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The Wolves of Westminster: Inside the Escalating Conflict Between Local and Central Government

The infiltration of private companies into public sector work has been years in the making, reports former council accountant Gary Gowers

Greater Manchester mayor Andy Burnham speaking to the media outside Bridgewater Hall, Manchester, following last-ditch talks with the Prime Minister aimed at securing additional financial support for his consent on new coronavirus restrictions. Photo: Jacob King/PA Wire/PA Images

The Wolves of WestminsterInside the Escalating Conflict Between Local and Central Government

The infiltration of private companies into public sector work has been years in the making, reports former council accountant Gary Gowers

The relationship between central and local government has been strained for decades, but the divide has never been more apparent than during the recent feud between Greater Manchester Mayor Andy Burnham and Prime Minister Boris Johnson.

In October, Burnham had the temerity to ask for the people and businesses of Manchester – set to be placed into a centrally-imposed lockdown – to be afforded the same help that Chancellor Rishi Sunak had offered the wider country in the first lockdown.

Johnson made the subject an arm-wrestle, and even when it reportedly boiled down to a £5 million difference of opinion, the Prime Minister refused to budge. He dare not. Margaret Thatcher did not wilt under the pressure of 165,000 miners led by Arthur Scargill, and Johnson felt this pressure of history.

Yet, just 10 days after winning his battle with Burnham, the Prime Minister took the whole of England into a second lockdown, while Sunak announced countrywide financial reparations that trumped the financial offer made to Manchester and its environs. It was not about the £5 million at all; it was about Westminster showing who is boss.

Of course, there is the added and obvious complication of the Conservative Government’s inclination to dump problems on non-Conservative local administrations, but the conflict goes far deeper.

Fifty Years of Turmoil

The relationship between central and local government has evolved over the last century, from a sustained period of centralisation to a period of devolution – accompanied by the implementation of the devolved assemblies in Scotland, Wales and Northern Ireland – back to an era of centralisation, determined by Cummings and his Cabinet Office machine.

The Local Government Act 1972 implemented a full-scale restructure that resulted in two-tier metropolitan and non-metropolitan county and district councils, all of which largely still exist today.

As a result of this Act, all major local services also effectively became grant-aided, with local government simply turning into a delivery mechanism of national public services.

As the world changed, so too did the range and scope of local authorities. In an attempt to address this, in 1990 the Conservative Government turned to the newly established Local Government Commission for England (LGBCE) to re-examine their structure.

Following extensive research and consultation – their words not mine – the commission recommended that some areas would benefit from retaining the existing two-tier structure, while others should be remodelled as unitary authorities (UA): single tier organisations that would oversee services previously undertaken by both county and district councils.

At that time, local government was also coming to terms with a word that had local officers shifting uncomfortably in their swivel-chairs: outsourcing.

The squeeze on budgets that started in the late 1990s and intensified during David Cameron’s Government forced local administrations to re-examine how they delivered services. Without the financial resources to operate independently, councils further turned into enablers rather than providers.

The private sector, so adored by the Thatcher and now at the heart of Johnson’s fight against the Coronavirus pandemic, was asked to deliver services, sometimes through existing companies, sometimes through bodies set up for the sole purpose of undertaking public sector work.

For those of us involved in the process, it appeared generally fair and transparent – far removed from the process favoured by No 10 during the present crisis, namely giving contracts to their mates without a tender process. However, it did offer the private sector a route into the public realm; one that meant shareholders as well as council tax payers would be the beneficiaries of local government contracts.

Waning Trust

As a result of the LGBCE review, 55 unitary authorities popped up across the country in the 1990s and 2010s. These are predominantly in cities, urban areas and larger towns.

My own experience of the review was less clear cut, with Waveney District Council – a former district council based in Lowestoft – being the subject of a tug-of-war (of sorts) between Suffolk, its home county, and Norfolk. When Norfolk and Suffolk were asked by the commission to work up a series of unitary proposals, Lowestoft was inexplicably included in the plans for both counties.

As the Waveney DC accountant responsible for liaising with both county councils, I helped to model the implications of Lowestoft being temporarily seconded to Norfolk, as well as being morphed into an overarching, one-tier Suffolk council.

Collectively, across Norfolk and Suffolk, the cost of the process ran into six figures, with the work reaching a fairly advanced stage before the commission decided that actually it really wasn’t a very good idea at all. As a result, the plug was pulled on both proposals.

For many other authorities, that work is still ongoing.

The financing of local government underwent a further twist in 2012 when Whitehall changed the rules regarding business rates (NNDR). The old system – which involved paying over the revenue and getting a grant allocation back through the local government finance settlement – was replaced by the business rates retention system, whereby local authorities retained a percentage of the income they collect.

This was intended as an equalising mechanism, but essentially it transferred all the financial risk arising from changes in business rates yield to local authorities.

Authorities still decide how the money is spent, but it is central government that determines which businesses pay local rates and how much they pay. The only, very limited, control possessed by local authorities is to encourage growth in the number and size of businesses in their area.

The changes in NNDR form part of a bigger debate around the financing of local government, known as the Fair Funding Review. However, the pandemic has led to this particular can being kicked down the road.

Whether the departure of Dominic Cummings from Downing Street will have any positive immediate effect on Whitehall’s relationship with councils remains to be seen, but if Johnson’s spat with Burnham is anything to go by, the perception of local authorities as a hindrance rather than a help will persist.

As long as local authorities continue to be subject to the whims of Westminster, it is not just funding levels that will leave councils feeling aggrieved. Trust too will remain in very short supply.

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