Examination of Witnesses (Questions 160-180)
MR RAY
SHOSTAK, MR
ANDREW LEWIS,
MS LINDSAY
BELL, MR
ANDREW ALLBERRY
AND MR
ROBERT DAVIES
27 APRIL 2004
Q160 Mr Cummings: Do you have a schedule
or programme of when you intend to start with the public information
exercise? Do you have a timetable of when you intend to commence
negotiations with local government?
Mr Allberry: We do not have a
published timetable for that yet.
Q161 Mr Cummings: If you do not have
a published timetable how are you going to persuade us that everything
is going to be tickety-boo for 2005. We are half way through 2004
at the present time. Are you working in the dark?
Mr Allberry: 2005 is critical
most of all because that is the antecedent date. It is the property
values in that year that will form the basis of the revaluation
two years later in 2007.
Mr Cummings: But the process is going
to start in 2005?
Q162 Sir Paul Beresford: If you have
not got a published timetable have you got a draft timetable that
you might be able to let us have a glimpse at?
Mr Allberry: No, we have not.
Sir Paul Beresford: Wonderful.
Mr Cummings: You do not have a draft
timetable?
Q163 Chairman: Let's just work backwards
then. We have got 2007 and presumably that is the April when people
are going to start paying on the new rates? So if we are going
to have extra bands put in, at what point—and as I understand
it we need legislation—does legislation have to go through
the House to increase the bands?
Mr Allberry: Because we do not
have a clear and agreed draft timetable I cannot give a particular
month for that but obviously we need to allow for that.
Q164 Chairman: How long does it take
to get legislation through? First of all, let us confirm we do
need legislation for some extra bands; is that right?
Mr Allberry: It is secondary legislation.
Q165 Chairman: How soon does that have
to be done before 2007?
Mr Allberry: It does not need
to be done a great deal in advance of 2007 as far as I am aware.
There is enough time between the end of the Balance of Funding
Review and the time that ministers will need to take to take decisions
and work out detailed proposals on anything coming out of the
Balance of Funding Review that is relevant to revaluation to take
forward that process, including those important steps that you
have mentioned such as public consultation, consultation with
local authorities and publication of secondary legislation to
get us through to the 2007 revaluation date. I am not saying there
is a great deal of time available but there is enough time available.
Q166 Chairman: So by the time Ministers
come before Committee on this inquiry it should be possible for
either you to have supplied us with or the Minister to give us
the timetable of when those things will have to happen.
Mr Allberry: We can certainly
give an indication.
Ms Bell: Ministers will not necessarily
know at exactly what point the decision is taken because partly
it will depend what the decisions are. Given that all options
are still open the option of not changing the bands anyway is
still an option, in which case the timetable will be different.
We will go away and we can work up some key elements in that timetable
and what the parameters are but that is probably as far we can
go.
Q167 Chairman: If I can take you on to
the business rates very briefly. Basically the amount of local
expenditure met by the business rate has gone down each year,
has it not, because of inflation and more has been shifted on
either local government grant or from the council tax; is that
right?
Ms Bell: Yes, the relative balance
has shifted, yes.
Q168 Chairman: Two-thirds of the council
tax is raised by local fees. Is there any reason why councils
should not be able to make a profit on some of their charges to
cross-subsidise?
Ms Bell: There is no theoretical
reason. At the moment the Government's policy is that it is a
cost of recovery base so that is the position at the moment.
Q169 Chairman: But there is no economic
reason why it should not be possible and if local electors want
to make a profit on one service to subsidise another that should
be perfectly reasonable?
Ms Bell: If that was the political
judgment then, yes, that is feasible.
Q170 Christine Russell: Can I ask you
about the provision of services by central government and local
government. Is the Balance of Funding Review giving any information
whatsoever as to who provides public services? I am thinking in
particular of education?
Ms Bell: No.
Q171 Christine Russell: So the review
is giving no consideration whatsoever?
Ms Bell: It is not part of the
remit of the review. The remit is to look at the balance of funding
on the basis you need a stable system that would apply with different
potential options.
Q172 Christine Russell: Okay. Does the
Department have a view on whether or not—
Ms Bell: The Department's current
view is that the weight of responsibility currently lies the way
Government wants it to.
Q173 Christine Russell: Does the Department
have a view on whether or not services that essentially are directed
by and standards which are set by central government which should
then be and are delivered by local government should be funded,
as they are at the moment, by local government?
Ms Bell: The Government view is
that the current arrangements are the ones that it wants. The
issue long term of whether funding is local or central is indeed
for the Balance of Funding Review and that is up for consideration.
Q174 Christine Russell: Does the Treasury
have a view because obviously at a stroke you could cure the problems
with the council tax by taking education funding away from local
government.
Mr Shostak: The question you were
asking was predicated on the fact that standards are set by central
government. Standards across many public services are, as it were,
agreed nationally. It is actually much more complicated in terms
of the responsibilities for local government versus the responsibilities
for central government. As I think the Minister has indicated
to you, there is consideration in terms of the overall balance
of responsibilities in terms of the strategy for local government.
That gets into a much broader set of issues and set of questions
about public service regulation, public service inspection, public
service roles and responsibilities, and where that best sits in
terms of local determination, local accountability and so on.
Q175 Mr Betts: Can I come back to an
issue we raised before. The balance of funding review was established
primarily because there was some concern at least that there might
be too much of the funding given from central government and too
little raised locally so if we move to a situation where local
government raises a larger percentage of its income from local
taxation, and at present about 4.2% of GDP is actually raised
locally in taxes so say we moved to a position where local government
raised about ten per cent of GDP in local taxes, would the Treasury
have a view about that?
Mr Lewis: I think this comes back
to the question you were asking at the beginning of this session.
Our view is that is an issue that should be considered and indeed
can be considered in the context of the Balance of Funding Review.
Clearly it would have pretty profound implications for the way
in which central government and local authorities interact and
it would put pressures on the process of equalisation and so on
but provided, as I said before, options can be considered within
the context of the Government's overall fiscal policy then those
are issues that need to be explored, yes.
Q176 Mr Betts: Does the Treasury see
any insuperable problems in terms of its desire to control overall
fiscal policy in such a shift of funding?
Mr Lewis: You say "desire
to control", I think it is important, as has been clear throughout
the whole process, that decisions on balances of funding—and
it is a question of balance rather than the overall level of tax
revenue—are taken within the Government's overall macroeconomic
context.
Q177 Mr Betts: Within that overall macroeconomic
context is there an insuperable problem to the shift of the balance
of funding to give local authorities a greater degree of control
over the amount of money?
Mr Lewis: I do not think we could
identify an insuperable problem. Clearly there are issues that
would need to be explored but I cannot see any insuperable problems.
Clearly a percentage change of the sort that you have just hypothesised
would have big implications that would need to be thought through.
Mr Betts: But there are no problems of
principle provided it is within the context of the overall fiscal
policy framework as set out by the Chancellor?
Q178 Chairman: What would be the levels
of devolved expenditure then as far as Scotland and Wales are
concerned? If we move off from the 4.2% figure that Clive mentioned,
what percentage do we get to in Wales and in Scotland?
Mr Lewis: I think the Barnett
Formula allocates just over ten per cent for Scotland out of marginal
increases in expenditure and I cannot remember the percentage
for Wales.
Q179 Chairman: No, the Barnett Formula
is to do with the increased expenditure as opposed to the actual
expenditure.
Mr Lewis: That is right. The Treasury
published analysis on that in the recent past. Obviously not all
expenditure can be defined—
Q180 Chairman: All I was trying to find
out was it appears that we can devolve a certain amount to Scotland
and I was just trying to find out whether if the same amount of
local discretion to spend were exercised by local authorities
in England whether you would see that producing a major problem?
Mr Lewis: I think that is a slightly
different question. Mr Betts was asking about the balance of funding
whereas I think your question is about the balance of responsibility,
which colleagues have explained is a different issue outside the
remit of the Balance of Funding Review.
Chairman: On that note, can I thank you
very much for your evidence and thank you to the Committee.
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