Opportunity knocks

By the time this column is printed, we are likely to have more clarity on the future direction of local government reform in England within this Parliament.

In Scotland, the process of reducing 32 councils to between six and 10 regional authorities is only just beginning. Is it any wonder that working in local government can feel a bit like a white-knuckle ride?

The impacts of reform often have a direct and visible impact on how people think about their area. These impacts are not just about the removal of proximity to a familiar council building, team or service, but are longer term and more incremental, with people experiencing a slow transition to a different experience of the local state.

All of this can live long in the collective memory as people process feelings of loss and sometimes confusion about identity.

However, public sector reform and its impact on local economies is a story that gets less attention. There are certainly well-trodden assumptions about how reform can lead to greater efficiencies, lower costs and ultimately, a slowdown of the rate at which public borrowing and expenditure are rising. Politically, this becomes evidence of an administration’s fiscal prudence.

However, unanswered questions remain about whether these assumptions really stack up when considering the impact of reform at the regional and local level.

Are positive impacts in terms of efficiency always supportive of inclusive economic growth and what are the opportunity costs that are difficult to quantify, particularly in the longer term?

In the first instance, rewiring of the state structures will have direct impacts on local economies which become clear once you begin to follow the money.

You can start by examining how services are commissioned and procured and the ability of smaller local organisations and businesses to access these opportunities – the management of assets, particularly those deemed redundant in a unitary system of local government. Reorganisation inevitably results in reductions in staffing, including early retirements which can have multiplier effects for local spend. Furthermore, the removal of council office functions from a high street may further exacerbate vacancy rates and dereliction.

Reorganising local government also has knock-on effects for strategic decisions on how the local state intervenes to support the conditions for economic development and innovation. Business support functions will inevitably operate across a larger area, which may reduce the capacity of the state to support local companies and smaller third sector organisations to explore and manage succession or expansion to more suitable sites.

Where unitarisation takes place across a large rural area, investment priorities appear to shift away from coastal and rural areas towards bigger settlements where the new unitary authority is based.

The interesting question for local government reorganisation now, particularly as we draw a collective breath in the process, is the opportunity to think more explicitly about the economic impact the rewiring of local government can have. How can economic inclusion be baked into the design of the new authorities from the start, for example, getting more bang for the public buck through social value redesign? This includes using public control over services to address local economic challenges, such as a lack of affordable housing or inadequate care. It is also about taking the lessons from Total Place to agree joint spending priorities that target social and economic challenges across geographies and public service silos.

This is not just about some social value tacked on the end, but a strategy to look at how, through the careful design of the structures, more economic benefits for local economies can be built into the design brief for the new authorities from the start.

By following the money, local authorities can understand the impact of their expenditure now and the potential to shift that towards growth sectors such as advanced manufacturing and green technology in the future. It can also explore how it uses service delivery to support and complement its local economic development powers including procurement, asset management and employment to increase the flow, circulation and ownership of wealth for communities.

This article was originally published in the Municipal Journal.