Dear Melanie
Congratulations on your appointment as permanent secretary at the Department for Communities and Local Government. Your career across government gives you the best possible experience on which to draw, and you have the best wishes of the local government sector as you come into the job.
As you enter the department, I’m sure you are aware that there is no magic bullet or easy solution to the many challenges that it faces. After five years of deficit reduction and austerity many local government functions have been cut to such a degree that DCLG often seems to have little to do other than observe the reduction in activity. This means that now more than ever we need realism, transparency and pragmatism to be the watchwords of the department.
Councils are facing more significant cuts than most other public bodies and this has limited their capacity to act on a wide a range of issues. They need support and encouragement for what they are being asked to deliver by government as part of the national effort to balance the books.
It is unfortunate that this call for greater clarity stands in opposition to the rhetoric and spin that has too often characterised the presentation of the numbers by DCLG and others over the past few years. There is a very serious point here about ethics in government. As head of a politically neutral civil service in your department of state, we ask that you ensure that it presents accurate and transparent information. In the view of finance professionals, a line has been crossed by the department in recent years, which means the public are being misinformed about official information and data. For example, describing transferred resources that still must be spent on the NHS as increasing councils’ ‘spending power’ in a way that under-reports their loss of DCLG grant is disingenuous. We expect that under your tenure, and bearing in mind your provenance in Treasury, HMRC and Cabinet Office, the government will more accurately report the degree to which it is cutting grant to councils.
CIPFA is highly focused on making the best use of public finances to deliver services. It is challenging, but services can be improved while resources are reduced, through effective prioritisation, medium-term planning, focused investment, sound appraisal techniques and good delivery skills. Of course, some councils are better run than others and there should be a mature debate about promoting good practice and learning from what works. The government should keep out of claiming credit for what councils are achieving and instead promote the importance of local democracy, saying ‘well done and thanks’ to councils on a cross-party basis. It should desist from trite claims that reducing reserves, abolishing the role of chief executive or sharing support roles mean that services to vulnerable children and adults do not need to be cut to compensate for the loss of grant.
For the avoidance of doubt, CIPFA’s guidance to chief financial officers is clear that at a time of increasing financial risk, a council making cuts should also increase reserves to reflect the greater volatility of its budget. If it wishes to be taken seriously as an authoritative non-partisan voice, DCLG should promote prudence and not claim that one-off spending of reserves could solve ongoing budget pressures.
Your new department is not regarded as a big hitter in Whitehall and your appointment brings an opportunity to reposition it at the ‘centre of government’. If it simply continues solely as the department overseeing local government, with other departments setting their own policies on English devolution and localism, I hope you would consider whether the department is needed at all. The Cabinet Office and Treasury have failed to coordinate a whole-of-government policy for English devolution encompassing local government, schools, skills, health, and policing. Perhaps with your unique background you can help DCLG put local government at the heart, rather than the periphery, of Whitehall’s thinking?
I would also encourage you to think about local government design. Finance directors and chief executives privately believe that reorganisation plays a part in the long-term sustainability of council finances. London, for example, does not need anything like 32 boroughs to be effectively represented or organised. The department you inherit often comments on the frequency of bin collection or parking charges – both matters for local electors and none of the business of the secretary of state – while avoiding a strategic policy debate on the form and function of local government. We hope the general election provides a watershed moment to explore change.
As finance professionals we welcome the de-ringfencing of recent years and the scaling back of wasteful over-regulation. So our plea to you is not to roll the clock back, but to move the hands forward to a new period of honest, sensible and strategic debate.
As our local government members scan the post-election horizon, they know that there are many more cuts and efficiencies to come. This should not mean the opaque funding system remains. We implore you to ensure that local authorities have the certainty and clarity they need about their funding now and into the future, whatever the decisions of your political masters. I hope you will take the time to consider the recommendations of CIPFA and the LGA’s independent commission on local government finance.
Most of all, I hope that by the end of your tenure we see a whole swathe of areas and regions in England able to set much of their own policy and raise their own taxes. If we are serious about devolving power this should include many of the tax raising and spending powers that Scotland, Northern Ireland and Wales are increasingly enjoying.
Finally, I hope that we will be able to work with you as honestly and without rancour as we have with your predecessors. Sir Bob Kerslake is not an easy act to follow as permanent secretary, but if anyone can bring about a renaissance in the department, I believe you can. Managers and staff there will want to put some difficult years behind them now they are settled in Marsham Street. I’m sure they will get right behind you in your work; and collectively we hope you will stand squarely alongside councils.
Yours sincerely,
Rob Whiteman
