Across the barricades

When Bing Crosby recorded Don’t Fence Me In in
1944, it went on to sell more than a million copies and top the
charts for eight weeks. The lyrics express a yearning for freedom
that still resonates with people of all ages and political hues
today. Now, as then, it is not clear where to draw the boundaries
between one person’s right to be free from restriction and
another’s right to protection. If I am free to wander through
your back garden, you will not be best pleased if I pick your prize
flowers. If, on the other hand, you surround every field with
barbed wire, don’t blame me if I lose interest in the
countryside or ask me to help conserve nature.

The theory highlights some of the difficulties behind the
ring-fencing of local authority grants. On the one hand, if central
government gives local authorities complete freedom in their
spending, some people fear that funding to vulnerable groups might
be cut and transferred to more politically popular causes. On the
other, if it lays down the law too severely, then councils will end
up as mere administrative agents of central government, fewer
people will be interested in local government, and the
community’s willingness to participate will wither.

So where does the cash come from? According to local government
figures,¹ councils receive about three-quarters of their
money for delivering services from central government. The rest is
raised via council tax. Central government cash comes in two forms.
One is a non-ring fenced formula grant, allocated on the basis of a
formula that determines each authority’s share according to
its circumstances. This includes an assumed level of council tax.
The second is specific government grants – allocated separately –
of which some are ring-fenced. However, the number of grants that
are ring-fenced has shrunk in recent years.

The Labour government has promoted decentralisation since it
came to office in 1997. In November 2002 the Office of the Deputy
Prime Minister announced a “dramatic devolution of power to local
government” with its package of “freedoms and flexibilities”. This
signalled a cut in the proportion of government grant that is
ring-fenced, and gave flexibility in spending decisions – excluding
grants passed to schools – to councils judged as excellent under
the Audit Commission’s new comprehensive performance
assessment.

Personal social services funding for 2004-5 is £14bn; of
this £1.7bn is classed as “special and specific grants” and
only £312m of that is actually ring-fenced.

But there are conflicting views on independence. The Local
Government Association advocates non-ring-fenced funding and sees
it as a crucial element of local accountability. However, many
social services directors are nervous about losing control of the
specific grants, fearing some of their most vulnerable clients will
lose out.

Mike Heiser, senior project officer at the LGA, says the
association favours non-ring-fenced funding because it gives more
discretion to local authorities to allocate funds in line with
locally decided priorities. He adds: “But we do accept there is a
case for ring-fencing in certain cases – when there is a new
function, or when expenditure pressures are divided unevenly among
some authorities. Supporting People is one example. In these
circumstances we think ring-fencing should be kept under review,
with a view to removing it in future years. There are also
transitional issues concerned with moving from ring-fenced to
non-ring-fenced funding which have to be dealt with sensitively,
such as preserved rights.”

The London Borough of Hammersmith and Fulham is rated as
“excellent” by the Audit Commission. James Reilly, the
council’s director of community services, acknowledges the
LGA’s argument but cautions: “My ideal world would be one in
which local government is strong, well engaged with its community
and well enough resourced for there not to be serious conflicts.
Strong community involvement with local services benefits social
services and our users, and more local discretion over spending
decisions does help to build such involvement. But the problem is
that there aren’t enough resources.”

Local authorities may lean towards ring-fenced grants, he adds,
particularly when education budgets are protected and the burden
falls on their other big departments for savings and balancing the
books.

There are advantages in retaining some control over finances.
Anne Williams is co-chair of the Association of Directors of Social
Services’ resources committee and director of community and
social services for Salford Council. She says: “Ring-fenced grants
have enabled us to make great strides in particular areas – for
example, the Quality Protects programme for children. And the
grants related to delayed discharges have had a very positive
effect in targeting money to these groups.”

While there are legal constraints and a performance agenda to
ensure that councils spend money on protecting children and cutting
delayed discharges, Williams adds that without ring-fenced grants
no one can guarantee the money intended for one purpose is not
hijacked for another.

Many people are unaware of the bulk of the work social services
departments do as it is often hidden from view. So when the public
are consulted about where their local authority should be spending
its budget, more visible tasks such as tackling crime and cleaning
up the environment top their list and social services are not
mentioned.

Local spending decisions and tensions can also amplify the
potential for greater variability of services between different
councils. Reilly recognises this problem, too: “If the government
wants the citizen to experience a standardised service then there
is an argument to get initiatives standardised, delivered and
bedded in, to avoid a postcode lottery. I would consider
ring-fencing for this.”

But there are other concerns relating to cutting ring-fencing:
worries about the funding for the Supporting People programme and
for people with preserved rights. Caroline Highwood, assistant
social services director for Kent Council, says Supporting People
could be a massive problem, with expenditure on it capped and
rumours of reductions in next year’s grant coinciding with
growing demand.

Williams believes that some of the most “excluded” service users
– such as those with mental health problems, drug and alcohol
problems or learning difficulties – could lose out if Supporting
People is cut. There are anxieties, too, about the funding changes
for people with preserved rights. The original grant was
ring-fenced and linked to specific people; now the money will go
into the general allocation and some authorities with many private
care homes, such as Kent, are big losers.

Highwood says: “This is directly detrimental because it is
ministers making decisions about local funding, not local members.
These are real people in real beds, who are vulnerable. Some
council members will protect the services because they regard them
as important, but others may well say ‘we have even higher
priorities elsewhere’.”

Ultimately, how budgets are divvied up comes down to a local
authority’s commitment to social services. Reilly says: “It
is about how much they are prepared to put their money where their
mouth is.

Where they are, you don’t need ring-fencing. Where
they’re not, you are going to want it.”

¹
Local Government
Financial Statistics for England 14, Office of the Deputy
Prime Minister, 2003