In a speech ahead of the government's spending review the Secretary of State highlights concerns that councils are effectively "letting money slip through their fingers".
Stephen [Greenhalgh], I want to start by thanking you and your colleagues for hosting us today.
Your work is absolutely leading the way. It’s what the future of local government is going to be.
Over the past four years, you’ve cut council tax, and consistently delivered high-quality services.
The most important thing is that you didn’t wait for ministers to tell you what to do.
There’s no reason why every council can’t do the same.
As you know, next week, the government will set out the spending plans for the next four years.
None of you will be under any illusions about exactly how tough that will be.
But we have got to face the facts.
Face up to the legacy we were left.
The crippling public deficit. The black hole in the nation’s finances.
We can’t forget how close to the economic abyss we came.
And we can’t pretend that we are somehow too big to fail.
The decisions we’re taking in the spending review are essential to preserve this fragile recovery. To retain our international credibility. To restore economic credibility.
But above all, we’ve been working towards a fair deal which protects the front-line services people rely on.
Locally, too, there’s a wrong response and a right response.
The wrong response is to panic.
The wrong response would be to slash and burn spending, regardless of where it’s going.
To salami slice services, in the assumption that one day you can go back to the old spending patterns. You can’t.
There is another way. As Hammersmith and Fulham and others show.
Putting everything they do under the spotlight.
Asking if every penny they spend is going to the right place.
Not just asking ‘how can we save money’ but ‘what do we really need to be doing.’
Do we need to be bringing in hired guns to lobby government?
Do we need separate planning departments? Lawyers? Communications teams?
Chief executives, even?
Or should we be focusing on the issues that really matter?
Better schools. Safer streets. Regular bin collections.
Most councils don’t need me to point this out.
They’ve seen which way the wind was blowing for a long time.
But frankly, others are bleating about the difficulties they face while letting money slip through their fingers.
Without picking on Islington, their internal audit, checking invoices to thirty of the council’s top suppliers, found ten had been paid twice. Two more were paid three times.
That was £55 000 overpaid. Through just a fraction of all their invoices.
One off mistakes might be understandable.
But a recent report from Experian suggests the problem runs much deeper in some places.
Their work with Leeds City Council has recovered around half a million pounds of overpayments.
Experian estimates that if this simple exercise were repeated in all of England’s local authorities it could save up to £147 million.
Now, you might say well, that is small potatoes. Hardly enough to plug the gaping holes in the public deficit. But actually, £147 million would pay the wages of nearly nine thousand care workers.
And more importantly, it betrays a particular attitude. A lack of respect towards public money. And at every level of government, that has got to change.
This was one of the first things I wanted to address in my own department.
That is why I’ve made it my mission to cut back on anything wasteful.
I worry we’ve forgotten whose money it is.
It’s not ours. We are entrusted with it. We can’t fritter it away.
All of us, my department as well as councils, have got to be able to look people straight in the eye.
And say, hand on heart, nothing is being wasted.
That’s why we’re asking councils to throw open their books. Become much more transparent and open. And why we’re doing the same.
Greater transparency will really revolutionise the way government works.
It will say to suppliers: government is no longer there to be fleeced.
It will make every single government employee think twice before they get out the public credit card.
And it will mean that the public can judge public spending for themselves.
They won’t forgive councils who don’t cut out all the waste before squeezing the services.
And perhaps public servants will take extra care not to overpay suppliers, when they know there’s an army of armchair auditors checking their working.
So as Baroness Eaton says;
“we should cut 100 per cent of the waste, red tape and junketing before we even contemplate reductions to front line services.”
But if the first step is to absolutely eliminate all traces of waste. The second is much more radical.
This might be an enforced opportunity. But it’s an opportunity nonetheless.
A chance to re-examine the way that every council works. The way every single service is delivered.
No-one can just fall back on throwing money at problems.
And if the past decade has shown anything, it’s that that won’t work anyway.
Nor does the solution lie in unitary restructuring. There is no point wasting time on divisive, expensive plans dreamt up and directed by Whitehall.
Instead, there are a lot of common sense solutions that councils have got well underway.
Birmingham are saving £430 000 a year just by sorting their own post. They plan to save around £540 million through changing the way their back office service works.
Worcestershire have counted 24 agencies working with young people not working or studying in their area - and know they can offer a better service if they get rid of the duplication.
That gives some indication of just how much room around the edges there can be.
The LGA said a couple of weeks ago that joining up services properly could save around £5 billion a year. And they are leading some great stuff in their productivity programme.
But you’ve heard about better procurement. Sharing services. Sharing chief executives. And greater efficiencies for years now.
It makes it even more surprising that not every council has got their act in gear.
Because we aren’t talking about economising; tinkering round the edges; being a bit more thrifty.
We’re talking really radical, creative, innovative stuff. Transforming everything that councils do.
Councils like Nottinghamshire and Somerset are reviewing every single service that they offer. As Councillor Maddox says: they are asking:
Does it really need to be done? Does it provide value for money? Are we the best people to be doing it? I want to support them in every possible way.
Not through handouts and instructions and diktats.
But by getting out of the way. Letting them make their own decisions. By making localism a reality.
It’s fairer. It’s more efficient. And it’s more democratic.
As the Prime Minister has said;
“we feel the importance of this in our heads as well as our hearts.”
It’s not my job to sit behind my desk like some sort of puppet master, pulling all the strings, taking all the decisions.
Instead of seeing how tightly I can pull those strings, I spent the past few months cutting them.
I’ve put an end to regional bureaucracy.
To interference from government offices.
To endless inspections.
And I’ve started a ‘bonfire of the inanities’.
When stacked up together, they aren’t just minor irritants but major barriers.
Hammersmith and Fulham alone came up with more than a hundred bureaucratic burdens taking up their time and energy.
And I can promise you, Stephen, I’m working on it. We’ve already sorted out several of them.
But I don’t plan to stop there.
Time and time again, I hear complaints from councils about how much of a burden the national indicator set is.
Not because measurement and targets are always a bad thing.
If councils, working with the residents, want to set themselves goals to aim for, that’s up to them. It could actually help in being accountable, clear and transparent.
But national targets mean that councils are constantly working on things which matter to Whitehall, regardless of whether local residents give two hoots about them.
I’d much rather councils were tackling local issues than telling me about them.
There are 66 pages of guidance telling councils how to report on national indicator 179.
Ironically, it’s supposed to measure how efficient councils are.
Kent reckon it costs them more than a million pounds a year to deal with inspections and regulation.
Add in what the local police force, health service and the district council are expected to do, and a conservative estimate of the total looks more like £7 million.
They think they currently have to measure their performance against no fewer than fifteen hundred different indicators.
It beggars belief.
The money being spent on form fillers and bean counters could be far better spent helping elderly people to stay in their homes. Or almost anything, in fact.
So today, I’m scrapping the existing local area agreements.
I’m handing over control over more than 4,700 targets to councils and their voters. To keep or dump as they see fit.
And instead of the National Indicator Set, and instead of every single department’s endless demands that you measure this, that or the other, I’m promising today that there’s just going to be one list of every bit of data that government needs from you.
Which I’ll be in charge of. So let’s make it as short as possible. Let’s sort out, together, the minimum that government actually needs to know.
So instead of red tape and regulation, instead of instructions and inspections, we’re giving councils what they’ve wanted for decades.
Freedom. Power. Responsibility.
Able to make your own decisions on housing. A stronger say on planning. A central role in the NHS. And in the driving seat of the local economy, thanks to the local enterprise partnerships.
And that’s just for starters. The localism bill, which we’ll unveil in a few weeks, will go even further.
Councils will be able to organise themselves however they want.
Through a general power of competence, they will be able to do whatever they want.
That’s up to them, and your voters. Not to me.
And perhaps most importantly of all. I want to make sure that councils are in charge of their own money.
We’ve said they can borrow against future business rates in order to invest.
They can keep the money from rents.
They’ll be able to agree locally to pooling their budgets across the public sector to better tackle social problems.
And we’ve already freed up more than a billion pounds worth of ring fenced funding.
But we can do a lot more.
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Durham has counted 58 different funding streams for housing and regeneration.
Dorset, Poole and Bournemouth have counted 80 agencies investing in economic growth in the area - many of them spending less than £50,000.
Councils haven’t been allowed to do things their way. They can’t spend it on anything else; and they have to spend it all in order to get more next time.
Whatever money was coming in. By the time the rules had been followed. The forms had been filled. The conditions had been satisfied. There’s always going to be a lot less.
It’s a recipe for financial madness.
Where’s the reason to be efficient? Where’s the incentive to be imaginative? What point is there in listening to local voters instead of central government?
Well, I do not want to be an overbearing parent. Handing out your pocket money and telling to exactly what to spend it on.
I have far too much respect for local government.
And that’s why, as part of the spending review, we’ve been working to make those artificial barriers come down.
Putting an end to those vanity funding pots.
Putting as much money as possible into just one cheque, for councils and residents to work out for themselves how they want to spend it.
But with the power, the freedom and the money, comes the responsibility to act on that power.
To do everything possible to protect frontline services.
To target spending at the most vulnerable.
To commissioning really effective and productive services: not just the same old, same old - and bringing in the voluntary sector.
And above all, to be proactive.
I do not want councils turning to me on every little issue.
Paralysed in case they do the ‘wrong thing’.
The past decade has stifled councils. Created a culture of dependency.
Some councils feel like they can’t do anything without my permission.
It’s hardly surprising, when councils have been tied to the apron strings for so long.
But we need to replace this culture of fear and paralysis.
We need a new culture of action and decisiveness.
A culture that is very evident here in Hammersmith and Fulham.
The public does not need to be patronised.
They understand there are incredibly tough decisions to be made.
They don’t want a blame game.
But they will want to make sure that their council, as well as their government, is doing everything possible to protect front-line services that they rely on.
I have done my part in the spending review negotiations. Councils must also do theirs.
Cutting out every penny of waste.
Becoming more creative and imaginative.
And facing up to the challenge, not ducking it.
I have led a council myself. I have sat in the chair. I have dealt with the budget. I have the deepest respect for those, like Stephen, who approach these difficult times imaginatively and thoughtfully.
And I can promise you that I will be an enthusiastic champion in Cabinet through these difficult times.
I will make sure that you have what you need to tackle the challenges you face.
Local government’s natural instinct is to innovate and to adapt.
Local government is often the place that finds the best solutions to any number of social challenges: in poverty, in housing.
And I want to ensure that, even in tight financial times, you have more power to shape services around the needs of your people.