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

Examination of Witnesses (Questions 200-219)


11 MAY 2004

  Q200 Chris Mole: How much grant have you had withdrawn?

  Mr Bilsland: In terms of withdrawal, we have lost grant through formula changes and part of our case has always been to challenge grant settlements on the way that money is shifted away, not just from Somerset, but from the South-West generally into other areas. For example, the year before last, we lost over £12 million worth of funding through what was then known as the Resource Equalisation Process. That did not result necessarily in cash because, as you must know by now, the system is totally complicated with floors and ceilings, but if you said—

  Q201 Chris Mole: You have not actually lost any cash?

  Mr Bilsland: You never know what you have lost, because the formula does not tell you what you would have had had some of these things not happened. We know we lost what was called the "Formula Spending Share" of £12 million. The Formula Spending Share results in extra cash. Quite how much—it is not pound for pound—we do not know.

  Q202 Chris Mole: At the time when the grant was going up?

  Mr Bilsland: That is right, but what we do know is if we had a fair level of funding for the county council, for example, we would have extra grant in the territory of at least £20-30 million, at least £20 million, of education funding to get us up to an English average plus at least another £10 million for all other services. So those are quite big figures, £30 million, so that is worth another 15%, 16% on the council tax.

  Q203 Sir Paul Beresford: The local protest on the council tax coincides with it?

  Mr Bilsland: Yes.

  Q204 Chris Mole: The resources that central government allocate are, as we were just touching on, both ring-fenced and passported. You have described this as undermining local democracy with the current arrangements. Can you explain what effect ring-fencing and passporting has on county council budgets, what discretion you have and how you exercise it, and, in practical terms, what is the difference between ring-fencing and passporting?

  Ms Bakewell: In terms of passporting, there always has to be a debate about whether we are actually going to passport to schools. You have to have that debate—it is quite right to do that—and if you choose to passport, which we always have done because we support schools, what have we got left with the rest of the services? There are key performance indicators for every service and, in order to deliver on a lot of KPIs, there has to be resource input. So there is then a debate about, "Okay, which of our KPIs are we going to put at the top of the list?", and they are always those about elderly and children on the at-risk register and those people who are extremely vulnerable. So you work down the list until you get to those services which are important, but you have to prioritise them. Then there will sometimes be things like trading standards. Well, that is important, and people do value trading standards services, but at the end of the day you have to balance the budget and, in order to keep the council tax down at a level which people can afford and are prepared to pay, there have to be some very tough decisions made.

  Mr Bilsland: In two other areas—it is not just schools—on the care of the elderly, for example, we have bed-blocking and bed-blocking fines, and certainly we have no choice really, even though we wanted to anyway, we have to fund care for the elderly costs. It would have cost us more not to have done that, but also, on capital, our local transport planning settlement is a big capital investment. Now although we want to do it, it is made very clear to us by Government office that, if we do not fund capital investment on transport at LTP levels, then future settlements will be massively reduced in all this funding; so again there is an indirect impact.

  Q205 Chris Mole: So you have to find the revenue implications of that coupled with funding implications?

  Mr Bilsland: Indeed, although we do get some support for the costs. Ultimately we have to meet the capital financing costs, the borrowing costs.

  Q206 Chris Mole: I think, Cathy Bakewell, you were touching on the priority that you give to education, including it is a central government priority which is delivered by local authorities to national standards. It is not justifiable for the Government to ensure that the resources to which it gives such high priority are delivered locally?

  Ms Bakewell: Yes, I think that is the case, and it would be my priority as well, is the other ring-fencing that we have had difficulties with, and, as we have already indicated, education is not necessarily the priority of quite a large section of our population. I personally find that quite sad, that some elderly people, a large proportion of elderly people, are not prepared to put money into education; they perceive that education is adequately funded. It is a priority for is. We have to sell that to the members of the public that we are going to put money into education, because not only is it the Government's agenda, it is our agenda as well because children are our future.

  Q207 Chris Mole: So do you think there is ever any justification for capping as a final resort? Surely the Government needs to be able to put a ceiling on it at some stage if efficiencies are not being achieved in councils or, as maybe has been described already, some local electors just cannot afford it?

  Ms Bakewell: I think capping is a pretty blunt tool. It does not really relate to the local population. If councils raise council tax too high the local electorate will pretty soon let them know.

  Q208 Chris Mole: One used to say it was a blunt tool when it was universal, but six authorities this year have been capped. It is not quite so blunt; it is quite precise?

  Ms Bakewell: It is quite precise, but it does not help them. It does not help the residents in their area. They will have to pay more for the same services if they are going to be re-billed, and that is just dead money: it does not produce any better increase in services. I think capping does not work. Councils still have priorities. They still have the people there which they have to provide the services for. I think it is better for councils to relate to their electorate and to their residents and for them to decide what is an adequate level.

  Q209 Chris Mole: So you do not think it was the threat of capping which kept increases that were on average somewhere between 10 to 20% last year in low single figures this year?

  Ms Bakewell: It was there in the background, but it was not an overriding factor with me. The overriding factor was the number of letters I was getting from the elderly, pensioners and people on low income.

  Q210 Mr Clelland: To go back to the question of education spending, you say it would be a priority for you too. You would acknowledge and support that. Where would that put you? If we had greater local accountability in an authority like yours where you say the majority of the population, or a huge section of the population, do not give education the same priority that you would yourself, how does local accountability affect that?

  Ms Bakewell: Obviously you have got the pensions on the one side and then you have the parents of the children on the other side. The parents of the children, the teachers in the schools and the head teachers are all very supportive of the education that we provide. We are a three-star LEA and the education that we do provide is first-class. We have very, very few schools with serious weaknesses, and we do not have any in special measures. The two divides come together, if you like, and the council has to decide on that, but we are elected to deliver services and, on the one hand, we are delivering services and education to children and young people and, on the other hand, the other main priority is obviously the frail elderly.

  Q211 Mr Clelland: But at the moment, as far as education is concerned, central government is dictating the priority even though you support it, because it is ring-fenced and passported, etcetera. If that central government funding was lifted because you want greater local accountability, is there not a danger that education will suffer in an authority like yours?

  Mr Bilsland: We did some research on this. In the days before passporting, local authorities already spent a lot more on education than the old SSA figures. Now that you have got passporting most councils start off with the premis that they will; only passport no more and no less, ie the evidence is there, that if there was local choice there would be even more spending on education than as a result of passporting.

  Q212 Mr Clelland: In Somerset?

  Mr Bilsland: Nationally.

  Mr Clelland: We are talking about Somerset!

  Q213 Chairman: Let us make it clear. Do you think that more should be spent on education? If you had total local control you would spend more on education, or would you spend less?

  Ms Bakewell: If we had more money we would certainly spend more on education. As Chris has already indicated, we are funded below the average.

  Q214 Chairman: If you had the chance to raise more money locally, would you raise more money locally?

  Ms Bakewell: If it were affordable, yes, I would.

  Q215 Mr Sanders: I am intrigued by your answer on capping, that the threat of capping was not what kept your budget down but actually the representations from the public. In areas that are being capped there is a case where the public are actually egging the Government on to cap those authorities. If you are capped is it councillors who feel the pain, council officers or is it public?

  Ms Bakewell: The pain is felt by the public because of the rebilling costs, because that, as I said before, is dead money, you do not get anything for the cost of rebilling, and that obviously goes on to the council tax, or the service cuts which support that; so, yes, it is the public.

  Q216 Mr O'Brien: You referred to gearing two or three times this morning and the unfairness of gearing. This brings in the question of parish town and city councils. It is a very interesting situation because gearing does not apply to them. In your opinion what effect does this have on local councillors when they come to make their decision on spending for the parish and town councils?

  Mr Lacey: So far as the parish and town councils are concerned, they are delighted to have direct accountability, much closer to the people than perhaps the principal authorities. If they wish to spend money locally on a particular project, it is likely they will have held a parish meeting to discuss it. For instance, in my own parish, I have the question of street lighting coming up in a fortnight's time—a wonderful rural issue—but it is all about spending, it is all about directly involving local people: because it is a meeting in the village hall held locally in the evening, we will get probably one-sixth of the total population of the parish turning up at that meeting. The hall will be full. That is very good direct accountability. It does not suffer particularly from the problems of the volunteer shortage.

  Q217 Mr O'Brien: What would be the average age of the people in the hall?

  Mr Lacey: Complete representation. There would be complete representation: mothers of young children, that age group, right the way through to the older people.

  Q218 Mr O'Brien: There would not be the over 50's group then? We have been told that one of the problems we have is the fact that a substantial number of the population are over 50. Council tax is unfair; gearing is unfair; we are looking for alternatives. In your case then the people who attend the parish meetings are the younger population?

  Mr Lacey: They would represent the community that we have. Therefore, if there is a large proportion of over fifties, then, yes, that will be represented. It goes on the parish.

  Q219 Mr O'Brien: The meeting you attend?

  Mr Lacey: The meeting I attend, I would say it would reflect the whole parish, and therefore the over fifties, the grey brigade, will tend to be, not a majority, but a significant chunk of the meeting.

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