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Deal or no deal?

Community groups and councils are being promised more control over public services and budgets. But how would local decision-makers cope in negotiations with the private sector, and what is the Treasury's role in any new arrangements?

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Balancing act: will local communities have the skills to deal with the private sector?

Sometimes two policies, each worthy in its own right, can collide head-on. The policies of localism – greater power for community bodies – and partnership working, which of course entails more deals with the private sector, may be one such case.

All three main parties are signed up to the idea, if not necessarily the reality, of giving local bodies a greater say over public services. Among the Opposition, the Liberal Democrats have long argued that Britain's over-centralised state "has done much to harm and dampen the energies of local communities" as their Treasury spokesman, Vince Cable, recently said.

For the Conservatives, David Cameron has pledged to "strengthen" local civic institutions such as community groups and local councils, while their schools spokesman, Michael Gove, has promised headteachers more control over education budgets.

However, what none has yet addressed in detail is the question of how local bodies are supposed to manage if they are also expected, as is the trend under Labour, to engage in increasingly complicated and wide-ranging partnerships with the private sector.

A recent National Audit Office report argued that many central government departments lack the commercial skills needed to drive a good bargain. How, then, will community groups cope? How, equally, will any kind of efficiency and economy of scale be preserved if deals are done as a series of single, isolated examples?

Greg Stone is a Liberal Democrat councillor in Newcastle who has worked on several local regeneration schemes. There is already, he says, "a tension there between trying to steer regeneration benefits to the community and trying to keep the private partners around the table".

True localism, he adds, means devolving power not just to local councillors like himself but further down to community groups and parish councils. "If the people who can turn the key on this were the local authority rather than the community, it would lead to a discrepancy of resources and power."

But, asked how it would work if those local bodies were left to work directly with the private sector, he says: "I don't think there is an easy answer. I don't think there's anything in place yet."

Even among local councils, the skills needed are "a little bit lacking", he adds. "It's going to have to be addressed. Otherwise the conversations and the development of various [projects] will be conducted in a way that's very unequal, and the risk is in the interests of developers will overpower the interests of local decision-makers."

The obvious solution to this conundrum is central guidance – some way of allowing local communities to draw on a body of expertise and experience of major projects.

John Tizard, a public-private partnerships expert from Birmingham University, says there is no contradiction in such an arrangement. "In some areas, particularly areas of complex procurement, access to central resources seems to me absolutely essential for local bodies.

"It would be unfortunate if the policy were to dismantle those support services that local agencies can call on or if local agencies felt they were being discouraged from drawing on them."

Central guidance

The need for such central guidance could lead to a new role for some of the agencies – notably the public-private quango Local Partnerships - that might otherwise have feared for their future. However, their functions could equally be carried out by regional bodies, or from within central government departments.

Steve Beet, of consultants PricewaterhouseCoopers, says one solution to the local procurement dilemma could be a "twin track" approach that splits decision-making from procurement. While local groups could assess – and decide on – what needs to be done in their area, their building or services projects could be brought together with others at regional or even national level to be procured in a big bunch.

If a community decided a new school should be built, "you can quite understand that being identified locally", he says. "But no one would argue that a parish [council] leader should go through the [centralised] Building Schools for the Future programme."

However, the danger is that leaving procurement decisions with a regional or national agency will negate any real devolution of power.

The temptation for a strong, centralised agency to interfere could be overwhelming; giving advice could easily tip over into taking control.

"The big tension is going to be between local needs assessment and consolidated procurement," Beet admits. "It's going to be an interesting challenge for the Treasury."

But how will that tension be resolved?

"This is the unknown," he says. "This is the bit all the parties are struggling with – what is the glue that sits between localism and community engagement and the central functions that can support and deliver what they require?"


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