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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC1120-v House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE TRANSPORT COMMITTEE
LOCAL TRANSPORT PLANNING AND FUNDING
Wednesday 5 July 2006 SIR MICHAEL LYONS and MS SALLY BURLINGTON Evidence heard in Public Questions 409 - 452
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Transport Committee on Wednesday 5 July 2006 Members present Mrs Gwyneth Dunwoody, in the Chair Clive Efford Mrs Louise Ellman Mr Robert Goodwill Mr John Leech Graham Stringer ________________ Witnesses: Sir Michael Lyons, leading the Independent Inquiry into Local Government, and Ms Sally Burlington, Head of Secretariat, Inquiry into Local Government, gave evidence. Q409 Chairman: Sir Michael, may I begin with a most heartfelt apology. I am very sorry that we have let the timescale slip so markedly. We were assisted slightly by the business managers in the House who insisted on votes in the middle of it all but I do apologise to you both and I hope you will forgive us. Sir Michael Lyons: Not at all. Thank you. We are very pleased to be here. Q410 Chairman: Can I ask you to identify yourself formally for the record and also introduce your colleague? Sir Michael Lyons: My name is Michael Lyons. I am currently leading the Lyons Inquiry into the future functions and financing of local government. I have a number of other roles and if it is helpful to you I will draw upon all my experiences in answering your questions. I am joined by Sally Burlington who is team leader for the inquiry. She is here only to support me on matters of fact and detail and I hope you are happy on that basis. Q411 Chairman: Of course; we are delighted. During your inquiry into local government what consideration you have given to local transport policy? Sir Michael Lyons: I am not required, and I am frankly not able in the time and resources I have, to do a detailed review across the full breadth of local government's responsibilities. Having said that, I am interested in everything that local government does and I have picked a number of areas to look at in greater detail. Transportation emerges under two headings: first, the issue of place-shaping which, as you might have seen in May report, I am emphasising as arguably the best way of encapsulating the broader responsibility of local government for the place for which it is responsible: its future, its economic, social and environmental wellbeing. Clearly, transportation issues are a very significant contribution to that. I am looking, although again in a limited amount of detail, at issues of infrastructure and how they might be better funded in the future, so again transportation comes up under that heading. Q412 Mrs Ellman: We have been told by witnesses to our inquiries that transport is not seen as a high priority by local councils. Would you recognise that sentiment and why would you think that is the case, if indeed it is? Sir Michael Lyons: I am not sure I would say that. However, what I have drawn attention to, and I am not the first person to do this, is that, as around local government there has developed a much stronger performance management framework by central government, that has tended to dictate the priorities at a local level, and indeed one of my conclusions is that I think the central performance management framework has had too strong a gravitational pull and local government spends its time looking up for instruction and guidance rather than concentrating on the issues germane to its locality and the people it represents. Certainly in talking to the business community throughout the last 18 months about issues of local business taxation the point they have made to me is that they feel that local authorities have in recent years become preoccupied by meeting national targets and that some important local issues like infrastructure investment have enjoyed rather lower priority. I would just be a bit more cautious about the conclusion because in talking to locally elected members I do not feel that there is a reduced interest in transport. I think good local leadership still recognises that that is an important part of the package. Q413 Chairman: You have said in your report that you think local authorities could have a greater influence over matters that affect economic development, and you cite transport as one of those issues. What kinds of changes do you envisage? Sir Michael Lyons: My initial conclusions in the main report say that first Government should reduce the weight of that central direction. If you want people to do good place-shaping they need to be looking out to their local responsibilities, their local community, their local business community and the future, and whilst they are looking up for guidance that is not going to be done as effectively, so I have very clearly come to the conclusion that there is an issue about taking the weight off them. Interestingly, the research which the Department for Communities and Local Government is about to publish, I understand, undertaken by PricewaterhouseCoopers, reinforces this point about the weight of central expectation. That is one of the things that I am arguing for a change in. I can see that there clearly is a job for local government to do in getting rather better at engaging at a local level with all aspects of its community and there may be a case for additional powers but my provisional conclusion, and I have to test this over the remaining months, is that the biggest issue is one about flexibility - the flexibility to respond to local priorities rather than feel that you have been set an agenda of priorities from somewhere else. That would in my view naturally lead to local government taking a stronger interest in the quality of the local economy, the state of the local economy and, indeed, of course, we can still see outstanding examples represented by some of the areas that you come from still of councils which are giving a very high priority to the health of the local economy and its interaction with issues like social cohesion and the future state of the environment. Q414 Mrs Ellman: How are you looking at regional transport issues? Could you tell us how you define the regions? Sir Michael Lyons: The second of those questions is the killer, is it not? On the first one, I am focused on local government. Although my initial remit dealt with funding and included the question of how might we fund elected regional assemblies, I do not need to explain to you why my clients are not pressing me to do much work on that issue. It is difficult enough to encompass everything about local government in the time that I have got without going beyond that, but where it is relevant I am very clear - and in the May report that I have published I underline this - that some things have different spatial patterns and that place-shaping will mean different things for different areas and that it is not bounded by the administrative boundaries of the council. Sometimes councils, in pursuing the interests of their place and the people that live in it, need to work across a wider area, in a coalition, and we see it very well in, if can I pick for a moment, Greater Manchester. The councils of Greater Manchester transcend the problems of the peculiar boundaries of that area by working very effectively together, maybe not always, maybe it is difficult, but they do have a mechanism for working in that way. First, I am clear that there are some things that lie outside the boundaries of any particular council but are relevant to its health and prosperity. It is the responsibility of the council to build proper coalitions and sometimes that means, as it did in the Nottinghamshire coalfields and other coalfields during the times of the mine closures, representing those communities by going to Europe to campaign for new programmes to fund both transportation and other matters to aid the future of the coalfield communities. What I am clear about as a result of the regional visits that we paid last year, particularly the one in the north east, and we were in the north east not long after the vote against an elected regional assembly, was that what that campaign had done was clearly return a very substantial "no" vote against the assembly proposition, but it had also sensitised people to the fact that there were indeed a number of issues that needed to be looked at and dealt with at a regional level, so it was a slightly perverse outcome at one level. People now were clearer about the fact that there were things to be dealt with at a regional level but they did not want that particular proposition as the way to do it. This tends to reinforce, in my view, that until we come back revisit these issues (if we ever do) voluntary collaborative arrangements are the way forward. Q415 Mrs Ellman: At a very local level could you give any examples of where you think local PTAs or local authorities should have greater power and not be subject to a veto, for example? Sir Michael Lyons: As I take this work forward the one thing I have become clearer and clearer about is the fact that a debate about what local government does and what central government does can appear at times adversarial; it can appear as if it is a tussle for power, when in fact at both levels, putting aside temporary differences of political opinion, the ambitions are shared, and so (a) you cannot separate looking at local government from looking at the whole governmental system and (b) we would have a stronger level of public trust and effectiveness if we viewed the system as a whole and looked at how local government and central government could work better together. What does that mean in practice? I am coming to an answer and this is not just waffle. It is the job of central government to produce a framework; I am clear about that. I have tried to lay out those things which I think are the characteristics of a genuinely local decision. What I am clear about is that most things that are important to a local community are often a mixture of some central responsibilities and some local responsibilities and I hope by the time I have finished in December to be able to say more about how we define that. Transportation might be a very good example, so the answer that I would give you is that I can see that there is a case for a national framework; that is incontestable, I can see that there is a case for issues to be dealt with at a regional level, but I do think at times we have ended up with a level of prescription for what is done at a local level which inhibits local action and local experimentation. If we look at what has been achieved in London with a completely different regulatory regime on buses, and London is a peculiar case and there is room for debate about whether we are talking about an authority or a regional authority (although I do not think it is strictly a regional authority), we can see some local experimentation, some very considerable achievement in improving extra bus ridership and it seems to me that we would be richer as a country if that level of experimentation were available to other communities. Q416 Mrs Ellman: Are you looking for new structures or are you looking for Government to withdraw from some of its powers? Sir Michael Lyons: I am not required to reach conclusions on the structure of local government and I have been clear, given that there has been so much controversy around that, about trying to stay away from that debate. However, all of my experience tells me that reorganisation is a pretty wasteful exercise. It is not to say that you might not feel that sometimes you need to embark upon it, but if it can be avoided so much the better. I come down very strongly, and again that is the line I have taken in the May report, in favour of encouraging people to do things voluntarily by working together where they need to go outside their boundaries. Indeed, one of my conclusions is that local government should be more clearly given a convening role for drawing together different agencies, some of them representatives of national government, some private, to meet local needs. I think we have been through a period where successive Governments were wary about giving local government that job. Even when the local strategic partnerships were first set up there was an aversion to saying categorically that they should be led by local government even though that seemed the obvious solution, and indeed our experience shows us that where local strategic partnerships and local area agreements are working well it is because they are well led by the local authority. In short, I am in favour of co-operative arrangements but I recognise that sometimes if they are not working you have to take other action. Q417 Clive Efford: We have heard that the Department for Transport control of funding for major schemes is problematic for local authorities. Is it preferable for the Department for Transport to make more of its budget available to local authorities for major schemes or should there be some other form of raising funds locally? Sir Michael Lyons: If you will forgive me I am going to be careful not to go beyond the bounds of my current knowledge and expertise so I am going to dodge the first question and instead concentrate on how else might you do it. There all I can really say is that this is the heart of the work that I will do between now and December. I do have to come to conclusions about whether the case for greater flexibility for local government to raise more of its own money is strong enough to warrant changes and, if so, what those changes might be. All I have done is to start work on that. I have got some modelling going on. We have done some international comparisons, and indeed what comes out of that, which will not be news to you, is that the British system is distinctive in a number of ways but most in that we are right at the bottom of any ranking that you might create in terms of the amount of money which is raised locally by local government. This is a highly centralised system. There are plenty of those arguing to me and publicly that there should be more flexibility, but at the moment as far as I have got is that I am very clear about the case for greater flexibility. I can see that there is a link to local taxation. I am concerned that public understanding of the basis for local taxation is very weak and therefore the room for manoeuvre for any Government to decide, "Let us move to more local taxation", is limited. It is not a question of what ministers think. It is what they have got the space to do. That is what I am focusing on. Q418 Clive Efford: So if you were to go down that route and recommend means of raising funds locally do you envisage that being available for major transport schemes? Sir Michael Lyons: If I were to recommend more local taxation, and it is important that I put this into context, I would probably see that in the context of a change from national to local taxation. It is not a question of more taxation. The trouble is that the public hear this debate as just taking more money rather than taking it in different ways from different people, or maybe from the same people but in different ways. I shall get myself into a deeper hole if I am not careful here. One of the potential arguments is that this would help local government to respond to the demands for capital investment. It would provide the revenue stream to achieve that. It is not the only revenue stream and you will see again in my main report, and indeed the report that I produce in December, that I acknowledge that there is an alternative to taxation, and that is charging and that can have its part to play here. Again we go back to the progress in London on the buses and that is in part about having access to the fare box as a way of underpinning investment in buses and other infrastructure. Q419 Clive Efford: Do you get the impression that businesses would be keen or willing to invest money in major improvements in transport infrastructure? Sir Michael Lyons: On one level the answer is that you know from evidence that has been given to you that the business community are interested in supporting Crossrail and have made it very clear that they are interested in investing. Q420 Chairman: Their interest gets a little less, Sir Michael, when they are asked for money. Sir Michael Lyons: I can see why you might have reached that conclusion. My understanding is that it is not the principle; it is the price, like with so many other things in life. In short, where this came to my attention most clearly was while I was being approached about infrastructure projects in the debate about relocalisation of the business rate, which is one of those things that I was asked to look at, and where the business community at a national level are quite clear that they want to maintain the uniform business rate. That would not be surprising given that it has the certainty of only going up by the rate of inflation and now represents a smaller proportion of the cost of local public services than it did when it was first nationalised. It is not surprising that they would find that an attractive proposition, but when you get beyond that into more detailed discussion consistently business communities have said to me that they do not believe that local government, as a result of the severed link, pays as much attention to the needs of business as it once did. They want to see issues, including infrastructure and skill issues, back on the local agenda and given higher priority, and they go from that to saying on occasion, not consistently, that actually it may be that that would require a bigger contribution from the business community, but they want to feel that the purpose is identified and they certainly want to feel that the money is spent locally, and that is a challenge in our very complicated and ambitious equalisation system. Q421 Clive Efford: Have you explored the potential for raising resources through capturing landowners? Sir Michael Lyons: Not in detail. We have done a little bit of work on the US system of taxing from in-funding and are watching with great interest the debate and possibly experimentation on planning gain supplement, so clearly this is a live issue and I hope to learn more by the time I finish my work in December. Q422 Clive Efford: PTEs have said to us that Transport for London has the benefit of receiving the revenues from the fare box and that this is something that they would benefit from. Have you looked into that at all? Do you have a view on whether we should change that? Sir Michael Lyons: Within the review that is not an area that I have looked at. However, I was very taken, and at the moment I am acting Chair of the Audit Commission, by that piece of work done with the National Audit Office on supply chain analysis, looking at the PSA for increasing bus ridership, and the lesson that I drew from that study is very clearly that it is the political leadership and the different regulatory framework in London that explains the difference in terms of the improvement in bus ridership in London compared with other parts of the country. Graham Stringer: I like that answer a lot. Let me start with a general question. Given your distinguished background in local government, Sir Michael, do you not, rather than being diplomatic, sometimes just want to sit back and scream that the emperor has no clothes? How dare the Government that runs the Home Office and various other offices of state tell local government that has never run anything as badly as the Home Office how to do it? Q423 Chairman: I think that is called leading the witness, Sir Michael, but by all means do comment if you want to. Sir Michael Lyons: I think the comment stands without needing embellishment by me. Q424 Graham Stringer: I will take your grin, which does not get into the record, as agreement. In quantitative terms we have been trying to establish the cost of central government control and interference in local transport plans. It is quite difficult to quantify. We have had witnesses here who say, "We spend an awful lot of time on this, there are abortive costs, there are real costs to preparing things that, if we did not have to talk to the Department for Transport, would be less". Have you attempted to quantify that? Sir Michael Lyons: No, I have not, although some of the evidence that has been submitted to me tries to give some quantitative support to that argument and it has been a pretty consistent argument coming from local government. Can I though refer you back to the piece of work which is about to be published from the Department for Communities and Local Government undertaken by PricwaterhouseCoopers? It is not a deep piece of work but it does include some metrics in terms of the balance of a call for information from local government, which actually comes from central government, as opposed to the needs of local communities, and I think comes to the conclusion that 80 per cent of all of the information that has been collected is about central accountability as opposed to local accountability and then goes on to estimate the cost for a small number of authorities of responding to the regulatory and inspection regime, and those figures are pretty substantial. Q425 Graham Stringer: That is rather interesting because it is the other side of the argument, is it not, that if there is going to be an increase in business rates or a sales tax or some other kind of tax, and nobody likes paying taxes, that is going to come to be controversial, but if you can show that central government regimes or a CPA system or whichever system it is, has a huge cost to it, you can put that against it? Do you not think it is really very important to try and quantify that beyond just general percentage information in the system? Sir Michael Lyons: I would absolutely agree with that. You just have to appreciate, if you will, that I am still in mid work rather than finished. I will have to do some rationing about which things I delve most deeply into but I think it is a point well made that you might well expect at the end that I would be able to say something that is rather more detailed on these issues. Can I develop a point, if you do not mind, about essentially the point about efficiencies because I have emphasised throughout the work I have done so far the importance of seeking both greater efficiency and moderation of the pressures for more public expenditure, and that leads me even more strongly to point towards greater local flexibility. I have used the word (not the only word by any means) "co-production" to cover a range of issues where, if you work with citizens at a local level, you can tailor services more carefully to their needs and get into a debate about what are those things that really should be coming out of the public purse and which are the things that should come out of the private purse. It seems to me that transportation includes some interesting illustrations on that about how you make decisions on how much is done by foot journeys, how much is done by bus, how you co-ordinate different transportation arrangements to improve the efficiency of them coming together, which are issues that can only be dealt with at a local level. There is efficiency here that would avoid the need for additional expenditure; I just want to leave that point with you. Q426 Graham Stringer: I would like to follow with a question on city government. I was on the Local Government Network Commission looking at city-regions and city government, whatever you want to call it, and we came to the conclusion, which I suspect is the basis for what you are doing, that you have to have a step-by-step process; you cannot go back to 1972 or 1974 and restructure the whole of local government. Do you believe that there is a quid pro quo between passing powers and resources back to Government and increasing the involvement of the electorate? If you are going to give extra powers to passenger transport authorities do they either have to be directly elected themselves or does there have to be an elected mayor, or would you, in the middle of that, just allow the voluntary arrangements that there are currently to be formalised in legislation? Sir Michael Lyons: I do not think I have a final position on this but a provisional position might read as follows, that there certainly is an issue of accountability, and indeed one of the issues that I am looking at is that if you were able to separate more clearly those things which are genuinely local responsibilities from those which are central responsibilities it is possible to contemplate a more contractual approach between central and local government for those things which are a matter of central government's accountability. That only works if you do not have too much in that box; otherwise we do not move from where we are. There is an issue generally about improving the effectiveness of local accountability. My strong suspicion from the work I have done so far is that that is not going to be evolved unless it is clearer what is decided at a local level. The electorate are not hoodwinked. They know that there is limited scope for a local authority to act within the current framework. Turning though specifically to your questions about PTEs ----- Q427 Graham Stringer: PTAs actually. Sir Michael Lyons: Sorry, forgive me: PTAs (and the PTEs that were before them), they are distinctive. I have worked in Birmingham and for the former West Midlands County Council. They are distinctive in the metropolitan areas in not being able to precept their levying authorities. That means that they work much closer with the local authorities and it seems to me that has got some strengths for accountability through existing elected arrangements. I am a bit wary about the idea of introducing new electoral arrangements for city-regions, especially whilst we have such a woolly idea of what a city-region is. There is room for debate here but the former metropolitan counties do not in my mind constitute city-regions. They may be useful building blocks for sub-regional co-operation but if we take Birmingham, for instance, the notion that Coventry is part of Birmingham city-region takes some justifying, not least in Coventry. Q428 Mr Goodwill: Following on from one of Mr Stringer's earlier questions, we have seen a number of very ambitious transport plans, such as the Leeds super-tram, but there are other examples in the north west and the south west which have been not developed but planned at great cost to local people. Also, I think a lot of people's hopes have been dashed. Why are these things happening? Is it because local government is misreading the signals from central government? Is it because they are listening to local people but they are not able to convince central government of the need or is it just that the target has been moved halfway through, because it seems to be happening all the time and everybody gets very frustrated about it? Sir Michael Lyons: Again, I think that I would be a bit cautious about believing that I have got the whole picture but I can see some components of the problem. Certainly in part it is about changing regimes of encouragement. We have had different messages at different times about the extent to which these schemes would be funded and the balance of funding that might come from the centre. There is certainly something about these being run as if they are schemes where they are not fully costed as schemes that have to be locally financed. We do not live in a world in which any city starts from the presumption that it has to find a way of funding the whole scheme and has a set of freedoms for how it might enter into a contract with its people and businesses to fund that sort of investment. There is a sort of uneasy alliance of local ambition and a national framework for both evaluation and funding which I suspect makes for a more complicated situation. It is difficult to find where the villains are in this because it might well be that with a whole set of people acting with goodwill you still get outcomes which are less than optimal. Q429 Mr Goodwill: Do you think it is symptomatic of any scheme where people have to compete for funding that there is going to be an awful lot of wasted effort in participating in a competition where only a few can win? Sir Michael Lyons: It is a difficult question to answer, is it not, because undoubtedly at times we can see that competition has resulted in innovation and creativity, but if the balance of losers to winners is too large eventually it discourages people from trying. I cannot give you a yes or no answer to that, I am afraid. Q430 Mr Goodwill: On a slightly different tack, you talked about local accountability. Those of us who live in areas with two-tier local authorities, three tiers if you count the regional and parish councils and Europe as well, do you feel there is an understanding in the population as a whole as to exactly who makes what decision in terms of transport and how that is funded or do you think there is widespread confusion? Sir Michael Lyons: I think all of the evidence suggests that there is weak understanding about who is responsible for what. There is a very brief understanding about the value of the tax pound raised through council tax. That is one of the things that I have drawn attention to. People feel they are paying a much larger proportion of the cost of local services through their council tax than they are in reality, and there is no doubt at all that multiple tiers do add to this opaqueness. Also, of course, it is not just about whether or not there are one, two or three tiers of local government. In part it is because it is not clear about what is central government's responsibility and what is local government's responsibility. One of the ambitions I have, and whether I can measure up to it I do not know, is to try to offer some lessons about how we might separate more clearly those things for which Government should properly be accountable from those things that should be left for local decision-making. The problem is that it is the bits in the middle which are shared which are the most complex and that is often the case in two-tier local government as well. The only point that I would make about multiple tiers of government is that although the public might not have a very good understanding of it they may have some very considerable loyalty to it. I found this during the 1991-1996 reorganisation where people's loyalty to place was very complicated. They could simultaneously be quite loyal to a small area, sometimes well captured by district boundaries, and at the same time to their county. The original view that all you needed to do was go out and talk to people and you would then be able to draw felt-tip pens around distinctive communities is always going to be elusive. Q431 Chairman: The difficulty is exactly that tension, is it not, in transport, Sir Michael? Sir Michael Lyons: It is. Q432 Chairman: What we would like to know is where you think the boundary should be drawn. For example, if central government is providing the finance, almost all of it, for a local scheme because it is a major scheme, should the department have the right to reject those schemes if there is something which fits in with the Government's national transport policy? Sir Michael Lyons: Again, let me be careful not to go beyond what I understand but to give you as fair a response as I can and I base it in part on the experience of being Chief Executive of Birmingham for seven years. The truth is you are never going to be able to map the outer perimeter of the commuting, shopping, pleasure journeys that take place around the city of Birmingham. They are changing regularly and they are certainly changing over time. Once you accept that you cannot map these carefully then on the issue of how you set the boundaries you accept that you are never going to be able to fix them and so it is better to look for virtual arrangements which are flexible but effective. I do not claim for a moment that we have got those. There were certainly anxieties about how the PTA worked in the West Midlands but on the other hand it has been around for a while and has not done a bad job in providing public transport over that period. If I put that into the context of essentially what is the responsibility locally and what is it nationally, the trouble with the current system, I suspect, is that we just see too much in the box of national responsibility. It does not leave enough flexibility at a local level. Q433 Chairman: The difficulty is that it is still going to be there while you have the money coming from one source, is it not? Sir Michael Lyons: I absolutely accept that and, of course, you go straight to the heart of the work that I am doing. There the challenge for me, and for those who would make the case for more local taxation, is that I am sold on the idea of greater local flexibility. I am clear that that would be a benefit. I am clear that the public have a woolly idea of how their local tax is spent and therefore their resistance to more local taxation, and there is I think a debate still to be finished about whether, as this all comes out of the pocket of the taxpayer, it is only because of the way that we behave that some of it is seen as central government's money and some of it seen as local government's money. There are potentially institutional arrangements which would see it as taxpayers' money and the exact pattern of local and central expenditure would be negotiated. You do find countries where that works well. I have not just dropped off the Christmas tree. I know that might be a difficult proposition to achieve in this country, but at least it needs to be considered alongside the proposition of more local taxation. Q434 Chairman: Are the department right to accept four shared national priorities for transport? Sir Michael Lyons: I do not know that I can give you an answer to that. Q435 Chairman: You are looking at balance, are you not, very specifically between local and national? Sir Michael Lyons: I am. Q436 Chairman: Their particular priorities are accessibility, congestion, pollution and safety. You say that we have to prioritise so which of those should we change? Should there be a limit on the department's involvement in local transport? Should it be able to change those priorities? Sir Michael Lyons: I have not done the detail of mapping of responsibilities in transportation yet but let me not avoid giving you an answer. I think the danger is that in a climate where, through a number of changes, local government is seen to be very much the agent of centrally established priorities, those priorities become overwhelming. I think my challenge to the authors of those four would be, what does it leave for local determination? What does it leave for Bradford to make decisions about what is distinctive in Bradford as opposed to what is distinctive and necessary in Bristol? If the framework does not leave enough room then I think you end up with what we have got, which is local government not seeming very powerful to the people that it represents, the feeling that decisions are taken remotely with arguably rather less innovation and value for money than you might get from getting a different balance. Q437 Chairman: The transport system in this country and the Government's policy in relation to transport have always been based on the assumption that you must have modal shift. The argument is always that to get that you have to have a policy that is both carrots and sticks. Why do you think decentralised local government has a better chance of achieving that than centralised government with all its planning equipment? Sir Michael Lyons: I think my case would rest on the success of one of the most centralised planning systems in the western world. It has not delivered all that we want to achieve, and I think that is why ministers are beginning to question whether they themselves might not see that a different partnership with a different balance of national and local responsibilities might deliver more forcibly. What I am interested in is that very often and for different Governments ministers have found it interesting to go to the United States for inspiration. Why is it that they go to the United States? Because it is a federal country and there is experimentation across the country as a whole, and you can easily disregard the things that are not working and concentrate on those things that are working very well and use them as case studies. We do not draw the secondary lesson from that, that actually more experimentation in this country might lead to some extra lessons that you could then disseminate across the country as a whole. Q438 Graham Stringer: Is the real driver of that decision that if you are going to decentralise properly central government has to take its hands off and allow failure? Sir Michael Lyons: Yes, it does, and the consequences of that. It does not mean you cannot put in place warning systems and arrangements which tell you when something is going off the rails - and it might be literally in this case. Q439 Chairman: What worries some of us about the concept of city-regions is the idea that within that structure smaller areas might easily find their interests particularly difficult to achieve. You have made it very clear that you think it is the flexibility of the response to the local population that is important but do you not see that there might be the same tensions between a large city in a city-region and the smaller areas around it that there are in effect between central government and local government at the present time? Sir Michael Lyons: Oh, for sure, but those tensions exist anyway, do they not? In seven years in Birmingham I was constantly being upbraided by the members representing individual wards about why it was that we were continuing to concentrate investment in the city centre and not doing exactly the same thing in Balsall Heath or Small Heath. Those tensions exist inevitably and that is why this is a political process rather than a technical process of making those public choice decisions in an open way and a way that you can explain to the people that elected you to do them. All I am saying is that that is the reality and it does not need me to argue that you have to have new structures, as long as you have elected representatives who can explain why those decisions were reached. Q440 Chairman: Have you looked at the difficulties about having separate capital and revenue streams? Sir Michael Lyons: It is one of those things which I am continuing to look at. On one level there will always be separate accounting arrangements just because they are essentially different decisions. Indeed, in this country we have moved to greater flexibility in terms of the funding of capital projects, which is only to be applauded. Q441 Chairman: We have heard that whole life costing, good asset management and strategic transport planning would be better served by integrating funding streams. Is that your view? Sir Michael Lyons: I would sympathise with that but it is not something which I have yet reached a final conclusion on. Q442 Chairman: But you are going perhaps to look at it, or not? Sir Michael Lyons: If I have time and the resources. Again, this is about what I can achieve in the time that I have. Q443 Chairman: Do you think we ought to ring-fence the revenue for transport because it does not always get the same initial support? People want good transport schemes but if there is a clash between, say, essential services and education at the local level and transport it does become the unloved runt in the litter. Sir Michael Lyons: The trouble is, of course, that once you start arguing for ring-fencing you end up in exactly the position we are in. We are in the position, some would argue, of not spending enough on transportation and environmental issues because we have ring-fenced the schools budget and other budgets to the point where the room for local flexibility is limited. This is one of those things where you have to suck with a long spoon. Q444 Chairman: Talking about sucking with long spoons, the Secretary of State said on the Crossrail Bill in Second Reading that no decision would be taken on the funding of Crossrail until Sir Michael Lyons' review of local government planning had been published. Sir Michael Lyons: Yes, I remember him saying that. Q445 Chairman: Why is that? Sir Michael Lyons: I think he might be the better person to ask, to be honest. Q446 Chairman: Oh, we are not about to ask him. Sir Michael Lyons: I am sure you are not. I think that he had in mind that I would be looking at the general balance of relationships between central and local government and that would inevitably capture the funding of big infrastructure projects. What I have said to you is that in as much as resources permit I will be seeking to come to some answers on that front. Q447 Chairman: Have you got a preferred option or are we asking too soon? Sir Michael Lyons: You are asking too soon. Q448 Chairman: Are you looking at the merits of funding Crossrail through local revenue sources? Sir Michael Lyons: I am interested in the issue, clearly, from what I said earlier on about flexibility and this might extend to flexibility to raise more money locally. I do find alluring the freedom of cities like Chicago to have entered into a contractual relationship with the businesses and citizens of those cities which have enabled them to fund the changes that they have brought about in those cities. Chicago is just one example of a freedom that you see certainly in North American cities and elsewhere in Europe as well. Q449 Chairman: But you are looking at those other factors - economies of scale, the size of an area like Chicago? If those sorts of examples are to be drawn from other societies then presumably you are going to be aware and you are going also to enunciate the fundamental differences and the difficulties that would arise as well as the advantages? Sir Michael Lyons: You are absolutely right to remind me that there are no simple solutions in this world. The thing I am hesitating over, and you will see that very clearly, is that this lies at the edge of my remit. I am very clear that with the resources I have got I have to answer the core questions of my remit. If I am able then in doing that to offer some insights which help in the wider debate, and that is what I sought to do in the May report, then I would be very pleased to do that, and I do take an ambitious view of the remit, but at the end of the day I have some very specific questions to answer about fairness of council tax and the case for flexibility. Q450 Chairman: That seems to be a very realistic approach, but can I ask you do you agree that if the money is to come from an amalgam of council tax and non-domestic rates, the price box will increase and we are likely to experience significant rises in rail, underground and bus fares to pay for things like Crossrail? Sir Michael Lyons: That sounds like a sound proposition if all of those assumptions held to be true. Q451 Chairman: Yes, it is an interesting quote. Sir Michael, you have been very diplomatic. You will understand that this is a debate which is going to exercise this Committee as well as other instruments of government for a long while to come. Let me ask you just one final thing. You will be asked inevitably to prioritise those areas in which you think local government ought to be more flexible than it is able to be at the present time. Is transport going to be on that list? Sir Michael Lyons: I am very clear that the place-shaping role that I defined is about improving the economic and social and environmental well-being of an area. I am clear that transportation makes a very big contribution to that, so I would go as far as I can and feel safe in making recommendations about the rebalancing of responsibilities in this way. Q452 Chairman: That is an extremely optimistic note on which to end. We are enormously grateful to you for finding time, I know that you are very busy, and you will not be surprised if we continue to press to have all our priorities put at the top of your list in the future. Sir Michael Lyons: I would only expect that. Thank you for being accommodating on your timetable, I know it has been difficult. Chairman: Thank you both very much for coming. |