Three local government priorities for the next Parliament 

As she steps into an interim CEO role, Jessica Studdert puts forward three proposals for the next government, at a critical time for councils.

The prospect of the most competitive general election in years creates a moment of possibility. Whoever forms the next government, there is an opportunity for a new agenda to put down roots and grow over the longer horizon of a new Parliament.  

Nowhere is this more urgent than in relation to local government. Over the years, councils have grappled with the consequences of reduced funding and short term, disconnected national decisions. Recent headlines have been dominated by the few who have gone bust and the expectation that more will follow. There is now a risk that in public policy terms, local government ends up in the ‘too difficult’ box.  

The prize for pursuing an ambitious agenda for local government would be big: communities thriving, empowered and participating in decisions that affect their lives

It doesn’t have to be like this. For the next administration, hard-won political capital is a precious commodity that will need investing wisely. But the prize for pursuing an ambitious agenda for local government would be big: communities thriving, empowered and participating in decisions that affect their lives, supported by a local state that is fit for the challenges of 2025 and beyond.  

So, here are three priorities local government needs from the next government, all of which New Local will be working to develop further in the coming months.  

1. Funding that reflects the reality of demand for services.  

Local government finance is complicated, but the ‘tl;dr’ of what’s happened in recent years is that how councils are funded has become completely disconnected with what communities need them to deliver. Spending power has been cut by 27% in real terms since 2010, at the same time as structural changes in society have shifted the nature of demand councils are confronted with. 

Our population is ageing, with new requirements for support for both working age adults with disability and a proportionately increasing elderly population. Widening income and wealth inequality has multiple, deep consequences for how many people require support. Secure housing is increasingly unaffordable for many, and catalysed by the cost-of-living crisis, numbers of households in temporary accommodation are skyrocketing. The consequences of rising deprivation and outright destitution is widening health inequalities, leading to more demand for family support, children’s services, and increasingly for basic needs for food and warmth.  

Councils have no flex in how they can respond: each year they must set a balanced budget. Government allows itself much more fiscal flexibility: nationally controlled budgets like social security are more demand-led and rise in times of deeper need. Meanwhile, there is no national assessment of the nature of local patterns of service demand or how this has shifted over time. New statutory requirements placed on councils, such as to provide adult social care or house asylum seekers, come with no guarantee of sufficient funding. This is the context for one in five councils facing effective bankruptcy in the immediate future. 

Local government needs a long-term strategy for a reset. We have advocated for a ten year plan for recovery and renewal that would begin to forge this:

• In the short-term finances could be stabilised by creating multi-year settlements and removing competitive bidding.

• In the medium term, we need to move towards an independent funding mechanism for local government which objectively assesses the nature of demand and allocates funding accordingly.

• In the longer term, local revenue bases should diversify to reduce dependence on changeable national policy. New Local’s proposal for fiscal devolution made the case for progressing this from our uniquely centralised starting point as a country, with equalisation between areas a core part of the approach.  

We will continue developing a practical route forward on local government finances for the next government. New Local will shortly be launching a research collaboration with the International Public Policy Observatory at UCL that will explore how councils are responding to financial pressures in real time. We expect this to consider what immediate actions could be taken to increase financial flexibilities, protect prevention and boost local government’s ability to intervene in broken local provider markets, from housing to care.  

2. A cross-government plan for place-based public service reform that rewires funding around communities not institutions. 

Whoever forms the next government will be confronted with the structural flaw in our Whitehall model that blunts the impact of how existing spending meets the needs of communities.

The local government funding question cannot be detached from how public services more broadly are resourced. Whoever forms the next government will be confronted with the structural flaw in our Whitehall model that blunts the impact of how existing spending meets the needs of communities. As our recent report calling for Place-based Public Service Budgets set out, departmental siloes between health, welfare, education, criminal justice and local government are mirrored in places. This creates barriers to collaboration between partners, including a ‘prevention penalty’ whereby there are disincentives for one service to invest upfront in prevention, because any downstream savings are likely recouped in another service spending line. This prevention penalty is playing out in real time with the lack of community-based early support creating knock-on pressures on acute services like hospitals and police. 

Just as the consequences of disconnected national policy manifest locally, the experience of local actors provides valuable insight to how things need to change. New Local’s work across our network of councils and in practice, including with the wider public sector, reflects the shift towards working in ways that enhance community power and participation. By augmenting public service capacity with the insights of communities themselves, there are many examples of pioneering approaches that produce better, more sustainable outcomes. They are inherently more preventative because they actively seek to build community capacity, networks and social capital, rather than bypass these elements. Moving beyond traditional paternalistic or transactional ‘provider-user’ models of behaviour, they are characterised by recognising communities as equal partners. Where this exciting practice is happening, it is working against the logic of a system that reinforces rigid pre-determined priorities.  

So, a core question at the heart of New Local’s policy agenda is how the system can shift to incentivise these ways of working as the mainstream norm, not the radical exception. This has led us to place-based budgets as a route to rewire how public spending flows into local areas, to better align investment around identified population needs and shared priorities across a place. This is a crucial foundation for the outward-facing, open approach to communities that public service institutions collectively need to be enabled to shift towards. We continue to build momentum behind the proposal for place-based public service budgets, which has drawn widespread support and interest.  

Making the case for this is crucial, because for the next government, there is a risk that a ‘business-as-usual’, limited approach to public service reform would simply continue relying on squeezing out efficiencies within service siloes. This would only serve to create more pressure on individual services and take them further from community priorities.   

3. A renewed national-local relationship built on clarity and respect  

Over the years, the national-local relationship has been stretched thin.

Underpinning the urgency to reset the terms on which local government is funded and to establish deeper place-based collaboration across services, is the slightly more basic need to rebuild a national-local relationship based on trust and respect. Over the years, this has been stretched thin. Whether it is overreach from national initiatives that micro-manage while the sector is macro-underfunded, or the failure to recognise the critical role of local public health teams during the pandemic, the next government needs to establish a different local-central dynamic. This would be built on clarity of understanding mutual roles, scale for impact of decision-making and the umbilical link between councils and communities. 

The cross-party consensus on devolution suggests the wider rollout of mayoral combined authorities in the next Parliament by whoever forms the government. This is positive but there is a risk that as a group of single individuals, mayors will be seen by Whitehall as easier to ‘do business with’, and all the energy in devolution will remain concentrated in the space between the central and the sub-regional level. This would be a missed opportunity to also create a more robust legal framework for local authorities to play a stronger place-shaping role and to deepen the involvement of communities in devolution at a neighbourhood level.  

it is not possible to empower communities while disempowering councils

New Local’s report, co-authored with seven Labour council leaders, set out vision for community power which would be built on the foundation of a new settlement between national and local government. This recognises that it is not possible to empower communities while disempowering councils. It also set out how a more inclusive approach to devolution could combine economic objectives with social and environmental purpose – so that people locally would benefit from new growth rather than fear being displaced by it. Guided by the principles of subsidiarity and participation, a renewed approach would seek to push power down to the level closest to communities, and reach out to secure their active involvement in decisions that affect them. The report provided a blueprint that was recently recognised in a study of devolution proposals as being both radical and implementable. We will continue to build the case for devolution that genuinely enables communities to feel they are taking back control – something which both main national parties have recognised the need for. 

As we will be celebrating next month at our annual Stronger Things community power event, there is an enormous amount of energy and determination locally to do things differently. New Local will continue to build the links between innovative local practice and ambitious national policy proposals – bridging aspiration with tangible routes to change.  

Photo credit: Unsplash: Paul Silvan

Join our mailing list