Examination of Witnesses (Questions 440-459)|
THURSDAY 11 JULY 2002
440. And when we come to look at this review
we have been promised about the balance of funding between central
and local government and the detail about where the money comes
from, is it actually going to achieve anything real or is it just
like some of the comments, that when we get down to the detail
it is not likely to amount to much?
(Ms Sillett) It is hard to say. We cannot second-guess
what your colleagues are going to come out with, but I suspect
within the Deputy Prime Minister's Office, and he and Ministers
would want to see a change in the balance of funding. I am not
sure about other departments, whether they actually are indifferent
to it, but it is how that is going to be achieved. Clearly the
easiest and simplest way to do it would be to bring it back to
a localised business rate, which it does not look as if this Government
is prepared to do, so given that, I do not think we are particularly
optimistic about the outcome of a review which is reviewing evidence
which we have seen over the last 50 or 60 years.
441. And that will make that less likely, in
your view? Linking the NMDR to the support grant in one stream
is likely to make it less likely for the business rate to be localised?
(Ms Sillett) If one was cynical, one would say that
is part of the reason for that to happen, but maybe it is an accident,
but it is clearly something that has happened which can be unpicked,
but it does not look as if there is any intention on behalf of
the Government for doing that or they would not have gone for
that merger which is not totally necessary, but it seems to me
that is a marginal point, it is not substantive. What is substantive
is, is there a will to do it and is the Government looking at
means to do so, and there may be other ways of doing so which
are not about localising the business rate, and how much is the
Government prepared actually to risk changing the system because
there is a reason.
442. On the issue of ring-fencing, which is
another matter of concern in local/central relationships, could
there be things included in the Bill which would reduce the ring-fencing
and have you got particular issues you would like to see included
(Ms Sillett) I am not sure the Bill is necessarily
the right place. Again I think it is about political will and
it is probably about some tensions between different government
departments more than it is about the workings of a Bill. It does
not necessarily need legislation. It may be within the prudential
framework but until we know how the subsidy mechanisms are going
to work for that, I do not think we can be clear whether there
is going to be more ring-fencing or less ring-fencing for capital
investment in terms of revenue funding. I think it is an outstanding
issue. It is an issue that is clearly outstanding from the White
Paper. I do not think it is necessarily something that is directly
about this Bill. I am not sure it could be in the legislation.
I think it is about government departments being committed to,
firstly, taking seriously what they were saying in the White Paper
about testing, more ring-fencing or new ring-fencing against certain
criteria and it is about particularly, I think, Health and Education
really wanting to do that. I think at the moment there is no sign
that that is the case, so I think it is about politics, I do not
think it is necessarily about legislation.
443. When you talk about the balance for raising
revenues between local government and central government, where
should the balance be?
(Mr Reed) The balance between central and local funding?
(Mr Reed) We would certainly like to see it be above
50 per cent. At the moment it is 25 per cent
445. And how would local government raise that
(Mr Reed) Well, there are a number of means to do
it. They would either return the business rate to local level
or they would have a combination of other methods, such as taxes
which are used in other countries, tourist taxes, hotel taxes
and so on. In the Commission we also asked that there be some
consideration in the future of the possibility of local income
tax, but however it is done, we believe that local democracy will
never be strong in this country unless
446. Why is that not included in your evidence?
In your evidence you have five lines on local government finance.
Now, you are giving us examples as to how you believe
(Ms Newman) It is the LGIU evidence you have got.
447. Yes, but I am looking at the Commission
on Local Governance submission. Mr Reed is now saying that there
are examples of raising taxes. Now, obviously if we are to consider
that, we want examples and I think it should be included in your
evidence unless you would like to send us a paper on that.
(Mr Reed) We would be quite happy to give you a paper
on that. We had 66 recommendations in our report, so obviously
we had to select a few for the evidence. We could not provide
the full report, but we will leave the full report with you and
we will be very happy to follow up with any written evidence that
448. Fine. In your introduction, you were not
happy with the Comprehensive Performance Assessment. Should there
be a right of appeal?
(Mr Reed) There certainly should. We understood that
there was going to be a right of appeal. At the moment the only
appeal mechanism, at least that is my understanding of it, is
internal moderation through the Audit Commission. We think that
is unsatisfactory and there must be a more transparent way of
challenging the final categorisation because a lot rides on the
final categorisation, not just the freedoms and flexibilities,
but also the status of the authority in the eyes of the electorate,
so yes, indeed.
449. We heard from Westminster earlier that
they thought that the Comprehensive Performance Assessments would
paralyse the local authority for a month or two.
(Mr Reed) Yes.
450. In your view, is this set-up hugely onerous
for local authorities? Is it going to do as Westminster suggest
(Mr Reed) It is massively resource-intensive and,
to give you an example because you have been pressing for particular
examples, the Chief Executive of East Sussex spoke at the LGA
Conference the other week and she said that she had kept a diary
of how much time she, as Chief Executive, during June spent on
inspection-related matters. Her diary indicated that she had spent
87½ hours during one month on inspection-related matters.
She quite rightly asked the question, "Do you think that
the ratepayers in East Sussex want me to be spending that amount
of time on inspection-related matters?" We believe the whole
thing has got out of kilter and needs to be addressed.
451. In your evidence you argue that inspections
should be able to ensure compliance with the law and constitutional
principles. How closely do the inspections ensure compliance?
(Mr Reed) Well, everybody agrees that central government
have a right to ensure that there is a certain quality of standards,
but we are now in a situation where the individual minutiae of
each service and the targets being achieved in each service are
being examined by numerous government inspectorates and it is
not just the Comprehensive Performance Assessment schemes, but
all the other inspectorates that are involved as well.
452. What do you believe the Government can
do to free the local authority from unnecessary inspection whilst
ensuring that poor-quality services can be identified and improved?
(Mr Reed) We certainly would not say that there should
not be some element of external inspection and challenge to what
local authorities do. It is just that the whole thing has now
been taken up by a massive bureaucracy and this needs to be addressed,
453. What would you do though? How would you
free local government?
(Mr Reed) We should rely far more on self-assessment
which is part of the CPA, but only a part of it. We should ensure
that it is only the extremes which are being assessed by government,
so where there are situations of extreme failure is where the
Government actually step in. The vast majority of local government
is quite able, with the current systems that are provided, for
example, by the Improvement and Development Agency, to organise
and improve its own services. I think that everybody now is concerned
about improving services across all political parties. This inspection
regime is not helping us to do that. In fact it is distracting
us from providing the home helps and so on which everybody knows
454. And yet you argue that the power trade
should not be related to a local authority's performance.
(Mr Reed) The power of trading?
(Ms Newman) Basically we think it is unworkable and
it is a very destructive way they have set it up at the moment
because what they are suggesting, particularly within the current
categorisation, you have an overall categorisation for a local
authority, then in every local authority, I think you know and
we know, there are some areas of excellence and in those areas
of excellence there is no reason where there are benefits to the
local community that the local authority should not be allowed
to trade. The only way they could sort out those specific areas
of excellence within the current framework is to inspect every
service and give every service a ranking so that you would decide
which was excellent, which was not, which would be allowed to
trade and which would not. That becomes a nonsense. You can have
a specific reason in a small area where you can really see how
trading could benefit your community where you are doing good
work. The Government has argued that that would be a distraction
if they allowed that to happen in a poor-performing service and
you could argue that a local authority is at the very bottom of
the league in the very lowest category, that maybe for a period
while it gets its act together it should not be allowed to trade.
In all the other categories there are going to be areas of excellence
and what we have found is rather like if you praise someone, if
you give them the ability to improve, they go on to improve in
other areas and if you give them the freedom and flexibility to
trade in those areas where they are doing good work and they themselves
know they are doing good work and they can justify it in terms
of the well-being of their community, the 2000 Act, then there
seems to us no reason why you should prevent the residents of
that area benefiting from these services that local authorities
456. Do you believe that the Bill should have
included proposals to streamline best value and, if so, how could
that be achieved?
(Ms Newman) Well, they are proposing to streamline
best value. I do not know whether it requires a legislative framework
to actually do that.
457. The question was, should the Bill have
(Ms Newman) I think it could be done outside the Bill.
One of the issues we have
458. You said it can be done in regulations,
so you prefer regulations to seeing things on the face of the
(Ms Newman) Guidance, if you like. One of the issues
is that the current Bill is actually heavily dependent on the
regulations. The impact it will have in these trading and charging,
what the restrictions are
459. That is why, as far as I am concerned,
I prefer to see things on the face of the Bill, but you are implying
that as part of best value, instead of having it on the face of
the Bill, they should be in regulations.
(Ms Newman) I think we believe that you should be
seeing the regulations at the same time as you are seeing the