Examination of Witnesses (Questions 140
- 159)
TUESDAY 25 OCTOBER 2005
RT HON
DAVID MILIBAND
MP, MR PHIL
WOOLAS MP, YVETTE
COOPER MP AND
JIM FITZPATRICK
MP
Q140 Sir Paul Beresford: Last year
when we had this discussion it turned out that the savings were
going to be recycled and the taxpayer would not have had any gain.
Is that correct now?
Mr Miliband: These are three-year
settlements. The old system was one where whenever the Department
saved any money the Treasury came along and said, "Thanks
very much. We'll have that." The three-year budgeting exercise
means that if we make any savings in-year we can carry them forward
into the next year. At each Spending Review it is open to the
Government as a whole to decide whether it wants to reward people
for the efficiency savings they have achieved or take them away.
Q141 Sir Paul Beresford: So effectively
they are as last year, they are going to be recycled?
Mr Miliband: We have moved on
to three-year spending which I think is seen as a good thing right
across the political spectrum, not a bad thing.
Q142 Anne Main: You said earlier
that there is real clarity behind the document for sustainable
communities. We have some budgetary concerns. For example, on
the total costs for renting affordable housing, this will need
a public subsidy of £50,000 per dwelling. This has been the
figure estimated in Hertfordshire, south-east Bedfordshire and
Essex. If there is this clarity between departments, are there
appropriate mechanisms and sources of funding for the delivery
of this?
Mr Miliband: I hope it is alright
if I ask my colleague to answer that specific question, Chairman.
Chairman: I think we may have leapt on
in our questions.
Q143 Anne Main: I am not talking
about infrastructure, I am talking about the crossing of departments
where the Government is going to have to be, for example in sustainable
communities, looking for subsidies for dwellings and I am just
wondering which pot this is going to be coming out of.
Yvette Cooper: Are you talking
about funding for affordable housing?
Q144 Anne Main: Yes, social, rented,
affordable housing for the three counties I have just mentioned.
Yvette Cooper: The funding for
affordable housing will come primarily from two sources. There
will be some that comes from Section 106 agreements and from local
arrangements, but the main amount comes through the funding that
goes through the Housing Corporation. They do have efficiency
satisfaction targets that they are expected to make and in fact
they have made quite considerable progress in terms of their savings
over the last period. They look at things around procurement,
possible savings around a whole process, about the way in which
homes are commissioned and such things in order to make those
savings. They have been relatively successful to date in terms
of the savings that they have made.
Q145 Anne Main: You mentioned the
Section 106 agreement. The £50,000 per dwelling figure Timms
was commissioned to look at and the developer's subsidy was estimated
to be £20,000 plus free land. You are confident, are you,
that the efficiency savings could be delivered on a local level
to deliver that subsidy?
Yvette Cooper: We think that the
Housing Corporation is already delivering savings in the way that
it procures homes for affordable housing. We also are trying other
and innovative ways to try and get savings in different ways,
for example by widening the number of providers who can come forward
and build affordable housing so that it is not simply done by
RSLs, other private house builders can come in and do so. We are
also hoping that the RSL sector and social housing sector will
benefit alongside the private house building sector from the design
to manufacture competition to build a house for £60,000 which
is underway at the moment and which there has been a lot of interest
in, because we think that this is another way of reducing construction
costs as well which is something that we need to push forward
into the future.
Q146 Chairman: I want to take us
back to the "core narrative" document. The second critical
project is "supporting robust local government finance; securing
a strategic role for local government". We had a discussion
with the officials last week about the consequences of the Lyons
Review being extended by a year so that the current system of
funding local government is likely to continue at least until
2007 if not beyond. How are you going to support robust local
government finance given that a decision on any reform of the
council tax has been put off for a considerable length of time?
Mr Miliband: This is something
I have been working with Phil Woolas on. I am very happy for him
to chip in. The Lyons Review has been set up to look at the reform
of council tax, but our responsibilities in terms of running the
system remain and obviously we have to make sure that we take
an appropriate approach to the setting of council tax next year
and the year after and that is what we are determined to do.
Q147 Sir Paul Beresford: Are the
local authorities going to be able to use the same sort of smoke
and mirrors that your departments are using on efficiency savings?
Mr Miliband: I do not recognise
that description.
Q148 Sir Paul Beresford: I think
local government does.
Mr Miliband: I do not know if
you are saying that the local government numbers that have been
produced by local authorities themselves are smoke and mirrors;
that is something that I would not want to say.
Q149 Sir Paul Beresford: Neither
did I.
Mr Miliband: Good, in that case
we agree. I certainly would not want to say that dedicated public
servants or people who volunteer to stand for election on their
council would put forward figures that are not robust. I think
they are as determined as we are to make sure that we get the
money to the most important places.
Q150 Sir Paul Beresford: You are
sliding round the question. Perhaps I will come up with a slightly
different one. Is the Department going to go out of its way to
help local government reduce costs, because a considerable proportion
of their costs, particularly those that go directly into the council
tax and are exaggerated by gearing could be removed if the Department
stepped back from its leaning on local government? I am thinking
of CPAs, all the inspections, the audit inspections and the bureaucracy
that is required by any action virtually that local government
wishes to do.
Mr Woolas: In answer your first
question, the overwhelming priority of our policy on financing
is to provide stability and to provide predictability, hence the
advantage of the goal of setting three-year settlements and to
align those three years with the three year overall Government
Spending Reviews. Within that policy we accommodate the Gershon
agenda which is designed to deliver savings for improvements to
front-line services and to reduce pressure on council tax. As
for your second question, is it the policy to reduce the burden,
the answer to that is an emphatic yes. The changes that have been
made already in the Audit Commission CPA regime do that, the moves
towards the smaller number of inspectorates do that and the reduction
in performance indicators, particularly backed up by the development
of local area agreements, also do that. I can report that the
central and local partnership that we have with local government
has a cross-party consensus on those two overwhelming goals. Obviously
you will want to discuss over the course of months and years whether
we are achieving those and whether we are on target, but I think
it is a fair point that has been made.
Q151 Alison Seabeck: I want to ask
you about local government funding and re-valuation. At our last
evidence session I asked Neil Kinghan if the ODPM had shared any
data with Sir Michael Lyons prior to the decision being reached
to postpone the re-valuation. Mr Kinghan said the Department had
not had a report from Sir Michael Lyons. On the following day
in the House of Commons Sarah Teather for the Liberal Democrats
quoted a figure of 2.2 million losers. I should add that I also
asked Mr Kinghan how many winners and losers there would be in
the process. Sarah Teather quoted a figure of 2.2 million which
she had gleaned from a meeting of SIGMA at which a minister from
the ODPM had given those figures. Can you tell me how the Department
got those figures? Are they based on any information gleaned from
the re-valuation or from another source?
Mr Woolas: I am very grateful
for the opportunity to deal with this because this issue did come
up on the floor of the House as well as in that meeting in the
Committee corridor of the Special Interest Group of Metropolitan
Authorities and I think there has been some misunderstanding as
to the nature of this information. During the course of the summer,
before our announcement on 20 September, there were many varied
estimates as to the potential number of winners and losers as
a result of the proposed re-valuation exercise and that number
and variety of estimates was perpetuated by the reported situation
in Wales. The 2.2 million figure is one of the figures that was
used and is derived from the fact that that figure is 10% of 22
million, which is the total number of homes that would be re-valued
in an English re-valuation exercise. The figure that was quoted
has no official status. It is one of a number of estimates that
were in the public domain. It would not be possible to give absolute
estimates before any banding consideration were given.
Q152 Alison Seabeck: So this has
not come from Sir Michael Lyons?
Mr Woolas: No. The figure of 2.2
million came from the fact that one of the comments that had been
made in public, in response to the debate, had been that if only
10% of homes were to have their bands changed, then that would
be the number. I would just like to say for the sake of clarity
that the other statistic that has been used is the figure of £38
million which was the budget estimate made by the Valuation Office
Agency as to the potential costs of dealing with appeals following
re-valuation. That figure was in the public domain from a parliamentary
answer that had been given in July.
Q153 Alison Seabeck: On the issue
of costs, how much has been spent so far on re-valuation and how
much has been saved? If we do not have another re-valuation until
2010 or beyond I assume current data will be a bit useless and
we will have to start all over again.
Mr Woolas: The most accurate figures
that we have on this information is that £45 million has
been spent on the preparation of the re-valuation, which is a
resource that can be of benefit in future work and future re-valuations.
That is essentially in lay terms data capturing and computerisation.
Of course one needs to update the data, but that would be a cost
that was there anyway. Around £15 million was money that
was spent in preparation that will not have a pay back. There
were various figures used in the budgeting exercise. The most
accurate figure that we had at the time was of £38 million
budgeted for the potential cost of appeals, not all of which would
be extra money. I think the figure was £140 million including
all the costs. It is not possible to provide exact budget figures
because some of the work for a re-valuation exercise is work on
fixed costs and the Valuation Office Agency will not have it.
There is no doubt that, as we explained in our statement and as
we explained in the debate in the House, we announced the decision
when we did in part to avoid further costs being incurred that
were unrecoverable.
Mr Miliband: For the record, the
report that Mr Kinghan was referring to was the report that Sir
Michael Lyons is publishing before the end of the year.
Q154 Alison Seabeck: In the autumn?
Mr Miliband: Before the end of
the year.
Q155 Chairman: If ministers did not
have a detailed analysis of winners and losers, what was the basis
of their decision to delay the process?
Mr Miliband: We laid this out
in our statement on 20 September, which I think was printed in
Hansard on 10 October when the House came back from its summer
holiday, which is that we had had discussions with Michael Lyons
on his work so far. We also knew that there were significant changes
underway in local authorities, changes to the development of children's
trusts, changes to the development of the work of the police on
neighbourhood safety issues and changes to do with the devolution
of powers to neighbourhoods. Secondly, we knew that there were
significant changes in the local government finance system as
well, most notably the move to three-year budgets. Thirdly, we
were concerned to ensure that the financial reform should follow
confidence and understanding about the changing role of local
government and clarity about how those arrangements bed down.
We think that the financial reform of council tax or re-valuation
needs to follow that debate about the functions. Michael Lyons
himself said that he believed that well-founded representations
about reform of council tax needed to be based on a greater public
and elite level of understanding and consensus about the role
of local government in national life.
Q156 Chairman: When can we expect
a fairer system of council tax to be introduced? What is the timescale?
Mr Miliband: There are obviously
changes that can be made in the short term within the existing
legislative framework. Last week in early PM questions I was asked
about council tax and benefit take-up which is an important part
of this whole agenda. Those things can be done in the short term.
In the longer term the timetable we set out is for Sir Michael
Lyons to spend the next six or seven months or so looking at this
changing role of local government, to turn in the second half
of next year to the financial issues and report at the end of
2006, and that fits very neatly with the Comprehensive Spending
Review that is now scheduled to complete in the summer of 2007.
Q157 Mr Olner: This concerns me a
little because we are moving down avenues of regionalised police
forces and what have you and there will be various precepts for
fire and rescue and for the police coming from an amalgamation
of authorities. How is that going to be dealt with? When do the
re-valuations get that sorted out? There are vast differences
between values of properties in neighbouring areas. Will it be
one precept that is being taken for police and fire and rescue
in the future?
Mr Woolas: There are parts of
the country, as Members will know, where the precept for authorities
that cut across unitary and two-tier authorities are already in
place. The upper tier authority in local council terms is the
basis for the raising of the precept, but obviously the point
that has been made is one of the points that have to be considered
in the re-configuration of any police authority, as and when that
takes place.
Q158 Mr Olner: How much work have
you done on that?
Mr Woolas: In the review of the
funding formula the police precept is obviously part of that consideration
which the Home Office leads. In moving towards any possible changes
in that one has to then determine the building authority which
differs in different parts of the country and we estimate that
work is quite straightforward and does not form a significant
part of such preparations should that take place. It may be worth
adding that the significant cost pressure in the police and fire
services is pensions, which is another major priority that is
covered in the report.
Jim Fitzpatrick: I would like
to respond to Mr Olner's supposition that we are going for regionalisation
of fire services. I know he is aware that we had the Opposition
half-day debate on this very question. We argued quite strongly
from the despatch box that there is no imposed regionalisation
structure for the Fire Service. However, as a result of the 2004
Act, because of the Baine Inquiry, because of an assessment of
certain aspects of fire policy, resilience being the most important
one, the ability of the fire and rescue service to respond to
a major disaster, whether it is a terrorist incident or a natural
disaster, there has to be closer cooperation and collaboration
between fire authorities at a regional level to be able to cope
with the scale of the potential disaster. There were other suggestions
pointed out by Baine and by the Act in respect of recruitment
and training where some of the smaller brigades do not and cannot
operate a full-time training centre but where on a regional basis
it would be much more appropriate. On procurements, again smaller
brigades are not able to command in the marketplace the ability
to make the savings which they are able to achieve. So we are
moving towards more cooperative and collaborative structures.
We obviously have announced the regional control centres which
we can discuss if you want to move on to that because this clearly
is an area where we could only achieve the level of resilience
and the ability to operate at an appropriately efficient level
for the service and therefore for the safety of fire-fighters
and the public were we to go for that kind of a framework. We
have regional resilience fora across the country. We believe the
London Regional Resilience Forum is the furthest forward in terms
of its planning and its ability to deal with incidents. The 7
July bombing's demonstrated very effectively why it is so important
that we have these regional fora where all the emergency services
and local authorities and businesses, health and others can get
together to plan for disasters which we can now anticipate, whether
they are major floodings such as in Boscastle, in Carlisle and
Yorkshire, whether it is the 7/7 bombing or whether it is a factory
building collapsing like we had in Glasgow where 14 people died.
The ability and the need for the service to respond to these major
incidents requires the ability of the service to operate at a
different level than that which it has been used to. The Office
of the Deputy Prime Minister has bought for the service what is
called New Dimension Kits, which include high volume pumps for
flooding, which is detection, inspection and monitoring equipment
for chemical incidents and prospective dirty bombs, and search
and rescue equipment which is for collapsed buildings and the
like. This is several hundred thousand pounds-worth of equipment
which brigades on their own would not be able to afford. We have
purchased this equipment. The regional control centres is a £1
billion project. The firelink radio system, for which we are hoping
to announce the winning tender of contract for within two or three
weeks, is another aspect on the back of the September 11 World
Trade Centre bombing. On the back of an inspection of the Service's
ability to respond to these 21st Century disasters, we are putting
a lot of money into the service to help it to modernise to enable
it to respond to anything in terms of protecting the public that
may have to come its way.
Q159 Sir Paul Beresford: I would
like to take us back to the re-valuation. Thank you for that very
full response. I will be using it when I go back to my own fire
service. Re-valuation, would I be right or wrong to read into
the delay that you are having second thoughts about the fact that
local council taxation of whatever form should be based on a property
valuation?
Mr Miliband: No, that would not
be the right conclusion to draw. The Balance of Funding Review
looked into this in—
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