Speeches recovered from the Conservative party’s online archive More…

George Osborne: What Whitehall can learn from Conservative town halls

Thank you to Margaret and the Local Government Association for hosting us today. I have called this meeting today because I want to make use of a unique opportunity.

Most councils in England are controlled by Conservatives. And at some point in the next eight months, I hope we will have a Conservative Government in power in Westminster. So I want the Conservative Party to learn from what local Conservative councils are doing right now, as they are dealing with many of the constraints that we may face very soon.

That's why we have brought together some of the best examples of our local councils doing an incredible job under the most difficult of circumstances. It's also why have brought together some newly elected Conservative councils, like Somerset, Cumbria and North Tyneside, who are hoping to learn from those who were elected a few years ago.

We should deliver the best to the rest. While we develop our policies for improving public services in an age of austerity, local councils have got on with doing it. When it comes to rooting out waste and cutting costs, or improving services through innovative new policies, Conservative councils are showing us that it can be done.

In short, Conservative Whitehall will have much to learn from Conservative town halls.

Across the country, councils have actually put into practice some of the ideas and policies we hope to introduce nationally if we form the next government. It shows how all the innovative new policy ideas are now being generated in the Conservative world. For example, Conservative councils are pioneering new approaches to information and transparency. 

So Boris Johnson in London has led the way in publishing detailed online information about the Greater London Authority's spending and costs.  Other councils are finding ways to save money by sharing their services or overheads, High Peak Borough Council and Staffordshire Moorlands District Council are sharing senior management positions across the two councils.  As a result, they now only have to fill 21 management positions - instead of 37.  Still others have taken the decision to reduce costs and improve services by outsourcing some of their activities or improving their use of information technology.

Lincolnshire County Council has been working in successful partnerships with the private sector for the last nine years, starting in the back office and now covering social inclusion projects and the delivery of critical services such as children's services.

And Kent County council has massively reduced their transactional costs by leading the way in E-government.

Many of the councils here today have demonstrated the importance of financial grip, setting clear spending priorities, controlling costs and holding people accountable for performance.

Trafford has introduced strict financial controls and concentrated on their key priority services

East Sussex has gone from a one star council in 2001 to a four star council today - but managed to deliver £165 million in savings in the process.

Hammersmith & Fulham delivered three consecutive annual council tax reductions for local residents while focusing more resources on more policing, local schools, improving public spaces and refuse collection.

While Wandsworth have the lowest levels of council tax in the UK, started what they call their "efficiency journey" over thirty years ago with a relentless focus on value for money, competitive tendering for services and continuous improvement in their procurement of goods and services.

And in London, one of Boris Johnson's first acts was to scrap the Londoner newspaper, and he has now saved £180 million by reducing spending on marketing, media, consultants and other administration.

There are important lessons here for central government as we look to spend tax payer's money more effectively.  But it's not just about saving money or fulfilling our very important pledge to freeze council tax - it's about really improving the public service you provide through changes in the way you spend money.

And here local councils are introducing pioneering and innovative new ways of spending public money more effectively. Westminster have introduced "joined up" service delivery for the 3 per cent of families in the borough that account for 80 per cent of social spending. This makes it much easier for the families involved - and also shows up where there are duplicated efforts. 

Essex are setting up a new municipal bank in partnership with Santander to lend to local small businesses, as well launching a new social care company which could potentially work with other councils in the future.  And Windsor & Maidenhead are introducing the innovative RecycleBank policy, which rewards people for recycling and has seen widespread success in the US.

They are also pioneers of the transparency revolution.

Of course there are many other Conservative councils who are not here today with similar success stories to tell.  What makes all of these achievements even more remarkable is that they have been accomplished under one of the most centralised governments in the world.

In Britain, over three quarters of government spending is spent by central government.  In Germany, the figure is 60 per cent. In Canada it is less than 40 per cent.

To take just one category of spending, less than a tenth of the money spent every year on regeneration is spent by local government. The rest is spent by a complicated alphabet soup of quangos, regional agencies and central government department. But the problem is not just that local councils don't get the money that really should be spent locally.

The problem is that too often local councils don't even have the power to choose how to spend the money that is actually allocated to them. The proportion of local government expenditure that is ring-fenced by central government has nearly tripled from 5 per cent in 1997 to 14 per cent last year.

If that were not enough, Labour ministers are constantly looking over the shoulders of elected councils, and the cost of monitoring local government has ballooned to £2 billion.  This central bureaucracy makes it much more difficult for councils to innovate. 

Councils lack the freedom to take decisions that could improve their local communities - such as stepping in to save post offices or small shops, or controlling late night drinking.

All this has contributed to a regrettable decline the control people feel they have over their local area. Only 38 per cent of people feel they can influence decisions in their local area. And turnout was only 30 per cent at the last set of local council elections.

Let me be very clear.

David Cameron and the modern Conservative Party are 100 per cent committed to devolving power to local government and local towns and cities. 

Localism brings people closer to political power and gives them control over their own communities. By giving people more power and control over the services that are delivered in their areas, we can inspire a new spirit of civic pride in our communities. When people know their actions can make a real difference locally they are far more motivated to get involved.

But not only that. As the councils in this room have shown, local government is often the best sources of new ideas and new policies. 

We want to give them more power and more responsibility to unleash their innovative potential.

That's why we have laid out plans for a radical decentralisation of power.

That's why we'll devolve down the funding and powers of RDAs to local councils and local businesses.

It's why we'll abolish regional assemblies and hand control to local authorities.

Regional government will have no more planning or housing powers.

Local authorities will now have the power to establish their own local enterprise partnerships.

And they will have a new 'general power of competence', giving them more freedom to act in the best interests of their residents.

But localism is about more than having the right policies. It's about understanding that not all good ideas are dreamt up in a policy unit in Whitehall.  It means realising that many of the best and most cutting-edge policies actually come from local government. And when it comes to public spending, I believe that local government offer at least three clear lessons for a future Conservative government.

First, innovation works. Conservative councils don't just cut costs. They improve services. And they do it by using new ways to deliver them.

So, for example, the conventional approach is to provide a range of different services in different departments.  But this ignores the fact that many vulnerable families will need to use multiple services simultaneously.

So, by joining up individual services, as Westminster Council has done, we can provide better care to the most vulnerable families, we can reduce the hassle they face, and we can also reduce costs.

To take another example, the government's approach to recycling is to threaten people and tax them into doing it.  But if decide to reward them instead, as Windsor Council has done, we can dramatically improve the popularity of recycling - particularly amongst households who were previously the least likely to recycle.

Some councils have gone even further by looking at new ways of providing finance for small businesses, as Essex Council has done, or by creating new companies to deliver social care.

The lesson is that when it comes to service delivery, it is vital to allow local councils and local public service professionals to use their own creativity to find the best solutions.

Second, transparency and openness are powerful tools in the fight against waste

Publishing spending programmes online is great example of how new technology can be harnessed to improve accountability.

Everyone can see exactly how their money is being spent. They can follow their money.

We have tried to get legislation passed through Parliament that would force the government to be more transparent about public spending, but Labour killed it off.

Well if this government won't tell the public how their money is spent, the next one will.

I make this pledge today that, if we win the next election, all items of public spending over £25,000 will be published on-line.  I know that it may create awkward stories for Ministers from time to time.

But that is the exactly the point.

As David Cameron argued earlier this week, when people don't know how their money is spent, it is much easier for a spendaholic culture to set in. 

When we open up the books to the public, there is a clear imperative on politicians and civil servants to ensure that only those projects that can be justified to the public will go ahead.

Third, it is not only possible to cut costs while improving services - Conservative councils are doing it right here, right now.

Of course, Labour Ministers are always saying they will cut costs. We've had the Gershon efficiency review, the Public Value Programme, the Value for Money Programme and the Operational Efficiency Programme.

Heaven knows how much that all cost. What we do know is they haven't worked. The reason they haven't really worked isn't just because there has been a failure of political will.

Yes, Labour isn't genuinely interested in value for money. It's just not a political priority for them.But the real reason they haven't worked is because they haven't addressed the root cause of the problem.

What we really need to do is fundamentally change what you are asking central government to deliver.

And let's start with the way government interferes endlessly with local management of public services.

The Department for Communities and Local Government decides on how many houses need to built. The Department of Health decides that local NHS services need yet another reorganisation.

Labour's instinct is to reach for the top-down target, the national strategy, the central government initiative.

In order to do this, it has created a large national bureaucracy of civil servants, inspectors and second-guessers all trying to manage remotely services that should be run locally.

There are around 80,000 people dedicated solely to monitoring, regulating, setting targets and inspections across the wider public sector. The schools department employs one civil servant for every secondary school head teacher. There are seven times as many civil servants in the central Department for Work and Pension as there are JobCentres in the country.

The relentless target culture has taken away the initiative of local professionals, local elected councillors and local public sector managers. The Local Government Association estimates that 81 per cent of central targets relate to local government.

We devote far too many resources to administration and regulation by Whitehall - the so-called policy, funding and regulation (PFR) functions. Why, for example, if we have real school freedom and proper choice-based reforms, do we need hundreds of people in Whitehall and quangos dictating every minute of every child's school day?

This needs to change if we are ever going to achieve meaningful reform of our public services and genuine decentralisation.We must escape the endless efficiency reviews that have dominated British politics for a decade.

Instead we must reinvent what government actually does.

So yes we will reduce the costs of central government.

And yes we will reduce the Whitehall headcount.

But this is not just a cost-cutting exercise.

It is about changing the role of central government - and making local government powerful again.

The result will not just be money saved for the taxpayer and debt reduced, but a fundamentally better government with better and more productive services.

That is what Conservative Whitehall can learn from Conservative Town Halls.

When it comes to innovation, transparency and cost-cutting, you are leading the way.

You can help us find the best and give it to the rest.

Keyboard shortcuts

j previous speech k next speech