Local Government Finance (England) Special Grant Report (No. 121) on Invest to Save Budget Round 5 Projects, Local E-Government Programme and E-Voting

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Mr. Philip Hammond (Runnymede and Weybridge): After re-reading the Hansard report of our exchanges on the Floor of the House last Thursday, I am tempted to say, ''Thank you, George,'' but I shall resist the temptation.

Conservatives always have concerns about ring-fenced grants, especially when they involve relatively small amounts of money. However, the individual amounts listed in the report are larger than some that I have had to consider in these Committees. Some of the broader, general aspects were debated in some depth when similar special grants were considered last year. The principal issues have not changed very much, but I wish to put some specific questions to the Minister.

The first question will take the Minister back to a debate that he was involved in last week on another

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special grant report. Several of the authorities listed as recipients in the report were classified as excellent in the comprehensive performance assessments. Two that leap off the page are Westminster and Hampshire, but there are others. Will the grants be ring-fenced for such authorities, and will they be subject in the same way as other authorities to the detailed conditionality attaching to the grants? I thought that one of the points of being deemed an excellent authority was to escape from micro ring-fencing and the conditionality attaching to individual grants.

Can the Minister tell us something about the number of authorities that bid for funding under each of the categories? That issue was raised last year. During the debate, the Minister undertook to check that information. Unfortunately I do not know whether that was done, but it would be useful if he could give us a flavour of whether we are talking about 10 authorities out of 50, or 10 authorities out of 12.

I want to consider the individual grants and part one of annex A—the invest-to-save budget. I raised this point when I intervened earlier on the Minister's speech. What is happening in the Cabinet Office and the office of the e-envoy is relevant, because the part one grant is a Treasury and Cabinet Office sponsored competition and it is accepted that there are some budgetary difficulties in the Cabinet Office, where there has been a substantial overspend. My understanding is that the Treasury is now imposing a rigid discipline on Cabinet Office spending, and that that involves a substantial reduction in the activity of the office of the e-envoy. Will the Minister tell us whether his understanding, as a Minister from the Office of the Deputy Prime Minister, is that there will be any impact as a result of the Cabinet Office problems on the invest-to-save budget for future rounds? Will there be any feed across from the Cabinet Office budget problems to the grants?

I move on to the part two grant—the local e-government national project's grant. The lead authorities are listed. There is reference in the detailed explanations to other authorities working with the lead authorities. My understanding is that the lead authorities are conducting the work on behalf of the broader local government community. Will the Minister tell the Committee—specifically in terms of the money, rather than the benefit of the work—whether the money will trickle down to other authorities from the lead authority, or whether the lead authority is charged with spending the whole of the budget and it is only the outputs that will trickle down to benefit other authorities?

I think that I am right in saying that unlike in the other categories there has been an underspend in relation to the maximum amount that was earmarked as available for 2002–04, which we are told was £75 million. £38.4 million was allocated last year and £20 million was allocated this year, plus another £2.9 million to West Sussex county council. If my maths serves me correctly, that suggests a shortfall of some £10 million on the overall grant that was available. Does the lack of allocation of all the

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available grant indicate a lack of bids, or does it indicate a problem with the quality of the bids that were received? Has the ODPM judged that some of the bids were of sufficiently poor quality that, despite the availability of funding, it could not properly fund them?

What is the Government's current estimate of the percentage of local government services that are e-enabled? We had a figure last year, and I would like to know what progress the Minister thinks that we have made during the year. Given that we have only two years to go until the threshold year of 2005, does he still believe that from whatever percentage he is about to tell us to 100 per cent. in two years is really an achievable target and one that the Government feel comfortable with? Does he have any data to indicate whether local authorities feel comfortable with it? At the time of the last such special grant report, a National Audit Commission survey was quoted. It showed that a third of local authorities were not confident of being able to meet the 2005 target for e-enablement of all services.

To pick up on a theme that was raised on the Floor of the House at Cabinet Office questions a little while ago, will the Minister acknowledge that enabling all services—ensuring the supply of electronic services—is only half the equation? The Government also need to ensure that there is effective demand and that consumers are enabled to access these services. That critically depends on the roll-out of broadband telecommunications services in parts of the country where they are at present extremely sparse. The quasi monopoly telecom supplier is showing a rather tardy response to the demand from consumers for those services. Will the Minister acknowledge that achieving e-enabled government has two parts to it: the provision of services and the provision of effective mechanisms for consumers to access those services?

Will the Minister say something about the on-costs of administering the grants? Some of the individual grants in the report are pretty small; I think that the smallest are about £50,000. What estimate has his Department made of the cost to it of evaluating a bid, making an award, processing a grant, monitoring that grant and checking compliance with the conditions? What estimate has it made of the local authority's costs in making the bid, complying with the conditions and making the necessary returns to the Office of the Deputy Prime Minister? Can such small ring-fenced grants be in any sense regarded as value for money? We would all recognise the danger that a £50,000 grant might chew up £30,000 or £40,000 in administrative costs in the ODPM and in the recipient authority. That is generally not helpful to the objectives of the Government or Parliament, with its wider representation. We all seek to see services delivered as efficiently and effectively as possible.

I shall ask the Minister some questions on part four, on the local government e-voting pilots grant, which I found the most interesting part of the report. I find it slightly strange—although perhaps I should not do so in the Alice-in-Wonderland world of local government finance—that we are sitting here on 13 May considering a grant whose purpose is to conduct

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e-voting pilots in elections held on 1 May. Presumably the local authorities in question had to take an informed view on whether the money would be coming to them. That is, perhaps, a polite way of saying that the Government believe that they can safely ignore the parliamentary scrutiny process, which is always something of a sham. In this case, the Government are explicitly labelling it an irrelevant exercise, since the money has presumably—perhaps the Minister can confirm this—already been spent. I presume that in many instances it must have been spent even before the current financial year began, to enable preparations for the 1 May elections.

I think that I heard the Minister say that e-pilots will have taken place on 1 May in areas covering 6.4 million voters. The report says that the e-voting pilots were expected to involve up to 1.4 million electors. The Minister gave some figures earlier on the number of electors believed to have voted electronically. Will he tell us something about participation rates in e-enabled elections? We are looking to discover the effectiveness of the spending of this money.

Will the Minister, or perhaps the hon. Member for Sheffield, Hallam (Mr. Allan), tell me something about the Sheffield smartcard programme? I see that that is one of the projects specifically funded by the grant. Is that, as its name and inclusion in the e-voting pilot suggests, effectively an electronic identity card, and if so, are the Government considering that as an answer to security problems if electronic voting were introduced on a wider basis?

Penultimately, will the Minister tell the Committee when the Electoral Commission report into the e-voting pilots at the election is expected to be published? Will he confirm that it will be published simultaneously with it being made available to Ministers? In other words, will the commission post it publicly on its website rather than deliver it privately to the Deputy Prime Minister?

Finally, will the Minister explain what the pilot user agreement referred to in annex C, as one of the conditions for receipt of grant under part four of annex A, actually entails? What is a local authority required to accept as an obligation under that pilot user agreement? I look forward to hearing what the Minister has to say in response to these various points later on in the debate.

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Mr. Richard Allan (Sheffield, Hallam): This is the sort of grant that one does not set out to oppose because it is giving money to local government. The council in my constituency, as the hon. Member for Runnymede and Weybridge (Mr. Hammond) pointed out, will receive a grant for expenditure that it has already incurred. I will not try to block the funding of my own local authority.

I congratulate local government on its achievements in this area; it has been incredibly innovative. The Sheffield city council website, for example, is far more accessible and useable from the point of view of an ordinary citizen than the vast majority of central Government websites. Local government is starting

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from a position where it can be proud of what it has achieved, and I am pleased that money is going into that area. However, we must be realistic about the scale of the task that local government faces. It is facing the most difficult process as it tries to move from delivering information services—a website that tells one about the local council is quite straightforward—to transactional services, for example the paying of council tax online, which are far more complex.

The hon. Gentleman is right to point out the 2005 targets. I am sceptical about those because they seem to be based on quantity not quality, as with so many targets that come from the centre. My view is that it is far better to have the most important services online in an effective way than it is to have everything online in a poor way. I fear that the targets, although they may provide an incentive for local government to move forward, may provide an incentive in the wrong direction. The incentive may be to put everything online, but not to achieve the most functionality in the provision of those services.

Some of the projects that we are funding are very important, particularly those involving shared service delivery, which is a critical area. The great thing about internet services is that they are not geographically or organisationally bound. People go to a website wanting to achieve something, and the last thing that they want to find when they search for information is that they need to know exactly which organisation they are looking for in order to find the service. Classic examples from a central Government point of view include matters relating to one's national insurance number, when one has to know whether to go to the Inland Revenue, the Employment Service, or the Department for Work and Pensions before one finds the information.

The great thing about putting services online is that sites can be designed from the citizen's point of view. People can use them according to their needs, whether they need care for an elderly relative or whatever. The shared service delivery partnerships are important in finding ways to do that. Historically it has been difficult to bring services and funding together.

I have some specific concerns that I wish to outline because it is not often that we get an opportunity to debate the projects that we are funding. It is helpful that we do have grant reports, so that we can talk about the way in which the Government are funding local e-government. It is right that local government makes its own decisions about its mainstream budgets, but in this case we are explicitly giving additional funding, and a right to raise concerns about the nature of that funding.

On the question of e-voting, I have submitted my comments in full to the Electoral Commission, which I will not go through entirely in Committee. For the information of the hon. Member for Runnymede and Weybridge, the closing date for submissions to go to the commission is 16 May. My understanding is that its report has to come out fairly swiftly after that. My report covers concerns about one aspect of electronic voting, which is the attempt to have electronic voting on polling day, where there has to be live online

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checking of whether people have voted electronically. My conclusion is that that is not safe under current technology. It is much better for electronic voting to close down at 9 o'clock the night before and to use only traditional paper on polling day based on paper registers. The pilots have demonstrated that it is not feasible to link a range of disparate community centres, schools and so on for one day with reliable links into a central server. I hope that such pilots will be regarded as genuine and that where problems have arisen we will learn the lessons and will not seek to repeat them in future years.

I have specific concerns about security, which must be the paramount consideration in any election. We were fortunate in that the results in those electronic pilot wards in Sheffield resulted in resounding victories for one side or the other. Had the results been close, there would undoubtedly have been electoral challenges as there were clearly security flaws. The polling stations could not access the online checking during the day and so had to abandon it. Some did not have laptop computers. Some never got telephone lines. Those are managerial issues, but they could occur at any election. The server became too slow in the evening and so online checking had to be abandoned as we had queues out of the door and people were walking away.

The additional benefit that is gained is a small increase in turnout, and the results from last year, which are repeated this year, show a 3 per cent. uplift in turnout. It is clear that if the primary objective is to increase turnout, the solution is to go to all-postal, not electronic voting. I have other concerns about all-postal voting, but electronic voting is largely a substitute—

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