Community Budgets

Andy Sawford Excerpts

Thursday 6th February 2014 Westminster Hall

[Andy Sawford (Corby) (Lab/Co-op)]

You have caught me by surprise, Mr Sheridan. I thought we might first hear from some of my hon. Friends who have a great deal of expertise in this area, but perhaps they will intervene in a moment.

I was a member of the Communities and Local Government Committee for part of the duration of the inquiry, and I found it extremely interesting; indeed, it was perhaps the most interesting of the Committee’s inquiries in which I participated. I congratulate its Chair, my hon. Friend the Member for Sheffield South East (Mr Betts), and all its members on bringing the inquiry to its conclusion and following it through with the Government. My hon. Friend has continued that effective work today by pressing the Minister on the Government’s response. I have read the response, and I believe there is significant scope for the Government to give us further assurance on how far they will go to ensure that the potential of community budgets is realised.

It is worth putting the matter in context. I believe there is a broad political consensus around the community budget approach. The previous Labour Government introduced the Total Place initiative in 2009 with several pilots, and the Treasury produced a report in March 2010 that stated:

“We will work with consistently high performing places to develop a ‘single offer’ for those places. This offer will give places a range of freedoms (freedoms from central performance and financial control as well as freedoms and incentives for local collaboration) for working in partnership with central government to codesign services and arrangements to deliver greater transparency, efficiency and value for the citizen and the public purse.”

The previous Labour Government did some great things during their 13 years in power. In the later years, however, there was a growing realisation that although performance management had successfully improved performance standards across local government, we had begun to see its limits. A new approach was required in which local authorities could take on a community leadership role and more effectively bring public services together.

That is not merely a criticism of the limitations of performance management under the previous Government, but a reflection on how society has changed. When the welfare state was established, the Government of the day were building services from scratch for many people around the country, and they had to bring services together. There were lively arguments when the national health service was founded, and some argued that local authorities could provide those services, particularly in London, where the local authority already provided a substantial number of health beds. Central Government had to inject some real impetus behind Beveridge’s proposals for the founding of the welfare state, and they did so successfully, whether in health services, social care, transport infrastructure or, notably, the building of housing.

Times have changed, however, and local government is in a different position, not least as a result of 13 years of increased resources and support, which my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) was particularly responsible for. The capacity of local government grew over that period, so it was right to set out an ambitious plan for Total Place. It is clear, and disappointing, that the Government’s ambition for the community budgets programme does not match the previous Government’s ambition and enthusiasm for the Total Place ideas. There has been a particular focus on troubled families, and I will address that in a moment.

I was present at some of the Select Committee’s evidence sessions, and I have read the transcripts of others. The report demonstrates a clear consensus that community budgets offer a viable model for public service transformation, and that it is necessary to move beyond the testing phase and implement them more widely. The report considers the second phase of the community budget pilots the Government have announced, and it rightly warns—in the spirit of the remarks of the Select Committee Chair—that the second phase of testing must not be allowed to slow the momentum towards wider implementation. Many areas of the country are already developing integrated models of service delivery that do not have the badge of community budgeting. I fully endorse recommendation 3 from the report:

“The Government must continue to send the clear message to all local authorities that it will support every authority wishing to introduce Community Budgets”.

Although I am sure the Minister will tell us that the knowledge network and the secondments have been helpful in some areas of the country, every local authority faces incredibly tough financial challenges, together with the need to reform and improve public services to deal with other pressures that increase costs, such as demographic change. Local authorities should, therefore, be supported in taking forward community budgeting approaches. I hope the Minister will tell us how the Government intend to respond to recommendation 3 in order to send that strong signal to local government.

The report calls on central Government to facilitate local partnerships and enable local authorities to reshape how central resources are spent in their area. I have a mixed view about that. It is important to tell local authorities that we want them to take the lead in developing networks of support for each other and in knowledge sharing. Indeed, Labour local authorities have been doing just that. The excellent publication “50 Top Achievements by Labour Councils”, which I recommend to Members as good bedtime reading, shows how Labour councils are supporting one another to improve community budgets.

The Select Committee report makes a powerful point about the consequences of not rolling out community budgets nationally. There was broad agreement among witnesses that demands and costs will escalate and services will suffer if community budgets are not adopted around the country. The urgency of the situation is reflected in the Select Committee’s conclusion:

“Without quickly and fundamentally changing the way in which services are delivered by increasing local autonomy and integrating services so as to reduce demand and dependency, the reductions that are made to public spending on local services may simply result in more spending in the future on welfare, and judicial and emergency health interventions.”

Local authorities are already familiar with many of the issues raised in the report because they have experienced them directly. In addition, the National Audit Office and the Public Accounts Committee have published useful reports on the matter, on which the Communities and Local Government Committee drew. The significance of its report lies in the clear message that community budgeting is the way forward for public services.

It is now widely accepted that the existing public sector architecture does not lend itself well to addressing the complex challenges currently faced by local and central agencies or to the kind of relationship we should seek to develop between local and central Government in the coming years. Indeed, the Chair of the Political and Constitutional Reform Committee, my hon. Friend the Member for Nottingham North (Mr Allen), has led some excellent work in that area. Governments have experimented with integration in the past, but the urgency of the present financial situation necessitates the immediate transformation of services. Many authorities know that community budgeting approaches offer a viable solution.

We should acknowledge that in recent years most, if not all, councils have developed practice that we could identify as community budgeting—bringing services together—whether or not the Government recognise that from their more limited view of pilots. When I was a member of the Communities and Local Government Committee, we faced a challenge. We were trying to impress on advocates of community budgets, particularly those with direct experience of them, the urgent need to demonstrate very clear evidence that could persuade the Treasury and the current Government.

I also wanted those advocates to persuade my colleagues in the shadow Treasury team, who I very much hope will be moving into that building across Whitehall in 16 months’ time. Those with experience must persuade the right people that if money is moved within the system, we can both generate savings and significantly improve outcomes. We must also look at whether that can be done in-year, within a three-year period or a five-year period, and so on.

We should consider very seriously the call for a longer-term funding settlement from the Local Government Association in its document “Rewiring public services.” That would reflect a growing trend—for example, three-year spending statements and past experiments with public service agreements—and be a clear acceptance of the fact that local government needs more financial certainty. It has been given a kind of certainty by the current Government—principally, it has known that its funding is going to be massively reduced. Local authorities with the greatest need in the most deprived areas of England know that they will lose six times more a year than the 10 least deprived local authorities, compared with 2010-11.

The situation makes the challenges in places such as Liverpool, Birmingham and Middlesbrough even greater than in places such as West Oxfordshire, Wokingham or Dorset that have, in some cases, received an increase in Government funding at the same time as most local authorities have faced massive cuts. That is why it is particularly important for Opposition Members to show that we will embrace community budgeting approaches.

It is worth noting that the Government have made progress following the significant troubled families programme. That programme builds on the great practice of the last Labour Government. Indeed, my hon. Friend the Member for West Ham (Lyn Brown) recently wrote a paper, which I would encourage all Members to read, that looks at not only the Government’s current troubled families programme but where it came from.

The previous Government invested hugely in Sure Start, for example. Schemes such as Think Family were forerunners of the Government’s family intervention programme. The Government inherited a well trained work force, and family intervention projects in certain areas of the country that would now be considered part of the Government’s programme were already up and running in the vast majority of councils, due to extensive investment to combat youth crime, as well as other initiatives.

The Government say that their programme has been a real success, based on early results and judged against their own criteria: 92,000 families have been identified, 62,000 families are attached to the scheme and 22,000 families are deemed to have been turned around. I note, however, the recent National Audit Office report that says that the right families are not being targeted. We should all be concerned about that, and I hope the Minister will have something to say about it. The NAO report said that

“there is a mismatch between the criteria the Department used to calculate the total number of families at which its programme is targeted, and the criteria for identifying the families in each local authority and then rewarding positive outcomes”.

The report showed that payment by results, which pays 80% on attachment and the rest on success, is being diverted by cash-strapped councils into other services as it is not ring-fenced. We should not criticise local authorities for that, or be too surprised, given the scale of the cuts they face, losing up to 40% of their central Government grant. However, the Government must acknowledge that, in practice, that is what is happening with its troubled families programme in many areas of the country.

The NAO report questions whether the achievement of the criteria for success really means that a family is turned around. The families in question have, by definition, complex and long-term problems. To claim that they have been turned around by fulfilling just one criterion in a six-month period is over-optimistic. It shows hubris on the part of the Government in their understanding the nature of the families, the experience of 30 years of very significant investment in some of these families around the country, and the difficulty of genuinely turning lives around. The single criterion could be having come off out-of-work benefits into a job in the past six months. Families obviously must have improved on a number of levels to make that a possibility, but what is still unknown is the families’ longer-term fate and whether they stay turned around if, for instance, that job is lost.

What happens once the council takes away the money for a turned around family? Some local authorities have good step-down support, but what happens after the intensive work is concluded? Does the truanting and antisocial behaviour continue at the reduced level, or does it go up? Is the job gained a job maintained, or does the family fail again? Is support withdrawn, meaning that it becomes impossible to sustain the effort needed to stay employed, given that some core problems in a family may remain unresolved? Can a family be called “turned around” if truanting and antisocial behaviour continue at any noticeable level?

My hon. Friend the Member for West Ham has undertaken research that suggests that more than half of all councils are not tracking the families that have successfully—according to the Government’s own criteria—completed the programme. There is a clear need to evaluate the programme. Indeed, the Select Committee report does consider the troubled families programme, and there is a growing body of evidence—I have mentioned the NAO report—that throws up as many questions as answers about how confident we can be in its effectiveness.

I hope that the Minister will confirm that his Department will undertake further evaluation and start to answer some of the long-term questions about the programme. It is a relatively new programme, so we do not yet know what will happen if a family needs further intervention. We do not even know whether the Government, the local authority or other public sector partners will be aware of where further intervention is required.

I want to close by saying a little about what the next Labour Government will do if we are successful at the next general election. I hope to answer some of the questions asked of the current Government by my hon. Friend the Chair of the Select Committee, but also to indicate what the future may hold. Indeed, my hon. Friend will be part of shaping that future because of his expertise and work such as the report we are discussing. I read his recent article in a Smith Institute pamphlet, which set out his ambitions for a future Government; I hope to give him some confidence. Of course, we will not be able to stop the clock or turn back the tide of cuts, but we can offer hope to local government that we both understand the depth of the financial challenge that councils face and are committed to finding a way forward.

We will start by putting fairness at the heart of the relationship between central and local government and into our approach to local government finance. We will acknowledge the difficulties that councils face, not try to sweep them under the carpet. We will respect the decisions that councils make at a local level about how to use resources, not criticise and carp from Whitehall. As my hon. Friend the Chair of the Select Committee said, the current Secretary of State carps about everything from the levels of reserves to bin collections, while masquerading as a localist.

We will review the funding formula. I thank the LGA for its excellent briefing on this debate, and also for its report “Rewiring public services.” We have looked at that, and if local government can come up with a united position on a fair settlement, we would of course take that into very serious consideration. The proposals the LGA put forward for five-year settlements, which are designed to give councils stability, are particularly important in the context of making community budgets a reality. In principle, we want to work with the LGA to take those proposals forward.

The LGA has some other very interesting proposals, such as local treasuries—the idea of local public accounts committees—which could be very valuable in driving community budgeting approaches around the country. Again, we will look to work with the LGA to develop those proposals and see what we can usefully make of them, and how effective they could be.

Of course, the next Labour Government will want councils to meet the needs of communities, be they in adult social care or raising educational standards. However, we have no intention of returning to the tick-box approach of the past. Our approach will be based on partnership underpinned by fair funding, and we need to work with local government to develop the architecture for that relationship. That means there needs to be some accountability that works both ways. However, this Government’s approach has swung the pendulum so far that the positive aspects of the previous architecture have been lost.

My hon. Friend the Member for Derby North (Chris Williamson), who is here today, and I recently served on the Committee considering the Local Audit and Accountability Bill. We were very disappointed that the Government’s proposals for the future of local audit fundamentally missed the point about the potential for transforming local public services. The Government failed to see how local value-for-money work, for example, could be a driver of local public services working together. They also failed to see that although we support combined authorities, city deals and other initiatives that bring local authorities together with local public service providers—initiatives that are at the forefront of the community budgeting approaches of authorities such as Greater Manchester—we need a system that follows value for money and that audits local authorities in such a way as to assure the public that money is being spent well, and which is that crucial driver, particularly given Whitehall’s resistance to the joining up of local services.

The English deal that we propose will support councils to deliver economic growth in all areas of the country. It will be about devolving powers over housing, planning, jobs and skills. However, we need councils to come together to decide how best to use those powers. Local economies differ, so we will not set down a model from Whitehall. Instead, we will ask local areas to develop their own local arrangements.

It would be helpful to hear from the Minister on some key points. For example, do the Government intend to reinstate the localism audit? That was a welcome and interesting initiative, even if it was a little charitable in its assessment of how localist some Departments were. I note, however, that it has been dropped. Instead we have other programmes, such as the major reform of probation that is now being pushed through, and the Work programme, which was commissioned across nine areas of the country. Also, following the abolition of regional development agencies, their powers—including their spending powers—were not placed with local government, despite the proposals involving local enterprise partnerships. Instead, those powers have been drawn to the centre. All of that activity has worked against the idea of community budgets.

That is why we will take forward our work on, for example, local authorities co-commissioning the Work programme, because we recognise the great potential of community budgets. It is also why our work to ensure that we genuinely reform the health and social care system, so that we have whole-person care, is absolutely vital, both for local authorities and central Government, to give the drive that is needed.

I congratulate the Communities and Local Government Committee on producing this report and securing this debate, and I look forward to hearing the Minister answer the many questions that have been put.

--- Later in debate ---

[Brandon Lewis]

There is still a lot that Essex can do within the abilities and powers that it has been given. We arranged a meeting with BIS directly, which I think has now happened, but I will pass on the hon. Gentleman’s message and ask BIS to respond directly to him on where it is at.

The Government have invited local areas to make public service reform proposals as part of the local growth deals, which are currently being negotiated with the cross-Government local growth team. We have also provided an extra £10 million a year for Jobcentre Plus, working in partnership with local authorities, to help young people find apprenticeships and traineeships. I hope that we can all agree that the focus on better outcomes, which is at the heart of the community budget pilots, is evident across all Departments and all parts of the public sector.

Members asked, “What exactly is there?” The network has 30 staff and a budget of £2 million. The network is accountable to Sir Bob Kerslake, but it reports to Ministers in the Department for Communities and Local Government, the Cabinet Office and the Treasury.

The Chairman of the Select Committee made a point about localism. The community budget pilots, the transformation network and some of the great work being done by councils across the country to bring public services together and to get on with changing how we deliver services for the better—this is what really matters—proves that the power the Government have devolved to local communities and local councils goes way beyond the central process that we had in the past. That is a revolutionary change that, hopefully, local government will grasp and take forward. It would be wrong for us in central Government ever to pretend that we have taken a vow of silence on what we think of certain decisions or on pointing out good examples of best practice for providing residents with the great services that all taxpayers deserve.

[Andy Sawford]

Bin collections.

[Brandon Lewis]

Whether for weekly bin collections or any other service that the council provides. I suggest to the hon. Gentleman that most council tax payers would expect, at the very least, to have their waste collected in a good and weekly manner.

I welcome today’s thoughtful debate. We can all agree on the critical need for public services to work together in the interest of residents, service users and taxpayers. The community budget pilots showed how local services can be transformed. Continued commitment and strong leadership, both locally and centrally, means that everyone can benefit. There is an opportunity to see something different and something better for our country. I hope that local councils will take a grip, make the most of it and deliver for all our residents.