Examination of Witnesses (Questions 1-19)
SIR MICHAEL
LYONS
23 JUNE 2008
Q1 Chair: Welcome, Sir Michael, to this,
the first introductory session on our inquiry on the relationship
between central and local government. We have a slightly unusual
form at this time in the sense that we have not yet firmed up
the terms of reference for this inquiry. We are having two introductory
sessions to help us to firm up the terms of reference of the inquiry
and then we will put out a call for evidence more widely for the
subsequent evidence sessions. This may be a slightly more deliberative
evidence session than maybe the normal. If I could start, Sir
Michael, by asking you about your inquiry, which was extremely
lengthy, kept having its terms of reference changed and extended
just as you seemed to be coming to a conclusion which might have
required the Government to do anything, and then came up with
a lot of recommendations, very few of which the Government has
actually acted on. What do you think, on balance, your inquiry
actually achieved?
Sir Michael Lyons: Good challenge!
It certainly was an extensive piece of work, and perhaps that
is inevitable given that both the remit changed but also I almost
certainly contributed to that by, from the very beginning, making
it clear, both in the original commission and certainly in laying
out how I intended to go about that publicly, that I did not believe
that you could look at the funding of local government and its
services as a narrow technical issue, that you could only seek
to understand and make any useful conclusions if you—and
I used this metaphor at the time—opened the lens very widely
and looked at the constitutional relationship between central
and local government, the relationship between local government
and those that it serves and at its policy of engagement. If there
are any areas in which I can look at the finished body of reports—and
as you know, altogether there were three separate reports and
quite an extensive body of research that we commissioned, which
is all in the public domain—I think it is about drawing
attention to those issues, the relationship between central and
local government, the constitutional underpinning of that and
whether that is right for the current age. Certainly, I answered
narrow questions about the funding of local government but I also
had a lot to say about the place shaping role of local government,
going well beyond local services, in terms of the stewardship
of place. So inasmuch as an inquiry like this is as much about
how it educates public discourse, and I would like to think that
this might be said to have scored quite highly, I can clearly
point to areas in which it has influenced government thinking
and action.
Q2 Chair: Would you like to do that?
Just briefly point us at some areas where it has altered government
thinking.
Sir Michael Lyons: I can certainly
do that. Let me start with the issue of place shaping itself adopted
in the White Paper, my conclusions that local government first
and foremost needed greater flexibility—we might argue whether
it is adequately so or not, but reflected in a reduction in the
number of indicators, a substantial reduction in the number of
indicators by which local government is held to account; reductions
in the degree of reporting that local government has to do; the
place shaping role. I drew attention to the fact that local government
should be more clearly identified as a primus inter pares
in terms of the local partnership. That is reflected in the Local
Government and Public Involvement in Health Act in terms of a
responsibility on other bodies to consult with local government
and the broadening of scrutiny powers. The concordat is admittedly
a diluted version of the new constitutional settlement that I
recommended, but it is a step in that direction. I do not want
to sit here in any way as the person responsible for government
decisions; I do not believe that is my responsibility, but I do
see signs of Government having responded to my recommendations.
I could say more but perhaps I should stop there.
Q3 Chair: Those are clearly areas
in which it appears the Government has responded but overall,
it seems to be incredibly difficult for a government to grapple
with these large changes and to implement them. Although in opposition
each party has been quite keen on change, once they get in, they
seem to go off the idea. What could be done to remove those constraints
on a government in implementing really significant constitutional
change in relation to local government?
Sir Michael Lyons: I think your
question is at the very heart of the problem; it reveals the very
heart of the problem. I sought to respond to that in my work by
talking about the fact that there was no quick fix, there was
no set of simple changes. Basically, there were a number of things
that had to happen, and I tried to sketch out a pathway and in
my final report was quite explicit that that went beyond the life
of one government. Of course, you cannot start that sort of journey
unless you make some bold early steps, otherwise, as the baton
is handed over, the journey has still to be started. It leads
me, as it did at the time—and I had discussions with representatives
of all three political parties as represented at Westminster and
elsewhere—then as now, to believe that this has to be an
area in which there is some understanding about the progress being
made, otherwise you end up with a rerun of the debate that surrounded
my final report, and indeed an earlier report, that this could
all be distilled down to the revaluation of council tax, which
was frankly a by-line in the picture that I sought to paint.
Q4 Sir Paul Beresford: If my memory
serves me well enough, there was a Raynsford Committee and then
they passed the ball to you, which was very kind of them, having
come to no real conclusions. The big problem at the time, as many
people perceived—and I do not just mean Daily Mail
readers but people like that as well—was that the council
tax had gone up enormously in cost, and it had gone up since 1997
quite dramatically. There was the contention from local government—and
you touched on this in your answer—that the imposition of
penalties, scrutiny, targets, audits and so on and so forth, were
having a dramatic effect on the costs and gearing was multiplying
that. Did you really touch on that? Did you really look at it
and would you agree with local government's position on that?
Sir Michael Lyons: I looked at
all of those issues. You particularly focus on the relationship,
I think, between the work that I did and the work of the Raynsford
Committee under the heading of the balance of funding.
Q5 Sir Paul Beresford: I was not
just meaning the funding. Some of the impositions of central government
on local government have cost local government, that they then
had to fund, and predominately that went on to the council tax
and the gearing hit the council tax payer savagely.
Sir Michael Lyons: Certainly,
the heart of my conclusions lay in the region of the lack of flexibility,
the lack of ability for local government to respond adequately
to the views and preferences of people in the communities that
they represented because of an onerous performance framework and
centrally dictated imperatives, some quite explicit in terms of
objectives set for local government, the use of ring-fencing of
expenditures, again, reducing the flexibility to respond to local
circumstances. That was at the heart, and I would put that much
higher up the agenda than the additional cost of responding to
that framework of control and regulation. I was much more concerned,
and indeed found stronger evidence, that it had the effect on
local government, perhaps you might say predictably, of making
it more interested in and more responsive to the views of ministers
and the departments that serve them than the people who actually
elected them.
Q6 Sir Paul Beresford: I accept that
and it has been my complaint of local government. Could I give
you a tiny example? I have a little council in my constituency.
Their budget is £10 million or something like that. The CPA
(Comprehensive Performance Assessment) costs them, quite apart
from the time spent working with the teams and the fact that the
senior staff are not working effectively for three weeks, about
a quarter of £1 million; because of gearing it costs the
taxpayer £1 million. On a budget of £10 million that
is outrageous. That is what I am really getting at. Not only are
they focusing on the CPA requirements for the auditors, et
cetera, but it is costing the local taxpayer an outrageous
amount of money.
Sir Michael Lyons: I am absolutely
clear about the point you are making. I do not have the evidence
on that authority, which of course is anonymous to me, nor indeed
did I spend a lot of time exploring what this body of costs might
actually look like, because I was more concerned with the issue
of what impact it had on behaviours. I do not dismiss the point
you are making for a moment.
Q7 Mr Olner: You have been in local
government a long while, Sir Michael, in some Midlands authorities
as well. Do you think, using that experience, and certainly since
you produced your report in 2004, the amount of council tax that
people have to pay has risen dramatically? I just wondered where
you saw local authorities and the Government in the "blame
game" stakes?
Sir Michael Lyons: My main report
in this area was, of course, in March 2007 but you are right;
I did earlier reports. In terms of increases in council tax since
I reached my final conclusions, I think the fact that they have
been modest for a number of reasons compared with the period immediately
before that, where they were very sharp, is probably one of the
reasons why some of the tensions which were around when I was
first commissioned have not rekindled, have not been as alive
again. What I was seeking to do in this report was, to the best
of my abilities, to expose whether increases in council tax could
be seen to be solely the problem of individual local authorities,
and indeed, one of the strongest conclusions I believe my work
reached was that, actually, it was impossible, despite all of
the resources that we assembled here, to identify the balance
of responsibility between local and central contributions to the
pressures which had led to increases in council tax. If that is
the situation, it tells us something much more serious. In terms
of who local people should hold to account for local expenditures
that is itself confused and needs attention. That is really where
I addressed the heart of my recommendations.
Q8 John Cummings: I think we are
all very aware that local government in England has been subject
to regular reform over the last few decades. We have seen a reduction
in local authority powers in education, in housing, et cetera.
On the other hand, enabling powers given to local authorities
have increased their economic regeneration and community leadership
roles. What do you believe have been the key positive developments
and the retrograde steps in the relationship between central government
and local government in the last decade?
Sir Michael Lyons: There is quite
a lot for me to answer there, but if I just pick up a couple of
points—with more time I would probably go more deeply into
these—in terms of the most negative impact, that is in my
view unequivocally the increased centralisation over areas of
local government responsibility, in some cases leading directly
to the effective transfer of that responsibility. I immediately
think of areas just at the boundaries of that time span you have
given me: further education; more recently, schools budget, with
a much stronger central responsibility defined by government.
There is nothing wrong with re-shaping what central government
believes it is responsible for and what it wants local government
to be responsible for, as long as everybody is clear about that,
clear in terms of who to hold to account and who actually makes
the key decisions. I think that has often been less clear to the
individual council tax payer, income tax payer, the local citizen,
than it might have been. You are quite right, of course: it has
not been one-way traffic. There have been some changes in the
other direction. Indeed, one of the things I would welcome is
that in the period since I reported and immediately around reporting
there have been some further changes, not least in reinforcing
the role of local government as a player in economic development,
in contributing to this place shaping agenda that I sought to
lay out. Perhaps I can approach that by focusing on one specific
issue which looms very large in my final report, and that is the
job that local government itself has to do. It sometimes has allowed
itself to be characterised as powerless in this debate. What I
was seeking to underline is that local government itself has a
job to do in rebuilding its relationship with those that it represents
and serves so that together they might place pressure on government
for faster change in terms of more local decision-making.
Q9 John Cummings: To follow on from
your last comments, how do you view the relationship between local
government and central government? Do you think central government
view local government as something to be tolerated, that has to
be there, that gives a smattering of local democracy, yet they
wish to retain power at the centre? What further changes do you
think are going to be necessary in order to improve the relationship
between central and local government?
Sir Michael Lyons: Again, it is
a very expansive question, so perhaps I can limit myself to two
areas that I sought to explore in the report. One of them was
this national debate about public expectations of what could be
delivered out of tax income, and my concern that, with the growth
of promises made through the centralisation of decision-making
in the United Kingdom, particularly in England, had been coupled
with a raising of expectations of what could be achieved with
tax income. As a result of that, there was a lack of balance between
what people expected and what was delivered, with the net result
that we had a downturn in satisfaction.
Q10 John Cummings: Where do you place
the blame for this?
Sir Michael Lyons: It is an interesting
debate. It is an interesting debate about the extent to which
local government—
Q11 John Cummings: Trying to move
it on, do you think it is a matter of central government offloading
blame on to local government, raising the expectations of the
general public, but not providing the incentives to allow local
authorities to carry out their functions in a more efficient manner?
Sir Michael Lyons: Do you know,
I have never found the apportionment of blame a great aid to making
progress, so I am going to decline your invitation to attach the
blame, but I am going to say that the problem is exacerbated—
Q12 John Cummings: If we cannot attach
it where the problem lies, how we going to correct it?
Sir Michael Lyons: Let us just
put the word `blame' to one side and say what are the factors
which contribute to this and make it difficult to tackle? There
I am quite clear: they are about inappropriately centralised control.
They are about decisions being made at Westminster which could
more appropriately be made locally, and they are about local government
not itself becoming an unequivocal champion for efficiency and
for working energetically with its local community. It is not
as if this is just a simple issue that can be resolved at the
centre. It actually requires—and I spent a lot of time thinking
and offering conclusions about this—local government also
to put its own house in order.
Q13 John Cummings: Do you think the
will exists in central government to move towards that particular
objective?
Sir Michael Lyons: It is a problem,
is it not? That is why these two things go hand in hand. Local
government continues to have a reputation of not always being
efficient, and this goes hand in hand with a national belief that
postcode lotteries are a bad thing, so an anxiety about different
decisions being made in different localities, as if it were possible
with limited resources to do the same everywhere, which it is
not. I am searching for how to give you the shortest answer to
something which I do not think is amenable to a short answer,
but my strong conviction is that central government finds it difficult
to move on not just because it does not have a will but actually
because there is a limited public space—
John Cummings: Do you think there is
a deliberate policy on behalf of central government to continue
to emasculate local government?
Chair: John, I do not think you are going
to get an answer to such a leading question!
John Cummings: Let him answer.
Q14 Chair: Can you answer that shortly?
Sir Michael Lyons: The short answer
is: do I believe that somewhere in the heart of government are
a group of people intent on hanging on to this? I do not think
it is as simple as that, no, but if you find them, I will be happy
to review my answer.
Chair: We appreciate these questions
are all very complex but we do need to try and get the answers
a bit shorter.
Q15 Anne Main: We have had four reports.
Can I just say, I have noted a few things you have said: that
local government allows itself to be characterised as powerless;
that there had been modest rises in council tax; that you could
not arrive at a conclusion as to who was to blame about escalating
council taxes, and you did not want to apportion blame. All that
is very interesting but I actually think people felt out of four
reports you could have shone a searchlight on some of these things.
I have an excellent rated authority, as many local authorities
are excellent rated, but they feel that the Government decrees
that so much needs to be done that they have very little control
over what they do, and the public are then asked to pick up the
bill if they have to put in extra services. The public do not
see the rises as modest. The public, and indeed councils, will
regularly say that they are hamstrung by the Government to having
to deliver a government agenda because that is where the funding
comes from. If they do not deliver, they do not get the funding,
and therefore they are more impoverished than they were beforehand.
So whilst I am not saying apportion blame, can you see, after
four reports, whether there is a better way of doing this? I do
not believe either that there are councils sitting there going
"Poor little me. I want to be characterised as powerless."
I think they genuinely believe they are and, having been a councillor,
I actually have sympathy with that. I am on the side of councils
here somewhat. We do not want to be characterised as powerless.
What can be done to shift the balance? Four reports of very interesting
engagement with the public debate, as you said earlier on in your
speech, to me does not sound good value for money.
Sir Michael Lyons: I have absolutely
no doubt that in each one of those reports there are clear conclusions
reached and clear recommendations made. The fact that it is a
complex picture I make no apologies for.
Q16 Anne Main: Is anyone following
your clear recommendations?
Sir Michael Lyons: I do not know.
Let me look to you and others who aspire to take on the mantle
of government. Are you looking at these conclusions, because I
was clear that was not only speaking—
Q17 Anne Main: You are reporting
to the Government.
Sir Michael Lyons: Let me finish.
This is an independent public report in which I explicitly said
this cannot be the responsibility of one government and I have
said publicly since if any one government does not take it on,
it remains an issue for future governments to consider.
Q18 Anne Main: Do you feel we are
any further forward as a result of your reports?
Sir Michael Lyons: Yes, of course,
I do.
Q19 Anne Main: I know what you say
about place shaping and things but things that are really on the
ground level, the level of council tax, which, as I say, people
do not feel is inconsiderable, and indeed, the level of powerlessness
that is genuinely felt by councils. Are we moving forward or do
they still see themselves as simply delivering a government agenda
and they then make up the shortfall in the budget?
Sir Michael Lyons: Let me be careful,
because I have not spent as much time in the last year working
on this. I have taken on another part-time job, which has distracted
me a little, but I have still had discussions with the Local Government
Association and others and, inasmuch as that captures all of the
views in local government, which is of course very difficult,
I have no doubt the Local Government Association and every local
government conference I have spoken to welcomed these conclusions
in their entirety, felt that they had revealed effectively the
dilemmas, hoped that they might lead to government making some
decisions but, most importantly, just to come back to my point
about change in local government itself, have led directly to
actions within individual authorities and collectively aimed at
further improving local government's performance and reputation.
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