State of the Nation – Local Government

By Professor James Mitchell

This briefing is republished from LGiU Scotland which launched on 30thSeptember. LGiU Scotland is a new policy information service dedicated to local government across Scotland. It provides briefings and daily news updates and you can currently sign up for free on a trial basis.

This briefing looks at the big picture of local government since devolution and ahead to the 2016 Holyrood elections. The hope that devolution would reverse decades of centralisation has not been realised for local government. And the centralist impulse is not only budgetary. Last year’s referendum proved to be a catalyst with significant implications for local democracy. Few are under any illusions that changes to local government funding will make life easy. So now is a good time to revisit original thinking from devolution’s outset about the relationship between local and central government in Scotland. The briefing will be of interest to all members and officers in local government.

Briefing in full
Devolution was supposed to mark a new, more constructive phase in relations between central and local government in Scotland after eighteen years in which the old Scottish Office, under the Conservatives, was increasingly out of step with local government as evidenced by its sharp decline in support between 1979 and 1997. A cross party group chaired by Sir Neil McIntosh, one of Scotland’s most respected public servants, reported weeks after the first elections to the new Parliament. The McIntosh Report called for:
•    a Covenant between the Scottish Parliament and Scotland’s 32 local authorities
•    a Joint Conference where Parliamentarians and local government representatives could hold dialogue on the basis of equality
•    a power of general competence for local government
•    a formal working agreement between local government and Scottish Ministers
•    an independent enquiry into local government finance
•    reform of the electoral process and system.

McIntosh saw the proposals as a coherent package but successive Scottish central governments have viewed them differently. The ideological gulf between central and local government has disappeared, but the hope that devolution would reverse decades of centralisation has not been not realised. There are a number of reasons for the limited nature of change. Institutional relations have become stuck on a path that is difficult to reverse with Scottish central government reluctant to give up power that it has gained without what it sees as any compensating gains. Successive Scottish administrations – from the Lab-Lib coalition through to the current SNP Administration – feel frustrated by local government in their efforts to deliver policy change. Members of the Scottish Parliament (MSPs) see themselves as local champions and pursue the Scottish Executive/Government on matters that are formally local government matters. The greater prospect of some local matter coming up at First Minister’s Questions or some other time in the Parliament’s Chamber concentrates minds at the centre.

One significant change occurred in line with McIntosh. The Single Transferable Vote was introduced in local elections in May 2007 increasing the number of councils with no overall control. That year also saw the election of an SNP minority government. The SNP came into office with a decentralist perspective having always been in opposition. It initially rolled back many of the detailed controls and reached agreement with local authorities with a Concordat with the Convention of Scottish Local Government (CoSLA). This involved a commitment to no structural reform of local government during the Parliament; spending levels agreed through to 2010-11; introduction of Single Outcome Agreements with a range of bodies operating at local level informed by agreed national outcomes; simplified performance reporting system; simplified funding mechanisms; local government retaining efficiency savings; agreed monitoring systems.

Key Facts

Scotland has 1,223 councillors in 32 local authorities
Scottish local government spends £18.6 billion on day-to-day running of council services
Scottish local authorities have £39 billion worth of assets and £14.8 billion debt
Local authorities employ the equivalent of 201,500 full-time staff
Source: Audit Scotland

But, as commonly happens with all parties, after a period in office the centralist tendencies have asserted themselves. The hope of a new era of decentralisation faded. The creation of a single police authority – Police Scotland – has been a source of controversy though a similar move with Fire and Rescue has not provoked the same criticisms. In both cases, efforts are being made to ensure that the creation of a single service should not lose sight of local considerations.

Part of the rationale behind the Police and Fire & Rescue reforms was a response to the fiscal crisis. Local government has suffered, though nowhere near the extent as England (yet). A third of the Scottish budget is spent by local authorities, a further third by the health service and a third by the rest. The Scottish Government decided to ring-fence health spending meaning that cuts in its total budget would hit local government hard. Between 2010/11 and 2013/14, Scottish Government funding for local councils fell by 8.5 per cent in real terms while demand for council services increased mainly due to population changes.

In 2007, the Scottish Government introduced a freeze on the council tax as part of the Concordat. This was a highly popular measure and credited with making a contribution to the SNP’s advance in the election that year. It was a policy endorsed by Labour, Conservatives and the SNP in 2011 and reduced local authority autonomy but without any compensating decentralisation as occurred in 2007.

Debates ensue as to whether the Scottish Government has offset the loss in revenues through freezing council tax by central grant. The commitment early on in the life of the Holyrood Parliament to a different care-for-the-elderly regime has also had budgetary implications for local government.

But the centralist impulse is not only budgetary. Education has been a source of friction. The Scottish Government has insisted that local authorities reduce the number of pupils in each primary school. The Scottish Government has maintained that it has funded this demand. However, the funding is conditional leaving little option but to accept a policy that is imposed uniformly and with little evidence of its impact.

The introduction of Community Planning Partnerships, voluntary agreements across a range of local partners including local authorities to bring coherence, have had mixed impact. Single Outcome Agreements formally set out key priorities but the extent to which these are more than paper exercises varies. Efforts to maximise the impact of different partners has fallen foul of typical silo effects, including budgetary silos. The emphasis on a more collaborative approach, including greater public engagement in policy making, and a shift to preventative measures were key ‘pillars’ outlined in the Christie Commission Report published in 2011.

There were fears that the Scottish independence referendum would marginalize local government concerns further as Scotland debated its constitutional future. But the long debate leading up to the referendum proved an opportunity for policy entrepreneurs to raise an expansive set of issues. While an adversarial and predictable debate took place in the spotlight of the media, other more constructive discussions and deliberation occurred. Local government and local issues insinuated themselves into this expansive debate.

A Commission on Strengthening Local Democracy, sponsored by the Convention of Scottish Local Authorities, was established in autumn 2013 and produced a report in August 2014 making the case for a more decentralized, deliberative democracy. The report identified seven principles to guide reform:
1.    Popular sovereignty – power lies with people and communities
2.    Subsidiarity – decisions to be taken as close to communities as possible
3.    Transparency – democratic governance should be clear and understandable to communities
4.    Participation – all communities should be able to participate in decision making
5.    Spheres not tiers of governance – spheres of governance should have distinct jobs set out in ‘competences’ rather than powers handed down
6.    Interdependency – shared approach to governance
7.    Wellbeing – purpose of all democratic governance should be to improve opportunities and outcomes for individuals and communities.

A more focused approach was adopted by Scotland’s three island councils – Orkney, Shetland and the Western Isles – who worked together to make the case for reforms in island governance. Our Islands Our Future set out key objectives and made a series of requests of both Scottish and UK Governments. This attracted considerable attention, especially from the Scottish Government, resulting in some reforms and ongoing discussions. In June 2014, the Scottish Government responded to the campaign following deliberations of a Ministerial Working Group with a series of commitments. Some of these would require Scottish independence as they involved matters then under the control of the UK Government including income from the islands’ sea-bed leasing revenues. Two months later, the UK Government responded with a framework. While this disappointed the Islands’ Councils they had made progress in their campaigns and ensured that the islands’ voice was heard in central government in Edinburgh and London probably as never since the previous round of constitutional debates.

The referendum provoked democratic deliberation across Scotland with a wide range of forms of public engagement. This was reflected in a turnout of 85% in the referendum on an expanded electoral register as many campaigners focused on the process of registering previously unregistered members of the public. In effect, the referendum proved to be a catalyst with significant implications for local democracy rather than, as feared by many in local government at the outset, a distraction at best and one that would make it more difficult to focus on local concerns.

There have been a number of initiatives since the referendum, largely building on these debates. Most notable has been the emphasis now placed by the Scottish Government on public engagement. A Community Empowerment Act was passed in 2015 reforming community planning to give communities more say in how services are planned and provided; giving communities new rights to identify needs and request action; and extending the community right to buy or have greater control over assets.

Another important initiative was the establishment of the Commission on Local Tax Reform charged with exploring alternative ways of funding local government. The Commission is chaired jointly by the Scottish Government Minister for Local Government and the President of COSLA and has engaged in deliberative fora across Scotland to consider the issues. Its membership includes representatives from all parties in Holyrood with the exception of the Conservatives who chose to boycott the initiative. The expectation is that its conclusions will inform the parties in drawing up their manifestos for the 2016 Scottish parliamentary elections and that those involved may offer similar packages. There is a now a prospect of an end to the council tax freeze though the Conservatives may well choose to include it in their manifesto.

Local authorities have kept an eye on developments south of the border with interest and some trepidation. The scale of cuts imposed on English local government have been greater than in Scotland and the expectation is that Scotland is simply a few years behind. The development of City Deals and combined authorities and particularly developments in Manchester are being watched carefully. The Scottish Cities Alliance set out an Agenda for Cities in collaboration with the Scottish Government with an ‘enabling framework’ for collaboration and attracting investment. The UK and Scottish Governments signed an agreement with Glasgow and Clyde Valley City Deal in July 2014 (including eight local authorities) that promises to deliver around 29,000 jobs with £5000m committed each by UK and Scottish Government over a 20-year period. Long-term planning such as this may be commendable but there is a wariness of a commitment to jam tomorrow.

The fact that Scotland’s cities are operating under difficult conditions at the present and into the foreseeable future cannot be hidden. Edinburgh’s recently published revenue and capital budget framework, for example, assume 27 per cent management and 15 per cent non-management savings in its Citizens and Localities Services.

There is every prospect that local government will feature heavily in next year’s Holyrood elections. In the forthcoming Parliament, local government anticipates changes to the funding regime, but few are under any illusions that this will make life easy. Changes to local government finance will take place against a backdrop of cuts in expenditure at central government level. Whether the parties commit themselves to continue ring-fencing health spending will be important in determining how much pain lies ahead. The move to permitting local authorities to raise more of their own revenue might be welcome but can also be seen as a form of devolving penury. As central grant is cut, local authorities may only find that they are given the ‘freedom’ to make unpopular decisions to increase local taxes to try to make up for shortfalls.

At the outset of devolution, the hope was that central-local relations would be improved. This would require changes that were proposed by the McIntosh Report. Public spending in Scotland rose annually on average by 5% in real terms up to the economic crisis. The fiscal consequences require alternative ways of thinking about delivering local services as outlined by the Christie Commission in its report in 2011. But McIntosh remains relevant and now would be an appropriate time to revisit its recommendations.

__________

James Mitchell is Professor of Public Policy and Co-Director of the Academy of Government at the University of Edinburgh. He is the author of Devolution in the UK(Manchester University Press 2009) and The Scottish Question (Oxford University Press 2014). He tweets @ProfJMitchell.

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