The Balance of Power: Central and Local Government - Communities and Local Government Committee Contents


Examination of Witnesses (Questions 142-159)

MR STEPHEN HUGHES, SIR RICHARD LEESE CBE AND MR EAMONN BOYLAN

10 NOVEMBER 2008

  Q142 Chair: Can I welcome you to this first evidence session in our inquiry on the balance of power between central and local government? You will know that you are the first of three groups of local authorities this afternoon, starting off with obviously two large metropolitan areas. So can I start with the first question? I note that both of you argued very strongly for greater powers being devolved to councils, from your own experience, and largely it seems to be the arguments are coming from cities. Are you suggesting that cities have a particular claim for greater powers, or do the arguments that you make apply to local authorities generally?

  Mr Hughes: There is definitely a particular role for cities, and coming from larger cities, you would expect us to say that. Based on the evidence which was done in, for example, the Parkinson report, which demonstrates that cities are a key driver of the economic performance of the country, but also underperforming compared with European counterparts, we have started from the perspective that there is a greater role that we could make, and that we can contribute more if we are able to have more powers at a local level. I do not think necessarily that that means that other areas could not form effective sub-regional arrangements which could similarly deliver benefits, but clearly it is really important that the major conurbations are able to help drive forward the economic performance of the country.

  Sir Richard Leese: If I could give a practical example: one of the things we are attempting to do in Manchester is tackle enormous levels of worklessness, even more difficult in the current climate, where we have to get not only what local authorities do but services from JobcentrePlus, services funded from the Learning and Skills Council and so on, joined up in a way that they historically have not been. We take the view that we need more power in order to be able to do that joining up effectively, but it is a particularly urban issue, a particularly city issue, and there are other parts of the country who would neither have the need to do that, nor would they have the capacity to be able to do that as well. I think smaller rural local authorities simply would not have the capacity to do that. So we would argue for a differentiated approach in that the devolution and decentralisation we would see coming to cities is not necessarily the same that would go to other areas.

  Q143  Sir Paul Beresford: The other side of the argument, and remember I have been on both sides, not at the same time—I am not a Liberal—I have been on both sides at different times, is that the Government have been elected on a programme, they have been elected with control of the economy, including unemployment, et cetera, and they will have a pattern that they wish to be installed throughout the country. How could they risk letting you loose, in effect, from their point of view, with the prospect of possibly not following their guidelines and going off on your own?

  Sir Richard Leese: I would say that the framework of local area agreements, and, more recently, multi-area agreements, allows a contractual arrangement to be established between central government and local government about meeting agreed outcomes for that particular area. What I think central government often then tries to do, and does not have the capacity to do, is to try and then tell us how we are going to achieve those outcomes as well as what the outcomes are. I think what we would argue is that we are in a far better place—on outcomes that we agree with Government, there is no division between us whatsoever, but we are better placed at a local level to know what mechanisms are needed in order to be able to deliver those outcomes.

  Q144  Chair: Why does that not also apply to smaller councils?

  Sir Richard Leese: Again, I go back to the capacity issue. First of all, if you take worklessness in some parts of the country, it is nothing like the level you will find in large urban areas. That is why I think it is a good example of the need for differentiation, but also particularly small district councils simply would not have the capacity to be able to drive an agenda that needs co-ordinating a whole range of public sector authorities. So it is a difference in need and capacity, as I said earlier.

  Mr Hughes: Just in answer to your question, what local authorities are doing through local area agreements at the moment is effectively trying to knit together all the various different funding streams which are supposedly designed to deal with things like worklessness. So you are working not just with Working Neighbourhoods Fund which authorities like ours have, but LSC (Learning and Skills Council) funding, JobcentrePlus, the RDAs (Regional Development Agencies), all of those have different sets of accountabilities back to central government, and what we are spending a lot of time doing is trying to get them all connected to deliver the local area agreement targets. Part of what we have argued for, both of us, in our slightly separate different ways, is that, having cleared one line of accountability on an area basis back up to Government, whether that is through a local area agreement or not, would help be more effective in delivering services at a local level. That is about making local delivery agencies all accountable in one way, instead of having lots of different ways in which they are made accountable for what they are doing.

  Q145  Sir Paul Beresford: Local area agreements, according to the Government, are a means of setting you free.

  Mr Hughes: Local area agreements are a massive step forward compared with where we were, but because you have to work it through a partnership arrangement, it is very dependent on forging relationships at a local level, which sometimes work, and we believe we are doing really well at it, but it is still difficult to make all those things pull together.

  Q146  Sir Paul Beresford: If I come back to my original point, if you are sitting as a minister, and you are looking at local government, you have, as I have used the phrase before, the good, the bad and the ugly, and I am not putting you into any of those classes: how can Government broadly release more down to local government than they are doing now when it has such a piebald mixture of quality?

  Mr Hughes: I give my own example, which is very close to my heart, what we have to do to get funding to do the refurbishment of New Street Station—£400 million in total—three different government funding streams, three different appraisal processes to get it agreed, and then once you have the funding agreed, we then have micromanagement of the project. It all takes a lot longer than it should do.

  Sir Richard Leese: Can I take issue with your description of that I think "piebald" range of quality? Actually most local government is now good to very good, and the amount of poor local government is very, very limited. Indeed, if we are talking about ministers delivering their objectives, if most civil service departments involved in delivery were put through the same sort of competency tests that local government is put through, they would not come out anywhere near as good. So the first thing I say to ministers is: if you really want your objectives delivered, the best way of doing it is through local government.

  Q147  Anne Main: I would like to take you back to the different funding streams. Obviously there is the complexity that you have said about the follow-through, but do you accept that if you were allowed to do your own thing, shall we put it, you may have difficulty accessing enough funding, because you would not necessarily follow the priorities of the Government?

  Chair : Sir Richard

  Sir Richard Leese: I do not think we are talking about just doing our own thing, we are not talking about some sort of anarchy of 400-odd local authorities —

  Q148  Anne Main: You may not be, but someone else might be.

  Sir Richard Leese: Well, we are not, and in our evidence, that is not what we are saying. I think it is quite clear that the LAA (Local Area Agreement) structure, local government coming to a negotiated agreement with central government, is something that we think has real value. We virtually never disagree about outcomes, by the way, it is always about the processes by which we will achieve those outcomes.

  Mr Hughes: I think there is an argument about whether we have enough resources, but actually there are lots of resources already being delivered at a local level, and what is not, I think, being done is making best use of them. One of the problems is where interventions to deliver outcomes are all agreed on to deliver benefits for people other than the person who is doing the intervention. So, for example, if we do work which helps reduce crime rates and people going to prison, there are benefits to the police and the Prison Service, Probation Service, but we do not necessarily at a local level capture those benefits, and therefore, the actual cost of doing that investment in the first place is much higher than it otherwise would be.

  Q149  Chair: Mr Hughes, just to qualify on that example, the benefit is to your local population. The financial saving may be to the police, but the benefit presumably is to the people that your council is responsible for.

  Mr Hughes: Of course it is, but the point is that if you could pool together the different funding streams, you could make a business case for making the interventions which would reduce the cost to other public agencies which we would not be able to do on our own, because we actually would not have the resources to do it. That is the point, you can make better use of the public resources that are available.

  Q150  Chair: Can I pick you up on that? Just one paragraph in the Birmingham submission, I think, actually suggests that "all public spend in a large local authority area to go via the local authority. Primary Care Trusts, the police and other public agencies would then have to ask for money from the local authority who would hold them to account for performance." I would be interested in Sir Richard's response to that one.

  Sir Richard Leese: It is not a route that we would look to go down, and there is a more powerful route for local authorities being able certainly to set the strategy for the area, and then we do have now, through the LAA framework, a requirement for all public agencies to deliver that agreed strategy. I do not think our ability to hold those agencies to account is strong enough, nor is our ability to effectively change the delivery method strong enough either, so we are about halfway down a road, but actually we do not want to, in that sense, manage everything in our area. What we want to do is to be able to oversee the delivery of a strategy for an area, for a place, I think the place-making role that was described by Lyons, where currently we do not have sufficient co-ordinating power to deliver on that.

  Q151  Mr Betts: Can I just follow up? There are lots of words around like "hold to account" and "set strategies", they all sound very nice, but what does it mean in practical terms that you want to do? Say with the PCT, should it be the council's job to say, "This is the strategy, we are approving it, you go out and deliver it, and if you do not, we have got certain sanctions against you"?

  Sir Richard Leese: I think that is the position we have to be in, and we are not in that position. We can scrutinise, so we can call in people from the PCT and ask them what they are doing and say, that is not very good, et cetera. What we cannot do is then effectively say: No, you are going to have to change what you are doing because you are not meeting the objectives for [in our case] Manchester.

  Q152  Chair: Just to press that, supposing Manchester decided that, I do not know, heart disease was more of a priority than cancer. Are you asking that you should be able to get your PCT to deviate from national priorities and put more money into heart disease?

  Sir Richard Leese: Yes, and there ought to be a balance between them. If you take what is a real case at the moment, there is a tension between preventative health work and spending on acute care, how do you stop hospital waiting lists being too big? One way is to treat people fast when they get on to those waiting lists; the second is to prevent people getting there in the first place. There has been an ongoing tension between local authorities, who would like to see a greater emphasis on the preventative side, as against the Department of Health, who put the emphasis on acute care.

  Q153  Chair: I thought that might excite people. Mr Boylan, do you want to add something?

  Mr Boylan: If I might, Chair, just to pick up on your comment, it would not be a matter of us deciding that heart disease was a more significant factor, it would be based on a very clear and rational analysis that shows that cardiac disease is actually one of the things that makes Manchester one of the places with the lowest life expectancy for adult males in the UK, and it is not adequately reflected in terms of the overall priorities that are being set nationally for NHS delivery, so it is a matter of a mediation between local circumstance and national priority. It is not about exclusively one or the other. At the moment, the balance, we believe, is wrong.

  Q154  Jim Dobbin: That touches on the area that I was concerned about. It is interesting, this debate about the relationship between health and local authorities, in particular Primary Care Trusts. You mentioned balance of power; where does that put a large regional health authority like the one that covers the North of England, in relation to the comments that have just been made about where the power should lie?

  Sir Richard Leese: Well, the regional health authorities say it is part of the NHS Executive, which as far as I can see is simply an intermediary between a national and a local level. I think where it plays a useful role is a lot of those acute facilities do not and should not be provided simply on a local level, so there do have to be strategies that are over and above the local level, that are sub-national, I think there is a role to play there. I have to say that I think primary health and community health is an area of expenditure that I could see at some point being part of what a local authority provides within the area. I would not expect to see acute care necessarily being part of the same thing.

  Q155  Anne Main: I was interested to hear you say that you would like to, for example, decide preventative care rather than acute care was the way you would go as a local authority, if you could do that. How would a neighbouring area feel then in terms of a postcode lottery, if you decided to withdraw yourself into that particular stance, and somebody says, I am not going to get the treatment I need in Manchester because actually they have decided that they should have prevented what I have got rather than treat it?

  Sir Richard Leese: There is a fundamental argument there about what is the role of local democracy, and if local democracy is that everybody gets the same wherever they live, then there is not any local democracy. Again, I go back to what Eamonn said, part of what we are talking about is a balance between national and local, but are we going to get different things in different places? Yes, I think not only we are going to do that, but it is right and proper that you should get different things in different places. If the area next door thinks that is unfair, then what they ought to do is elect a different council to get what they want.

  Mr Hughes: It is also about how you measure these inequalities. You might look at that in terms of access to acute care, but you could also look at outcome in point of fact that sizeable parts of our population have a life expectancy of 10 years lower than other parts of the city, or other parts of the country. That should be concerning us as as great an inequality that we need to address as inequalities in access to acute care.

  Q156  Chair: Can I just mop up a question in relation to the local area agreements, which is whether you have actually had any disagreements with central government over the conduct or process relating to LAAs?

  Mr Hughes: We came to an agreement at the end of the day, but we had a robust discussion along the route about issues which individual central government departments wanted to be included, the level of the targets that they wanted to have, but at the end of the day, the agreement we came to was one which not only the council but our partners were comfortable with, as was the government department, so the process was robust, as you would expect, but nevertheless, an agreement was arrived at.

  Sir Richard Leese: Yes, we do have disagreements, as I say, generally about process rather than outcomes, but if I give an example of a disagreement we had with the Department for Work and Pensions, JobcentrePlus, the targets we wanted to set locally for tackling worklessness were far more ambitious than those that JobcentrePlus wanted to set, so we had a disagreement about that. There is a multi-area agreement disagreement around how we tackle skills, but this is rather more complex, because the two government departments that are responsible for different bits of skills, they are having an argument with each other as well, so it is a three-way argument at the moment. And again, I think that demonstrates what I see as part of the thing we ought to be able to do at a local level, is to do that joining-up that those two government departments, with all respect, will never be capable of doing.

  Mr Boylan: Local area agreements are a huge step forward, as has already been said, but I think they have an important limitation, and that is that they are defined around a specific target, and over a fixed time period for the delivery of a single target, albeit a range of them making up the totality of an agreement. The approach we have tried to take with the Greater Manchester multiple area agreement, which is an important new development, because it involves not one but all 10 of the Greater Manchester authorities, working on the delivery of outcomes that actually, in terms of worklessness and health, would have national significance if they were delivered, it is an iterative process. It is actually a renegotiated process over a period of time, so actually, it can monitor trend and performance and not simply the delivery of a fixed target. Fixed targets, by their very nature, tend to be out of date rather quickly, and I think that is a limitation of the LAA framework, although I think we could learn from the multiple area agreement approach that has been taken in Manchester and elsewhere.

  Q157  Jim Dobbin: We are right in the middle of a very difficult economic process. What are your councils doing to support your residents in protecting the local economies through the global recession, and how do you think the Government could help you in that whole process?

  Sir Richard Leese: One of the things we are trying to do, Jim, is to get £3 billion worth of investment in public transport infrastructure, and we have some misguided people opposing us. Actually, we are trying to get investment in our infrastructure. There are a number of other examples where the City Council is itself using public sector money to invest and maintain momentum in other developments, including commercial developments. We have established a partnership with the Chamber of Commerce that we do monitor, and make sure we try and have realtime information of what is happening in the economy, to make sure we can intervene promptly if we have the capacity to intervene. Clearly, the extent to which any local authority can set itself against what is a global economic effect is somewhat limited, but we are doing what we can.

  Q158  Sir Paul Beresford: The latest whizzkid idea of central government in both parties seems to be cutting tax. Presumably your local authorities have cut your council tax?

  Sir Richard Leese: If you look at Manchester's council tax, we have had an increase in council tax no more than the rate of inflation for the last nine years, in which period of time we have gone from, I think, the third highest council tax in the country to what, according to The Times, was the fourth lowest average council tax in the country. So we have taken a fairly consistent approach on that.

  Q159  Sir Paul Beresford: So there is room for improvement?

  Sir Richard Leese: In terms of the financial issues, it is one of the reasons why I have argued against supplementary business rates, and said it is no substitute for relocalisation of business rates, because a supplementary business rate only allows you to do one thing, which is to put it up, whereas relocalisation would give us the option of being able to put business rates down as well as put them up.



 
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