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By michaelward, Mar 1 2013 04:40PM

Public services in the North of England are being stretched to breaking point and another round of efficiency savings won’t be enough to protect services.

The Coalition’s Office for Budget Responsibility has established that the 2008/9 recession was deeper and more damaging than had at first been thought. And since the start of the austerity programme in 2010 the economy has flatlined.

This lack of growth is very serious for the public sector. With the economy grinding along at a far lower level of activity than had been anticipated, the tax revenues are not there to fund existing levels of public services – leave alone to cope with increased demand or demographic change.

The Coalition originally expected five years of squeeze, followed by a period of recovery. But this time, unlike past recessions, the economy has not bounced back. Austerity is now forecast to continue at least until 2018. As my new report, published by the Smith Institute with the support of PwC (‘Public Services North: Time for a New Deal?’) shows, happy days are certainly not here again.

Now some services, notably the NHS, have been ‘protected’. The trouble is, logically, if you propose overall cuts, and then protect some services, other policy areas are hit even harder. Thus the cumulative cuts to the CLG Department’s Communities budget – covering, among other things, much of the social housing budget – are forecast to reach 70% by 2018.

In addition, the national tax base is declining. As North Sea oil production passes its peak, so tax revenues from oil production begin to fall sharply. As environmental taxes begin to change behaviour (for example, as fuel duty encourages manufacturers to develop more fuel-efficient engines), so the yield from these taxes goes down.

Corporation tax rates are increasingly set with reference to tax rates in other jurisdictions, as countries jostle to attract footloose investment.

On top of all this, the local government finance system does not serve the needs of the North well. The tax base – for Council Tax and Business Rates alike – is now heavily concentrated in London and the South East. Since 2010, the grant system has become less redistributive. Grants that used to be targeted on the areas with the highest needs have been ‘rolled in’ to the general grant – and in turn some of that general grant has been taken out of the formula to fund the Government’s New Homes Bonus – which favours more affluent areas and the South.

All this amounts to a car crash for public services in the North. As Sheffield City Council’s Leader, Julie Dore, says:

“To have another three years of cuts will cause the whole social infrastructure to collapse and services will go.”

So what needs to happen?

• First, the key redistributive elements of central government support to local government need to be restored, giving poorer communities a fairer share;

• Second, Councils and trade unions need to work together to drive up service productivity. There are no quick fixes – but without this, both jobs and services will go; and

• Third, service providers and civil society across the North need to work out what the deal is for the future – an alliance for change under the umbrella of ‘Public Services North’.

It is time to face the big questions:

• As a society, what will we provide through the state, what through the market?

• What services will be provided by local government, what by central?

• How will we pay for public services, through taxation or user charges?

These choices will not simply go away after the next general election. Any incoming government will face serious constraints on what it can promise. Neither is there any easy way out for service providers.

By michaelward, Feb 22 2013 12:10PM

Just back from an inspirational week visiting fair trade and organic coffee cooperatives in Uganda.

Since last year I have chaired the Board of TWIN and TWIN Trading, a London based alternative trade organisation (http://www.twin.org.uk/). I have only been on the board a year, but in the 1980s I was involved with Robin Murray and Michael Barratt Brown and others when we started TWIN with GLC support.

TWIN works with farmers in the global south to try and improve their position through fair trade. The main commodities with which we are involved are coffee, nuts and cocoa.

This week I went to Uganda with colleagues from TWIN, first to attend the African Fine Coffee Association conference and trade fair in Kampala, and then to travel to the Mount Elgon region to visit coffee cooperatives there.

AFCA brings together brings together traders and industry giants, with smaller local business, academics , non-governmental organisations and government interests as well as coffee farmers from estates and cooperatives. TWIN has now worked in East Africa for more than twenty years, promoting fair trade, helping coops to achieve certification, and driving up quality. Our senior associate in Africa, Andy Carlton, has helped many coops form and grow, working in Uganda, Tanzania, Malawi, Rwanda, Burundi and the Democratic Republic of Congo. A long term TWIN staff member, Richard Hide, leads a Twin team which is working with eleven African producer co-operatives to develop the Joint Marketing Initiative (JMI) with the support of Comic Relief, to sell high quality certified coffee across the world (http://jmicoffee.org/). Richard works with Kat Nolte, responsible for marketing, and Rachel Wallace, who deals with communications.

One coop with which we are working is the Malawi-based Mzuzu Coffee Planters Cooperative Union, whose Chief Executive, Harrison Kalua, now chairs the AFCA Board. Mzuzu coffee is now on the shelves in Sainsbury’s .(http://www.fdin.org.uk/2012/12/mzuzu-fairtrade-coffee-hits-shelves-in-sainsburys ).I talked to many of the producer groups with which TWIN works. Their commitment, dedication and hard work are amazing, humbling and extraordinary. I found the people from the Democratic Republic of Congo (DRC) particularly impressive – working to rebuild an industry ravaged by decades of war. In the 1950s coffee from the Congo had a high reputation, but since then it has largely been absent from world markets. Rebuilding their export trade helps farmers and their communities move beyond a subsistence economy. The three DRC coops with which we work are Sopacdi, Furaha and Muungano

After the AFCA event it was time for the five hour taxi ride to Mbale to visit Gumutindo, a dynamic coop in the Mount Elgon region (http://www.gumutindocoffee.co.ug/). In their own words:

“Gumutindo is an organisation of smallholder coffee farmers who produce washed Arabica coffee for the specialty coffee market. We live and work on the misty ridges and in the lush upland valleys of Mount Elgon, an extinct volcano on the eastern border of Uganda.”

Kat Nolte, the energetic JMI marketing person from Seattle, filled a nine-seat minibus with an eclectic mix of coffee people. Our guide was Lydia, the young quality control manager at Gumutindo, who had been at AFCA. Then there was Raf, who leads on fair trade for Oxfam Belgium; Steve, from Blue Bottle Coffee in Oakland, California; Robyn and Micky, who run a coffee roaster business in Vancouver – and a Norwegian and an Australian, travelling on to Kenya. Stopped en route at Jinja to see the source of the Nile.

We were greeted at Mbale by Willington Wamayeye, Gumutindo’s long serving Managing Director, who is also one of the producer members on TWIN’s Board in London. TWIN has been a regular customer for the cooperative’s coffee (since 1998, in fact), and so had the other buyers with our group.

Although I have been drinking coffee for many years, I am an absolute beginner in understanding its production, so it was great to see the process in detail: sorting, milling, quality control, and despatching. The experts asked all the penetrating questions – I just watched and listened. I then met members of the board of the cooperative, talked to them about the progress they have made – and thanked them for freeing Willington to come to our meetings in London.

After seeing the Gumutindo factory, we went up Mount Elgon with Willington to Sipi Falls – a staggeringly beautiful waterfall high in the coffee growing area. The landscape is very green, lush vegetation and a very fertile soil which produces excellent coffee. It was a stiff climb down to the bottom of the waterfall, and up again, guided by a couple of local young men.

Climate change presents a serious threat to these smallholder coffee farmers who are already suffering from increased climate variability. Impacts include longer drought periods and heavier rainfall which in turn lead to poor quality coffee cherry, low yields and severe erosion.

Gumutindo’s farmers are working with Twin to plan and implement activities that enhance the climate resilience of its members and the wider community, and to raise awareness about the impacts of climate change. Combining local knowledge and coping strategies with scientific climate projections, farmers have prioritised specific adaptation activities to help protect against the impacts of climate change - specifically soil erosion and soil fertility.

Women have traditionally played a subordinate role in African coffee farming. They do much of the work on the farm but do not control the money earned from coffee sales. The JMI co-operatives are part of a movement to change this. Women farmers are leaders in the cooperatives, they sit on the boards and head up their primary society village-level co-operatives. They are members of the co-operatives in their own right. At Gumutindo, farmers have gone one step further in promoting fully traceable ‘Coffee Grown by Women’ with a premium paid towards projects which support women’s empowerment.

On my final day we again went to the mountain. Gumutindo is a union of sixteen primary cooperatives. One of these, at an altitude of over 2,000 metres, is Nasufwa. It was a long, bumpy ride in a 4 wheel drive. This year Blue Bottle Coffee in California are buying a container load of Nasufwa’s coffee, and the visit gave Steve from Blue Bottle the opportunity to ask detailed questions about techniques of coffee drying and compost making.

High up, near the Nasufwa compound, Gumutindo have bought some pasture land, at the centre of which is another spectacular waterfall, Kajere Falls. They have plans for a campsite for visitors and a place for the cooperatives to have meetings.

Later that day I went back to Entebbe airport, near Kampala, for the flight back to London. I travelled with Justine Watalunga from the Gumutindo Board, who is making her first visit to the UK to participate in Fair Trade Fortnight.

Strange to travel from hot, sunny, 30 Celsius tropical Africa straight back to cold wintry London.

Many people in Uganda and the neighbouring countries still live in extreme poverty. But the leadership of the cooperatives – and the commitment of the present generation of leaders to bring on young women and men to succeed them – must give great hope for the future.

Thankyou Willington!

By michaelward, Dec 7 2012 11:39AM

Local government: from the pragmatic to the apocalyptic

The Director of the Institute for Fiscal Studies, commenting on the Autumn Statement, has warned that public services face ‘inconceivable’ cuts. Paul Johnson said on 6 December:

“Roll forward to 2017-18, and if the NHS and schools continue to be protected, and no more welfare cuts or tax rises are found, then these unprotected spending areas – police, local government, defence, environment, transport – face cumulative real terms cuts of 16% in the three years to 2017-18, or cuts of nearly a third since 2010.

That begins to look close to inconceivable. Further welfare cuts and tax rises must be on the cards. £27 billion worth would be required to protect other spending in real terms.”

Local government has responded to the cuts since 2010 in pragmatic ways. Jobs have been cut, back offices have been merged, efficiencies have been identified and implemented. But these actions were taken as part of a strategy to keep services going. Local government, like their counterparts in Whitehall, assumed that growth would come back, tax receipts would begin to rise again, and services would carry on.

It is now becoming clear that normal service is not about to be resumed. Austerity is scheduled to continue until 2017-18. Many services, and even some councils, will not survive the storm.

In the last few days:

• Newcastle City Council has announced proposals to completely cut funding for major cultural institutions in the city; (http://www.newcastle.gov.uk/sites/drupalncc.newcastle.gov.uk/files/wwwfileroot/your-council/budget_and_annual_report/budget_2016_-_14_reduction_in_financial_support_for_the_indpendent_cultural_sector_in_the_city.pdf)

• Sheffield City Council’s Leader has announced that: “Another three years of austerity…. will mean the end of the council as we know it. To have another three years of cuts will cause the whole social infrastructure we have to collapse and services will go.” (http://www.thestar.co.uk/news/business/the-end-of-sheffield-council-as-we-know-it-1-5199684)

• West Somerset District Council has announced that it faces an unbridgeable budget gap, and that it will have to become a ‘virtual’ authority, providing no services at all itself, with everything contracted out to other public or private sector agencies.

(http://www.lgcplus.com/finance/west-somerset-to-become-virtual authority/)

Michael Ward

7 December 2012

By michaelward, Nov 13 2012 12:43PM

The establishment of a directly elected Mayor for Greater London in 2000 was a turning point for London government. The role survived a change of party in 2008: by the time of the next mayoral election, Labour and Conservative will each have held the position for eight years. The Mayoralty promises to outlast its predecessor, the Greater London Council, as a permanent structure.

Other English city regions can learn from the success of creating an elected Mayor for the whole conurbation, rather than just the city or district Mayors that have been on offer elsewhere.

Nevertheless, the 2016 election promises to be a turning point: neither Ken Livingstone nor Boris Johnson is likely to stand again. Already at least one candidate for the Labour nomination has declared.

But before the parties pick their runners, there needs to be a debate about where London is going. Has the Mayoralty become too close to the business lobby in general and the finance sector in particular? Is it not time to reclaim London for its citizens and communities, time to reclaim London from the neo- liberal agenda of deregulation and cuts in corporate taxation?

From 1986 to 2000, London was the only English region without a strategic planning framework. Now it is the only region with one. I have experience of both the old, pre-1986 structure of London government, and the new system, led by the directly-elected mayor. I am quite sure that the new system is an improvement – a lean, strategic authority, with executive agencies for fire, transport and police, answerable to the mayor, and strong strategic planning powers.

I also believe that Labour’s record in power in London from 2000 to 2008, during Ken Livingstone’s two terms as mayor, was a strong and effective one. Introducing the congestion charge was an act of political courage – and the charge remains in force. Winning the right to stage the 2012 London Olympics was a huge achievement.

London has changed dramatically since the abolition of the GLC. In particular:

o The long decline in population has been reversed;

o The finance and business services sector has come to dominate the London economy more than ever.

For more than thirty years after the Second World War, there was a consensus between central and London government: London was too big, too congested – its jobs and its people should be dispersed. London should be decentralised. Government took statutory controls over the location of factories – and, later, offices too – to make this happen. From a high point of over 8 million in the 1930s, Greater London’s population declined steadily, reaching a low point of 6.6 million by 1981. After that, it began to rise again, passing the 8 million mark once more in the 2011 census. It is forecast to reach 9 million by 2026.

At the same time, the role of business and financial services in London is more important than ever. The Thatcher government’s abolition of exchange controls, followed by the deregulation of the City in the ‘Big Bang’ of 1986, led to fundamental changes in the finance sector. The City of London, with New York and Tokyo, is one of the three main global financial centres, and the dominant European centre. The financial sector is increasingly dominated by international companies, rather than UK ones, and recruits its key staff in a highly mobile global labour market. Back in 1971, there were 1 million manufacturing jobs in London – by 2000, there were only 326,000, and this figure is forecast to fall to only 89,000 by 2031. Business and financial services jobs are forecast to rise from 1.56 million in 2007 to 1.98 million in 2031.

During London’s long interregnum, London’s business lobbying moved up a gear. The City Corporation, the mediaeval municipality that runs the Square Mile of the old financial district, argued effectively for action to boost London’s role as a financial centre. A new lobbying organisation, London First, appeared alongside the long established London Chamber of Commerce and the regional committee of the CBI. And the new financial district, Canary Wharf, emerged as a substantial force in its own right.

These changes were reflected in a major report, published by the borough-led London Planning Advisory Committee in 1991, on London as World City. It seems extraordinary now, but London’s international role was virtually ignored in the major planning documents of the post war period – the County of London Plan (1943), the Herbert Report (1960), and the various iterations of the Greater London Development Plan (1964-86).

The World City Report changed the framework through which London problems were viewed, comparing London with its international peers – Paris, New York, Tokyo, Hong Kong and Shanghai. London strategic planning was reinstated in 2000. The first two mayors have used their London Plans to respond to these changes. The 2002 plan made a commitment to accommodate the growth of population and jobs within London’s existing boundaries, with massive investment in housing and transport infrastructure – the opposite of the old policy of planned dispersal. This approach has been retained in subsequent plans – the latest, the 2011 Plan, concludes that 'the only prudent course is to plan for continued growth'.

Boris Johnson’s 2010 Economic Development Strategy goes further. Its first objective is 'to promote London as the world capital of business', and its second is 'to ensure that London has the most competitive business environment in the world'. This had led him, in turn, to oppose the idea of a European financial transactions tax.

The London Plan exists in a vacuum: there is no national strategy for land use or economic growth – no national framework for where new development should take place. Both private and public investment are concentrated in the south east. The coalition has expressed the hope that the economy will be rebalanced between the south east and the rest of the country, but has no policy instruments to make this happen.

It is certainly the case that London is a world city. Jobs in finance and business services are central to London’s future prosperity. It was the great achievement of both New Labour and Ken to see this; the change of Mayor in 2008 led to no change in this approach

The business agenda will continue to be important for London. But it cannot the only perspective for London’s future. The key task for London government is to set a proper balance between the needs of the finance sector and the needs of London’s communities – between the City and the citizens.

Now is the time for a wide ranging debate on the policy issues, before the general election and the 2016 mayoral election, and the 2014 London borough elections.

Here are just a few examples:

* HOUSING. The combined impact of cuts to the housing programme, and to benefits, is precipitating a housing crisis in London. Large areas of inner and central London are destined to become ‘no-go’ areas for the poor, including the working poor. Boroughs are rehousing homeless people far from London. The coalition has redefined ‘affordable’ housing to mean homes let at 80% of the open market rent. The government is weakening the obligations on developers to provide affordable homes. Relying on developers to provide affordable housing on the back of profit making developments is unsatisfactory. It is vital to restore a major programme of new home building, by the Greater London Authority, the London boroughs, and housing associations.

* LAND USE. For how long will it be realistic or sensible to contain London’s growth within London? The Urban Task Force called for high density, high quality urban development. Densities went up slightly – but recent new development did not manage to create quality environments with good leisure and cultural facilities. But the London Plan housing targets can only be achieved by using employment sites (indeed, using almost any vacant sites) for homes. Is it time to look again at new communities in the wider urban region, beyond London’s boundaries?

* COMPETITIVENESS. Business and financial services jobs are important for London. But it does not follow from that undoubted truth that London’s Mayor must be a cheerleader for the whole deregulation, low-tax lobby. The public interest is that there should be a responsible, regulated financial sector – not a free for all.

* TRANSPORT AND INFRASTRUCTURE. London’s tube and rail network is old, intensively used, and expensive. It needs new investment, and with Thameslink 2000, Crossrail and the tube upgrade some of this is happening. For the future, there will need to be a new balance struck, between new lines and improved services that improve access to the centre of London for excluded communities, and improvements to London’s international access, as well as a balance between revenue subsidy and new investment.

* AIRPORTS. Airports policy has bedevilled London politics since the 1960s. Heathrow generates major noise and air pollution problems. Communities under the flight path are no longer prepared to tolerate these. But business is concerned that London’s role as an international aviation hub is critical for its economic future. Boris has proposed an airport in the Thames Estuary – but this is very costly, and carries its own set of environmental problems with it. Either the economic arguments are valid or they are not. But if London does need to remain a European centre for aviation, then some way of compensating for the environmental problems needs to be found. What is needed is a joined up approach, looking at economic and environmental issues together, not separately.

* LONDON AND THE REST OF BRITAIN. Ever since the establishment of the London County Council in 1889, London has pointed out that its taxes are spent in the rest of the country. The central London business rate, which gave the LCC and the GLC a powerful independent tax base, is now shared across the whole of English local government. As long as London is the richest region in England, it is inevitable that its wealth will be used for the benefit of the country as a whole. But what is the right way of sharing this wealth? And how could a Labour mayor build alliances with other cities and regions?

By michaelward, Oct 18 2012 05:33PM

The ignominious collapse of the franchising process for the West Coast Main Line, leading to abortive costs of at least £40 million, brings to a head major concerns about the way we run our public services.

After the Second World War it all seemed to be straightforward: the Government ran the health service and, through public corporations, the railways and the energy industries, while local government ran schools and welfare services.

In the 1970s and 1980s, a different approach began to emerge. We were told that services would be better under conditions of competition. Markets, not government, knew best. The utilities were privatised, and local services were put out to tender.

Over time, this became a new orthodoxy: Public Service Reform. Anyone with a complaint about British Rail, the local gas board or the council housing department was told that the answer to all their worries was simple: a heady brew of choice, markets, competition and outsourcing. Miraculously, one size really would fit all.

Where public bodies continued to provide services directly, they were split into rival bureaucracies – one acting as the ‘contractor’, the other as the ‘client’. Many services went to new providers. Public Service Reform has become the conventional wisdom of the age, enshrined in legislation, and supported by commentators (and politicians) from left and right. Services as diverse as Women’s Aid refuges, and now probation, have been subjected to the same formula.

Now, however, public services face a unique set of challenges:

o The period of budget austerity, originally planned to end in 2015, has been stretched out, at least until 2017. Councils and health authorities are having to squeeze budgets, year after year. Whether the delivery agency is public or private, there is no more scope for ‘efficiency’ savings – real cuts in standards are taking place.

o Even when the national budget deficit has been eliminated, tax yields in the future are expected to go down – as taxes on North Sea Oil, and tobacco, and environmental taxes, bring in less.

o An ageing population puts extra demands on health and social services.

o Some services, like health and universities, are facing their own, separate, national, top-down reorganisations.

As service providers grapple with these challenges, the need to observe the doctrinal precepts of Public Service Reform, and to restructure so as to promote markets and competition, is just another burden.

Public Service Reform is no longer part of the solution: it has become part of the problem. Introducing markets and outsourcing is neither necessary nor sufficient to cope with the challenges communities now face.

It must now be time for a new settlement – one that:

o Accepts a mixed economy of public service delivery;

o Halts the forward march of marketization;

o Accepts that, just because markets, choice and outsourcing may work for some services, it does not follow that they are appropriate for all;

o Identifies the costs as well as the benefits of separating client/commissioning roles from provider/contractor roles.

o Starts from need as the basis for service planning;

o Guarantees full transparency about direct costs and overheads;

o Ensures democratic scrutiny and accountability;

o Sets minimum national standards for key services.

At the heart of that new approach must be a commitment to public service productivity. Productivity in the NHS stagnated for most of the last decade. In moving away from market-based solutions, public authorities and their workforce need to develop a new, joint approach to improving value for money. This commitment is as important for trades unions as it is for councils and health organisations.

Public service managers have navigated their way through past periods of austerity with their organisations and structures largely intact, confident that the good times would return, and spending levels would increase again.

This time it is different. There is no early prospect of the years of plenty coming back. It is time to stop creating pretend markets, fantasy castles in the neo liberal air, and start addressing the core problems of community need and service productivity.

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