This article is written by Joe Montgomery CB and Seb Lowe and was originally published on The MJ.
Joe Montgomery and Seb Lowe review the King’s Speech, and they conclude the sector is well placed to help the Starmer government find solutions to several conundrums.
Squaring the circle
Change, as we all know, is constant and unrelenting. There are moments when it is almost imperceptible and others when shifts are clearly signalled. And there are moments when the specifics of particular changes are still up for grabs.
This week’s State Opening of Parliament might signal an opportunity for local government to help shape how this new administration frames it programme. Although the King’s Speech describes the government’s ambitions, our sector must use the months before the all-important autumn budget and the subsequent spending-round decisions to shape the specific policies that will affect the space in which local councils operate.
As the Government looks to drive economic growth, it is conceivable that they might review PWLB borrowing rules for example, in order to give local councils the scope to invest in major housing, regeneration and growth initiatives.
The Starmer government needs help to find innovative, appealing and fiscally smart solutions to several conundrums. It has several circles to square and our sector is well placed to advise and assist. Firstly, the government has a big ambition to improve public services despite being short of spare cash to throw at concerns that range from potholes to prison places and from the social care system to defence spending. Secondly, the new administration has committed itself to sharply increasing devolution to local mayors and councils while simultaneously saying it intends to be directive on issues to do with housebuilding and economic growth. And thirdly, Rachel Reeves has leant into the task of bringing the business sector onside and placating the markets while having a clear intention to reintroduce significant state control in the energy and passenger rail sectors.
The legislative programme outlined in the King’s Speech sets out broad intentions, but local government’s experience, insight and know-how must help shape the specifics that will determine how all this is transacted. Much has already been made of the number of new MPs with a local government background, and this includes the outgoing chair of the LGA. The new LGA chair and chief executive might find the new parliament to be more receptive to the needs of the sector than the previous one. This is an ideal moment for the sector to be more vocal in shaping the discussion for devolution and establishing its priorities. We expect that the LGA’s new leadership, in collaboration with the authorities they represent, will make a persuasive case for what the sector needs.
In a sector where stories of actual or impending bankruptcies continue to dominate the headlines, the hope will now be that the new government will provide some much-needed stability. The new administration may have abandoned the term ‘levelling up’, but it is certain that the focus on ensuring opportunity is evenly spread across the nation will continue.
The incoming Labour government has indicated that there will be no additional funding for local government – at least in the short term. More welcome though is the promise of multi-year financial settlements for local government – something the sector has long been crying out for. Whilst the lack of fiscal headroom currently available to the new Chancellor and her team makes meaningful additional funding unlikely, even as we move beyond the initial phases of the government, the sector will at least be better placed to plan and predict over a longer time horizon.
From a capital budget perspective, whilst there has been little to indicate a shift in government policy, we may find this is an area where the government will start to make its mark. Although there are a number of notorious examples of local authority capital expenditure going badly wrong, in the main, local government has shown itself able to handle major projects with relative ease. As the Government looks to drive economic growth, it is conceivable that they might review PWLB borrowing rules for example, in order to give local councils the scope to invest in major housing, regeneration and growth initiatives.
On taking office, the new Government made the now traditional calls to resolve the housing crisis through building more homes. The ambition here was similar to that of the previous government, however we have seen that earlier attempts to reform the planning system were repeatedly diluted before being kicked into the proverbial long grass. Despite the current diversity of constituencies which now have a Labour MP, it is possible that the new Government will need help to find a workable balance between the speed and certainty sought by developers on the one hand, and the reasonable concerns of residents and their representatives on the other. If campaign promises are to be followed by meaningful action, we are likely to see significant changes to the planning system to enable more homes to be built. These changes may well involve a far greater role for central government or regional bodies in determining planning decisions – something which might play badly in many town halls if decisions are taken out of their hands completely and given over to regional or national entities who may not have the same local knowledge.
Like planning, the previous government stated its intention to reorganise the structure of local government in England. And, as with planning, political challenges from the predominately Conservative-leaning two-tier local authority areas made it more convenient for them to let this matter lie. The new administration could well be less sympathetic to the defenders of the two tier model, and so it is possible that some form of reorganisation will be back on the table. The prominence already given to combined authorities and discussions about a potential Council of Nations and Regions might provide some insight into Labour’s thinking.
Another circle for the Starmer administration to square concerns majoritarianism. Between them, Labour and the Conservatives attracted just 57.4% of the vote in General Election. This contrasts with a combined vote share of 82.3% in 2017. The electoral system masks the fact that fewer people voted Labour than in 2019 (far fewer still than in 2017). The UK electorate has never been so widely spread across so many different parties, and this trend is being felt at a local level with MP’s and councillors from Reform and the Green Party no longer being a rarity. The new Prime Minister has emphasised that his government will serve all citizens – even those who did not vote Labour. By extension, those of us involved in local government will need to listen to wider range of local voices while continuing to foster cohesive communities.
Seb Lowe is one of our partners in our Local Government practice and is available to discuss the impact of the Labour government on your local authority and share our insights from across the sector to support you and your teams.
Joe Montgomery CB is a GatenbySanderson ambassador, former Civil Service Commissioner & Chair of Re Ltd.
GatenbySanderson are the leading Executive Search, Interim and Leadership Development Consultancy across public services, and one of the largest consultancy firms in the UK. Contact us for more information