Place based finance: A new model of financing local outcomes

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by Daniel Goodwin, Executive Director – Finance & Policy, LGA

Published in: Business, Economy & Finance
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Place based finance: A new model of financing local outcomes

  1. 1. Place based finance A new model for financing local outcomes December 2013 www.local.gov.uk
  2. 2. Today’s public service model is unsustainable • • • • Demand and costs going up Funding going down Handling failure rather than trying to prevent it Public services are seen as bureaucratic, remote and bogged down in process • The economy is managed top down and policies are ‘one size fits all’.
  3. 3. Local growth isn’t working either • The national economy is growing again • But there are: – – – – – – Regional imbalances Areas where performance is weak and resilience poor High levels of youth unemployment Skills gaps Infrastructure problems Housing shortages
  4. 4. Financial sustainability at risk
  5. 5. ‘Re-wiring’ public services said: • Allow each place to act as its own local treasury, managing local tax and spend and driving growth • A local treasury to provide the incentive for a local budget for growth and choice, rather than silo budgets to fund services. • [it] would have the ability to flex business rates and other taxes including for example tourist or sales taxes… • Local Treasury = Place based finance
  6. 6. What principles underpin the model? • Local democratic accountability for all local services • Equity and fairness in outcomes between places (national statutory entitlements) • Fairness in funding distribution across the UK and within England • Strategies for growth should be local to lend resilience to the national economy
  7. 7. Place based finance • Responsible for – public value and the local economy – raising local taxes – allocating funding to drive local outcomes and improve services – local borrowing, prioritising and approving investment – being a performance management and consumer champion • Not silo based or institutional funding • Not a commissioner? • Not a provider? • Not any existing council?
  8. 8. Issues • • • • • • Scope – what local functions covered? Geography- what area covered? Money in – where would it come from? Money out - where would it go? Accountability – how would it work? Assurance – how would national govt. be assured standards were met
  9. 9. Testing place based finance Technocratic tests Political tests • • • • Financial sustainability and resilience – Councils, CCGs – Resilient new network Performance improvement – Children’s services – Health/social care integration Growth premium – Skills and enterprise – Road building and maintenance – Transport integration – Resilient network of sub-national economies • • • Local – not another layer of government National – more effective delivery of national policy Democratic renewal and civic engagement Involvement of : – Democratically elected representatives and local people – PCCs, Fire, CCGs, FE colleges, schools – Chambers of commerce and private sector – Universities, housing associations
  10. 10. Conclusions • A solution is needed to an unsustainable public service and economic model. • Local treasuries would ensure local people get the results and local services they need by giving them power over local taxation and how their taxes are spent. • It is a new structure for local services and local growth where spending and delivery are more resilient and more visible to local people and national government.
  11. 11. Questions • How would place based finance work in the West Midlands? • What are the particular West Midlands issues we would need a local treasury to address?

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