Building up from the local
This article originally appeared in the Municipal Journal.
As local government gears up for the annual budgeting process, there is still no certainty the new government in Westminster will be prepared to grasp the nettle on local authority finance. However, there is a huge opportunity to use investment in local government to help deliver Labour’s mission for growth.
Revaluing and restoring a strong and accountable local state will be essential if we are to ‘fix the foundations of Britain’s economy’.
If ever there was an example of how disinvestment in local government and public services generally undermines our ability as a country to run an effective economy, it is the last 14 years of austerity. George Osborne’s strategic vision was one of expansionary austerity – a belief that fiscal constraint would generate expansionary effects in the economy as private investment piled in to fill the gap. That has never materialised. Yet it looks as if the new Government wants to give it one more go.
“the erosion of words”
So far, all the talk of how we will deliver the UK’s growth priorities has focused on private sector investment. Slowly, we are seeing the erosion of words such as community, inclusion and public sector from local growth plans as areas begin to commit their ideas to paper.
The word from the Government is that we cannot afford to invest in public services until we have growth. But if you were to ask a council leader who is trying to balance their adult social care budget, support children with special educational needs or tackle rising levels of homelessness, they would give you one message loud and clear: we cannot afford to wait.
“a cost to us all now and in the long-term”
They would tell you a failure to invest in making life better for people not only brings moral injury for council leaders, but also undermines the ability of the UK economy to function. Being forced to deliver inadequate services to society’s most vulnerable people comes with a cost to us all now and in the long-term.
An IPPR report published last week underlined this challenge, showing that health outcomes have gone into reverse, making the UK now, the ‘sick man of Europe’. Which private investor is going to bring their money to a country where we cannot even get the basics – such as health, education and affordable housing – right?
“shaping and supporting the conditions for local economic development”
However, investment in the public sector is not simply about services. You only need to look at the basic functions of local government to see just how important a role it can play in shaping and supporting the conditions for local economic development. There are nearly six million public sector workers across the UK, with two million of them working in local government. This gives our councils the potential to deliver decent jobs, training and support to local residents, particularly in areas of disadvantage. Similarly, councils in the UK own significant tranches of land and property and can actively use their portfolio alongside their planning powers to operate as market actors. This includes the power to add value to land and to help leverage investment as well as delivering council and community-owned affordable housing.
Councils also spend some £127bn every year in goods and services in their local and regional economies. Many are now using this expenditure creatively to support local business innovation and to pioneer new technology in growth sectors such as life sciences, low carbon and renewable energy.
“building back the foundations of the economy”
In a time of crisis, we need to look at all the opportunities available to us – particularly when it comes to getting our economy into better shape so we can start to adapt to the very real challenges we are facing. Simply placing our faith in private investment to do the heavy lifting will not be enough to deliver the inclusive growth this country needs. Building back the foundations of the economy also means investment in public services, in local government and in the places where communities have been on the receiving end of a cost of living crisis for years.
We might be convinced, but now we need the Government to start listening.
