To succeed, the new boards need to be able to influence everything from social care and planning to school immunisations and housing. But NLGN’s new report finds scepticism among councils about whether the boards can survive on ‘soft power’ alone, combined with concerns about a potential lack of public engagement in the work of the new institutions.

Drawing on a new survey of over 50 councils and interviews with 28 senior officials involved in setting up the new boards, NLGN’s new report Healthy Places: Councils leading on public health, calls for a range of new powers:

• A explicit ‘duty to cooperate’ with HWBs for public bodies such as free schools

• Call-in powers that would give HWBs a say in the health implications of major commissioning decisions by other council departments

• “Health and wellbeing deals” with central government to support budget pooling around the Joint Health and Wellbeing Strategy

• ‘Prenuptial’ agreements on resource allocation between board members

• An explicit strategy for increasing public engagement in the agenda.

Report author, Daria Kuznetsova, said:

“Health and wellbeing agenda boards offer a real opportunity to reshape local public services, but without tougher powers they risk falling between organizational silos. A small number of hard, statutory powers could turbo charge the new boards and ensure the emergence of a new generation of health improving councils.”

The report also calls for much greater joint working in two tier areas, where district councils control many of the services that the county’s health and wellbeing board needs to influence.

“The country is storing up a crisis in the social care system. This is the single biggest cost that local authorities face and demand is rising rapidly. If the government cannot find a way to contain the costs of elderly care, the short term impact will be to suck money out of critical local services such as roads, street cleaning and community support. In the long term, there is a clear risk of bankrupting local government finances. This issue cannot wait: we need a cross-party consensus as soon as possible.”

NLGN is disappointed that government has side stepped the issue of social care funding in the Queen’s Speech. It urges political leaders to take stock of the pressing need for a solution and encourages a cross party approach.

NLGN therefore calls on the government to extend its discussions about new powers to places like Hartlepool and Mansfield, and to include directly elected leaders like Sir Steve Bullock and Dorothy Thornhill in his cabinet.”

Simon Parker, Director, NLGN

In a provocation paper setting out scenarios for future relationships between councils and the public, the think tank warns that the era of austerity could create ‘me first’ attitudes that cause people to turn away from public services and instead demand tax cuts and access to private sector services. Cuts could also lead to a new generation of e-enabled ‘super NIMBYs’, using powers in the Localism Act to ensure that they get as big a slice as possible of a shrinking public sector pie.

NLGN’s paper – Anticipating the Future Citizen – argues that without strong local leadership, greater central government support for localism and significant investment in community solutions, local government risks ever greater community disconnection and anger. But while the think tank’s analysis suggests that a renaissance of community life is unlikely by 2015, it does see hope in what some describe as a ‘new mutualism’ – social enterprise schemes such as Southwark Circle and the Empty Shops Network that encourage mutual self-help.

Graeme Walker, the local government specialist at PA Consulting and lead author of the paper, said: “The scale of spending cuts and the coalition’s ambition for the Big Society means the time is now for councils to encourage greater community involvement in service delivery and re-cast the relationship between citizen and state. The ‘Future Citizen’ scenarios we have developed with NLGN are our contribution to this debate – how will you respond to the challenges and opportunities they pose?”

NLGN Director and report co-author Simon Parker added: “The first wave of responses to the cuts has focused on reducing the costs of supplying services. This paper reinforces the message that the next wave of change must be about the way citizens interact with government. The size of the public sector matters, but the really important question is what we want government to do, and what we as citizens are prepared to contribute to building a better society.”

Since the government raised the rate at the Public Works Loan Board, it has become cheaper in some circumstances for councils to borrow from the capital markets, and many local authorities have now secured strong credit ratings. The Greater London Authority raised £600m via an institutional bond issuance for example – saving 17 basis points compared to the PWLB rate.

Retail bonds are bonds issued in sufficiently small denominations to be accessed by private individuals as opposed to wholesale bonds which are issued in denominations only accessible by institutional investors such as pension and sovereign wealth funds.

The report also calls for the creation of Infrastructure ISAs to help channel savings into vital infrastructure investment.

A recent NLGN survey showed that 84% of the councils that responded faced a capital funding shortfall. This translates into dilapidated schools, potholed roads and less land released to spark economic growth.

Report author Joe Sturge said:

“The wholesale bond market is beyond the reach of all but the biggest councils, but retail bonds are issued in smaller denominations which mean that many more councils can take advantage.

“Not only could retail bond issuance cut borrowing costs for councils, but it could allow them to develop a more localist approach to finance. By targeting their bonds at local residents, a stronger link between citizen, council and infrastructure investment would be developed. Local people would take an active role in shaping the future of their communities while gaining access to a new, safe and accessible investment option.”

The costs of housing benefit for families in B&Bs and other temporary accommodation is so high that it in some parts of the capital it would be cheaper to build new social housing for them. As councils pay for private rents at market level, the rent for each household in social housing would be much cheaper.

As ministers prepare to cap the amount of housing benefit families can receive – potentially leaving 64,000 people who currently reside in London unable to afford to continue living there – NLGN calls for the government to examine new house building as a partial alternative.

The report argues that this will be less disruptive to peoples’ lives while also meeting the government’s aim of building more properties and providing a short term fillip for the capital’s economy. This new housing could be built using a combination of housing benefit set at social rent and block grant from the Department for Work and Pensions to repay the development costs. Alongside the cashable long term savings, the capital’s housing supply would be increased by 9500 units.

Simon Parker, Director of the New Local Government Network, stated:

“We recognise the need to contain housing benefit costs, but the idea of building new homes represents a win-win solution for the government, councils and families. Our analysis suggests that 10 boroughs might be able to save money while providing more properties.

With a predicted shortfall of 750,000 homes in London by 2025, there has never been a more vital time to pursue this approach.”

The collection is an uncompromising analysis of where the District Councils’ are currently and crafts a vision for where they need to go. Contributors included, Manjeet Gill, Chief Executive of West Lindsey District Council, Ruth Marlow, Managing Director at Mansfield District Council and Sandra Whiles, Chief Executive of Blaby District Council.

Working together with the District Councils Network we hope this collection is the start of a much broader conversation about the future of District Councils.

Local government used to be able to borrow cheaply from the Public Works Loan Board, but a recent increase in PWLB rates means that it could now be more cost effective for councils to issue their own bonds. The recent GLA bond issue suggests that, in the right market conditions, this financing option could save councils up to 20 basis points on their borrowing costs, amounting to millions of pounds on a large bond issue.

Against the backdrop of a 22% cut in central government funding for local infrastructure, the research shows that an astonishing 84% of councils surveyed face a capital funding shortfall. This translates into crumbling schools, potholed roads and slower economic growth for many parts of the country.

Nearly two thirds of the councils surveyed for the new research say the PWLB rate rise will change the way they borrow, suggesting that bond issuances will come back onto the local agenda for the first time in 17 years.

Capital Futures was supported by a Taskforce made up of experts from across the local government finance sector.

Report author and Taskforce member Tom Symons said:

“Councils must explore a completely new landscape of financing options to survive this Spending Review. Issuing bonds on the capital markets could enable vital investments to be saved, assuming the right market conditions. As a result of central government cuts we need to see a much more ambitious approach from the sector if our infrastructure deficit is to be addressed”

Chair of the Taskforce Paul Woods (and Finance Director at Newcastle City Council), said:

“The responsibility for driving economic growth and responding to the demands of communities in an uncertain and difficult climate has fallen largely on councils. Councils have a vital role to play, and it is important that as a sector we optimistically grasp this time as a moment of opportunity.”

The report warns that without these reforms, social care in England risks ending up in the same situation as the Netherlands, where cost inflation and austerity measures have led to the scaling back of the Dutch equivalent of personal budgets.

The think tank’s new analysis of council cost data shows that each additional direct payment issued to someone with a learning disability, between 2002-10 adds between £15-25,000 to a council’s overall expenditure on learning disability services. This may reflect the fact that personal budgets are identifying new and previously unmet needs, and it is possible that the new system will save money for other sectors such as the NHS. The finding should nonetheless ring alarm bells in Whitehall about the pace of change.

This means embedding new measures such as “Social Care Related Quality of Life” (SCRQoL) that assess the quality and impact of social care services. If councils are better able to manage the contribution a service makes to a person’s wellbeing, and use that information to create a vibrant, competitive market that delivers best value for money. With a robust outcomes measurement system in place, emerging commissioning tools such as payment by results and social impact bonds could be developed within social care.

To reconcile the shift in relationships that outcome-based commissioning implies, commissioners will need to play a greater role in developing the market and “place shaping”. This will ensure that people with learning disabilities have a real choice between a wide range of services, so that people are able to access wider public services including employment and leisure as well as residential services and day services.

Report author, Daria Kuznetsova said: “We need to make a decisive shift away from managing outputs and instead develop new metrics and commissioning approaches based on outcomes. This will drive a focus on value for money, rather than simply cost, and it will help commissioners identify effective forms of intervention that help people with learning disabilities to live the lives they want to lead.”

Care for people with learning disabilities accounts for more than 23% of the adult social care budget, and represents the fastest growing part of that budget in last five years.

The report was launched following the coalition’s planned introduction of a package of decentralist policies to designed rebalance local-decision making in favour of economic development. The Local Government Resource Review will allow local authorities to retain increases in business rates generated in their area. This represents a fundamental change in the way local government in England is financed. The report makes recommendations to ensure this business rates retention model achieves goals and reinforces a council’s ability to secure economic growth.

The report is guided by two principles.

• Firstly, if the government is going to move to a system designed to incentivise business growth, then the system must be geared towards this goal. A change in the system should not become a complex replication of the current grant settlement.

• Secondly, whilst we believe that a system of redistribution and equalisation is essential, we argue that it must operate outside the business rates retention scheme. We call specifically for a capital fund to be accessible by areas of lower business rates growth.