Ministry of Housing, Communities & Local Government
The Communities Secretary’s speech at the CIPFA Conference 2019
Speech given yesterday at the Chartered Institute of Public Finance and Accountancy (CIPFA) Annual Conference.
Thanks, Gaby [Hinsliff], it’s a pleasure to be here on my first attendance at your annual conference.
As Gaby rightly said, in some ways it feels a little bit like coming full circle.
My Dad, yes, was a CIPFA accountant. His journey through local government and public service started off in a town clerk’s office of in Cornwall and I think of his qualifications, his journey with CIPFA being there, and the support and training it gave him.
How that’s defined his career in local government. He went on to be a chief executive and an acting comptroller of the Audit Commission.
So you could sort of say I’ve grown up with CIPFA always being there in the background.
It’s these personal connections underline to me how, with the special responsibilities you have for managing public money, you embody some of the finest ideals of public service.
Indeed, CIPFA is the only professional accountancy body in the world that’s exclusively dedicated to public finance.
And yet I know that many people don’t appreciate the vital work you do.
They will think, principally, of systems and spreadsheets. The need to balance the books above all.
But they forget that your bottom line is honouring the shared responsibility we all have to the people of this country who have entrusted us with their hard-earned money to deliver on their behalf.
Despite what some may claim or promise, you simply can’t have strong public services without strong public finances.
That lesson was as a true when CIPFA was founded in the 1880s as it is now.
At the time, local authority treasurers in booming, newly industrialised Manchester came together to support each other and share best practice during a period of great change for their citizens and towns and cities.
We are now at another moment of great change for our country.
We will shortly have a new Prime Minister and a new government.
And we’re on the brink of a forging a new relationship with the EU and, indeed, the rest of the world.
A moment of national renewal – a moment when your work at the heart of our communities will, once again, be of the utmost importance.
Significance of local government and public services / progress made
Like you, I want to ensure all these communities, all parts of our country can benefit from this – can take control of their destinies and come together as we chart a better future for our country.
And, as I said at the LGA last week, I can’t see a better future for this country that doesn’t have local democracy at the heart of it.
Equally, just at this precise moment in time, unfortunately I can’t be too definitive, or provide you the absolute certainty that you may seek, on the next steps towards this positive future.
But I do want to share with you today the ambition and gratitude I will always have for the good that all of you, on the frontline of our democracy, do and can do in the future.
Delivering essential local services - including for the most vulnerable – yes, but also so many national government priorities – building the homes and infrastructure we need, driving local growth, improving public health, revitalising our high streets.
And continuing to do this in a particularly challenging climate – with tight finances, big demographic shifts and growing demand, especially around social care, putting severe pressure on the system.
I know that much of this responsibility - to help reduce our debts and rebuild our economy – has fallen on you as financial professionals - working with elected members and officer colleagues to maintain financial discipline and make difficult choices that aren’t always popular.
Your efforts are greatly appreciated – efforts that have notably gone beyond driving efficiencies to aim higher and make improvements.
To embrace innovation and invest in preventative initiatives such as the highly impressive Troubled Families Programme.
I want to celebrate and spread this commitment to excellence so that that we unleash opportunity and prosperity for all our people and places, with no-one left behind.
A sustainable future for local government is absolutely pivotal to this – that’s why it’s one of my biggest priorities this year.
We’ve made some progress towards this via this year’s local government finance settlement which provides a real-terms boost in spending, an extra £650 million for social care and which confirmed the government’s continuing approach to addressing negative RSG.
Much of your funding; such as retained business rates, which have risen annually in line with the growth in business rates, and council tax is, of course, already locally sourced - in line with our commitment to putting local government truly in the driving seat.
Answerable not to central government, but to the communities you serve.
And we remain committed to implementing the local government finance reforms, including increased business rates retention, incentives to authorities to help grow local businesses and a new approach to distributing funding.
Thank you for your continued support and influence on this.
We need to consider how we implement these important and challenging reforms to make sure we get these right.
With budget planning underway, I hear your calls loud and clear for early clarity and certainty for 2020 to 2021 to give councils enough time to plan and recognise that significant changes introduced quickly could lead to poor value for money.
Overall funding available to local government will, of course, be a matter for the Spending Review and I will continue to make a powerful case for you – for local government – as a proud champion of the sector.
To see that local government gets the support it needs and gets as much certainty as possible as early as possible.
I know that certainty is valued to keep up the momentum on good work even when the precise details aren’t available.
The New Homes Bonus, for example, has provided a valuable means of rewarding housing delivery.
The various social care grants, too, have been critical in managing demand for sensitive, high profile services.
I’m thinking especially of the improved Better Care Fund (BCF) – an important vehicle for improving the way health and social care services work together.
This - together with the NHS’s contribution to the Fund - is providing around £4 billion for adult social care this year.
I’m pleased to confirm the BCF amounts to £6.4 billion this year and that the increase in the element provided by the NHS is rising by 5.3% - well above inflation and in line with overall NHS revenue growth.
And while I can’t say much more about the future of the BCF, I know we’ll want to build on your commendable efforts to reduce delayed transfers of care by over 50% – helping more people to be cared for at home and live independently for longer whilst freeing up much-needed hospital beds.
All these issues - particularly your pressing need for clarity, which cannot wait until the end of the year - will need to be addressed by the new government as we consider what a sustainable settlement looks like for local government for the coming years.
A new deal for local government
And it’s in that spirit – of getting local government onto the front foot to fully grasp the opportunities and challenges of not just today, but tomorrow – that I want us to go forward with a new deal for local government.
Funding undoubtedly matters.
And if that does rise - with the multiple funding streams that fuel inefficiency and higher overheads minimised - we can expect questions about how this is going to power better outcomes.
Which takes us back to that sense of shared responsibility for the difference we can all make to the communities we serve.
We need to harness this responsibility to collaborate more effectively in the interests of local communities – to strike the right balance between managing daily pressures and pushing the boundaries to deliver better, smarter services.
To achieve this, I believe the next leader of my Party will need to rethink the relationship between central and local government and the systems and structures underpinning local government; acknowledging the part we all play in giving local authorities the freedom to deliver, but also spotting problems earlier and helping each other improve. There is certainly more central government could do, for example, to identify and support councils earlier to prevent failure and protect residents.
To that end, we’re working towards an improved approach of local government oversight and support to help the sector drive the modernisation agenda.
Careful stewardship is at the crux of this; to help maintain a stable and credible financial framework whilst maximising opportunities and managing risks collectively.
As I’ve said before, ensuring the New Burdens Doctrine remains fit for purpose is also a key factor – as was reviewing and updating the prudential framework to ensure that councils are thinking carefully about investment decisions and weighing up risks.
CIPFA has led the way on this issue along with improving our understanding about the financial risks and performance of individual councils.
And I’m immensely thankful for all your work in this area – work that strengthens our efforts to improve the local authority governance and accountability framework - the set of rules and norms governing what local authorities do.
I see central government as playing a more active role as a convenor of this framework in the future.
And I’m hopeful the framework review panel – which includes members from the sector, including Rob Whiteman - will help us arrive at an approach that keeps pace with the evolving role of local government.
In doing so, it’s right that we’re drawing on sector expertise - including from SOLACE, CIPFA and the LGA on the role of statutory officers – reflecting how ownership of the many elements of the framework is spread among different partners.
As you’ll be well aware, a robust local audit system is also absolutely pivotal to this work on oversight - not just because it reinforces confidence in financial reporting.
But because it reinforces service delivery and, ultimately, our faith in local democracy - with potentially far-reaching consequences when audits aren’t carried out properly and fail to detect significant problems.
Concerns have recently been raised about audit quality and whether the audit framework is too fragmented.
That’s why – as many of you will know - I’ve committed to reviewing the audit framework.
And I’m delighted to announce today that Sir Tony Redmond will be leading this work.
Many of you will know Tony from his work at CIPFA and across the sector and I’m sure you’ll agree that his extensive experience will be a huge asset.
I’ve asked him to look at how the audit arrangements introduced since 2014 have been implemented as well as the effectiveness of the current audit arrangements.
To look at whether auditors are making full use of their reporting powers and doing so in a timely way.
To look at whether there’s a gap between what taxpayers expect and what audit can deliver.
And to make recommendations that will help us improve and restore confidence in the quality of the audit of local authorities.
But it’s not enough to restore confidence in the audit regime if the way in which financial information is presented by local authorities isn’t clear and easy to understand.
And this isn’t about transparency for transparency’s sake.
With local government in England accounting for just over a fifth [22%] of total public spending, it’s about taxpayers having a right to understand how their money is being spent – about maintaining that faith in democracy to which I’ve just alluded.
I know that CIPFA has also, rightly, alighted on this issue of improving access to this information in recent years through your Telling the Story and Streamlining initiatives.
As a result, I’ve also asked Tony to also include transparency of financial reporting within the scope of his review.
To be absolutely clear, I’m approaching this with an open mind, but our aim must be to ensure the financial reporting and audit framework helps members, Section 151 officers and chief executives make informed and responsible decisions about improvements and is more open and accountable to our citizens.
Because as I said at the start, that’s what all of this ultimately comes down to – the people and places who are trusting us to deliver for them.
And we should be proud of what we’ve achieved together.
Delivering more homes last year than in any bar one of the previous 31.
Driving down the number of people sleeping rough for the first time in 8 years.
Paving the way for a new generation of social housing with the removal of the government cap on how much councils can borrow to build.
Continuing to support those affected by the unprecedented tragedy at Grenfell Tower 2 years ago – to keep people in similar buildings safe and transforming our approach to building safety.
And, of course, supporting local areas to prepare for Brexit.
As finance professionals, as some of our most committed public servants, your contribution to all of this has been absolutely crucial – and will continue to be crucial as we develop and deliver a new deal for local government and our communities.
I want to see these plans set out in more detail in a Green Paper and welcome your input in the knowledge that there’s a great prize in our grasp.
A deal that gives you more opportunities to transform services and ensure taxpayers’ money is well spent.
A deal that resets the relationship between local and central government and renews our democracy.
A deal that, in changing times, strengthens your special role in our communities as the bedrock on which all our people can build better lives.
And underlines the good that local government and all of you do.
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