Examination of Witnesses (Questions 1-19)|
MONDAY 8 JULY 2002
Has anyone got any declarations of interest
they want to declare?
(Mr O'Brien) I am a supporter of SIGOMA.
(Mrs Ellman): Vice President of the Local Government
(Mr Cummings) Local Government Association, National
Association of Councils.
(Mr Betts) I was a member of SIGOMA and Vice President
of the Local Government Association.
1. Right. If I can start the session by welcoming
everyone to the first session of the Committee's inquiry into
the draft Local Government Bill. Can I point out to everybody
that all the evidence we have received is now in a published form
and will be available on the web page if anyone wants to have
a look at it. I am very grateful, obviously, to all the staff
in the office who managed to get it done in record time because
we have got very limited time for this. Can I welcome the two
of you to today's session and ask you to introduce yourselves
to the Committee.
(Cllr Bruce-Lockhart) I am Sandy Bruce-Lockhart. I
am the new Vice Chairman of the Local Government Association.
(Mr Kinghan) I am Neil Kinghan, I am the Director
of Economic and Environmental Policy at the Local Government Association.
2. Do you want to say anything by way of introduction
or do you want us to go straight to questions?
(Cllr Bruce-Lockhart) I would like to say something
about the White Paper and the draft Bill in general.
3. Yes, by all means, not too long though.
(Cllr Bruce-Lockhart) No. The White Paper set out
to do three or four things. Firstly, as it says, to revitalise
local government, to improve public services, to strengthen community
leadership and indeed to strengthen local democracy. That is what
the Bill is about and therefore that is what we should be judging
it by. There is in some sense a tension between Central Government
and local government. Central Government, on the one hand, wants
to control public expenditure, it wants to have consistent standards,
local government on the other hand wants to assess local needs,
local priorities, have local diversity and through that to empower
local democracy. The thrust of the Bill is I think welcome in
the fact that it is a step in the right direction but from local
government's point of view the challenge is to give the freedoms
and the powers and the responsibilities to local government and
by doing so to release the energy and innovation amongst those
that work in local government. Therefore, we have seen so far,
I think, some of the freedoms and flexibilities but probably fewer
than we have seen progress on things like the Comprehensive Performance
Assessment. We welcome items such as the prudential borrowing
which is, particularly important but there are other aspects where
we have not seen progress. The LGA feels very strongly about the
need to reduce the amount of specific grant, to reduce the 66
plans and reduce the whole burden of regulation which stifles
the progress towards improving public services. I will leave it
there for a start and pick up the separate points as we go along.
Chairman: Thank you very much. Louise Ellman.
4. Taking the Bill overall would you say the
relationship between central and local government is changed by
(Cllr Bruce-Lockhart) Would I say it is improving?
5. Would you say it is improving? I asked if
it had changed but perhaps you would answer if it is improving.
(Cllr Bruce-Lockhart) I think that some of that is
covered by what I have said already. I think, as I have said,
it is a step in the right direction. There are a number of things
where we need more detail, and indeed there are a number of things
which local government would wish to see. I think the relationship
between central and local government has improved through one
or two initiatives which are outside the Bill. For instance, the
central and local partnership whereby Central Government Ministers
meet the LGA on a regular basis has undoubtedly been an improvement.
6. Would you say that the Bill shows the Government
is putting more trust in local government?
(Cllr Bruce-Lockhart) That is the key question, is
it not? Again, I think we can say it is a step towards that but
I think if we compare local government in the UK with most of
the rest of the Western democracies, local government in the UK
is probably more centrally controlled than anywhere else. We have
seen in the last ten years that control increasing. The LGA's
view is that we need a radical decentralisation and deregulation
and that has not happened yet. It needs to happen but, as I say,
this is one step in the right direction.
7. Would you say that this Bill puts more control
in central Government's hands or more in local government's hands?
(Cllr Bruce-Lockhart) That is a difficult question.
I think that what we have seen so far is the controlling side.
The big shift I think in the Bill from my perspective is the prudential
borrowing. I come from Kent County Council and the big challenges
there are probably around massive school building programmes,
road building programmes and so on where we need-£3-400 million
for school building programmes alone, we are simply not getting
that at the moment either through loan sanction or grant and the
ability to go for prudential borrowing would undoubtedly be a
help. That is helpful. What we are seeing, of course, is a tighter
control through inspection through Comprehensive Performance Assessment.
We have seen one side but not yet fully the other side.
Sir Paul Beresford
8. Can I put it to you that in fact a quick
look at this Bill it is actually shackling you to the wall. You
mentioned capital, that you are free to borrow but subject to
revenue, revenue is in the Government's hands almost entirely.
With capital receipts you can have these confiscated, even retrospectively.
There are huge restrictions on budget control, as outlined to
you. Your grant is no more predictable than it ever was, very
similar to the 1992 Local Government Act. Your business rates
are going to be pulled together so transparency has gone. Your
HRA subsidy which is by formula is now going to be subjectively
allocated so you cannot predict it. The same goes for your major
repair subsidy. Your housing rents, you are not a housing authority
but if you were they are set by Government control. Add to the
audit industries, the Audit Commission will come in and go through
a two week smash and grab raid and go away and decide whether
you are or are not good enough for the Bill. You are telling me
this is a step forward.
(Cllr Bruce-Lockhart) No, I did not, I said
9. How can it be local government without local
(Cllr Bruce-Lockhart) Can I be clear, I said it was
a step in the right direction
10. Which one?
(Cllr Bruce-Lockhart)towards what is needed
which is a radical decentralisation, deregulation and return of
powers to local authorities. Also I said I thought the UK was
the most centrally controlled. I am starting off by saying that
is what we need, a radical shift in freedom.
11. If it is a good step what is a bad step.
(Cllr Bruce-Lockhart) In the prudential borrowing
you have got one step in the right direction but I have said,
also, that we need to see many more freedoms and flexibility.
Sir Paul Beresford: When you say capital is
a step in the right direction, it is a subterfuge, it is a waving
of the magic wand. Your revenue is tied up. I would ask you to
have another look at Clause 4.
12. Why not all have a second look at Clause
(Cllr Bruce-Lockhart) One of the most important things
the LGA have asked for on the revenue side is to go back somewhere
towards where we were which was five years ago, four per cent
of our revenue expenditure was on specific grant, and that has
risen now to 12 per cent. The LGA is totally opposed to that rise
and would like to see that returned. On the capital side, on the
prudential borrowing, we do not know the details of that yet.
The LGA says that sounds good but we want to see the detail first.
13. Just to follow on that point, you have expressed
some concerns about Clauses 2 to 4, the issues around the prudential
guidelines and how they might be constrained by the Secretary
of State. Would you like to highlight the main concerns you have
around that problem?
(Mr Kinghan) Can I just add to what Councillor Bruce-Lockhart
said about the capital provisions generally. They do include constraints,
and I will come on to those, but they do represent a shift from
a system in which local authorities have been very heavily constrained
over what they may borrow for many years and the power to borrow
beyond the levels which the Government has previously set for
individual authorities will be a step forward. That is why we
actually welcome this new system. It does not go nearly as far
as many in local government would want but we live in a world
where we have to move on from where we are rather than go to where
we ideally want to go to. The points that we particularly raised
about Clauses 2 to 4 are about the rules concerning loan agreements
where we think the powers such as Government is taking go wider
than may be necessary. In particular, the Government presents
the national limit as a reserve power and it is the case that
some reserve powers do not get used, the reserve capping powers
are not being used at the moment, but on the other hand a lot
of things that were introduced as reserve powers by the original
capping regime do tend to get used. We would rather that those
powers were not taken in that form. If the Government insists
on retaining the reserve power then any reassurance it can provide
about how rarely it would use it would be most welcome. I think
there are other more detailed provisions of Clause 4 which we
have addressed but those are the main points that we are concerned
14. In effect, Clause 4 can totally remove the
effect of the prudential guidelines if applied by the Secretary
of State who comes along and says "you have all got the freedom
to borrow locally but collectively this is how much you can borrow"
and that is the end of the prudential guidelines.
(Mr Kinghan) There is that danger, absolutely. That
is why we would rather see that power not expressed in that form
or us given as hard an assurance as possible that it should not
be used in that form. It is interesting that
15. How should it be amended specifically?
(Mr Kinghan) The best way to amend it would be to
take it out, to remove the reserve power.
Sir Paul Beresford
16. You were addressing part of your answer
to me specifically. Local authorities are into long-term borrowing
and to do that they need to have the revenue aspect of it.
(Cllr Bruce-Lockhart) Yes.
17. They need predictability of that and most
of the revenue, directly or indirectly, comes from Central Government
with no predictability which cripples the freedom to borrow.
(Mr Kinghan) A large part of it does, that is absolutely
18. So the combination of the two means that
you are strapped to the wall by both hands.
(Mr Kinghan) Obviously it is not for me to defend
the Government's position here and no doubt you will want to ask
those questions of Government ministers. We start from where we
are which is that there are tight controlsSorry?
19. It is bad getting worse.
(Mr Kinghan) I do not think it is getting worse. I
think that the power to borrow beyond what the Government takes
the view is absolutely necessary is a desirable one. Yes, revenue
is controlled and we would far rather, as Sandy said, have significantly
more freedom to control our own income, our own revenue, and we
hope in due course that will come. At the moment we have a degree
of freedom in relation to the council tax, not nearly as much
as one would wish. As you say, a lot of the revenue comes from
Government. Given the choice between a control which says "here
we will say exactly how much you can borrow" and one which
says "you can borrow a bit more but you have got to pay for
it yourself out of scarce resources", the second of those
choices may not be an enormous step forward but it is a step forward.