Local Government in the Welfare Corporate State
| Date | 01 July 1981 |
| Published date | 01 July 1981 |
| DOI | http://doi.org/10.1111/j.1468-2230.1981.tb02752.x |
| Author | Martin Loughlin |
LEGISLATION
LOCAL
GOVERNMENT
IN
THE
WELFARE CORPORATE STATE
THE
scale of State activity has increased dramatically in the last
century. One index of growth is the fact that the ratio of public
expenditure to gross national product has risen from 9.4 per cent.
in 1870 to 60 per cent. in 1975.’ This growth in expenditure has
resulted from the emergence of the welfare corporate State in
which the State has assumed responsibility for management
of
the
economy and the provision of programmes for the promotion of
social welfare. Local government has played a key role in this
development. Between 1870 and 1975 its share of G.N.P. increased
from
3
per cent. to 18 per cent.2 and by the mid-seventies local
government was spending €15,000 million
a
year, was servicing
a
capital debt of €25,000 million and employed nearly
3
million
pe~ple.~ The period between 1965 and 1975 was particularly signi-
ficant as it was marked by a high growth rate in local government
expenditure combined with an unprecedented increase in its share
of G.N.P. and was also the occasion for intense official inquiry into
the structure, management and functions of local government.
Nevertheless, in spite of this dramatic increase in the
scale
of
State intervention, social problems, such as unemployment, bad
housing and poverty, remain. As
a
result, the period since 1965 has
also been
a
period of critical examination of the
nature
of State
intervention. The debate in essence revolves around the issue of
whether State intervention operates to aid the market or act as an
alternative to it. Perhaps the two key areas of this debate are
(1)
the relationship between public expenditure and private investment
and accumulation’ and (2) the functions of public service pro-
gramme~.~ The signs are that in the last five years
a
certain vision
as to the scope and role of the public sector has achieved domin-
ance. The Local Government, Planning and Land Act 1980 pro-
vides
a
clear indication
of
its implications for local government.
The Act has been described as
a
“
legislative farrago (of) 19 Parts
and 34 Schedules of which 12 are themselves divided into between
1
Figures from
A.
Peacock and
J.
Wiseman,
The Growth
of
Public Expendirure
in the United Kingdom
(1967),
p.
42 and
J.
Dearlove,
The Reorganisation
of
British Local Government
(1979), p. 223.
2
C. Foster,
R.
Jackman and
M.
Perlman,
Local Government Finance in
a
Unitary State
(19801,
p.
78.
3
Report
of
the Committee
of
Inquiry
on
Local Government Finance,
pp. 13-14,
Cmnd.
6453
(1976) (hereinafter the LayAeld Report).
4
The iye has been referred to variously as “overload in government” (see
A.
King, Overload Problem;,
of
Governing in the 1970s
”
[
19751 P.Q. 23) and
&‘the fiscal crisis
of
the state (see J. O’Connor,
The Fiscal Crisis
of
the State
(1973) and Dunleavy,
Urban Political Analysis
(1980),
pp.
65-70).
5
For a selection on the functions of urban policies, for example,
see
R.
Pahl,
Whose City?
(2nd ed., 1975);
R.
Hambleton,
Policy Planning and Local Govern-
ment
(1978) and P. Saunders,
Urban Politics
(1979).
422
July 19811
LEGISLATION
423
2
and 14 parts of their own. It is really
5
Acts.” It is suggested,
however, that the Act, far from being
a
hotchpotch, provides a
fascinating insight into the effects of this dominant vision on the
two key areas of debate. Through its provisions for reform
of
(1’
local government finance and
(2)
the policies and system of urban
land development the Act provides a detailed indication of the role,
nature and purposes of State intervention in accordance with this
dominant ideology.
1.
Local
Government
Finance
The dramatic increase in local government expenditure between
1965 and 1975 was met largely by grants from central government
and
as
a result the proportion of expenditure financed by rates
remained at an almost constant proportion of G.N.P.7 In fact in
that period rates as a proportion of personal disposable income fell
from 2.4 per cent. to
2
per cent.8 This trend was of great concern
to central government as it threatened to jeopardise the sophisti-
cated system of public expenditure control introduced by the
P.E.S.C. system in the early sixties. This is evident from the
Treasury’s view in 1969 that as local expenditure is a significant
part of total public expenditure it is
“
inescapable that central
government and the Treasury should be increasingly concerned
with the need for forward planning and effective control of the
movement of local authority expenditure as
a
whole.” Local
expenditure was brought into the P.E.S.C. system in a more
coherent way with the establishment in 1975 of the Consultative
Council
on
Local Government Finance headed by the Secretary of
State for Environment and consisting of representatives from the
department and from local authority associations. This forum for
negotiation and persuasion has been successful
in
assisting the
Government in controlling expenditure but the fact remained that
the financial powers of central government in relation to local
authorities were designed primarily to aid authorities and were
rather blunt instruments for fiscal control.
The trigger for official inquiry into the system of local govern-
ment finance was the record rate increase of 1974-75 resulting from
the coincidence of the high costs of local government reforms with
a
period of high inflation. The Government’s reaction was to set up
the Layfield Committee
of
Inquiry.lo The reforms to the system
of
local government finance have their origins in this period. Local
authorities obtain finance to operate their services through four
6
C. Arnold-Baker,
“
Local Government, Planning and Land Act 1980
*’
(1980)
131
New L.J. 1132.
7 Foster
ef al.. supra,
note 2.
8
Dunleavy.
supra,
note 4,
p.
63.
Written Evidence
of
H.M.
Treasury to the Royal Commission on Local Govern-
ment in England.
Cmnd. 4039.
pp.
4-5.
(Quoted
in
J. Dearlove,
supra,
note
1,
at
p.
243).
10
Supra,
note
3.
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