Local Government Finance (England) Special Grant Reports (Nos. 102 and 104)

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Rosemary McKenna (Cumbernauld and Kilsyth) indicated dissent.

Mr. Wilshire: The hon. Lady shakes her head as if that is not relevant but, my word, it is! People may be asked to do something on behalf of the Government—I went round that course in my local government days—and they do what they think is supposed to be done, in good faith, on a promise of being reimbursed. However, if there is no watertight definition of what will be refunded, they may discover afterwards that they have spent money that they do not get back. Who determines what is relevant expenditure is a serious

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issue. What appeal can be made against the person who does the determining if it is not done properly?

I assume that, having chosen Kensington and Chelsea, the Government will include the full salaries of the officers concerned when dealing with relevant expenditure. I should be grateful if the Minister would confirm that. If that is the case, it is right, but also curious, because when the Government determine what the salaries of local government officers in the south-east should be in general, they do not take into account the full cost of paying such officers or anyone else working in the public sector in the south-east.

Is relevant expenditure some mystical average figure for what it costs to employ someone in the country generally? That tends to be the case when there are problems with the SSA. Or are the Government accepting once and for all that people in the south-east, particularly London, must be paid a proper rate? If that decision has been taken in this case, it undermines the arguments about why that should not be done for all other local government services in the south-east.

I am also concerned about the phrase ''and associated administrative costs''. Again, those who want to get to the barbecue will think that I am being pedantic, but I can assure them from bitter experience that such a phrase can result in quite a few people coming to grief. Does it cover accommodation costs? Some might argue that administration and accommodation are two entirely different things. Are the costs of the office space being occupied by the people reimbursed? The council tax payers of Kensington and Chelsea provide it. Do administrative costs include secretarial support? Is the cost of recruitment included, as well as that of the salaries? More importantly, is the cost of supervision included? In my book that is all relevant expenditure, but it might not be in the definition that the Minister uses.

Annex B says that

    ''the Prime Minister launched the Performance and Innovation Unit Review of Adoption''.

If there was a problem, why was the Prime Minister required to intervene to deal with it? Why on earth did the Secretary of State not spot it, rather than waiting to be instructed by Downing street to do something about it? Is that an example of Downing street poking its nose into things, or do we have an incompetent Secretary of State? I should welcome the Minister's clarification as to which answer is correct.

The report states that the taskforce

    ''has a membership of experienced practitioners''.

We have been told how many and who they are, but I am interested in supervision, and who determines how many there will be. The unit is placed within local government, and local government is very much involved. In addition, relevant expenditure can be claimed back. Are the Government keeping control of the numbers, or does that rest with Kensington and Chelsea? We need to know.

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The report refers to who is appointed. That includes a director, but there is the potential for mayhem when a director might have to report to two people. Will the Minister clarify whether the director takes his instructions from, and reports to, the Department of Health, Kensington and Chelsea, or both? If the answer is both, what arrangements have been put in place to resolve disputes? It would be a tragedy if this initiative, which we all support, collapsed in acrimonious disputes between a local council and a Department of State. I sincerely hope that arrangements are in place to deal with the reporting relationship.

The report states on page 5:

    ''The authority may make a claim for grant monies only in respect of relevant expenditure incurred or likely to be incurred during the financial year 2002/2003.''

That in itself is not unreasonable, provided that the Minister can assure us that it does not preclude the taskforce from making commitments to made expenditure in a following year. If the money that can be repaid is for this year and there is a complete ban on thinking and planning for next year until it gets to next year's grant, it will be working with its hands tied behind its back. Everything that it does will be short term. Could the Minister confirm that although it can only have a grant repayment of what it spends this year, it can plan and commit ahead in the knowledge that it will get support for that?

Another aspect of the part of the report headed ''Claims'' puzzles me. A lot of paperwork has to be completed and handed in no later than 28 February 2003, but if I understand it correctly, the grant is made payable on 31 March. Under paragraph 4(2)(b) the poor person completing this paperwork is asked to make an estimate of relevant expenditure up to 31 March. I am curious to know why it does not say that at the end of the year someone will give us the figures. Why does the Minister want it a month early so that someone must guess at what the rest will be? If that guess is inaccurate, either a repayment will have to be made, or another lot of paperwork will have to be completed. Another meeting or two will have to be held and up will go the administrative costs. Why must we have these two separate dates for the same financial exercise? I should be grateful if the Minister could clear that point up for us.

I turn now to the ''Certified statement'' on page 6, which brings us back to the question of accountability. When the taskforce draws up the accounts of what it has spent, the council's chief finance officer has to certify them. That is probably right in accounting terms. However, what happens if a chief finance officer, who is independent and says that his job is to certify the accounts without fear or favour, disagrees with the definition of relevant expenditure laid down by the Secretary of State? That is why I query who is to decide. If the Secretary of State says that it means something, but a qualified accountant, whose job is on the line if he does not follow accounting law, disagrees, what mechanism does the Minister have to resolve the dispute?

If the Minister says that the reporting relationship between the director and the superior is centred on the

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Department of Health, there will be problems. There will be a director whose line management at day-to-day level is carried out by the Department of Health, but whose financial responsibility is to the chief finance officer of a local authority. If anything has a capacity for confused reporting relationships, misunderstandings, bickering and failure of projects, this arrangement has. I should be grateful if the Minister could think carefully about that.

I have only one point—or perhaps two—to make about the passage headed ''Other conditions''. Condition 7 says:

    ''Where any amount of grant has been paid other than in respect of the authority's relevant expenditure'',

it has to be repaid. As it is being paid on a certified statement that it is relevant expenditure, why do we need that provision? It is not as if one were paying a grant up front and hoping that in due course it would all be all right. One is getting these accounts in and then one is paying out. Condition 7 is needed only if the Secretary of State is going to overrule the chief finance officer whose professional job it was to certify that it was accurate. Why do we need the additional provision?

I promise that this is my final comment, Mr. Hood. Under paragraph 8 of annex C, the Government are creating a mechanism to deal with things that were not done correctly in financial terms. That amounts to the same point, which I will not repeat. It is a fining mechanism. If something goes wrong, money that has already been spent will be taken away, and the victims of that will be the council tax payers of that wonderful Conservative authority, Kensington and Chelsea.

6.29 pm

Jacqui Smith: The hon. Member for East Worthing and Shoreham asked how much would be paid out to reimburse councils for the taskforce. I made it clear in my introductory remarks that in 2001–02 the taskforce cost about £250,000, which is what we expect during 2002–03. Many of the questions asked by the hon. Member for Spelthorne fundamentally misunderstand the purpose of the special grant report, which is to provide a legal mechanism to allow the Government to spend money to support the taskforce hosted by Kensington and Chelsea. It does not give that authority an open cheque. It seems inappropriate to spend half the time lauding a particular authority, and the other half suggesting that it will somehow try to pull a fast one on the Government. The special grant report will give us the legal ability to fund Kensington and Chelsea to host the taskforce. All that enables us to cover some of the specific issues raised by the hon. Member for Spelthorne. The director of the taskforce will continue to report to the Department of Health on the functions that are being carried out. Kensington and Chelsea hosts the taskforce, so it seems appropriate that it should claim back the money that the taskforce costs it.

There are different dates in annex C because it is sensible for the authority claiming for the costs of hosting the taskforce to claim before the end of the financial year, to allow them to be paid in year. The hon. Gentleman also asked where the money was

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coming from, and suggested that the Treasury might have some pocket of cash for its friends. Everyone in the Department of Health is a friend of the Chancellor and the Treasury, but in this case, that is not what happened. The taskforce is being funded out of the £6.5 million that is held centrally for supporting adoption services over three years. We previously discussed that money, and that is the source of the funding for the taskforce.

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