What would a Labour Government mean for local government?

September 26, 2018   By Jessica Studdert, Deputy Director, NLGN

As its annual conference closes, and a flurry of new policy announcements add to last year’s manifesto, Labour’s agenda continues to take shape. While Brexit negotiations still dominate these unpredictable political times, how far is it possible to identify in practice what a Labour Government might mean for local government? Patching together the “known knowns” that exist, here follows an attempt to set out what the Labour Party’s future direction of travel might mean for local government, were they ever to assume office.

An end to austerity?
The first most obvious policy shift under a Labour Government is the oft-repeated ambition to “end austerity”. Taken on face value, this will surely be welcome news for councils – whose budgets have been cut by nearly 50 per cent in real terms since 2010. Jeremy Corbyn himself has recognised the dire financial straits of the sector – telling Andrew Marr last Sunday that “we need proper funding for local government” and warning against councils being used “as a conveyor belt for austerity”.

So, good news for starving budgets? The small print of Labour’s policies to date is actually surprisingly thin on how local government might benefit from this radical fiscal shift. In the 2017 Manifesto, alongside headline spending commitments to pump £30 billion into the NHS, inject £250bn into infrastructure investment and abolish tuition fees, the pledge to councils was much tamer – it would “give local government extra funding next year”. Not to be sniffed at, but hardly the landmark reversal of austerity one might expect from the party’s rhetoric.

Labour has its sights set on reform of the two key revenue streams on which councils have become increasingly reliant as formula grant dwindles: council tax has been labelled “broken” and business rates are a “ticking time bomb”, according to senior frontbenchers. Labour has committed to review both taxes and “consider new options such as a land value tax”.

At this stage, the analysis of local government funding seems to be clearer than the solutions. Will the party be radical and introduce significant new local revenue-raising powers to shore up resources? Or will the priority be equity between councils, which implies centralised redistribution mechanisms? A commitment to sustainable funding is a much-needed first step, but the all-important detail on how sufficiency and incentives will be balanced in practice is still very much work in progress.

National versus micro
Where Labour has provided detail about new funding or revenue-raising locally, there is a recurring absence of the role of local government, in preference for a national approach. While it might be assumed the new levy on second homes announced this week would be an additional council tax power. It is actually a national levy which appears to bypass councils altogether to create a new fund for homeless families. Likewise, the 2017 Manifesto contained a significant funding commitment of £8bn to social care budgets, but this came attached to plans for a new ‘national care service’. Whether this service is to operate inside or outside existing local authority budgets and care provision is not clear.

All of this seems to suggest that under a future Labour Government, local government would see the resurrection of a mechanism which was largely swept away in 2010: the ring-fenced funding stream. Although any Opposition party uses specific policy announcements to indicate a wider future direction of travel, the sum total of micro-commitments across the Shadow Frontbench suggest significant accumulation of bespoke funding pots. These include a children’s public health fund; an end to youth funding cuts; the abolition of child burial fees; free wifi in town centres; updated computers in libraries and a cultural capital fund for museums and the arts. The trouble with ring-fenced funding streams from local government’s perspective is that taken separately, each may well have a solid rationale, but taken together they amount to a form of statecraft which is heavily prescriptive and binding on councils’ room for manoeuvre to meet local needs.

Restating the role of the local democratic state
Labour’s future statecraft appears to swing from on the one hand a preference for new national services (for education and for fostering, in addition to care), to micro-prescription on the other. It was ever thus under the pre-2010 Labour Governments, but Corbyn’s Labour Party does seem to place the role of councils front and centre of its public service reform agenda in new ways.

After consecutive Labour, Coalition and Conservative Governments downplayed or removed councils from addressing big social challenges, Corbyn’s Labour restates their role with confidence. For an avowedly democratic socialist party, local authorities are real lever for social change, embodying as they do both democratic accountability and the state. Local government can expect returned democratic oversight over schools, the removal of restrictions on investing in council housebuilding and significant new planning powers vis-à-vis the private sector. There also seem to be new roles in the nationalisation agenda – the new publicly-owned water system is to put the service “back in the hands of local councils, workers and customers”.

However, there are hints that new powers to local authorities in practice might extend only so far as they adhere to a Labour Government’s agenda. A frequent rebuff to the principle of devolution is “why should we give power to Tory councils that won’t do what we want?”. This question remains very much live within the party judging by fringe discussions in Liverpool, despite the Shadow Chancellor’s view that extending democracy “should always be our goal”.

Labour’s instinct to control is already manifest in Opposition, especially with regard to its own councils. Corbyn used last year’s conference speech to call out Labour councils over regeneration plans that do not pass certain “markers”. And the Party’s Democracy Review is proposing to let members choose Labour council leaders and return to a committee system in which the trade unions would play a stronger role, moves branded “unworkable” by Labour’s most senior councillor Nick Forbes.

So, the picture for local government under a Labour Government is potentially mixed. More funding might come with more prescription and a greater role might be balanced with greater control. What is clear is that the party would have both more ambition for the role of councils, and more expectation on them than previous governments of both colours alike.

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