Examination of Witnesses (Questions 140-159)
MR RAY
SHOSTAK, MR
ANDREW LEWIS,
MS LINDSAY
BELL, MR
ANDREW ALLBERRY
AND MR
ROBERT DAVIES
27 APRIL 2004
Q140 Chris Mole: —If, if, if.
Mr Allberry: If, then the local
authority must pass that relative inefficiency to the local community.
Q141 Chris Mole: But that does assume
that everyone is spending at the same base level. There are massive
differences in base level spending.
Mr Allberry: That is true but
at the margin there might be a requirement to spend more, and
in this case we are assuming that requirement to spend more is
as a result of inefficiency—
Q142 Mr O'Brien: In local government
now they have ways of explaining to the electorate that gearing
is the responsibility of central government and not local government
and therefore the question of the impact on the electorate does
not always fall on local government. What I am looking for is
the way that your Department has been looking at other factors
or levers to improve efficiency within local government without
the gearing situation. Has any thought been given to that?
Mr Allberry: A lot by the Department.
Q143 Mr O'Brien: If there has can you
tell us what it is. Better still let's have a paper on what you
have been doing.
Ms Bell: There is a lot else going
on to try and help local government both to try and measure efficiency,
and one of the problems is how you measure what is down to efficiency,
and also to help improve efficiency. The local government performance
regime and the best value regime have been operating now to try
and secure improvements and there is the CPA regime run by the
Audit Commission.
Q144 Chairman: The Committee has had
quite a bit of evidence that there are ways of going for different
forms of grants which will get rid of the gearing problem. How
far have those solutions been looked at?
Ms Bell: In terms of what they
do for efficiency?
Q145 Chairman: In terms of whether they
get rid of the gearing problem which several people round this
table feel is unacceptable.
Ms Bell: The Balance of Funding
Review is looking at what different mix of things would provide
a different spread of central and local things which would affect
the—
Q146 Chairman: Yes but in the various
papers that have been submitted one or two people have suggested
ways of getting round the gearing problem. Do any of those appear
to be attractive to the Government?
Ms Bell: The Government is still
looking at everything that has been put to it in the context of
the balance of funding so it has not ruled anything out.
Q147 Mr Betts: CIPFA put forward a specific
proposal about having a core grant and then a top-up grant which
effectively would make a major difference to gearing arrangements.
Are there any practical problems foreseen with adopting that sort
of approach?
Mr Allberry: That suggestion was
made in the context of the Balance of Funding Review and we will
have to await the—
Q148 Mr Betts: I am asking for an ODPM
view. Clearly that is a proposal being put forward. I am not saying
are you going to adopt it or do you agree with it; I am saying
are there any practical problems with its adoption?
Ms Bell: The short answer is I
do not know.
Q149 Mr Betts: What about the Treasury?
Do the Treasury have any practical problems to put forward as
to why they might not be too happy with that proposal?
Mr Shostak: No, I am not able
to respond to that. I just do not know. I have not got enough
detail of the specifics of the proposal that you have raised to
be able to answer that.
Q150 Mr Betts: The idea is essentially
that central government would share in funding the costs of the
provision of extra services along with local councils so the gearing
problem would be got rid of. It is a bit like the system we had
for 40 years after the War.
Mr Shostak: Gearing is inevitably
one of the big issues that the Balance of Funding Review is looking
at. There are a variety of alternatives to solve it of which the
CIPFA proposal is one. Because of the gearing we know (and in
a sense that was part of the rationale behind the Balance of Funding
Review at the off) that there is lack of clarity in terms of issues
about accountability, there is lack of transparency, there is
a range of other problems in terms of its impact in terms of council
tax and so on. What the Balance of Funding Review—and the
CIPFA proposal is one—is looking at is a range of issues,
a range of alternatives that could potentially address that gearing
issue. As I say, I do not know enough detail about that particular
one.
Q151 Mr Betts: That is helpful but let
us put it another way. Given that there will always be an element
of local government funding presumably that comes from the centre,
if only to equalise the difference in needs of different areas
and the difference in their resource base, then without some form
of approach such as has been proposed by CIPFA there will always
be different gearing ratios into different authorities and therefore
some inherit unfairness between authorities in the impact of increasing
expenditure by a given percentage in those areas. Is that accepted?
Mr Shostak: Yes.
Q152 Mr Betts: Is that an issue that
the Balance of Funding Review will have to address and come out
with some ideas on?
Mr Shostak: Yes.
Q153 Chairman: The CIPFA paper on local
income tax; did they get it basically right?
Ms Bell: I really cannot pre-empt
what the Government's view on that would be.
Q154 Chairman: I am not asking for views;
I am asking whether the work CIPFA did on local income tax and
the costings, things like that, did they basically get it right?
Ms Bell: I think it is jolly useful
work in that sense and indeed they are doing more work.
Q155 Chairman: Does "jolly useful"
mean they got it right or do you see major flaws in it?
Ms Bell: The short answer is I
cannot comment on what our assessment of the work is but the fact
that it has been done and they are doing now more detailed more
work is precisely because we want to get into this and the devil
will be in the detail and we need to find out. We cannot really
take it further than that at this stage.
Q156 Mr Cummings: Assuming that the revaluation
will take place in 2007—and perhaps you can confirm or deny
that this morning—for a revaluation to be completed by 2007
obviously the process will have to start in 2005. If that is the
case, can you explain how any changes to the council tax banding
coming out of the Balance of Funding Review will be implemented?
Could, for example, changes to the number of council tax bands
or the introduction of regional banding be implemented by 2007?
Ms Bell: The short answer is yes.
Q157 Mr Cummings: To all of them?
Ms Bell: Yes.
Q158 Mr Cummings: That is ideal. What
are you going to do to inform the public about the possibly impacts
of revaluation and what discussions are you having with local
authorities about the possible impact of revaluation?
Ms Bell: We are certainly aware
that the communications will need to be very clear. This is a
big issue and we will be consulting. Exactly what form that will
take I do not know and we are certainly also consulting local
government.
Q159 Chairman: Wait a minute, there must
be a timetable now for this actually happening. The revaluation
is going to start next year, is it not?
Ms Bell: 2005 is the antecedent
date, is it not?
Mr Allberry: There is a progressive
programme of work that the Valuation Office Agency are already
engaged in obviously working up to 2007.
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