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Local government: a new era of co-operation Local government: a new era of co-operation
(3 months later)
Eighteen months ago, the then Conservative-controlled Southampton city council was in the middle of a bitter dispute with unions over its imposition of unilateral pay cuts for all staff at the same time as it was trying to implement swingeing cuts to services.Eighteen months ago, the then Conservative-controlled Southampton city council was in the middle of a bitter dispute with unions over its imposition of unilateral pay cuts for all staff at the same time as it was trying to implement swingeing cuts to services.
Royston Smith, the then Tory council leader, imposed a pay cut of up to 5.5% on 4,600 employees by scrapping their contracts and rehiring them on lower pay. Smith wanted to turn Southampton into a "commissioning council", with many services outsourced and a 25% cut in non-ringfenced services over three years.Royston Smith, the then Tory council leader, imposed a pay cut of up to 5.5% on 4,600 employees by scrapping their contracts and rehiring them on lower pay. Smith wanted to turn Southampton into a "commissioning council", with many services outsourced and a 25% cut in non-ringfenced services over three years.
But, like other Tory-controlled local authorities attempting a radical reorganisation to cut costs, Smith's plans faltered due to opposition from staff and little public support. Campaigners against Barnet's "easyCouncil" proposals to outsource numerous services have delayed the authority's deal with Capita until the campaigners' appeal has been heard at the high court next month.But, like other Tory-controlled local authorities attempting a radical reorganisation to cut costs, Smith's plans faltered due to opposition from staff and little public support. Campaigners against Barnet's "easyCouncil" proposals to outsource numerous services have delayed the authority's deal with Capita until the campaigners' appeal has been heard at the high court next month.
Cornwall county council has had to drastically scale back its £300m outsourcing plans, while, in 2011, Suffolk county council scrapped its "virtual council" plans to outsource all its services.Cornwall county council has had to drastically scale back its £300m outsourcing plans, while, in 2011, Suffolk county council scrapped its "virtual council" plans to outsource all its services.
When Labour won back control of Southampton city council in May 2012, it was faced with continued strike action by staff and a £30m budget gap.When Labour won back control of Southampton city council in May 2012, it was faced with continued strike action by staff and a £30m budget gap.
"The big decision we took was to resolve the industrial dispute that was caused by the Conservative decision to impose rather than negotiate pay cuts," says Simon Letts, the council's Labour leader."The big decision we took was to resolve the industrial dispute that was caused by the Conservative decision to impose rather than negotiate pay cuts," says Simon Letts, the council's Labour leader.
Letts says Smith's decision to impose pay cuts was subject to a legal challenge with a potential liability of millions of pounds, so it was a priority to persuade the unions to withdraw their legal action. "Four months later, Unite and Unison agreed a deal. Terms and conditions are being restored over three years, starting with the lowest-paid employees. Smith's plans to turn Southampton into a commissioning body have also been halted. Letts says the council is renegotiating the £36m contract that the Conservatives awarded to Capita in 2007 to provide the local authority's IT, procurement, HR, benefits and property services. He says that breaking the contract would cost the authority tens of millions of pounds, so the council will be making the arrangement more flexible with suitable break clauses. Plans are due to be put before the full council in the autumn.Letts says Smith's decision to impose pay cuts was subject to a legal challenge with a potential liability of millions of pounds, so it was a priority to persuade the unions to withdraw their legal action. "Four months later, Unite and Unison agreed a deal. Terms and conditions are being restored over three years, starting with the lowest-paid employees. Smith's plans to turn Southampton into a commissioning body have also been halted. Letts says the council is renegotiating the £36m contract that the Conservatives awarded to Capita in 2007 to provide the local authority's IT, procurement, HR, benefits and property services. He says that breaking the contract would cost the authority tens of millions of pounds, so the council will be making the arrangement more flexible with suitable break clauses. Plans are due to be put before the full council in the autumn.
Now instead of a "commissioning council", Southampton declares itself a "co-operative council", a moniker it shares with a number of town halls across England, including Oldham, the London borough of Lambeth, and York.Now instead of a "commissioning council", Southampton declares itself a "co-operative council", a moniker it shares with a number of town halls across England, including Oldham, the London borough of Lambeth, and York.
But is it really any different? After all, Newcastle city council, which calls itself a co-operative council, proposed earlier this year to axe its entire arts budget until public outrage caused it to retain £600,000 funding.But is it really any different? After all, Newcastle city council, which calls itself a co-operative council, proposed earlier this year to axe its entire arts budget until public outrage caused it to retain £600,000 funding.
"It's about working with people, not doing things to them," says Andrew Pope, Southampton's lead on co-operative councils. The idea, he adds, is to give residents and communities much more power to determine what local authorities do. That doesn't mean services will automatically be reprieved, however, as the council has had to make £16m savings this year, with £20m of cuts to follow in 2014-15."It's about working with people, not doing things to them," says Andrew Pope, Southampton's lead on co-operative councils. The idea, he adds, is to give residents and communities much more power to determine what local authorities do. That doesn't mean services will automatically be reprieved, however, as the council has had to make £16m savings this year, with £20m of cuts to follow in 2014-15.
Local authorities fear that Wednesday's spending review will see an additional 10% reduction in council budgets. For the average English council, this represents further £30m cuts for 2015-16. They have warned George Osborne that any further budget cuts in addition to the 33% cuts imposed since 2010 would result in vital services such as children's centres, libraries and sports clubs having to close.Local authorities fear that Wednesday's spending review will see an additional 10% reduction in council budgets. For the average English council, this represents further £30m cuts for 2015-16. They have warned George Osborne that any further budget cuts in addition to the 33% cuts imposed since 2010 would result in vital services such as children's centres, libraries and sports clubs having to close.
"The Tories did the first two years of the government's dirty work and we've done the third year of the government's dirty work with further years to follow," says Letts. "So when you say what did they do that we rowed back on, well, unfortunately, a very limited number [of things] because when you row back on something you end up then having to add further to your budget gap.""The Tories did the first two years of the government's dirty work and we've done the third year of the government's dirty work with further years to follow," says Letts. "So when you say what did they do that we rowed back on, well, unfortunately, a very limited number [of things] because when you row back on something you end up then having to add further to your budget gap."
Letts concedes that the council will no longer be able to provide all services itself, but is adamant that it will be able to approach belt-tightening in a way that remains true to co-operative values.Letts concedes that the council will no longer be able to provide all services itself, but is adamant that it will be able to approach belt-tightening in a way that remains true to co-operative values.
"There's no point reinstating services that were threatened, only to come back in six to seven months and cut them again," he says. "We need to encourage our voluntary and community-based organisations to work together to provide similar services that would traditionally have come from local government, rather than see them just vanish. If we're not going to deliver services, we either say they're not going to be delivered or we attempt to find another way of doing it. We see co-operative councils as a crucial part of that 'Let's work together to find a different way of delivering services' [approach].""There's no point reinstating services that were threatened, only to come back in six to seven months and cut them again," he says. "We need to encourage our voluntary and community-based organisations to work together to provide similar services that would traditionally have come from local government, rather than see them just vanish. If we're not going to deliver services, we either say they're not going to be delivered or we attempt to find another way of doing it. We see co-operative councils as a crucial part of that 'Let's work together to find a different way of delivering services' [approach]."
So far, it's early days. The council points to its efforts to work with local credit unions and campaigners to improve financial inclusion as good examples of acting co-operatively. In April, the council awarded the city's Solent Credit Union a £66,000 grant over three years (it previously received none) and has just introduced a payroll deduction scheme so that council employees can save with the union. It has also pledged to support the local campaign against legal loan sharks.So far, it's early days. The council points to its efforts to work with local credit unions and campaigners to improve financial inclusion as good examples of acting co-operatively. In April, the council awarded the city's Solent Credit Union a £66,000 grant over three years (it previously received none) and has just introduced a payroll deduction scheme so that council employees can save with the union. It has also pledged to support the local campaign against legal loan sharks.
The council has ambitious plans for more co-operative services such as participatory budgeting, where local groups bid for a slice of £50,000 funding for public health projects.The council has ambitious plans for more co-operative services such as participatory budgeting, where local groups bid for a slice of £50,000 funding for public health projects.
Yet, Southampton has been wary of "spinning out" council services to form mutuals that are owned by its employees. Letts says there are four or five community groups interested in taking over elements of the city's youth services, and he is looking into whether libraries and museums could form co-operative trusts to provide services, but the city will not rush into mutualising services. According to government statistics, 19 public service mutuals have spun out in local government, from adult social care, to libraries, children's services and housing – some in Lambeth, which has been widely seen as one of the early drivers of mutuals.Yet, Southampton has been wary of "spinning out" council services to form mutuals that are owned by its employees. Letts says there are four or five community groups interested in taking over elements of the city's youth services, and he is looking into whether libraries and museums could form co-operative trusts to provide services, but the city will not rush into mutualising services. According to government statistics, 19 public service mutuals have spun out in local government, from adult social care, to libraries, children's services and housing – some in Lambeth, which has been widely seen as one of the early drivers of mutuals.
However, Paul O'Brien, chief executive of the Association for Public Service Excellence, warns that co-operatives and mutuals are not so different from privatisation. "The reality is that this is outsourcing control of services in the same way as services are outsourced to the private sector," he says.However, Paul O'Brien, chief executive of the Association for Public Service Excellence, warns that co-operatives and mutuals are not so different from privatisation. "The reality is that this is outsourcing control of services in the same way as services are outsourced to the private sector," he says.
Ed Mayo, secretary general of umbrella group, Co-operatives UK, says: "If you're going to call yourself a co-operative council, then you need to be clear what that means and you need to have a dialogue with the wider co-operative sector."Ed Mayo, secretary general of umbrella group, Co-operatives UK, says: "If you're going to call yourself a co-operative council, then you need to be clear what that means and you need to have a dialogue with the wider co-operative sector."
Co-operatives UK has issued criteria for co-operative councils. These include operating as a fair-trade town, encouraging co-operative schools, promoting co-operative businesses such as credit unions, and buying utilities and banking services from co-operative providers. Where services are transferred to a co-operative or mutual, assets should be protected through common ownership. And co-operative councils should have links with the wider co-operative movement.Co-operatives UK has issued criteria for co-operative councils. These include operating as a fair-trade town, encouraging co-operative schools, promoting co-operative businesses such as credit unions, and buying utilities and banking services from co-operative providers. Where services are transferred to a co-operative or mutual, assets should be protected through common ownership. And co-operative councils should have links with the wider co-operative movement.
Oldham is probably the most advanced co-operative council. All tenders for contracts are assessed for their social value, all staff are paid the living wage, and it has created a £930,000 fund to finance local projects. Grants are awarded by a panel of young people, business leaders, voluntary sector representatives and councillors. It is the lead local authority in the co-operative councils' 15-strong network, which launches next week.Oldham is probably the most advanced co-operative council. All tenders for contracts are assessed for their social value, all staff are paid the living wage, and it has created a £930,000 fund to finance local projects. Grants are awarded by a panel of young people, business leaders, voluntary sector representatives and councillors. It is the lead local authority in the co-operative councils' 15-strong network, which launches next week.
But even Oldham fails to match up to Co-operatives UK's criteria. So are councils correct to parade their co-operative credentials, or are these simply a fig leaf for cuts?But even Oldham fails to match up to Co-operatives UK's criteria. So are councils correct to parade their co-operative credentials, or are these simply a fig leaf for cuts?
Mayo says that while co-operative councils are often doing "pioneering work", they are not a panacea for cuts. "There's no magic wand to get rid of austerity. At the moment everybody's suffering and it's a question of how you go about those tough decisions. The line between enabling communities to be more self-governing and responsible for their own outcomes and cutting communities adrift is a very fine one."Mayo says that while co-operative councils are often doing "pioneering work", they are not a panacea for cuts. "There's no magic wand to get rid of austerity. At the moment everybody's suffering and it's a question of how you go about those tough decisions. The line between enabling communities to be more self-governing and responsible for their own outcomes and cutting communities adrift is a very fine one."
He adds: "We have seen plenty of good intentions and a welcome interest in co-operative models of innovation, but less in terms of any practical statement of outcomes that can be used to hold a co-operative council to account. Ultimately, they are trading on the good reputation of true co-operatives."He adds: "We have seen plenty of good intentions and a welcome interest in co-operative models of innovation, but less in terms of any practical statement of outcomes that can be used to hold a co-operative council to account. Ultimately, they are trading on the good reputation of true co-operatives."
'The credit union has changed the way I view money''The credit union has changed the way I view money'
Southampton council sees strong credit unions as one of the best ways of tackling loan sharks and helping people like Samantha Young. Young, 30, is heavily pregnant with her fourth child. Until she found the credit union, she says she was struggling to make ends meet and had got into a lot of debt. But in 2011 after her grandmother, a long-term saver with credit unions, nagged her, Young started saving £5 a week. Six months later she had £300 and now she's managed to save £1,000. "I'd never been able to save before in my life," she says.Southampton council sees strong credit unions as one of the best ways of tackling loan sharks and helping people like Samantha Young. Young, 30, is heavily pregnant with her fourth child. Until she found the credit union, she says she was struggling to make ends meet and had got into a lot of debt. But in 2011 after her grandmother, a long-term saver with credit unions, nagged her, Young started saving £5 a week. Six months later she had £300 and now she's managed to save £1,000. "I'd never been able to save before in my life," she says.
"I was stung heavily by payday lenders. It's really easy money but the interest is daily. Most haven't got phone numbers so you can't phone them up, so the debt keeps getting bigger. It's a horrible cycle to get into.""I was stung heavily by payday lenders. It's really easy money but the interest is daily. Most haven't got phone numbers so you can't phone them up, so the debt keeps getting bigger. It's a horrible cycle to get into."
She says the credit union has changed her life. "It's rewritten my spending habits and changed the way I view and utilise money."She says the credit union has changed her life. "It's rewritten my spending habits and changed the way I view and utilise money."
But unless there are enough savers, credit unions don't have the capital to lend money to residents like Young. John Merritt, president of Solent Credit Union, says the council's payroll deduction scheme is crucial to his organisation's ongoing financial viability. "All successful credit unions have large numbers of employees [saving with them], so payroll deduction is vital for us," he says.But unless there are enough savers, credit unions don't have the capital to lend money to residents like Young. John Merritt, president of Solent Credit Union, says the council's payroll deduction scheme is crucial to his organisation's ongoing financial viability. "All successful credit unions have large numbers of employees [saving with them], so payroll deduction is vital for us," he says.
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