A former secretary of state is calling for Total Place style pooled budgets as the best use of public spending when there is no financial quick fix for public services.
Place-based budgets would allow services and communities to allocate their whole area's spending according to their unique needs. Currently, budgets are divided by department and tightly controlled by Whitehall.
In the paper authored with New Local, John Denham says this approach would eradicate some of the oversights of the current system and create better outcomes for communities. He argues this is the only feasible approach for a future government wishing to create preventative public services offering value for money.
The proposals are inspired by Total Place: a policy that was axed in 2010 despite successful pilots, enthusiastic take-up from councils and endorsement from the Treasury.
Under New Local's proposals for a new approach to place based public service budgets, local partners including councils, emergency services, schools, the NHS and communities would come together to identify all the money being spent in their area and decide the best way of spending it to meet local needs.
The paper argues that this would improve outcomes for people who need support. They must currently deal with multiple services, often being passed between them or falling through the gaps in provision. Siloed budgets create a ‘prevention penalty', where local services are incentivised to save money upfront rather than prevent future problems that might fall outside their remit.
Pooled budgets would create a joint incentive to tackle people's issues collectively and at their root. It would join up responses of health and social care, for example, or probation, housing and employment support.
John Denham says:
“Whitehall would like to tell us that keeping government departments siloed and answerable only to the UK Treasury makes sure that public money is used well. It does not work.
“It can't be emphasised enough how much the current system is failing. The huge waiting lists, the stress on staff, the rising inequalities from place to place is evidence of that.
“This is not a system designed to get the best value for every single taxpayer pound. We need to have the bravery to move to one that does.”
Co-author Jessica Studdert, Deputy Chief Executive, New Local, says:
“Total Place is the best policy that never was, and it's overdue a comeback.”
“Councils are chronically underfunded. But their problems are magnified by the fact they can't use existing money in the way that best serves their communities. Meanwhile, demand is rising on other services of last resort - hospitals and the police. This is producing worse outcomes for people and is a poor use of public money overall because costs are simply shunted around the system.
“The next government will need to act swiftly to loosen Whitehall's grip, and free public services and communities to work together to make money go further and services work better.”
Philip Rycroft, former Permanent Secretary at the Department for Exiting the EU and previous head of the UK Governance Group in the Cabinet Office, says:
“This paper sets out a practical and necessary reform of public policy in England. We can't go on as we are, with Permanent Secretaries in Whitehall ostensibly responsible for outcomes in the lives of people in places they don't know and don't understand. It is well beyond time to put budget control and accountability where it properly belongs, at the local level, where public money can be aligned with the real needs of communities.”
Cllr Georgia Gould, Leader of Camden Council, Chair of London Councils and Policy Advisory Group member, Future Governance Forum, says:
“Place-based budgets should be at the heart of a new partnership between national and local governments. Our communities have enormous power and capacity which our over-centralised system too often bypasses by design. Our public services need to be forged around human relationships not transactional processes, and rewiring the funding to enable this to take shape would be a massive catalyst for change”.
Diane Coyle, Bennett Professor of Public Policy at the University of Cambridge, says:
“People and businesses in the UK are held back by short-termism and a lack of co-ordination by central government. There is an urgent need for a new model to ensure that long-term investment that meets local needs, and place-based public service budgets would enable that.”
Notes to Editors
- Place-based public service budgets: Making public money work better for communities is available here.
- A video of the authors Jessica Studdert and John Denham discussing the paper is available here.
- For interviews please contact Katy Oglethorpe, Director of Communications, New Local - katy@newlocal.org.uk / 0791 2163 536.
- John Denham was a Member of Parliament from 1992 to 2015 and served as Secretary of State for Communities and Local Government from 2009 to 2010. He is currently a Professor at the University of Southampton.
- The report was published in collaboration with the Future Governance Forum.