Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 181-199)


11 MAY 2004

  Q181 Chairman: Can I welcome you to the Committee this morning to the session on Local Government Revenue that the Committee is holding and ask you to identify yourselves for the record?

  Ms Bakewell: Cathy Bakewell, Leader Somerset County Council.

  Mr Bilsland: Chris Bilsland, County Treasurer, Somerset County Council.

  Mr Lacey: Peter Lacey, Chief Executive of the Somerset Association of Local Councils, the Parish Councils Association in Somerset.

  Chairman: Does anyone want to say anything by way of introduction, or are you happy for us to go straight to questions? Then it is straight to questions. Christine Russell.

  Q182 Christine Russell: Good morning. I would like to start by asking you about the survey which I believe the county council carried out. Was that survey carried out solely by the county council or did you carry it out with support from the district and the parish council? Also, in the survey of your budget options I believe the result was that the majority of people in Somerset supported one of the extremes, either the high council tax, improvements services, or low council tax, cuts in services. Would you like to comment on how you carried it out and what conclusions you drew from the results of the survey?

  Ms Bakewell: It was a survey that we carried out ourselves. We used Somerset Influence, which is a body of 5,000 people recruited from the general public which the district councils buy into; so we all use the same people but they do rotate on an annual basis.

  Q183 Christine Russell: It is like a giant focus group?

  Ms Bakewell: It is like a giant focus group, yes. Mainly they are contacted by television or by forums, but in the case of this particular budget consultation we also had six focus groups around the county, one in each of the district council areas and the second one in Taunton, which also included members of staff, but it was mainly through leaflets which were distributed and advertised in the local newspaper; they were in the libraries and in schools and people could ring in to get them and they were also on the Internet so they could get them off the website. I thought we had very good response. We had 4,600 odd responses, which I do not think is too bad for a county of our size. In terms of the responses that we got with the people being polarised at the two ends, it was obvious when we went to the focus groups that, although we knew from the statistics which had come out of the census that we had a predominantly elderly population with over 50% per cent of the population being over 50 and people living much longer and therefore we had a large proportion of people on pensions and also frail elderly, that when we came to the focus groups myself and my colleagues were quite shocked at the absence of younger people, young married people, and they were predominantly elderly people. Some of that was about the time that we held the focus groups and some of that was about the age profile of the areas. Certainly in West Somerset, which also takes in Exmoor National Park, the majority of the population is over 50, and we have a large retirement population, and those people are the ones that voted for 2.5 per cent. As you might imagine, they are on fixed incomes, some of them are on very, very low pensions and they just could not afford to pay any more.

  Q184 Christine Russell: You may not know the answer to this, but I know in my own county of Cheshire over 50% of the population are over 50. Is that not common with many of our Shire counties? Is Somerset different to any other of the Shire counties?

  Ms Bakewell: I would not know about the profile of other counties. It is the case that a lot of the people from the Home Counties retire to Somerset, so we have an in-migration of pensioners.

  Q185 Chairman: I am sorry; I did not intend to cut you off. I thought you had finished. Go on; your last sentence.

  Ms Bakewell: I was going to say that we have no university. Our young people go away for higher education and they do not come back, they do not come back until they are in their middle-age and with families. There is a skew towards the elderly.

  Q186 Sir Paul Beresford: The options you give where you talk of cuts, you directly relate those to cuts in services and cuts in finance together. Any big organisation would be looking for efficiencies and, particularly with the gearing effect, presumably an organisation with a budget as big as yours, a 1 or 2% cut in expenditure through efficiencies should be easily managed, I would have thought, and therefore have dramatic effect, through gearing, on council tax.

  Ms Bakewell: Gearing has a dramatic effect, and I am sure you are all aware of that. Before we went out to public consultation we had already gone through some very stringent efficiency savings and had taken four million out of the budget through that process.

  Q187 Sir Paul Beresford: What is that as a percentage?

  Mr Bilsland: As a percentage of our spending? We had already taken out about £4 million savings, or £4 million in cash, so that is about 1, 2% in total. In council tax terms that is more like 5, 6 or 7%, but we did not consult on that because we knew that people would vote for efficiency savings, so all people saw were the cuts options after we had made the efficiency savings.

  Q188 Chris Mole: What is that as a percentage of the non-schools budget?

  Mr Bilsland: Double the figures basically; so sort of 10%.

  Q189 Sir Paul Beresford: You will find that expenditure has gone up dramatically throughout the country for every local authority if you sum them up together. In the last 10 years it has gone up about 72%. Do you feel that government interference through best value, CPA, inspection, and so on and so forth, has contributed massively to that?

  Mr Bilsland: My answer would be, "Yes". We have never seen an Ofsted report, we have never seen an SSI report that did not encourage us to spend more money. They are always routing for more with the backlash of consequences. Passporting forces council tax up because, members may know, the Government improved the schools funding position this year by requiring local authorities to passport even bigger figures into schools by increasing the floor, but we need to put more money into the system to make that happen. What we found was by the time we start our budget process most of the allowable increase was swallowed up by having to meet the prospective target. But it is not just education, we have similar pressures on social services, we have similar pressures even on the library service where we are under pressure from the department to improve and increase our spending on library books.

  Q190 Sir Paul Beresford: Would the same apply to district authorities? If I could use Torbay as an example. It is written up as a weak authority. They tell me that they are a weak authority but they are now being clobbered with 24 inspections programmes next year which is going to cost them £2.5 million on top of the budget?

  Ms Bakewell: It is the case that when authorities are rated as weak or poor there are more inspections for which authorities have to pay, and it is a bit of a bone of contention that you have to find money to pay for the inspectors, which I would say we could do without, it is right that we should be inspected, but the level of inspection is very, very onerous.

  Q191 Christine Russell: Can I ask you a particular question that arises out of your submission. You are aware that the Home Secretary has mooted the idea of perhaps there being a local levy to pay for additional policing if local people are prepared to pay a little extra to support it, but you are dead set against any kind of local referenda to decide local spending priorities. Do you want to elaborate on why you are against local referenda?

  Mr Bilsland: One of the reasons why we are against local referenda comes back to the results from our own consultation process. As Cathy was saying, part of it was the focus group meetings, and one of the things we did in those focus group meetings was we polled people before they came in and said, "What sort of council tax increase do you think you would be prepared to pay: 2.5% up to 11.5%?" Then we polled them afterwards, after we had been through all the case, all the explanations, all the consequences, and we found a very substantial core of people would not change their position regardless. We know there is evidence to explain that part of the reason for that is simply that people cannot afford to pay a council tax increase, but many people can afford to pay but they are simply not prepared to pay any higher taxes for any public services under any circumstances.

  Q192 Christine Russell: Is that because they assume others are consuming the services rather than themselves?

  Mr Bilsland: That would certainly be one of the reasons, would it not, yes. We found, for example, elderly people tended not to be very supportive of schools funding. There again, elderly people were also not very supportive of the care of the elderly either. You could view that as a denial of old age, but we felt, hang on, how useful is it to have a referenda? If before you even start there is going to be a substantial majority of people who simply will not pay any more regardless?

  Q193 Mr Betts: Let us come on to the issue of the balance of where the funding comes from, either from locally raised taxes or from the centre. What difference do you think it would make to the accountability of the county council if the amount of money that you spent that came from local taxes was increased?

  Ms Bakewell: I think that would be good. I think there should be local accountability for the money that is spent, and it should be raised locally. I think that is the right way forward. It is much more transparent. People can see where their money has gone. They can, through consultations such as the one we have done, have an input into where that money is spent. However, they have to be able to afford it, and currently council tax is not affordable.

  Mr Bilsland: I think, Cathy, we would add to that that if business rates was repatriated, which we believe should be the case, that would also result in a much better connection between local authorities and local businesses, which would also be seen as a very good thing.

  Q194 Mr O'Brien: Would you say that the same principle should apply to business rates, that the business should be able to afford it?

  Mr Bilsland: Business would say it cannot afford higher taxes, but we are saying two things really. First of all, we are saying let us repatriate it to begin with and that would improve the balance of funding and accountability; then let us look again at whether a business is paying its fair share, although our experience is that local council tax payers are having to cover the costs that business might have been paying had we had a local system.

  Q195 Mr Betts: What do you think might be a fair and reasonable split then? Currently, I think, from the figures that we have had, Somerset has a relatively high percentage of its spending funded by local taxation. I think it is 37% of the total, which is higher than the national average of 25%. What balance do you think we should be working to on a national basis?

  Ms Bakewell: I would think over 50%, between 50% and 75% is reasonable to be supported locally, but, as I have said before, it has to be affordable, especially relating it to the local householders.

  Q196 Mr Betts: So we are going to increase the amount raised locally, and the grounds for that is that that gives you greater accountability. Is that the real reason?

  Ms Bakewell: It gives us greater accountability. However, if more is raised locally and we still have the same government restraints on what we spend the money on, then that would, I think, be unreasonable, and that would not be transparent, and I do not think the local population would understand that. I think there has to be some relaxation by government on what the money is spent on. Whilst I support putting money into education and have always done that and would always passport through to schools wherever possible, the increasing trend towards ring-fencing is not particularly helpful. Is local government there just to deliver National Government's priorities?

  Q197 Mr Betts: We may come on to that in a minute, but still on accountability, how do you think you can measure whether accountability is improving? One idea is that we ought to be looking at the turn-out in local elections?

  Ms Bakewell: Yes.

  Q198 Mr Betts: Would you see that was a reasonable measure of accountability, that if we say to local authorities, "You have got the right to raise more taxes locally, more of your spending will be funded locally", then turn-out, or if it does not then it has failed?

  Ms Bakewell: It would not just go up because more money was raised locally. There would have to be other measures in which the local population were engaged as to how the money was spent. Certainly a lot of what I do is about trying to re-engage the public with the county council, which is often seen as remote and just providing the Government's agenda rather than following the one which the local people want. So there are some issues about re-engaging the electorate, but certainly electorate turn-out is very, very important and in the county, in the rural areas, there tends to be a much higher turn-out than in the urban areas.

  Q199 Sir Paul Beresford: Can I ask you to explain what I see as a small quandary? You say you want it to go up to perhaps 50/50 Central Government funding, which increases accountability. On the other hand, you have done your efficiency cuts and you cannot cut your expenditure, therefore the council tax will go up dramatically, and you then make the differences with shifting Central Government off your back. Is that going to be sufficient: because you told us at the same time that if the council tax is too high the rebellion that has already come up over the last couple of years is going to be even worse?

  Ms Bakewell: It is a difficult situation. It is not a question of just getting government off our back, it is a question of a balance between local government priorities and national government priorities and about where the funding actually comes from. At the moment the effect of gearing is such that the withdrawal of central government grant, in order just to stay still the council tax has to go up 4% for every 1% increase in spending. That is a very difficult concept to get over to members of the public; very, very difficult.

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