A further £3bn of cuts could derail local government’s devo max dream

http://www.theguardian.com/society/2015/jul/07/cuts-destroy-devo-max-dream

Version 0 of 1.

One advantage of having a budget in the summer is that it falls in the conference season of those who run public services. This gives a chance to check the impact of the chancellor’s plans in the real world. And the first of those checks comes on the journey to the local authority conference: it takes a mere two hours and 10 minutes by train to travel the 200 miles from London to Leeds, at a speedy 92mph. But there’s a sudden change of pace when you change trains: the final 15 miles from Leeds to Harrogate take 35 minutes on a train that goes a steady 26mph.

It’s a reminder of why northern councils were furious when, just weeks after the election and bold talk of a northern powerhouse, the chancellor George Osborne took another look at Network Rail’s books and froze the plans for vital upgrades to major rail lines in the Midlands and the north of England. After the promises, northern councils felt they were once again fighting over the crumbs – a mere 14% of transport infrastructure spending is outside London and the south-east.

Related: Devolution means local government can afford to be more ambitious | Bob Kerslake

It’s also a reminder of the complex position in which local leaders find themselves. Councils in England want to make the most of what might be on offer via the chancellor’s plans to move more power out of Whitehall and into regional bodies. From Cornwall to Carlisle, from Bucks to Northants, you can hear the cry of those terrified of being excluded from the devo dream of greater local self-determination.

Talking to local leaders last week, Greg Clark, the new communities and local government secretary of state, struck a very different tone from his predecessor, Eric Pickles. Instead of hectoring and lecturing, Clark praised his audience for the way they have already made huge cuts and exhorted them to step forward and grasp the decentralisation deal, which would, he said, give councils the opportunity to take a bigger slice of shrinking public sector funds and make their own decisions on issues such as transport, skills, health and welfare. “You have told me that you can do things better,” he said. “So why wait? Why miss your chance to break free?”

But, as even Clark had to acknowledge, the question for councils is how quickly their decentralist dream will turn to the stuff of nightmares when there is no money left. The chancellor has made his intentions clear and there will be big cuts over the next few years to almost every part of the public sector. Carl Emmerson, deputy director of the Institute for Fiscal Studies, has said that if the government keeps its promise to protect health, aid and education spending, the remaining central departments will have to cut their budgets by a further 15% (£30bn) over the next three years.

If defence spending is, as some predict, also spared from the biggest cuts, other departments would have to find savings of 18.7%. Transport, justice, local government and communities, business and the Home Office would all feel the effect of the axe on top of the £49.2bn of cuts made over the past five years. The chancellor’s much-trailed plan to slash a further £12bn from welfare will also, of course, have a huge impact on the problems public bodies will have to deal with – from pressures on social care to homeless services and debt advice – no matter how the government tries to redefine issues such as child poverty.

Health chiefs, too, are deeply concerned about spending cuts to social care, with 99% of those polled in a survey, released during their annual conference last month, warning that these cuts are loading extra pressure on the health service. Housing association leaders, when they recently met in Manchester, were deeply gloomy about the effect of welfare cuts on their residents. Ministers have already said they will cut housing benefit for 18- to 21-year-olds, and Osborne is reported to want to cut housing benefit for all tenants. Social housing providers are also fearful about how their finances might be hit by what has been described as the “disastrous” plans to extend right-to-buy to social housing.

Related: Revealed: how the stress of working in public services is taking its toll on staff | Society

The Local Government Association says that without a radical shift in the way they are funded, councils in England could face cuts next year of £3.3bn, 6.5% of their £51bn budget. This is on top of the staggering 40% cuts they have already made since 2010.

Mike Turley, head of public sector at Deloitte, has released figures which purport to show that saving 1% of public sector workers’ time through productivity measures could save £1.64bn a year. That supports the chancellor’s case, but will be difficult to sell to an already demoralised public sector workforce.

A recent Guardian survey of almost 4,000 public sector and voluntary staff painted a stark picture of long hours for little reward. They would no doubt like to be more productive, but it tends to require investment – in good IT and other support systems. With no sign of that kind of investment from the chancellor, many public leaders still feel they are on the slow train.