Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witness (Questions 320 - 339)



Dr Pugh

  320. I hate to be seen as a supporter of the CCT regime but the CCT regime—and I have had experience of both—had certain advantages over Best Value. One was the de minimis rule, so a very, very small part was not subjected to this enormously cumbersome bureaucratic Best Value assessment and the second major thing is that local authorities could concentrate within CCT on the departments that they themselves deemed to be performing less efficiently. Best Value does not allow them to do that. Best Value assumes that everything right across the board is examined in immense depth and in an amazingly bureaucratic way and therefore there are appreciable costs of conducting Best Value whereas the costs of introducing CCT were possibly less.
  (Mr Raynsford) I do not accept your description of Best Value. I have said that we want to achieve a streamlined system and we are working to do that, but the purpose of Best Value is to raise the standard of service and, if you are a local council taxpayer, you want to be confident that all the services the local council deliver to you are run efficiently and well and therefore it is right that there should be measures to consider the performance of the local authority in all its responsibilities. Clearly it is for the authority itself, with guidance from the Audit Commission, possibly with help from the IDA and other support bodies in local government, to consider how it can take the most effective action to deal with those services which are least efficient and also to ensure it is giving high priority to those services which its local customers say they value most. Those are legitimate and proper democratic decisions, but I do not think it is right to say that one should have a framework where it is perfectly possible for an authority not to deliver decent standards of service across the board.

  Dr Pugh: Nobody is saying that.

Ms King

  321. May I ask when the Best Value review you have mentioned is going to be published and also if you can outline what the main issues are to emerge. You mentioned one of them and while I say that what you said about the two per cent efficiency cut is entirely proper and reasonable and I agree with what the Government is doing wholeheartedly, could you say if there are going to be any potential changes in legislation which might help reduce any unfairness in terms of conditions for staff when they are transferred.
  (Mr Raynsford) The Best Value review is looking specifically at the current framework in relation to a number of issues including the one that you have highlighted about the impact on staff who transfer to another provider. We have said that we will consider evidence on the emergence of a two-tier workforce and if there is evidence that is conclusive and that has an adverse impact, then we will consider appropriate remedial measures. It just so happens that this week the meeting of our review group is due to deal with that particular issue so I am not able to say more about it. In the previous meetings, we have had three very productive meetings; these have been held jointly involving representatives from the trade unions, from local government, from the Audit Commission, from the private sector and from the voluntary sector and, in the course of those discussions, we have covered a number of important issues about establishing a level playing field, ensuring that the focus is on quality rather than simply cost and ensuring that it does work effectively as a means of raising standards because that is our overriding objective. So, the meetings have been very positive indeed to date. We have some hard work still to do before I submit the report to the Secretary of State by the end of the year which is the timetable he has set me.

Mrs Dunwoody

  322. Have you taken any evidence from the transport unions who have very precise evidence of what happens when you do the transfer of workers from one nationalised industry to private industry, which immediately not only wrecks their terms of employment but also, by the simple device of breaking that contract and re-employing them for a different unit, manages to change their levels of pay, their conditions of work and their pension entitlements?
  (Mr Raynsford) The review is solely concerned with Best Value in relation to local government.

  323. However, you did say you wanted evidence.
  (Mr Raynsford) But the Transport & General Workers' Union is represented on the review, and parties have brought their wider experience to the review. I have to say, we have seen quite interesting evidence of circumstances where it has been found possible to do particular jobs in a better manner, to deliver a more efficient outcome, some of which have involved an entirely public sector solution, some of which have involved a partnership with the private sector or voluntary sector. Our approach is very much that there should be a level playing field without a predisposition to one particular type or model of service delivery.

Mr Betts

  324. Can I pick up on the level playing field? There is quite an important issue around which often gets raised. One area where there clearly is not a level playing field is in the ability of the public sector to raise capital. A lot of that is necessary to put in an appropriate bid for a service, whether it be in investment, in plant and equipment, or vehicles, or computer systems. The whole benefit system in Sheffield was privatised. One of the reasons was that the local authority had a choice between investment in its computer systems or using the limited capital it had to spend on other things. The Secretary of State at the Labour Party Conference gave an inkling that there might be a freeing up of local authorities' ability to raise capital to invest. Is that one of the issues that has been addressed as part of this Best Value process?
  (Mr Raynsford) It is, and it is one of the issues on which we expect to say more in our Local Government White Paper. We did consult on the possibility of replacing the current borrowing approvals regime with a prudential regime, in our consultation paper on local government finance published more than a year ago. We will be setting out how we intend to take that forward in our Local Government White Paper. The position, I should clarify it, would involve local government being freed from a requirement to seek borrowing approval, but instead there would be a prudential regime to avoid authorities undertaking a level of debt that they would not be able to service. So it would not provide a completely open door for widespread borrowing.

  325. But they were raising money actually to invest in things, to make improvements, actually to make savings in some cases.
  (Mr Raynsford) It certainly would allow that particular option, and that would, in our view, be widely welcomed by local government.

Sir Paul Beresford

  326. On a related issue to that, you are reported, I understand, if I remember correctly, in some of the local government journals as going for removal of municipal trading restrictions on local authorities, is that correct?
  (Mr Raynsford) Yes. We also believe it is right that as part of both the creation of the level playing field but also part of the general framework of freeing local government from unreasonable restrictions, that there should be greater opportunities for local authorities to trade, and that that should also be governed by similar rules relating to efficiency in performance. So there will be greater freedoms for those authorities that have demonstrated particular abilities in that field.

  327. So if we continue the level playing field, presumably they will be divided into units, they will have corporation tax applied, they will have to pay business tax and so on and so forth, or would that be a little unfair?
  (Mr Raynsford) There will inevitably be different standards of performance that will apply in the public as against the private sector. The aim will be, within those patterns, to ensure that were a local authority is trading, it is doing so in an efficient way. That is measured against the performance of other service deliverers.

  328. That was not quite the question. The question was really to bring in the level playing field. Here we are with municipal trading, with the prospect of a local council supported by business rates, supported by simple taxation, competing with the people who are actually paying for it and not contributing to that themselves.
  (Mr Raynsford) I think you have to say that that exists already in the voluntary sector which provides a number of very important services, but where it is not subject to the same taxation regime as the private sector. These are differences that exist and they reflect the nature of different organisations. What we are seeking to do is to try to create a level playing field without the kind of biases that currently prevent sensible activity that is to the benefit of the community.

  329. Local government expenditure is something like 25, 26, 27 per cent of government expenditure. It rather puts charities into a shadow. I do not think the comparison is valid.
  (Mr Raynsford) The comparison is entirely valid, because there is a large number of voluntary organisations that do sterling work in many fields. You will be aware of the housing field where housing associations now represent a very, very large proportion indeed of the total housing stock and they are voluntary organisations.

  Chairman: Can I just remind the Committee that we have a fairly lengthy set of questions, and I hope we can reduce the number of supplementaries that we are getting. Christine Russell.

Christine Russell

  330. Minister, can we move on to the cost on inspection. Do you actually know how much is being spent on inspections not only by the Audit Commission but by all the other inspection bodies too, and including local authorities who obviously spend a great deal preparing for those external inspections?
  (Mr Raynsford) I can supply you with the full cost, but I cannot off the top of my head give you the figures for the total cost of all the inspections including Ofsted and the Social Services Inspectorate for which I am not responsible. What I can say is that it is our objective to try to achieve a more coherent and more integrated framework, so that the various inspectorates are working to broadly comparable standards and to reduce the unnecessary burden and bureaucracy of inspection, which is very much part of what I was talking about earlier about how we could simplify and streamline the Best Value review, with less inspections, again relating to the performance of a local authority, so a light-touch regime applying to those authorities that have demonstrated a high level of performance. We expect to say more about that in our forthcoming White Paper.

  331. An academic study suggested £600 million per annum. Would that figure surprise you?
  (Mr Raynsford) That would not surprise me at all.


  332. Do you think it is reasonable to spend that much, then, on inspection?
  (Mr Raynsford) I think it is reasonable to ensure high standards of performance, and that the effect of inspection in a range of different areas—I just mentioned education as one—has undoubtedly played a crucial part in helping to improve performance standards. What we have to do is to get value for money and to ensure that the people of our country are getting high standards of service from local government.

Christine Russell

  333. So you are satisfied that in general all the inspection is improving standards?
  (Mr Raynsford) Yes, I am. I would not pretend for a moment that every inspection is successful. Inevitably there are some that do not do as well as others, but I do believe the process as a whole is a very competent one and it is helping to raise standards.

  334. Can I focus in particular on the Audit Commission and whether that is providing good value for money. Is there any real evidence that following an Audit Commission inspection there is any real evidence of a failing local authority improving thereafter?
  (Mr Raynsford) There is a lot of evidence, and the Audit Commission is increasingly publishing evidence showing the way in which local authority services are responding. What we are keen to do is to sharpen that process, to ensure that there is more focus on outcomes and less on the process itself, to get away from a slight tendency towards a tick-box approach towards inspection and more of a focus on outcomes that really will benefit local people who will get improved services. That is very much our intention.

Sir Paul Beresford

  335. How much has the staffing level of the Audit Commission gone up?
  (Mr Raynsford) I cannot give you precise figures off the top of my head, but I can certainly write to you with those.

  336. You would not be surprised if it were more than double?
  (Mr Raynsford) The Audit Commission has taken on a very substantial additional range of responsibilities to include Best Value and Best Value inspections as well as its traditional auditing role.

Christine Russell

  337. This Committee in the past recommended that really more emphasis should be placed on peer review and that inspections themselves should be better co-ordinated. Are we ever going to see this happening?
  (Mr Raynsford) Yes, we believe there is an important role for peer review. I have discussed this regularly with local government and with the IDA which is doing very good work in this field already. Most people in local government I speak to feel that both are necessary, that there is a need for more external inspection which can so often be more rigorous than a peer review and that there is the need for the supportive approach which those who are currently working in other local authorities are often best placed to give to help organisations that are having difficulties in improving their service.

  338. Could I move on to those councils that the Audit Commission describe as "underperforming". I think that is 15 per cent of local authorities. Have you actually been provided with any analysis of what are the characteristics of those 15 per cent councils?
  (Mr Raynsford) I have been deluged with information which measures local government performance in a whole variety of different indicators. What the Audit Commission is seeking to do, quite rightly, is to draw together the key ones that give above all a sense of the corporate health of a department, because while you can get detailed figures about the performance of individual services, very often a failing service is the result of a corporate failure by the authority as a whole, and it is that area of the corporate health of the local authority which is going to be one of the key focuses for proposals in our Local Government White Paper, building on the existing Best Value regime and the existing inspection regime which inevitably measure the performance of specific services. So those three elements we want to bring together to ensure that we get a picture of the performance of local authorities. Can I add that the White Paper will spell out the categories of performance that we expect to use in the future, and this will define the difference between the levels of performance achieved by local authorities, but it would not be right to say that 15 per cent of authorities are treated as failing.

  339. Can I try to draw you out on whether there are any characteristics that are appearing here. I would particularly like you to comment on whether size matters or not, because some of the reports I have read certainly seem to indicate that some of the authorities that are really struggling to perform well are those very small district authorities.
  (Mr Raynsford) I think size does have an impact. One of the interesting conclusions that we have drawn is that among district councils there is probably the widest range of performance, with some doing very well indeed, others having difficulty. We certainly think that it is going to be important for local authorities to look at ways in which they can work with others, and that will include links between neighbouring districts or links between districts and counties, to ensure more efficient service delivery. If I can move into the area of introducing electronic government, which I think is hugely important, that is an area where it is quite clear that the small authorities simply cannot go it alone, they must work with others, and we are encouraging that.

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