Rob Whiteman, Chief Executive, CIPFA
A reasonable conclusion to take is that we should never lose sight of the fact that politics is rarely about one isolated issue. Political debate is broad-ranging and complex, and it feels like the public is growing savvier and less tolerant of watered-down, soundbite politics.
And, of course, Brexit is anything but an isolated issue. The outcomes of these negotiations will, to varying degrees, impact on all areas of the UK and we will need to strike a deal that works across the public and private sector, while also meeting the needs of our European partners.
Does Brexit mean Brexit?
There have been clear signs the public does not want another referendum, but nor has it endorsed any one party on its Brexit stance. Far from strengthening the Prime Minister’s mandate for a ‘Brexit means Brexit’ kind of Brexit, the result of the election means the government will now most likely need to compromise, bring in cross party consensus and, with daily worsening public finances, it will have to pay much closer attention to the potential economic consequences of no deal.
But, however the final deal looks, exiting the EU will have a measurable impact on how the UK public services operate, and not in a uniform way.
The effect on local government
Local government is a good example of such differing needs; what is of central importance to one council, may not be such a crucial concern for another. Sufficient housing to provide a suitably large workforce might top the list of concerns for one chief executive, while another might be struggling to support local industry due to infrastructure needs. The chances seem pretty slim of the prime minister pulling off deals that work for everyone everywhere, so it seems unlikely that the Brexit deal will be able to be sensitive to all localities.
Nevertheless, there will certainly be common needs shared by most councils. The provision of social care is the obvious example that springs to mind; and given that this is one area that relies heavily on low-wage EU migrant labour, any loss of capacity will have a very real effect on the sustainability of services. Securing the rights of EU workers, therefore, should be a priority for the sector.
Beyond Brexit and austerity
Beyond Brexit, the public mood has changed and with it, a growing sense that austerity as a policy goal has run its course. Already the government has effectively relaxed its spending target, along with the rhetoric of clearing the deficit, which is unlikely before 2025. Pressured by a resurgent Corbyn-led Labour Party, combined with a set of demands from the DUP and a very precariously positioned PM, the Conservative Party will likely halt the benefits cuts programme and maintain the triple lock on state pensions. All of this amounts to spending a lot more money – social cohesion will come at a cost!
What this all means for local government remains to be seen. Whitehall will have plenty of preoccupations over the coming years and there is a real concern this may dampen devolution momentum. But with the introduction of the new metro mayors and the implementation of 100% business rates retention, this could have the opposite effect.
CIPFA’s response to this is that councils should work to ensure:
- Strong and transparent financial management, with spending decisions based on independent evidence-based assessments.
- Innovative thinking towards being more commercial, but with due consideration of the new skills and expertise this requires and good awareness of the level of risk this introduces.
- Deliverable affordable housing and innovative financial solutions that support economic growth; and materially more council housing if that's the quickest way to change present supply and demand imbalances and force improvements to the private rented sector.
- Continue working with the government to drive greater fiscal devolution away from Westminster to enhance systems thinking across highly rationed resources.
- Powers to mayors and combined authorities to develop new 14-19 skills strategies to tackle post-Brexit workforce shortages that schools alone cannot tackle.
It feels futile to offer any predictions for the timing of the next election, how the UK will look post-Brexit or who is our next prime minister will be. But I can say with certainty that we have dropped from the top to bottom for G7 growth in a year, and inflation has jumped 0.2% this quarter. So hold on, it’s going to get bumpy, and you all need to be leaders!