Hand councils 'area budgets' – LGA

Author: Local Government Chronicle - May 21, 2010

Around £22.5bn worth of savings are available if ministers give the green light to a radical shake-up of public services governance, which would see significant control over local spending devolved to councils, according to the Local Government Association.

Councils should be handed control over local spending through “area budgets” and then report direct to Parliament, according to the LGA, which said the proposals could help councils get through tight spending settlements without hitting frontline services.

The model would cut out the cost of quangos, funding agencies and excessive reporting requirements which could contribute to significant savings over the next five years.

The plans build on much of the evidence gathered through the Total Place programme although it remains unclear exactly which funding streams the LGA wants transferred into the “area budget”.

LGA chairman, Dame Margaret Eaton (Con), said: “Conventional ways of achieving savings will simply not be enough.

“Our plans would save taxpayers £22.5bn over this Parliament, without damaging vital front line services. But that could just be the start. There are enormous opportunities to save billions more if we grasp the nettle and cut out the middlemen who tie up huge sums in needless red tape.”

The reform programme includes:

Specific proposals for cuts to central bureaucracy and red tape worth £4.5bn a year, or up to £22.5bn over the five-year Parliament.

Giving elected councils control over local spending through local “area budgets” – reporting direct to Parliament - cutting out costly quangos, funding agencies, ring fenced budgets and excessive reporting requirements.

A national productivity programme to identify further efficiencies in local government through greater sharing of back-office functions, running joint services and workforce modernisation.

A tough new system of self-regulation for councils, to ensure that high-performing town hall experts can step in to help any authority in difficulty and guarantee world class standards of services.
David Parsons (Con), chairman of the LGA’s improvement board and leader of Leicestershire CC, hailed the plans.

“What we are proposing is a dramatic reshaping of the local government map,” he said. “In my own county, there is £6bn a year which is spread between organisations which on occasion do similar or overlapping work. It can’t be sensible for that to continue and given the budget cuts approaching, it’s unsustainable.Local government is close to the ground and is well poised to deliver more efficiencies while the government strips away the quango state.”

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