Examination of Witnesses (Questions 300-319)|
TUESDAY 9 JULY 2002
Sir Paul Beresford
300. If you were a commercial businessman in
Stockport and you were growing bedding plants, you would be paying
the business rate, you would be probably paying council tax on
your property, etc, you would have overheads which a local authority
has not, you would be paying business taxation and yet you would
be competing with an in-house firm which was not required to produce
any of those and was not actually required to produce a profit,
how would you feel?
(Professor Stoker) How would I feel? I would find
it very difficult to put my feet into such a place.
301. That is what effectively this would do
to the businesses in the same field.
(Professor Stoker) If you have a general feeling to
encourage trading, I think that in addition to the constraint
that we have talked about already, which is the constraint that
in a way should have a demonstrated capacity in terms of delivery
in the area, I think that a second constraint might be is there
in effect such a dynamic market in that area that it is not appropriate
for an authority to be a player in that market. I think there
are many areas where local authorities could potentially trade
where in effect there is not a market and they are going to be
creating a market by their capacity to do something which will
be of benefit not only to their own citizens but also to other
citizens because they have access to a service which is done far
302. Should that restriction be put into the
Bill or not?
(Professor Stoker) Again, I understand, certainly
from the general rubric around the White Paper, that considerations
about market conditions are part of the regulations that are likely
to be put around the general power of trading.
303. Should they be?
(Professor Stoker) Yes, they should.
304. Did you want to add anything?
(Mr Travers) Merely to make the point, I think, Chairman,
that in a sense there are two quite discrete things caught up
here. One is the question of whether or not local authorities
should trade, and clearly to answer Sir Paul's point it seems
to me that we have experience in England, and indeed in Britain,
of ensuring as far as possible that local authorities where they
do trade with the private sector do so on fair and equal terms.
A lot of the experience under compulsory competitive tendering
will have ensured that is possible. Without trying to tease out
motivation that is not explicit, the motivation for this particular
reform has more to do with the Government wanting to offer prizes
for authorities that perform well and finding a way of motivating
and incentivising different behaviour at least as much for that
reason as it does to encourage trading. I think there are a number
of authorities that would like more freedom to trade but a lot
of the pressure on Government here is to find something to reward
305. Sort of gold stars?
(Mr Travers) There are a lot of stars around but this
is another possibility, yes.
306. What about Comprehensive Performance Assessments,
are they going to be a good way of getting freedom and responsibilities
for councils? You can both answer.
(Mr Travers) While we are on tzars and stars. The
Comprehensive Performance Assessments, like what we have just
been discussing, are clearly yet another way for the Government
to feel confident about letting go of a bit of power. As with
a lot of the Government's proposals in the last two or three years
there is clearly a sense that the Government gives the impression
that it would love to give more power to local government but
in the end does not quite trust local government enough to give
it much power. Things such as the Comprehensive Performance Assessments
are a way of the Government getting the Audit Commission in this
case to determine which authorities are most trustworthy, most
competent, and then giving them a little extra power and seeing
what happens. It is a very gentle release mechanism to try to
let local government have a little greater freedom than they have
had in the recent past without any great risk. I think that Comprehensive
Performance Assessments have to be seen against that background.
They will be extremely complex constructs in that they bring together
many performance indicators and judgments of auditors and inspectors
into a single distilled thing and they will only be as good as
they are good, if you see what I mean, as plausible as they can
be made by those making them plausible.
307. Do you think they will be understandable?
(Mr Travers) They will be understandable in the sense
that they will, in effect, mark local authorities 1, 2, 3, 4,
5 or 5, 4, 3, 2, 1 and in that sense they will be comprehensible.
I think the question is will they be credible or plausible, particularly
for the local authorities themselves. If authorities feel they
are being fairly treated I think it will be okay. I think the
real difficulty will be if there are significant rewards particularly
for those in the top rank or penalties for those in the bottom
then being on the margin and just in or just out, that will be
very, very important. The question of how that is calibrated,
if it is not done properly, will lead to legal challenges, there
is no question.
308. Are the freedoms offered going to be very
(Mr Travers) I think that would be a question, as
they say, better put to the Ministers who you will doubtless have
309. We will put it to the Ministers but have
you got a view?
(Mr Travers) Again, the experience of
the local Public Service Agreements, which went down this road
first, is not hugely and not entirely encouraging I think it would
be fair to say. I think there is a risk since all the incentive
mechanisms are there that just at the point that freedoms are
due to be given there could be a kind of loss of nerve, there
is always that risk.
310. Are the freedoms likely to be real then?
(Mr Travers) Again, to be fair to the Government,
in this legislation there is the potential on the capital side
for a significant increase in local autonomy but we will not know
until we get there whether it operates like that. You are asking
me to guess whether I believe what Ministers say. Of course I
believe what Ministers say, and I am sure they do, but
311. That is the question, will it happen?
(Mr Travers) The issue is will they actually get there
when that day arrives.
Sir Paul Beresford
312. All these inspections are horrendously
expensive. Would it be a sensible incentive for a reduction in
the inspections so as to select and rank and then use the expertise
of the Audit Commission and so on to actually concentrate on those
local authorities at the bottom that specialise in incompetence?
(Mr Travers) I suppose, to be fair to the Government,
in a sense the system will beAre you effectively saying
not to discuss the top
313. Get off the backs of the top 80 per cent
and concentrate on helping rather than penalising the ones at
(Mr Travers) Certainly that would be another way of
doing it. It would be more straightforward. It would involve the
Government in less aggravation, although I think the Government
shows every sign that it is cautious about becoming involved in
failing authorities. It would put even greater pressure on the
Government to get the involvement right because that is what everybody
would then be concentrating on whereas at the moment they are
concentrating also on the high performers, or they will be, as
well. It is clearly the poor performers that cause the most difficulty
for the people whose services are being damaged, no question.
As I say, I think part of the reason for doing this is the Government
is trying inch by inch to find a way of letting go of control.
314. Get off their backs with all the regulations
and inspections and so on.
(Mr Travers) That would be the simple way of doing
it but, as I said a moment ago, to be fair, this is not unique
to this Government and this Government does not feel that it can
in one leap
315. We could not quite get on the record the
movement of your eyes at that particular point. We noticed that
you were looking at Sir Paul.
(Mr Travers) Thank you for recording it for me, Chairman.
Sir Paul Beresford
316. However, I do remember doing a certain
amount of releasing particularly on CCT but that is an argument
for another day.
(Mr Travers) Indeed.
317. Professor Stoker, do you want to add anything
to this or do you agree?
(Professor Stoker) I agree largely with Tony. I would
just add three things. One is that the crucial thing is that the
assessment system is seen as legitimate by local government. Secondly,
that it is seen as simple and straight forward. Personally I would
like to see it as something that became the focus of local public
discussion and debate so it is not a strict score but something
which then gives you an opportunity to have a local discussion
about whether or not the authority could be performing better.
The third thing is that the freedoms have got to be real and substantial
otherwise it is not worth going through this amount of hassle
in order to create the league tables. I think the crucial freedom
then is freedom from inspection and demand for plans and regulation
and so on, precisely because it will free up opportunity. I do
not think it is a question of Central Government support but maybe
it will free up opportunity for local authority peer support to
those authorities that still clearly do need help.
318. If I was a local authority that had just
been relegated to the Third Division South would I not have some
justification in claiming that it was lack of resources that I
received as a council that meant I had provided poor services?
Until you can convince the public that each local authority is
getting a fair crack at the money, is there any point in having
these league tables or performance assessments?
(Professor Stoker) I think it is very difficult to
imagine that we will ever get to the state that you have just
described where everyone believes that they have got a fair crack
at the money. I would say that it opens up an opportunity for
a new debate because if you do get relegated both your friends
and your foes in your local community may point out that there
are other authorities that seem to have remarkably similar levels
of resources that are not in the same league as you, in fact are
in a better league than you, and you have got to explain why that
is the case. It seems to me we all know there is substantial differential
performance within local authorities, I do not think that the
local authority community itself really denies that. My immediate
feeling, certainly from talking to people in local government,
is that many of them were going to use this as a fantastic wake-up
call to try and persuade those forces of conservatism within their
own organisations that they actually do need to change and think
about operating in a different way.
319. Does anyone believe that these grading
systems are fair? Have you ever come across an academic who thinks
that the assessment of academic departments is a totally fair
(Professor Stoker) Oddly, yes, but that is because
I have always been in a five department, so it has always been
easy to convince myself of that. The reality is that people have
increasingly convinced themselves in the academic community that
the grading systems are fair. The reasons why we have been able
to do that is because in many ways the ownership of the grading
has been taken by the academic community. I think one of the good
things about the way the Audit Commission is trying to develop
its proposals is it is trying to buy a lot of ownership within
the local government community from the way in which the formula
and process is constructed to the way in which the activity is
undertaken. I agree that it may well take a while but, yes, I
could imagine circumstances where people would regard it as a
fair judgment and then the crucial question would be in two or
three years' time when they felt they had moved forward if the
judgment then indicated that, no, they had not.
(Mr Travers) I think the real problem, and Gerry just
hinted at this, comes not with the very good authorities and not
with the very bad ones where a glance at existing performance
data, the CIPFA figures and so on, will give you a very clear
proxy for whether an authority is good or bad, whether it is collecting
its council tax or not, what the public thinks of it, these indicators
work surprisingly well, I think the difficulty will be at the
borderlines between various categories, that is where the agony
will come and where there is a risk of legal challenge if authorities
feel they are being badly or unfairly done by. Sporting analogies
have been used and in a sense the Comprehensive Performance Assessment
system will be a little bit like trying to determine the Premiership
without playing a game. It will be trying to weigh up the cost
of the team, the quality of management and so on and trying to
work out who is best and who is worst that way rather than playing
the games with all the attendant difficulties.