In the run up to Christmas, amidst office parties and last-minute present buying, you would be forgiven if Eric Pickles’ latest policy announcement was not foremost in your mind. As the New Year is well upon us, however, it is worth reflecting on the positive impact it could have for cities in 2012.
The Secretary of State announced the 14 areas chosen to pilot the Community Budget approach to the funding and delivery of local public services. The project is the second part of the Local Government Resource Review, a process we have been following closely. Of particular interest for cities and their leaders will be the four whole-place Community Budget pilots, in Manchester, Essex, London and Chester.
These pilots will test whether a combined budget can be used across a range of public services in an area. The principles behind Community Budgets are simple: spending is decided locally; service providers work together; the tax-payer saves money. Keen-eyed local government finance spotters will point out that these ideas are not new – and that the process will be difficult. However, the principles have much to recommend them.
Centre for Cities has long been a champion of devolved spending powers from Whitehall. To have genuine control over their economic futures, cities need the freedom to decide on their priorities for investment and spending on their patch. Whole-place Community Budgets, in tandem with devolved capital pots on offer through the City Deals, could bring the prize of genuine financial autonomy from Whitehall much closer.
There is a long way to go though. The pilot areas will have been very busy on their return from the festivities. They will spend the rest of the year scoping, modelling, consulting and drafting. In the autumn they will sit down with Government officials and get the verdict on whether their plans can work and whether they can be trusted to put single budgets into place in 2013.
In choosing the ten local authorities of Greater Manchester as a pilot area, DCLG is backing a favourite – showing its keenness to see this scheme work. Having set up a combined authority for economic development and transport in April last year, the Manchester city-region has a head start in partnership working. The good news for other cities is that the Government recognises that a “whole-place” doesn't begin and end at the city council's border.
What is less clear at this stage is how whole-place budgets will be managed across multiple councils – who will take the lead? Throw in the complication of emerging LEPs and potential city mayors and the picture becomes more confused.
Then there is the issue of who benefits from any savings brought about through whole-place budgets. There needs to be a financial incentive to take on the responsibility of public spending across a city. Budget holders should be able to retain savings and reinvest them locally, rather than seeing them siphoned back to Whitehall spending departments.
But experiments are about identifying and resolving difficult issues. If the pilots are able to demonstrate that their plans are sound and viable, the Government is more likely to move towards devolved financial powers on a wider scale. It is worth the effort to get it right this time.