe that however dire the economy it is beyond the power of politicians to make any impact. Ironically just as localism is being trumpeted as the next stage of involving people in decision-making the people have decided that decisions are being taken elsewhere globally over which they have little control.
Tuesday, 24 April 2012
London will have to return to the age of the tower block estates
The furore over the London borough of Newham's request to a Stoke-on-Trent housing association to house some of its homeless families is just the tip of the iceberg. London's housing problem is of Victorian dimensions and yet scarcely figures on any political agendas and although housing is not the Mayor's responsibility has not featured in the Boris v Ken election campaign.
Just look at the facts. London's population is expanding, driven in part by people moving to it from other parts of the country or more often from other parts of the world in search of jobs and there is not enough housing to satisfy it. In many cases wages do not cover the high price of accommodation. On top of this because of sterling's weakness global millionaires are snapping up properties in central London thereby driving up prices and having a knock-on effect on rentals. London's private rental market is already a landlords' market. It is hard enough for young, wage-earning single people to find rented property. If you are relying on benefits, especially now the coalition has capped them, then forget it; you cannot live in London on benefits unless your rent is covered by the taxpayer. But that of course then becomes unfair on those who are having to pay for their own rented accommodation.
On the flipside, outside London there are areas such as Stoke where accommodation is cheap. Newham is just one borough which through no fault of its own has run out of housing and money to top up the capped benefits. It is clearly unacceptable for a borough to 'export' its poor to other already poor parts of the country but Newham doubtless argues it is 'thinking outside the box' when it comes to solving this impossible conundrum.
There is clearly a short-term problem exacerbated by the housing benefits cap and the over-heated rentals market. But it is also a macro-problem which this government, and previous ones, has simply failed to address. London is too expensive to live in, there is not enough accommodation, and yet its population, driven by immigration from within the UK and from abroad, continues to rise. We could of course return to the age of tower blocks, which were a social disaster when it came to housing poor families though worked better for the well-off (such as the Barbican estate in the City). Or governments could simply admit that London has become too big while the rest of the UK stagnates and regional policy therefore needs to be urgently kick-started again. Either way - it is time for government to act.
Just look at the facts. London's population is expanding, driven in part by people moving to it from other parts of the country or more often from other parts of the world in search of jobs and there is not enough housing to satisfy it. In many cases wages do not cover the high price of accommodation. On top of this because of sterling's weakness global millionaires are snapping up properties in central London thereby driving up prices and having a knock-on effect on rentals. London's private rental market is already a landlords' market. It is hard enough for young, wage-earning single people to find rented property. If you are relying on benefits, especially now the coalition has capped them, then forget it; you cannot live in London on benefits unless your rent is covered by the taxpayer. But that of course then becomes unfair on those who are having to pay for their own rented accommodation.
On the flipside, outside London there are areas such as Stoke where accommodation is cheap. Newham is just one borough which through no fault of its own has run out of housing and money to top up the capped benefits. It is clearly unacceptable for a borough to 'export' its poor to other already poor parts of the country but Newham doubtless argues it is 'thinking outside the box' when it comes to solving this impossible conundrum.
There is clearly a short-term problem exacerbated by the housing benefits cap and the over-heated rentals market. But it is also a macro-problem which this government, and previous ones, has simply failed to address. London is too expensive to live in, there is not enough accommodation, and yet its population, driven by immigration from within the UK and from abroad, continues to rise. We could of course return to the age of tower blocks, which were a social disaster when it came to housing poor families though worked better for the well-off (such as the Barbican estate in the City). Or governments could simply admit that London has become too big while the rest of the UK stagnates and regional policy therefore needs to be urgently kick-started again. Either way - it is time for government to act.
Wednesday, 18 April 2012
Kensington and Chelsea has a better credit rating than France
Not a lot of people know this but it would be cheaper for the French government to let the London borough of Kensington and Chelsea borrow money on its behalf as the latter has a triple A credit rating while France's was downgraded to AA+ in January. The same applies to Spain and Portugal whose ratings are even worse at A and BB respectively. Woking BC has a better rating than either od those countries at AA-. The UK government, currently at triple A, is terrified it might lose iots rating which of course then affects the cost of its borrowing.
The idea that UK local authorities have a better rating than many national governments, possibly in time even their own, is entertaining but does also underline a serious point. The Localism Act in theory could mean more councils borrowing from banks or bonds rather than simply relying on the Public Works Loan Board which recently has been prone to interference from the Treasury. A recent report by ratings agency Standard and Poor's (which rates Kensington and Chelsea and Woking) says that local government will continue to have good creditworthiness despite cuts and other changes such as taking on housing debt from the Housing Revenue Account.
Yesterday I chaired a panel session at a conference on local government funding with treasurers from various major UK local authorities. All of them complained at the way the government keeps moving the goalposts on PWLB borrowing costs and at the lack of direction from the Treasury about whether it really does want to give councils more powers to go to the money markets for funding or is just keeping Eric Pickles and the DCLG sweet over localism. Judging by the current creditworthiness of councils they would have no trouble getting the cash - and maybe lending some of it back to HM Treasury!
The idea that UK local authorities have a better rating than many national governments, possibly in time even their own, is entertaining but does also underline a serious point. The Localism Act in theory could mean more councils borrowing from banks or bonds rather than simply relying on the Public Works Loan Board which recently has been prone to interference from the Treasury. A recent report by ratings agency Standard and Poor's (which rates Kensington and Chelsea and Woking) says that local government will continue to have good creditworthiness despite cuts and other changes such as taking on housing debt from the Housing Revenue Account.
Yesterday I chaired a panel session at a conference on local government funding with treasurers from various major UK local authorities. All of them complained at the way the government keeps moving the goalposts on PWLB borrowing costs and at the lack of direction from the Treasury about whether it really does want to give councils more powers to go to the money markets for funding or is just keeping Eric Pickles and the DCLG sweet over localism. Judging by the current creditworthiness of councils they would have no trouble getting the cash - and maybe lending some of it back to HM Treasury!
Wednesday, 11 April 2012
We need SOLACE on Newsnight
Our regular columnist, Sir Stephen Bubb, chief executive of ACEVO, the voluntary sector chiefs association, is quite a media star. He ought to get repeat fees judging by the number of times he has appeared on Newsnight.
He was on again last night, in a discussion chaired by Jeremy Paxman on George Osborne's attack on tax-avoiding millionaires and donations to alleged spurious 'charities' which were merely front operations. Stephen quite rightly gave a robust defence of charities and how Osborne's comments were hitting donations and also demanded evidence of these charities because if they are not above board then they will be dealt with by the Charity Commission.
But my point is not about the discussion but about how the media selects its representatives. Around the table were a Tory MP, someone from the City, someone from the TUC - a pretty good cross-section in other words, for a debate and Stephen is an excellent spokesman for the voluntary sector.
But it occurs to me that if this were a discussion about local government - and there have been plenty in the past few months - would we see a representive from SOLACE on Newsnight? I suspect not. Indeed I don't believe the society has ever been on Newsnight. There are numerous occasions when local government could be represented in such debates - the recent Darra Singh report on the riots, or the welfare reform issue or council tax levels or housing come to mind just from the last few weeks. I don't blame SOLACE. It may be because of the media's lack of interest in councils. But local government needs a meddia-savvy representative like Sir Stephen Bubb to bat for it.
He was on again last night, in a discussion chaired by Jeremy Paxman on George Osborne's attack on tax-avoiding millionaires and donations to alleged spurious 'charities' which were merely front operations. Stephen quite rightly gave a robust defence of charities and how Osborne's comments were hitting donations and also demanded evidence of these charities because if they are not above board then they will be dealt with by the Charity Commission.
But my point is not about the discussion but about how the media selects its representatives. Around the table were a Tory MP, someone from the City, someone from the TUC - a pretty good cross-section in other words, for a debate and Stephen is an excellent spokesman for the voluntary sector.
But it occurs to me that if this were a discussion about local government - and there have been plenty in the past few months - would we see a representive from SOLACE on Newsnight? I suspect not. Indeed I don't believe the society has ever been on Newsnight. There are numerous occasions when local government could be represented in such debates - the recent Darra Singh report on the riots, or the welfare reform issue or council tax levels or housing come to mind just from the last few weeks. I don't blame SOLACE. It may be because of the media's lack of interest in councils. But local government needs a meddia-savvy representative like Sir Stephen Bubb to bat for it.
Tuesday, 27 March 2012
No 10 rolls out the red carpet for elected mayors
An invite pinged into my email in-box a fortnight ago announcing that the Prime Minister requested the pleasure of my company at a reception at No 10 Downing St on March 27 'at a reception in support of the Government's policy on the referendums for city mayors.'
What could this entail I thought? The PM must be a pretty busy man what with all these foreign policy crises, meeting President Obama and mopping up after incompetent party treasurers. Surely he has no time to spare sipping Chardonnay (or in his case water) talking to local worthies about obscure constitutional issues of local government.
Well obviously he does because the big guns were rolled out for this event. As I queued at the gates I found myself in front of Lord Heseltine who turned out to be compering the presentations. Upstairs at No 10 the function room was packed with civic and business leaders. Lord Heseltime announced to laughter that he had 'waited for a long time to invite you to No 10.' The Prime Minister then delivered an impassioned speech in favour of elected mayors saying he backed them for three reasons, their accountability to the electorate, their direct link for inward investors and their visible leadership. He also pledged to set up a Cabinet of elected mayors whose first meeting he would chair.
To emphasis that this agenda was strictly cross party there were also speeches from Leicester's Labour mayor Sir Peter Soulsby, the ex-Lib Dem leader of Newcastle Lord Shipley and of course Boris Johnson. Announcing that Lord Heseltine was 'the godfather' of elected city mayors and glancing at the PM Boris added: 'I want to thank Dave for allowing me into No 10.'
On the way out into Downing St in the glorious spring sunshine a crowd ofvisiting schoolchildren thronged around the famous doorway. In front of me Boris wheeled his bicycle down to Whitehall. As he entered it a teacher called out to her brood: 'Look children! It's the London Mayor!'
I guess that proves that rather proves Cameron's point.
What could this entail I thought? The PM must be a pretty busy man what with all these foreign policy crises, meeting President Obama and mopping up after incompetent party treasurers. Surely he has no time to spare sipping Chardonnay (or in his case water) talking to local worthies about obscure constitutional issues of local government.
Well obviously he does because the big guns were rolled out for this event. As I queued at the gates I found myself in front of Lord Heseltine who turned out to be compering the presentations. Upstairs at No 10 the function room was packed with civic and business leaders. Lord Heseltime announced to laughter that he had 'waited for a long time to invite you to No 10.' The Prime Minister then delivered an impassioned speech in favour of elected mayors saying he backed them for three reasons, their accountability to the electorate, their direct link for inward investors and their visible leadership. He also pledged to set up a Cabinet of elected mayors whose first meeting he would chair.
To emphasis that this agenda was strictly cross party there were also speeches from Leicester's Labour mayor Sir Peter Soulsby, the ex-Lib Dem leader of Newcastle Lord Shipley and of course Boris Johnson. Announcing that Lord Heseltine was 'the godfather' of elected city mayors and glancing at the PM Boris added: 'I want to thank Dave for allowing me into No 10.'
On the way out into Downing St in the glorious spring sunshine a crowd ofvisiting schoolchildren thronged around the famous doorway. In front of me Boris wheeled his bicycle down to Whitehall. As he entered it a teacher called out to her brood: 'Look children! It's the London Mayor!'
I guess that proves that rather proves Cameron's point.
Wednesday, 21 March 2012
Watch out for the warning over welfare costs.
Ironically towards the end of the Chancellor's Budget speech news flagged up on the TV that Game, the high street computer games shop chain, was seeking administration with the loss of thousands of jobs. It was a salutory reminder that despite Osborne' s well-crafted and highly political Budget speech, that in the real world the econony remains on a knife-edge, especially out in the regions. With the eurozone growth rate downgraded to just 0.3% this year and the UK's still anaemic projection of 0.8%, the chances of the forecasts going awry are still considerable.
So what does it mean for local government? The Office of Budget Responsibility expects growth to be 2% next year and 2.7% in 2014. The Chancellor says borrowing will be £1 billion less than his forecast last November at £126 billion for 2011/12. - not including the impact of the state taking on the Royal Mail pension fund whose liabilities will be £200 million a year after the initial upfront credit impact of the fund. Public sector net borrowing will fall from its peak of 11.1% of GDP in 2009/10 to 4.3% in 2014/15. Borrowing in 2010/11 was £137 billion, £9 billion lower than forecast in the 2011 Budget. The elimination of the structural deficit by 2016/17 remains on course. The Budget claims that 40% of the cuts announced in the 2010 Spending Review will be achieved by April 2012 and that government departments will actually underspend by £6 billion in 2011/12 - a figure that definitely needs more scrutiny. As usual with Budgets beware of smoke and mirrors.
The growth agenda remains a key plank in government policy with an extra £270m for the Growing Place Fund, a new Pension Infrastructure Platform owned by pension funds which will deliver its first £2 billion of investment next year, £150m announced in TIF money for cities and the pilot 'earn back' fund for Manchester city region with the rest of the core cities being examined this year. Regional pay variations may be introduced to some Whitehall departments but not local government. The increase in the tax allowance to £9,205 from 2013 will be good news for low-paid council staff. Doubtless chief executives on salaries above £150,000 will be quietly celebrating the drop in the top tax rate to 45% from then - but will Eric Pickles insist they hand it back to their councils?
What however is especially interesting in the Budget is the commentary about welfare reform. Osborne expects the new Welfare Reform Act to deliver savings of £4.5 billion by 2014/15 but his speech warned that if welfare continued to rise - it is already a third of all government spending - there could be as much as £10 billion that would need to be cut from it. Watch this space.
Overall, the underlying economy remains fragile but the Budget is politically canny, obscuring the reality of the real world with modest tax cuts and tax tweaking with populist measures like the tax on company-owned properties. For local government and the public sector I'm afraid it is business as usual.
So what does it mean for local government? The Office of Budget Responsibility expects growth to be 2% next year and 2.7% in 2014. The Chancellor says borrowing will be £1 billion less than his forecast last November at £126 billion for 2011/12. - not including the impact of the state taking on the Royal Mail pension fund whose liabilities will be £200 million a year after the initial upfront credit impact of the fund. Public sector net borrowing will fall from its peak of 11.1% of GDP in 2009/10 to 4.3% in 2014/15. Borrowing in 2010/11 was £137 billion, £9 billion lower than forecast in the 2011 Budget. The elimination of the structural deficit by 2016/17 remains on course. The Budget claims that 40% of the cuts announced in the 2010 Spending Review will be achieved by April 2012 and that government departments will actually underspend by £6 billion in 2011/12 - a figure that definitely needs more scrutiny. As usual with Budgets beware of smoke and mirrors.
The growth agenda remains a key plank in government policy with an extra £270m for the Growing Place Fund, a new Pension Infrastructure Platform owned by pension funds which will deliver its first £2 billion of investment next year, £150m announced in TIF money for cities and the pilot 'earn back' fund for Manchester city region with the rest of the core cities being examined this year. Regional pay variations may be introduced to some Whitehall departments but not local government. The increase in the tax allowance to £9,205 from 2013 will be good news for low-paid council staff. Doubtless chief executives on salaries above £150,000 will be quietly celebrating the drop in the top tax rate to 45% from then - but will Eric Pickles insist they hand it back to their councils?
What however is especially interesting in the Budget is the commentary about welfare reform. Osborne expects the new Welfare Reform Act to deliver savings of £4.5 billion by 2014/15 but his speech warned that if welfare continued to rise - it is already a third of all government spending - there could be as much as £10 billion that would need to be cut from it. Watch this space.
Overall, the underlying economy remains fragile but the Budget is politically canny, obscuring the reality of the real world with modest tax cuts and tax tweaking with populist measures like the tax on company-owned properties. For local government and the public sector I'm afraid it is business as usual.
Tuesday, 20 March 2012
Osborne's Budget 2012 is not what he had planned
A picture in yesterday's papers shows an unshaven, bleary-eyed George Osborne jogging around St James' Park, Westminster, at the start of another long day. It is safe to say that the Budget was uppermost in his mind. Doubtless too, he would have been ruminating about Harold Macmillan's famous warning that 'events, dear boy' have a habit of upsetting the best laid plans of government.
According to the original plan outlined in 2010 by now Osborne ideally should have been standing up on Budget Day announcing that his plans were on course to meet their original 2015 targets. Of course they are not as we know thanks to external events like the euro-crisis and high inflation, as was flagged up in the Autumn Statement last year. The deficit-reduction targets have stretched into 2016/17, a year which many in the public sector now fear could be another cliff-edge drop in public spending, coming as it does after a general election.
The reality is no one, least of all Osborne, knows where the economy is heading. The original deficit-reduction targets are out the window though deficit reduction as a strategy ploughs on. The Chancellor is at the mercy of international events, gleaning hope from latest growth figures in the US or the settlement of the Greek crisis or even changes to growth forecasts in China. The Treasury will put a gloss on the figures - a tweak to the tax regime here, slightly improved public sector borrowing figures there, icing on the cake. But in the real world the UK economy, after two years of coalition economics, is becalmed.
According to the original plan outlined in 2010 by now Osborne ideally should have been standing up on Budget Day announcing that his plans were on course to meet their original 2015 targets. Of course they are not as we know thanks to external events like the euro-crisis and high inflation, as was flagged up in the Autumn Statement last year. The deficit-reduction targets have stretched into 2016/17, a year which many in the public sector now fear could be another cliff-edge drop in public spending, coming as it does after a general election.
The reality is no one, least of all Osborne, knows where the economy is heading. The original deficit-reduction targets are out the window though deficit reduction as a strategy ploughs on. The Chancellor is at the mercy of international events, gleaning hope from latest growth figures in the US or the settlement of the Greek crisis or even changes to growth forecasts in China. The Treasury will put a gloss on the figures - a tweak to the tax regime here, slightly improved public sector borrowing figures there, icing on the cake. But in the real world the UK economy, after two years of coalition economics, is becalmed.
Thursday, 24 November 2011
Councils will not turn down the tax freeze offer
There has been much media coverage today about a survey into whether councils intend taking up the government's offer of funding a 2.5% rise in council tax from next April in order to create a freeze. According to a sample of 146 council finance directors, '20%' may not take up the offer.
I'm puzzled by the attention given to the survey. The percentage of councils likely to reject this offer is actually only 4% i.e. 7 with the remaining 16%, about 21, undecided. They are undecided because as yet they haven't made up their minds, quite probably because a decision about council tax rises for next April has not yet been taken by their authority.
It will be almost impossible for a council to tell its taxpayers that it has turned down a subsidy from the government in order to put its tax up by 5%. The government knows it is a populist gesture which shows it feels voters' pain. Long-term it will whittle away councils' tax base but in the short-term councils have little choice but to accept it or face derision followed by extinction at the next local polls.
Mark my words, come next spring councils will take up this offer.
I'm puzzled by the attention given to the survey. The percentage of councils likely to reject this offer is actually only 4% i.e. 7 with the remaining 16%, about 21, undecided. They are undecided because as yet they haven't made up their minds, quite probably because a decision about council tax rises for next April has not yet been taken by their authority.
It will be almost impossible for a council to tell its taxpayers that it has turned down a subsidy from the government in order to put its tax up by 5%. The government knows it is a populist gesture which shows it feels voters' pain. Long-term it will whittle away councils' tax base but in the short-term councils have little choice but to accept it or face derision followed by extinction at the next local polls.
Mark my words, come next spring councils will take up this offer.
Friday, 11 November 2011
Councils should get on with their own community budget plans despite the pilots
The LGA and its leaders are right to criticise the modest ambitions of the next round of cxommunity budget pilots, that is, the two for neighbourhoods and the two for a single pot in a whole place. When they were first announced at the LGA conference in June by Nick Clegg I made that point myself to one of the DCLG ministers, Greg Clark, and was given the impression that there would in time be more to come and that these pilots were merely the start of the process.
What puzzles me is that I have yet to meet anyone from across the political spectrum who disagrees with the principles behind expanding the community budgets programme. Eric Pickles is now an enthusiastic convert and - as he told The MJ last month in an interview at an LGA conference on community budgets - is keen to 'smash down the silos' between government departments both nationally and locally. So if no one disagrees with the concept, then why not make the next stage of community budgets much more ambitious than merely announcing four pilots?
The answer has to be that Whitehall itself is concerned at the prospect of seeing departmental, silo-based budgets morphed into single pots, thereby blurring its own accountability lines even though Mr Pickles told councils at the conference to 'make Whitehall an offer.'
Okay, then councils should take him up on it. Forget the modest number of pilots and the DCLG form-filling required to apply to be one. Why can't a council simply set up its own shadow whole place, single pot budget along with its local partners and present the findings to Mr Pickles? Don't wait for guidance or pilots - just get on with it anyway.
What puzzles me is that I have yet to meet anyone from across the political spectrum who disagrees with the principles behind expanding the community budgets programme. Eric Pickles is now an enthusiastic convert and - as he told The MJ last month in an interview at an LGA conference on community budgets - is keen to 'smash down the silos' between government departments both nationally and locally. So if no one disagrees with the concept, then why not make the next stage of community budgets much more ambitious than merely announcing four pilots?
The answer has to be that Whitehall itself is concerned at the prospect of seeing departmental, silo-based budgets morphed into single pots, thereby blurring its own accountability lines even though Mr Pickles told councils at the conference to 'make Whitehall an offer.'
Okay, then councils should take him up on it. Forget the modest number of pilots and the DCLG form-filling required to apply to be one. Why can't a council simply set up its own shadow whole place, single pot budget along with its local partners and present the findings to Mr Pickles? Don't wait for guidance or pilots - just get on with it anyway.
Wednesday, 26 October 2011
More redundancies means less paying members in the pension scheme
News that the Local Government Pension Scheme is losing members in droves is hardly surprising considering the job losses in the sector in the past year. Nor is it much of a surprise that neither the DCLG- which issued the figures - or the unions or employers have shouted it from the rooftops; after all, fewer members making contributions means less income coming into the scheme and more pressure on the funding level which is not helpful to the current delicate negotiations about reducing the LGPS's costs to the public.
The DCLG says the number leaving the scheme because of redundancy in the year ending last March was up 40% to more than 17,600. The number of former staff entitled to deferred benefits is also up. Many of these will be ex-employees who have left before retirement, either voluntarily or through redundancy. Not only do they cease to contribute but their deferred pension sits as a cost in the scheme ready for when they retire.
While the scheme's assets rely heavily on stock market performance for their income, a reducing number of paying active members is bad news. On top of this the town hall unions, in their campaign to prevent the government from forcing the LGPS to increase contribution levels, has already issued warnings that staff on average salaries - above the threshold for increased contributions - will quit the scheme because of its extra costs.
Another figure to bear in mind is the number of early retirements triggered by cutbacks. These in effect become another burden on the pension fund. A decade ago the Audit Commission issued a warning about councils using the pension fund as a means of managing out staff. In those days it could afford it; now it cannot.
The DCLG says the number leaving the scheme because of redundancy in the year ending last March was up 40% to more than 17,600. The number of former staff entitled to deferred benefits is also up. Many of these will be ex-employees who have left before retirement, either voluntarily or through redundancy. Not only do they cease to contribute but their deferred pension sits as a cost in the scheme ready for when they retire.
While the scheme's assets rely heavily on stock market performance for their income, a reducing number of paying active members is bad news. On top of this the town hall unions, in their campaign to prevent the government from forcing the LGPS to increase contribution levels, has already issued warnings that staff on average salaries - above the threshold for increased contributions - will quit the scheme because of its extra costs.
Another figure to bear in mind is the number of early retirements triggered by cutbacks. These in effect become another burden on the pension fund. A decade ago the Audit Commission issued a warning about councils using the pension fund as a means of managing out staff. In those days it could afford it; now it cannot.
Friday, 7 October 2011
The impact of quantitative easing
What is the difference between quantitative easing and public spending? Or for that matter what is the difference between QE, public spending and the billion pounds that Messrs Pickles and Osborne together found down the back of their sofas for weekly bin collections and freezing council tax?
There will undoubtedly be a technical argument - that the billion pound bung was 'found' in Whitehall from money already collected in taxes and simply unallocated and therefore does not count as extra public spending on the balance sheets. And QE is directed at banks and bonds. But the principle remains the same. The economy is stagnating, liquidity is tight, consumers are cutting their spending and the government wants to get things moving by injecting more cash into the economy. The effect of £75 billion of electronic money created to purchase bonds issued by the Treasury is aimed at stimulating spending. The £800m announced by Osborne to hold down council tax is aimed at not further deflating consumer demand through tax rises.
Would it have been better instead not to have imposed such a severe spending round for the public sector in the first place in particular local government which has caused job losses and further depressed the economy? And would it now not be better for the Treasury to revisit its spending plans for the next two years and alleviate some of these cuts, especially in the more depressed regions like the north and Midlands?
There will undoubtedly be a technical argument - that the billion pound bung was 'found' in Whitehall from money already collected in taxes and simply unallocated and therefore does not count as extra public spending on the balance sheets. And QE is directed at banks and bonds. But the principle remains the same. The economy is stagnating, liquidity is tight, consumers are cutting their spending and the government wants to get things moving by injecting more cash into the economy. The effect of £75 billion of electronic money created to purchase bonds issued by the Treasury is aimed at stimulating spending. The £800m announced by Osborne to hold down council tax is aimed at not further deflating consumer demand through tax rises.
Would it have been better instead not to have imposed such a severe spending round for the public sector in the first place in particular local government which has caused job losses and further depressed the economy? And would it now not be better for the Treasury to revisit its spending plans for the next two years and alleviate some of these cuts, especially in the more depressed regions like the north and Midlands?
Monday, 3 October 2011
The Osborne council tax freeze bung
Perhaps the Conservatives should take up the emblem of a sofa for their annual conference backdrop in Manchester this week judging by how useful said item of furniture has proved in the past few days. First Eric Pickles found £250m down the back of the DCLG sofa for his favourite pet project of weekly bin collectiions. Now George Osborne has discovered another handy sofa in the Treasury behind which he has extracted £800m to fund a second year of council tax freeze.
No wonder people get cynical about politicians. Firstly, this billion pound bung just happens to coincide with the Conservative Party conference. Secondly, I thought we were supposed to be broke. Thirdly, where has this money come from and don't tell me it's from that hoary old chestnut 'Whitehall efficiency savings'? And fourthly, maybe it was always there from the start, deliberately kept back for a rainy day. For George Osborne in opposition always maintained that he would freeze council tax for two years - then made it only one year in his last Budget, thereby allowing himself the room to 'announce' another year.
Furthermore it is just more nails in the coffin of localism. If councils can't even decide on their bin collections or their council tax levels then what powers do they really have in the end?
No wonder people get cynical about politicians. Firstly, this billion pound bung just happens to coincide with the Conservative Party conference. Secondly, I thought we were supposed to be broke. Thirdly, where has this money come from and don't tell me it's from that hoary old chestnut 'Whitehall efficiency savings'? And fourthly, maybe it was always there from the start, deliberately kept back for a rainy day. For George Osborne in opposition always maintained that he would freeze council tax for two years - then made it only one year in his last Budget, thereby allowing himself the room to 'announce' another year.
Furthermore it is just more nails in the coffin of localism. If councils can't even decide on their bin collections or their council tax levels then what powers do they really have in the end?
Friday, 16 September 2011
Clegg plays to the Lib Dem gallery in fast tracking 40 infrastructure projects
As always with politicians their speeches are significant not so much for their content as for their timing and their message.
Take Deputy PM and Lib Dem leader Nick Clegg's address at the LSE on September 14. Some of the national media in the morning trailed the fact that he was 'fast tracking' 40 major infrastructure projects. But the real story was how he was setting out his wares in advance of the Liberal Democrat conference.
Clegg has to stand by the government's deficit strategy and indeed he said so in his speech. But this is unpopular in his own party, many of whom are calling for 'Plan B' with a slowdown in public spending cuts. So Clegg then maintained that there was a backlog of big projects sitting in Whitehall, already accounted for in the budget, but grinding through the system. If these could be pushed through, was his message, then they would help alleviate some of the impact of spending cuts on employment and the economy. In effect he was calling for more public spending to offset public spending cuts, surely as near an appeal to bring in Plan B as he can.
But Cameron and Osborne will be relaxed because they know the Liberal Democrat conference is looming and the last thing they want is Clegg being howled down. They also realise that highlighting the headline 40 infrastructure projects is the usual example of political smoke and mirrors. The aim is entirely to get Nick Clegg out of a tight spot by being seen to 'do something' about the economy without really doing anything at all.
Take Deputy PM and Lib Dem leader Nick Clegg's address at the LSE on September 14. Some of the national media in the morning trailed the fact that he was 'fast tracking' 40 major infrastructure projects. But the real story was how he was setting out his wares in advance of the Liberal Democrat conference.
Clegg has to stand by the government's deficit strategy and indeed he said so in his speech. But this is unpopular in his own party, many of whom are calling for 'Plan B' with a slowdown in public spending cuts. So Clegg then maintained that there was a backlog of big projects sitting in Whitehall, already accounted for in the budget, but grinding through the system. If these could be pushed through, was his message, then they would help alleviate some of the impact of spending cuts on employment and the economy. In effect he was calling for more public spending to offset public spending cuts, surely as near an appeal to bring in Plan B as he can.
But Cameron and Osborne will be relaxed because they know the Liberal Democrat conference is looming and the last thing they want is Clegg being howled down. They also realise that highlighting the headline 40 infrastructure projects is the usual example of political smoke and mirrors. The aim is entirely to get Nick Clegg out of a tight spot by being seen to 'do something' about the economy without really doing anything at all.
Wednesday, 31 August 2011
Has the government run out of steam already?
The political party conference season is loooming and if I were a government minister I would be increasingly worried that my policy cupboard was looking bare after hardly 18 months in power. The question now is what does the Coalition stand for? What does David Cameron stand for? What is the direction of travel?
Absolute core to the government's economic policy is reducing the deficit but this is increasingly suspect due to the feeble state of the economy and rising inflation. George Osborne's gamble was to hope the private sector would pick up in time to offset early public spending cuts. This looks unlikely and in UK cities and regions where public spending is already a large part of the local economy, spending cuts are tipping them back into recession.
The Prime Minister's White Paper on public sector reform early in the summer was a disappointing mish-mash of existing policies and vague expressions of intent. Big Society, which once defined Cameron's political philosopy, was hardly mentioned. The recent riots have placed a question mark over cuts to police budgets. The health reform plans have had to be revised. Housing is rapidly moving up the political agenda with no apparent strategy to tackle shortages. The welfare reform plans are still in their infancy. Only in education has Michael Gove's academies and free schools moved inexorably forward.
The paucity of policy contrasts with the deep-seated fundamental challenges faced in UK society. They range from inner city youth crime to long-term pension provision, elderly care, the impossibility of finding mortgages for young housebuyers, the decline in the average standard of living, the long-term position of financial services as engine of the UK's economy. Let;s have some serious policy papers on these.
Absolute core to the government's economic policy is reducing the deficit but this is increasingly suspect due to the feeble state of the economy and rising inflation. George Osborne's gamble was to hope the private sector would pick up in time to offset early public spending cuts. This looks unlikely and in UK cities and regions where public spending is already a large part of the local economy, spending cuts are tipping them back into recession.
The Prime Minister's White Paper on public sector reform early in the summer was a disappointing mish-mash of existing policies and vague expressions of intent. Big Society, which once defined Cameron's political philosopy, was hardly mentioned. The recent riots have placed a question mark over cuts to police budgets. The health reform plans have had to be revised. Housing is rapidly moving up the political agenda with no apparent strategy to tackle shortages. The welfare reform plans are still in their infancy. Only in education has Michael Gove's academies and free schools moved inexorably forward.
The paucity of policy contrasts with the deep-seated fundamental challenges faced in UK society. They range from inner city youth crime to long-term pension provision, elderly care, the impossibility of finding mortgages for young housebuyers, the decline in the average standard of living, the long-term position of financial services as engine of the UK's economy. Let;s have some serious policy papers on these.
Saturday, 6 August 2011
Opening up public services
The other day as part of our series of articles on winners from The MJ Awards 2011 I visited Wiltshire Council which won the best political team category. Virtually all the cabinet members as well as the leader Jane Scott was there to talk to me about progress as a new unitary since 2009 and it has been an impressive story.
What is interesting is their attitude to outsourcing. They may be Conservatives but they maintain they take a pragmatic view to who delivers services. They have even taken a previously outsourced service contract back in house because they felt the supplier was under-performing and say the service has since improved. They argue that had more services been outsourced it would have been difficult to make savings since they would have been tied into inflexible contracts.
David Cameron's recent White Paper on opening up public services seemed to miss this essential point namely that what matters is what works and that it is not always the case that transferring a service to an outside provider necessarily makes it always better. And the idea that a council has less potential to make savings if its services are all tied into externalised contracts adds another dimension.
The private good-public bad or public good-private bad argument is a stale debate that has long outlived reality. Local government has been dealing with mixed provision for decades and knows there is no right or wrong about delivery. The public doesn't care and pragmatic councillors, like those at Wiltshire, will make their own minds up about who is best placed to deliver the best services to their residents.
I'm away now for two weeks in Italy - which considering the economic circumstances coulld prove interesting!
What is interesting is their attitude to outsourcing. They may be Conservatives but they maintain they take a pragmatic view to who delivers services. They have even taken a previously outsourced service contract back in house because they felt the supplier was under-performing and say the service has since improved. They argue that had more services been outsourced it would have been difficult to make savings since they would have been tied into inflexible contracts.
David Cameron's recent White Paper on opening up public services seemed to miss this essential point namely that what matters is what works and that it is not always the case that transferring a service to an outside provider necessarily makes it always better. And the idea that a council has less potential to make savings if its services are all tied into externalised contracts adds another dimension.
The private good-public bad or public good-private bad argument is a stale debate that has long outlived reality. Local government has been dealing with mixed provision for decades and knows there is no right or wrong about delivery. The public doesn't care and pragmatic councillors, like those at Wiltshire, will make their own minds up about who is best placed to deliver the best services to their residents.
I'm away now for two weeks in Italy - which considering the economic circumstances coulld prove interesting!
Tuesday, 26 July 2011
The GDP figures and Osborne's public spending plans
I was having lunch the other day with a distinguished ex-government public finance expert who had a couple of observations that stuck in my mind. One was: 'There's no way George Osborne will cut public spending. No government has. All the spending review does is to reduce the rate of spending growth.' His second was: 'I don't understand why he keeps banging on about spending cuts satisfying the international markets. Most of the borrowing to fund the deficit is from within the UK.'
I thought about this as the latest grisly GDP for the second quarter of the year was published today. At 0.2% it is down on the previous quarter however much the drop is blamed on the Royal Wedding and the Japanese tsunami. With public spending cuts starting to bite, there is a very strong likelihood the current quarter could even show a minus figure. The irony is that it is financial services which are offsetting the drop in government services spend.
Will there be a temptation to do some behind the scenes adjustment of spending levels in order to shore up the GDP? For it is likely - going back to the above comment - that public spending will anyway prove to be resilient to cuts, especially as demand keeps rising. George Osborne is increasingly relying on the mantra that his spending plans are saving the UK from being hammered by the international markets like Greece even though the figures may be all smoke and mirrors. But in two to three years time all this will just be history and no one will probably care anyway.
I thought about this as the latest grisly GDP for the second quarter of the year was published today. At 0.2% it is down on the previous quarter however much the drop is blamed on the Royal Wedding and the Japanese tsunami. With public spending cuts starting to bite, there is a very strong likelihood the current quarter could even show a minus figure. The irony is that it is financial services which are offsetting the drop in government services spend.
Will there be a temptation to do some behind the scenes adjustment of spending levels in order to shore up the GDP? For it is likely - going back to the above comment - that public spending will anyway prove to be resilient to cuts, especially as demand keeps rising. George Osborne is increasingly relying on the mantra that his spending plans are saving the UK from being hammered by the international markets like Greece even though the figures may be all smoke and mirrors. But in two to three years time all this will just be history and no one will probably care anyway.
Tuesday, 5 July 2011
More adoption could save in the long term
Two reports this week examine both ends of the care system, one from Dilnott on adult care and the other from ex-Barnado's chief Martin Narey on adoption.
The former has received inevitably huge coverage. It has at least provoked politicians into an all-party approach to the intractable issue of how to deal with adult care. The worst fears of the elderly is that they will lose all they have on being looked after in the last few years of their lives. At least Dilnot places a figure on the maximum cost the infirm elderly can expect to pay, thereby ensuring they can plan for it, as well as making the costs of finding insurance for it more feasible. The whole point of the welfare state is to act as a safety blanket so that citizens do not find themselved impoverished through no fault of their own. And nor should this just apply to the poor. If the middle classes are somehow removed from the benefits of the welfare system then they will refuse to fund it. Dilnot at last offers practical solutions. Now it's down to the politicians...
The second report, from Narey for The Times on July 5, follows the newspaper's campaign to improve the ramshackle adoption system. It criticises councils - among others - for inconsistent performance in placing children into adoption and calls for league tables to name and shame the council laggards. In particular it attacks bureaucratic and politically correct barriers to adoption and slates some social services departments for insisting against evidence on returning children in care to their problem families.
Considering that the local authority bill for looked-after children has soared since the Baby P case one would have assumed councils would be far more pro-active in placing such children into adoption. The record on educational achievement and crime among looked-after children is so abysmal that care has to be a last resort. More adoption will in the long-term save money - it could even help fund the extra costs of adult care outlined in the Dilnot report!
The former has received inevitably huge coverage. It has at least provoked politicians into an all-party approach to the intractable issue of how to deal with adult care. The worst fears of the elderly is that they will lose all they have on being looked after in the last few years of their lives. At least Dilnot places a figure on the maximum cost the infirm elderly can expect to pay, thereby ensuring they can plan for it, as well as making the costs of finding insurance for it more feasible. The whole point of the welfare state is to act as a safety blanket so that citizens do not find themselved impoverished through no fault of their own. And nor should this just apply to the poor. If the middle classes are somehow removed from the benefits of the welfare system then they will refuse to fund it. Dilnot at last offers practical solutions. Now it's down to the politicians...
The second report, from Narey for The Times on July 5, follows the newspaper's campaign to improve the ramshackle adoption system. It criticises councils - among others - for inconsistent performance in placing children into adoption and calls for league tables to name and shame the council laggards. In particular it attacks bureaucratic and politically correct barriers to adoption and slates some social services departments for insisting against evidence on returning children in care to their problem families.
Considering that the local authority bill for looked-after children has soared since the Baby P case one would have assumed councils would be far more pro-active in placing such children into adoption. The record on educational achievement and crime among looked-after children is so abysmal that care has to be a last resort. More adoption will in the long-term save money - it could even help fund the extra costs of adult care outlined in the Dilnot report!
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