Second Standing Committee
on Delegated Legislation
Monday 10 February 2003
[Mr. David Amess in the Chair]
Local Government Finance (England)
Special Grant Report (No. 110) (HC320)
on 2002–03 Special Grants in Connection
with Local Public Service Agreements
The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Christopher Leslie): I beg to move,
That the Committee has considered the Local Government Finance (England) Special Grant Report (No. 110) (HC320) on 2002–03 Special Grants in Connection with Local Public Service Agreements.
The Government are committed to the modernisation and improvement of public services. Local authorities play a key role in that. This special grant report seeks Parliament's approval for grants totalling £93 million to assist 84 local authorities to deliver challenging targets for service improvements.
Local public service agreements—local PSAs—are agreements between central Government and individual local authorities. They focus on improving performance in key areas and addressing national and local priorities. Following a successful pilot exercise in 2001 to test the process with 20 authorities, we are now about halfway through a schedule of negotiations with the other 130 county and unitary authorities.
Each local PSA includes at least a dozen demanding targets for improving key outcomes in local services—including education, social services, crime reduction and transport—over and above what authorities and their partners were planning to achieve in any case. Each agreement provides for future financial rewards if and when the targets are met, and it records commitments on the part of central Government to change various rules and regulations and other administrative arrangements that authorities believe act as barriers to performance, such as a reduction in the number of plans required by Government or more flexibility in the use of certain grants, and provides for an upfront pump-priming grant. A copy of each agreement, when signed, is deposited in the House of Commons Library. They can also be seen on the website of the Office of the Deputy Prime Minister, together with summaries of their contents.
The pump-priming grants are what this special grant report is about. Subject to parliamentary approval, we are committed in each agreement to make an upfront grant to the authority, to contribute towards the costs of projects that the authority is planning and to help it deliver its targets. The local PSA scheme provides for each authority to receive a pump-priming grant averaging £1.05 million to support target-related projects. All sorts of useful projects, proposed by authorities and specified in the
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agreements, will be supported, from new IT systems to improving city centre environments.
The local PSA report follows the standard format for special grant reports. It sets out the purpose of the grants, the authorities concerned and the amounts payable at annex A, the main features of the grants at annex B and the conditions attached to the grants at annex C.
The report includes provision for grants to 53 authorities with which the Government have already concluded a local PSA. It also includes provision for grants to a further 31 authorities, which are scheduled to complete negotiations on a local PSA by the end of this financial year. If it is impossible for us to finalise negotiations with some authorities in time, we would need to make relevant grants in the coming financial year instead. In such circumstances, those authorities' entitlement to grant under this report should be extinguished. That is the purpose and effect of the condition in annex C that grant is not payable unless a local PSA has been signed before 15 March 2003.
The grants proposed in this special grant report will help local authorities to deliver better services. That will benefit local people, enhance councils' standing and effectiveness and contribute towards meeting and exceeding the Government's targets for improving public services.
Mr. Philip Hammond (Runnymede and Weybridge): The Minister mentioned the piloting in 20 authorities, and he and the report said that it was a successful set of pilots. Can he elaborate a little more about those pilots and the basis on which the Government have assessed them to be successful in terms of the benefits delivered and the costs incurred? There are 84 authorities listed, and I certainly will not ask him to do it for all of them, but from the 53 agreements that have already been reached, can he give the Committee a flavour of them? Does a theme run through them? Are there some major areas on which the focus has settled? It would be useful to receive that information.
I notice that the two largest grants have been made to Conservative-run, and therefore excellently managed, local authorities—Hampshire and Essex. My approach to the report may be somewhat more benign as a result. Will the Minister comment on the correlation across the 84 authorities between comprehensive performance assessment results and the awarding of the grants? Is there any correlation that is deliberate or otherwise that his Department has analysed?
The Minister said that 31 agreements were not concluded. Will he tell us a little more about what stage they are at? He said that the Government were about halfway through negotiating them. I do not know when he started, but he had better get a move on, because he has set himself a cut-off date of 15 March, which is just over four weeks away. There also seems to be a discrepancy about the cut-off date. Annex C states that agreements must be signed before 15 March. In annex B, we are told:
''The government expects to be able to sign individual Local PSAs with up to 84 authorities by 31 March 2003.''
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The important information is how many authorities the Government expect to have been able to sign local PSAs with by 15 March, not 31 March, because as the Minister rightly said, a body that has not signed up by 15 March will have to slip into next year. It might be useful for the Committee if we could find out the anticipated numbers.
Perhaps more importantly, can the Minister explain to the Committee how the sums in the grants are determined? The lowest amount is the sum for Hartlepool—about £800,000.
Mr. Edward Davey (Kingston and Surbiton): Bananas.
Mr. Hammond: I shall let the hon. Gentleman elaborate on that point in due course.
Mr. Leslie: Monkeys.
Mr. Hammond: I understand the point, but I prefer to let the hon. Member for Kingston and Surbiton (Mr. Davey) elaborate on it in due course. At the other end of the scale, the amount is somewhere over £2 million for Essex and Hampshire county councils. The average figure is approximately £1.109 million. Can the Minister explain how the sums are arrived at? Are they matching grants? Is matching funding required by the local authority? Perhaps the Committee can thus have some idea of how we have arrived at such large discrepancies in the amounts awarded.
The Minister confirmed that the amounts were pump-priming sums, and if local authorities entering into local PSAs successfully achieve their targets they will be subject to further reimbursement. Can he clarify the source of those reimbursements? Presumably they will come not from his departmental budget but from the budgets of the Department of Health, the Department for Education and Skills, perhaps even directly from the Treasury. In those circumstances, is it correct to assume that the pump-priming sums will be a charge against the departmental estimates of the Office of the Deputy Prime Minister, but the substantive payments made, when local public service agreements are in place, will be largely drawn from other departmental budgets?
Penultimately, may I ask the Minister about the cost of administration? The special grant regime can be quite onerous in terms of the amount of scrutiny and management for quite small sums. Today, we are talking about a sum getting on for £100 million, but on other occasions I have dealt with sums as small as £50,000 in special grant reports.
Have the Government undertaken any analysis of the cost-to-award ratio in the regime? Clearly, a lot of management work by the Department is involved in considering bids from local authorities. Local authorities themselves incur significant costs, and smaller authorities in particular may find that quite an onerous burden. It is important that we keep an eye on the ratio of cost to sum awarded, and anything that the Minister can say on that would be of great interest.
Finally, the special grant regime shows that the Government's apparent willingness to trust local government is again thrown into question. We are
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talking about quite small sums when compared with the budgets of the authorities concerned. For Essex, which is a £1 billion budget authority, we are talking about a £2 million grant. No doubt that money is very welcome, and no one in their right mind would turn it away, but £2 million is a relatively small sum in terms of the authority's overall budget.
I suspect that the cost of this procedure will be relatively high. Have the Minister or his Department made a rigorous assessment of the extent to which the application of the regime influences and determines the behaviour of local authorities? That question is posed genuinely in the spirit of inquiry. I just wonder whether the award or not of a £2 million grant to embark on a programme that may generate future revenue streams will be very influential in determining the behaviour of a £1 billion budget authority.
I am sure that the Government have considered that, but the Minister will appreciate that there is at least a suspicion of a significant element of micro-management. Relatively small amounts are being offered to local authorities to do very specific things. That regime is costly to operate and tends to undermine the assertion that the Government are willing to trust local democracy and let local authorities make their own decisions.
I should appreciate very much any reassurance that the Minister can provide that the Government have done their homework, that the costs in terms of money and effort are worth while in that they genuinely lead to a behavioural change by the recipient authorities, and that the Government in turn can justify such micro-management of behaviour in the delivery of the special grant.