Is there any reason to be optimistic about local government finance or is it just the honeymoon period, asks chief reporter Caitlin Webb.
Both the president and new chief executive of the Chartered Institute of Public Finance and Accountancy (Cipfa) launched Public Finance Live last week with talk of a “moment” or “inflection point” for the public sector.
President Carol Culley said that after a “really tough decade” for those working in public services and a “real kicking” from austerity there may be reason for optimism due to the new government promising change.
She credited the meet-up of the metro mayors at Number 10 as an indicator that devolution and the voice of regional leaders is a priority for Keir Starmer’s cabinet.
While chief executive Owen Mapley claimed this new government provides a “real opportunity” for finance directors to be “radical” and “reframe the relationship” that Westminster has with the public sector.
He spoke of “strong collaboration” and a “tangible shift to prevention” to “deliver better value for money for local taxpayers”.
Mr Mapley joked about the need for a “long honeymoon period” as he is also new in his job.
Director of LSE London, Tony Travers told the conference that this new government is not a “silver bullet” for saving the public sector but instead a sign that the “mood music will be softer”.
He predicts that only a sustained period of economic growth would provide the additional funds to re-invest into public sector but regulatory reform will be a priority as it “costs nothing”.
So Mr Travers is hopeful that a “new deal” can be implemented to balance the tax burden but warned this may take more than the five years Starmer and his team have so another term could be necessary.
Political commentator Jon Sopel and the closing speaker for the conference called Starmer “serious” and a “bit dull” but claimed he is the “right person at the right time” because of the pessimism that politicians “can’t actually fix it”.
He said that “this might be the right stuff for the times right now” as Starmer is “someone coming in and desperately hoping that his manifesto under promised but will over deliver.”
David Phillips from the Institute for Fiscal Studies told the LGC that this quiet optimism is not necessarily founded in the financial climate but more a sense that this government is “more persuaded by the idea” that the public sector is worth the investment.
He said that this optimism “might help” influence some additional capital funding from government as their provision can be “more effective and more efficient”, however he is not convinced it will drastically improve local government finance in general.
“The outlook for central government funding is worse in the coming parliament than the last parliament. The last parliament actually saw some pretty big increases in funding from central government with councils funding increasing about 14% in real terms but not enough to undo the cuts in 2010.”
The real source of optimism could lie within the future of council tax and whether rates can rise above the level of inflation, Mr Phillips said. But this would rely on whether central government would devolve these powers further.
While the future of local government finance is not often one filled with optimism, it is refreshing to see a change in mood within the sector especially in the face of so many unknown outcomes.
