ippr north

Community Kitty

The government has just launched a consultation on a strategy to roll out participatory budgeting across England by 2012, as part of the empowering agenda for communities.  This is both interesting and welcome.  For those that haven’t come across it, the model of participatory budgeting was first developed in Brazil – city of Porto Alegre to be precise – as a mechanism through which communities can engage directly with the local authority budgeting process.  This original experiment was partly about a desire to deepen democracy, and partly about the need to open up the budget process to combat corruption and patronage.

Whatever the original rationales, in Porto Alegre increased public participation in decision-making was certainly an outcome – it is estimated that 18% of the population took part in budget setting meetings over a five year period in the 1990s.  That’s pretty remarkable when you consider the turnout for local elections in England is often only around 30%.

In England a number of participatory budgeting pilots have been underway over the last few years – one in Hazel Blears’ home town of Salford, but also in Bradford, Newcastle and Sunderland to name some others.  An evaluation of these pilots suggests that many experiences have been very positive, but doing participatory budgeting well is resource intensive – in terms of money, council officers’ time and community development work.  This is not an argument against doing it - in fact it is right that we should invest in our democracy, and many techniques to increase participation are costly, especially if you’re targeting the most excluded individuals or the groups which traditionally have low interest in community engagement (e.g. youth).  I raise this issue merely to make the point that participatory budgeting is not some sort of easy option or silver bullet and will add value in a combination with other mechanisms aimed at enhancing participation.

In fact, doing participatory budgeting badly could be worse than not doing it at all.  If it’s not well planned and resourced it may be hijacked by small but vocal groups to further the interests of the few.  If it’s not seen to be a fair process it could serve to increase community tension, whereas there is some evidence to suggest that when done well participatory budgeting can have a positive impact on community cohesion.

Another big question about participatory budgeting is how central it is to council activity.  On launching the consultation Hazel Blears referred to participatory budgeting as providing ‘community kitties’ to areas.  This may simply be because the phrase ‘participatory budgeting’ is not the most accessible.  But a ‘community kitty’ to me suggests a small pot of additional money.  While divvying this up may offer some benefits, participatory budgeting is meant to be more ambitious than this, dealing with mainstream budgets in education, social care, and so forth, and involving communities in the hard decisions that have to be made between competing priorities.  It is participatory budgeting of this scale that would be truly ambitious and empowering.

Marching forwards

It feels as if the North East is slightly under assault at the moment as major organisations within our region have been at the centre of media storms, ‘disk-gate’ looks like a story which will run and run while we all hope NR manages to stabilise as around 6,000 jobs in the region rely upon the business.

While issues such as these often become politicised it makes it all the more important that the North East’s policy is driven by evidence and not just opinion. This month we’ve been releasing the results of two major projects which provide a good example of how to move forwards.

Along with Centre for Cities we reviewed Newcastle City Council’s performance against OECD recommendations and criticisms from last year, based around the city-region’s economy and lack of leadership. Amongst other things we found that the city had to find a bigger role for business leadership and improve a fragmented regional transport system.

There is a need for leadership and shared focus, the time for territory and tribalism is over, with higher expectations demanding sharper and more strategic alliances between local, regional and national players. We must also look to pull in more high value public sector jobs.

The latter point is also reinforced in our latest research The Northern Economy in the Next Decade which will lay down a blueprint for the region for the next 10 years. For more information on any of our work email north@ippr.org

The Spending Review

Now there is time to reflect on Alistair Darling's CSR, after the initial media rush and comment on headline grabbing topics such as inheritance tax (read my thoughts here), non-doms, and capital gains tax, it's interesting to focus on the areas which cross-over into ippr north's work and recommendations.

Of particular interest to me, as it ties heavily into our work around A Northern Economic Agenda, was the Government's approach to Public Service Agreements (PSAs).  For the uninitiated, PSAs (of which there are 30) set out the Government's 'key priority outcomes' for the next spending round and are underpinned by Delivery Agreements with the relevant departments. 

Unlike previously, when PSA targets had been assigned to specific departments, from now on they will be delivered jointly by all responsible departments (with occasional, entirely reasonable exceptions).  This is a welcome step in ensuring strategic, cross-departmental work and may even give greater flexibility to local service providers.

One of these targets aims to 'Improve the economic performance of all English regions and reduce the gap in economic growth rates between regions'.  This is underpinned by an increased number of measurements including growth rates of Gross Value Added per head (GVA – an economics tool to measure output), GDP per head compared to the average from the 15 old EU member states, GVA per hour, and – importantly for the North East – regional employment rates.

This approach gives a far truer picture of disparities and is in line with our recommendations this summer. We also recommended a change in the headline aspiration as we believe Government should be aiming to reduce the absolute gap in economic output between regions, rather than just slowing the relative gap in regional growth rates as the current PSA target specifies.  If this is not tackled we may end up with some regions improving performance, but forever lagging behind others.

To the regions…and beyond

Last week I wrote on Open Democracy's blog of the Sub-National Review of Economic Development and Regeneration grabbing headlines for culling the regional assemblies. But there was more to the review then that: combined with Brown’s plans for constitutional reform, it gives us a further glimpse at the Prime Minister's approach to power and accountability.

The review offers more power to local authorities, transferring 14-19 education budgets to them, as well as opening consultations on a legal duty for economic development and some flexibility over business rates.  It also strengthens the role of Regional Development Agencies (RDAs), adding to their portfolio the Assemblies’ strategic powers over planning, transport and housing.  Bringing these powers together with economic development may result in regional strategies that are more focused, prioritised and coherent.

This will be challenging as RDAs are business-led quangos primarily focused on economic development.  Their new planning role will encompass land use, the green belt and housing - not simply economic matters, but social and environmental ones too. It is here that the role of local authorities is critical, as they must provide RDAs with their knowledge and experience in these matters.  Most importantly they will provide accountability.

The review gives local authority leaders a more integral role in developing and agreeing regional strategies.  Embedding local authorities in the work of their region has to be welcomed but could prove a complicated process.  Two additional government departments will also have to sign off strategies, with regional select committees offering additional scrutiny.  It remains to be seen whether this is the beginning of a bright new relationship between central and local levels or just too many cooks in the kitchen.

In our State of the Union project we argue that Brown must focus on the way England is governed as part of this constitutional reform.  He must address the real curse of the English: not what Scottish MPs can vote on but overbearing centralisation in England. Taken together with the promised concordat between local and central government, maybe, just maybe, this review signals a step in the right direction.

Regions in the spotlight

It’s often argued that despite substantial funding allocated to the English regions and a multitude of regionally-targeted initiatives, the English regional policy lacks individual approaches to the regions. There is an impression that sometimes the Government is not brave enough to propose a positive discrimination agenda when some regions are treated very differently based on their specific local conditions and needs. The start of Gordon Brown’s term as Prime Minister was marked with a proposal to substantially change the way in which the country is governed. Last week’s Green Paper Governance of Britain contains proposals which could have fundamental implications for the English regions.

The newly introduced regional minister posts, and the proposal to create regional select committees along with introducing regional questions in Parliament could pave the way towards more regionally-tailored, place-based policies across Whitehall departments, with increased levels of accountability. Although these changes are broadly positive, it is important to highlight some of the potential implications. Nine individuals are representing the interests of the nine regions in Westminster and Whitehall giving local and regional governments greater accessibility to central decision-making. In addition, the regional ministers have also been made responsible for giving citizens a voice in central government.

However, the proposed arrangement may also create unhealthy rivalry and competition for funds from individual departments that are ring-fenced but not specifically allocated, such as investment in transport. It may also be difficult to steer cross-departmental co-ordination when there are nine different positions to take into account. The lack of institutional organisation and specifically allocated resources may further hinder the process of coordination.

It is also important to look at relations between the ministers, who should provide a clear sense of strategic direction for their region, and other regional institutions, such as Government Offices in the regions, Regional Development Agencies and Regional Assemblies. Will roles and responsibilities of these organisations be changed as a result of the new ministerial posts? We expect this question to be answered in the Government’s Sub-national Review of Economic Development and Regeneration, which will be released very soon.

Greater scrutiny of regional policy initiatives at the national level, as proposed by the Green Paper, is a very positive step. However, it is important to ensure that it’s not performed at the expense of regional and local powers of accountability. There is then a danger that these changes will not be perceived as a move towards greater decentralisation but rather centralisation. For this reason we should make maximum use of these new influence mechanisms transferred from London as an opportunity to articulate and implement policy priorities that are important for the individual regions.

Scotland's Choice

Next month sees the Scottish Parliament’s third election since devolution in 1999, while almost to the day, the Union also celebrates its third centenary.  The question on everybody’s lips is whether Scotland is about to take a leap towards independence thus ending the Union with England.

Previously I've mentioned our State of the Union project, which looks at the prospects for the Union between England and Scotland in the 21st Century, and this of course remains a hot topic as the campaigns for the Scottish Parliamentary elections get underway.  The Scottish Nationalist Party (SNP) are doing well in the polls, and look set to be the largest party in the Scottish Parliament after the elections - but not large enough to govern without the support of the Liberal Democrats.

However this prospect is by no means guaranteed and will require some tough negotiations, not least because the Lib Dems have publicly declared themselves against holding a referendum on independence in the next four years, a central plank of SNP policy.  More recently the Lib Dems have floated the idea of more powers for the Parliament, which could be a way for both parties to kick the independence issue into the long grass.  That might not be a bad idea for the SNP as recent polls, suggest that support for the party is not translating into support for independence, which currently stands at 27%.

Much of the debate about unionism and nationalism revolves around the performance of the Scottish economy, which has become one of the central issues in the election campaign, but the argument in many ways remains rather superficial.  Some nationalists claim an independent Scotland that cuts corporation tax will be the answer to all Scotland’s economic problems.  On the other side some Unionists dangle the threat of removing the fiscal transfers that Scotland currently enjoys, rather than seeking to positively address the underlying problems that hold the Scottish economy back.  And never far away is the debate about whether an independent Scotland would be able to balance its books, this largely focuses around the value and ownership of North Sea oil - although it hardly seems the most sustainable basis for a successful long-term economy.

Our seminar last week tried to get under the surface of these debates by looking at how interdependent our economies are, considering trade and migration between the two nations and what the implications are for the Union.  We also looked at the fiscal debate, and possible models for replacing the Barnett Formula.  This is work that we will be developing over the next few months, and no matter who wins the Scottish elections, these are not issues that will go away.

Lyons' Roar?

The remit has been extended several times, and publication was originally scheduled for December 2005, but finally, yesterday, the long awaited Lyons Inquiry into the future of local government was published.

Most of the coverage so far has been about the recommendations regarding the council tax.  In many ways this is understandable. Council tax is certainly unpopular and regressive, and Lyons’ recommendations to make council tax simpler and fairer must be implemented by central government.

However, Lyons also has another story to tell, one that so far has been less reported.  His final report takes a balanced and considered view of the risks and opportunities associated with local flexibility.  We at ippr north know from our work on devolution that while on the one hand people want greater local flexibility, they also want common minimum standards of service delivery.  Lyons recognises the need to combine light touch common standards with local flexibility.

This is the right approach but it presents serious challenges to both central government and local government.  Central government must continue to loosen its stifling target and control culture – and once loosened departments must resist the temptation to allow ring fencing and restrictive targets and performance management to creep back in.  That is not to say there is no place for targets and performance management, only that it is time there was a far more grown up relationship between central and local government.

For local authorities too this presents challenges.  They must respond to this opportunity and be less risk averse if the innovation and creativity that greater flexibility can bring is to be realised.  They must also be more outward-looking, embracing their role in reconnecting people to politics.  The best of local government already does this, but it is time to see more of it.

The Sand Timer

Where you live can affect your likelihood of being in work and, to some extent, we do live by post code lottery.  Geographical variations of worklessness throughout the UK underline the need to look at what more can be achieved at a local labour market levels.  This certainly shouldn't mean an end to common standards of welfare provision but should be about setting minimum standards centrally and giving local areas the flexibility to deliver in the most appropriate way.

Last week we published The Sand Timer which looked at the remaining challenges for reaching full employment in the North West of England and on Friday held an event in Manchester looking at these issues with the Secretary of State for Work and Pensions, John Hutton.  One of the themes of the conference, and our research, was greater devolution within the welfare to work system; empowering local areas to better understand and respond to their local labour market conditions.

There has also been much talk of benefit reform and the next steps for welfare to work over the last few days in response to the publication of David Freud's review of future welfare to work options.  These debates are critical for this government in light of its aspiration to have 80% of the population in work, and it's no surprise that Blair and Brown are standing as one on this issue. For a progressive think tank such as ourselves full employment is not just about economic efficiency and making sure that no talent is wasted, it's also about work as the best route out of poverty. Also let's not forget that working increases levels of wellbeing, self-esteem and confidence.

Our research (alongside anecdotal evidence from our conference) shows the ability to coordinate activity locally is often constrained by a lack of coordination centrally. So while Freud's discussion of contracting, personalisation, rights and responsibilities in the benefits system and the potential merits of a single benefit are all important, they are not the whole picture.  Undoubtedly great strides have been made in improving the employment rate in recent years, and while we are closer to full employment, we are still not close enough.