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Introduction

It鈥檚 wonderful to be speaking in this great Baroque building - magnificent monument of the great Nicholas Hawksmoor.

It鈥檚 easy to forget that Hawksmoor and his great contemporary Sir Christopher Wren were not just building churches, but consciously redesigning a London ruined by the Great Fire.

Times were tough then too. Conditions unfavourable. They had few resources to draw on other than their own talent, aspiration, and creativity. Yet together they remade London.

This is pretty much what I think of local government. In difficult times the best of it has risen to the challenge, managed change, protected the best of the public service ethos.

Facing the reality

Make no mistake: local government, which accounts for a quarter of public spending, would not have been protected no matter who had been addressing the deficit.

The last government was planning spending cuts of 拢52 billion by 2014 to 2015. There is a reasonable case that because local government was not considered to be a priority service, that councils may have borne an even greater share. This is precisely the reality that the National Audit Office鈥檚 recognises.

So the future of local government could be a dreary decline or a new reality of more power, flexibility and responsibility.

In our first year we passed the Localism Act. In the second year we devolved finance, so that, in this third year, you could transform your services.

Our approach to Community and Neighbourhood Budgets points the way forward. Essex has got a range of services working as one to provide employment, training and mentoring for offenders. It believes it can reduce re-offending by 5% and make net savings of 拢124 million by the end of the decade.

Greater Manchester has turned the old approach to troubled families on its head. Instead of numerous different agencies contacting the same family at different times in isolation, they have put in place one no-nonsense worker who grips the whole family 鈥� no excuses. It believes investing 拢138 million in their 8,000 troubled families should save 拢225 million over the next 5 years.

And over in Ilfracombe they鈥檙e addressing the over-prescription of medication 鈥� all those pills and potions which gather dust in your kitchen cupboard for years on end. They鈥檙e onto something. Nationally, wasted medicine is reckoned to cost the NHS 拢300 million per year.

This has the potential to repatriate billions to the public; billions you can reinvest, protecting the vulnerable in your communities, keeping vital services in place for hard-working people, furnishing the homes people need. So transforming services can make a real difference.

But the NAO report has given this work added urgency, shown this isn鈥檛 just the right way, but the only way to go.

The alternative, call it the Miss Havisham approach: refusing to change from a faded wedding dress; waiting for the return of a groom who is not coming back and who realised you were mad decades ago; feasting on former glories; reciting the taxing mantra; dreaming of taking not making; fooling yourself into thinking you can really have power without responsibility.

Referendum

These are times of great constitutional change. The thing that is pressing on our minds is the full implications referendum for local services: the Council Tax referendum. It鈥檚 not just a simple arbitrary replacement of capping. It was something much more subtle, and used correctly has the potential to be liberating to local government and public participation in budget making.

From April, 70% of local authority income will be raised locally. It is therefore important to ensure that it a balance between all available income streams. Decisions will be made locally.And that means you鈥檒l need to look to your residents for consent and support.

The public will always want the referendum threshold to be low with the automatic annual inflation rise a thing of the past. Does this mean that Council Tax increases after nearly a decade and a half of rapid expansion are over? Of course not. But they will have to be explained, justified and consented to locally.

Maybe the Council Tax has to be increased for a period to invest in order to make greater saving or to meet a particular demand. The flexibility of reducing Council Tax is always there.

Public expenditure should never be so impenetrable that only the anorak wearing expert understands it. Trusting the people is the very bulwark of democracy. If you need to raise Council Tax, just be straight with people. Take them into your confidence. Don鈥檛 treat them as fools. Be confident. People will listen to a sensible case.

But the voters aren鈥檛 stupid either. They will spot it if you try to pull the wool over their eyes. Like the democracy dodgers who try creep in under the radar, putting up their tax by 1.99%. Remember, if you freeze the government will pay a grant equivalent to 1% so the raise is only about 0.9%. If your officers tell you they can鈥檛 find 0.9%, my advice is: get new officers.

If your officers say it is only in the base for 2 years remind them that NOTHING is in the base at the start of a new spending review.

The smug incrementalist approach to local government finance just makes the problem worse. Anybody using loop holes, cheating their taxpayers: we will make sure they pay next year.

Levy boards

Local government has been at the forefront of this government鈥檚 transparency agenda, opening up the books, its spending and its meetings to public scrutiny. We intend to go further with the transparency code to free up more data, and ensure it is reused and republished for creative and innovative ends.

But some parts of local government have not been so open. There is a secret state in our country. A regime of local quangos who help set Council Tax, but have minimal presence or public profile. At best, their meetings are buried away on the darkest parts of the internet. At worse, they don鈥檛 even exist on Google. What do I mean? Unelected Council Tax levying bodies like:

• internal drainage boards
• integrated transport authorities
• the Environment Agency
• garden committees
• joint waste disposal authorities
• national parks authorities
• Inshore Fisheries and Conservation Authority
• conservators
• pensions authorities
• harbour and bridge boards
• port health authorities
• and the slightly sinister-sounding crematorium boards

I want to open up this secret state, and ensure their Council Tax setting is accountable directly to the people, and their policy decisions are open and transparent.

For example, in Manchester, their Council Tax this year is being forced up by a botched PFI deal signed by the unelected waste authority, a 25-year deal which means they are paying double the market rates to dispose of their residual waste, a deal which, despite funding to maintain weekly collections, has forced councils into a double whammy of both fortnightly bin collections for some of its residents and higher taxes.

These details are buried in the small print of Manchester City鈥檚 budget this year. A shoddy deal by a shadowy, unelected body, with no-one taking responsibility, and local taxpayers left with service cuts and higher taxes.

That isn鈥檛 local democracy. It鈥檚 municipal autocracy.

But we鈥檙e also talking the worst-case scenario. The fact is I know many of you get it already. That鈥檚 why we鈥檙e seeing 115 councils now freezing Council Tax from Derby to Dorset, Northampton to Norfolk and Wolverhampton to Worcester.

And the reason I enjoy coming to NLGN every year, the reason I enjoy meeting you, is because I know that tax and spend isn鈥檛 what really floats your boat.

But I have never doubted your commitment to public service.

Conclusion

So 2013 is your year. And we鈥檝e made sure that, unlike other parts of the public sector, you are not facing an additional 1% cut.

So be radical. Be brave. Be bold. Make good our great expectations. Follow in the footsteps of the great Hawksmoor, and you will not just remake your area but remould public services.