Examination of Witnesses (Questions 160-179)
MR STEPHEN
HUGHES, SIR
RICHARD LEESE
CBE AND MR
EAMONN BOYLAN
10 NOVEMBER 2008
Q160 Sir Paul Beresford: So we warn
Westminster and Wandsworth you are going to beat them next year?
Sir Richard Leese: There are clearly
parts of the country that have such special circumstances; for
any relocalisation, there has to be some equalisation basis built
into it, and I think we all understand that.
Q161 Mr Betts: Were you disappointed
with the Lyons report, in that it did not seem to think that actually
any devolution of financial responsibility and accountability
was necessary, that it was all a matter of simply giving you probably
a bit more choice over how you spend the money that you were given?
Sir Richard Leese: Yes. I think
the power element of this is the most important, but I think money
means power, power is money, and I think if we were able to have
far greater control over the money we raise, then I think that
would deal in a very straightforward way with a lot of the devolution
issues.
Mr Boylan: If I can just pick
up on that, as Richard said, it is very much around power, and
if you look at the multiple area agreement that the 10 Manchester
authorities have put together, it actually does not bid for any
additional resources at all. It is purely and simply a plea for
better ability to manage the resources that are currently being
spent by the public purse in the city region. I think that is
the important issue for us. I think that is where Lyons did stop
short.
Q162 Mr Betts: So you do not want
to put the council tax up any more, presumably, from what you
have said; you have argued, fair enough, for the relocalisation
of the business rate. What else would you want to do, in terms
of additional revenue raising powers that you would like to see
local authorities receive?
Sir Richard Leese: I think first
of all, we would like to see council tax made fairer, and I think
a property tax as an element of localisation is quite reasonable,
but we have argued for more balance, both top and bottom, clearly
for revaluation, because we are on 1991 values at the moment.
I think in terms of additional taxes, there are perhaps things
we would think about, like a tourism tax and so on, but we are
not looking really for substantial new taxes, we are not finding
lots of new ways of getting money out of people. Even taxes like
tourism tax would have to be very, very carefully directed, and
would have to be done in such a way that there is a direct benefit
that went back to the people who were contributing to that.
Mr Hughes: I agree with that.
I do not think it is about new tax revenue raising resources,
but better control over the resources that are already available
in the local area. There are some —
Q163 Mr Betts: So that is what Lyons
said, effectively. Do you agree with Lyons?
Mr Hughes: What you I think said
was Lyons was not allowing local authorities to have control or
powers over the funding that is in a local area, and that is something
which we are arguing very strongly for: that public spending in
a local area should be much more co-ordinated through a local
authority, if you like, but through some other one form of accountability,
rather than through all the myriad that we currently have. Where
I think there are some arguments is about where, for example,
local authorities need to be able to capture some of the benefits
that are created by growth that occurs. One of the proposals which
the core cities are putting forward at the moment is around advanced
development zones, which is like tax incremental financing, in
other words that within a particular development area, all of
the business rates which occur as a result of development can
come back to that local area to fund the infrastructure investment
needed to make that redevelopment occur in the first place. Again,
it is about making better use of public resources that are actually
already there in a local area.
Sir Richard Leese: Can I give
two examples of things that we would have done in Manchester if
we had a power of general competence with associated revenue raising
powers? Things that would not be enormous, but we would have had
mandatory licensing of private landlords at least 10 years ago,
if we had had a power of general competence with revenue raising
powers; we would have had dog licensing back probably about 20
years ago if we had had that power of general competence, with
revenue raising powers. Those are the sorts of things we could
do and would have done locally.
Q164 Chair: Can I just press you
on that? Are you absolutely precluded from doing that with the
current powers? Could you not argue, I do not know, through the
Sustainable Communities Act or power of general well-being?
Sir Richard Leese: The power of
general well-being is no, because it specifically excluded regulatory
powers within it. Yes, under the Sustainable Communities Act,
I guess we could come back with a proposal to be able to do that.
The point I am making is if we had a power of general competence
with revenue raising powers, we would have done it long ago and
we would not have had to ask anybody other than ourselves about
doing it. The Sustainable Communities Act is a rather clumsy way
of us being able to ask to do things that we ought to be able
to decide in our own right to do.
Q165 Mr Betts: There is always a
bit of concern about having extra revenue raising powers linked
to development, or the ability to charge people more in some way.
It simply means that those areas which have a greater ability
to collect money, whether it be because they have extra development
or they have a wealthier population, are the ones that are going
to benefit from that; in other words, you get more development,
you raise more money on the back of it, and you have the ability
to actually create more development.
Mr Hughes: Possibly to some extent,
but if I can go back to the example I quoted earlier around New
Street Station, we know that the redevelopment opportunities that
are created by the refurbishment and regeneration that is going
to take place there are likely to generate something of the order
of £30 million extra rate income per annum as a result of
the development that is taking place. Now that point is that would
have actually been enough to fund the redevelopment of New Street
Station on its own. You contrast that with what the supplementary
business rate will give in Birmingham; it will raise, for actually
charging businesses more tax, £15 million. So the point about
being able to capture the value of development that is taking
place in an area is a much more powerful way of actually helping
that development take place than being able to charge extra taxes.
Q166 Sir Paul Beresford: Would you
not expect the Treasury to look at your extra fundraising and
reflect that in equalisation?
Mr Hughes: That is the point;
if you equalise away everything, then there is no benefit at all,
and that is the current situation. Actually, I have an incentive
to reduce the amount of businesses I have in my area and the number
of properties that exist, because actually, I do not have the
pain of having to collect the tax, and I get full compensation
through the grant system. That seems to be a very perverse way
of operating. We need to have some benefit from those developments
ourselves.
Q167 Chair: But to use the counter
case, it is all very well to argue that you are representing cities
which have good economic development, although under the current
circumstances that may alter, but if you were representing a place
whose major employer had just gone out of business so that your
local revenues were falling, would you then have a different argument
to put? Where is the funding going to come from for an authority
such as that, if there is no equalisation?
Sir Richard Leese: I think equalisation
comes through a number of routes, and it is not solely through
the CLG budget formulae or the Treasury budget formulae. For instance,
Regional Development Agencies are one form of equalisation around
the economy. If you look at the North West, if you look at expenditure
per capita, the bulk of development agency money goes into
deficit economies, so Cumbria gets far more money per head than
Greater Manchester does. So there are other ways of getting equalisation.
Q168 Chair: Can I also just get you
to clarify, Sir Richard, when you were talking about council tax
and being in favour of the reform of council tax, you were not
suggesting, were you, that if you had the powers, you would reform
the council tax in your city alone?
Sir Richard Leese: I do think
there is some limited room for things that are national rather
than local. I can see the point of having a national benefits
system, I think that is a very good example of something where
I think rates ought to be set nationally, although even then,
how the benefit system—although the rates ought to be set
nationally, how it is operated, there would be room for local
variation in order to be able to support particular activities
at a local level. Again, it is what Stephen was talking about,
how you recycle money. If we are tackling worklessness, then using
the benefits system as part of how we tackle worklessness is something
that would be better done at a local level rather than through
a national programme.
Sir Paul Beresford: So we would not have
a National Health Service?
Q169 Anne Main: I really would like
you to expand on how you would alter local benefits in a way that
you would not expect them to be where they are now. You just said
tackling worklessness, what sort of thing would you be suggesting
for that?
Sir Richard Leese: It would not
be about changing the benefit levels, it would be, well, it is
now coming through, I think, the national legislative programme,
but effectively, the requirement of people on incapacity benefit,
unless they are classified as having certain forms of incapacity,
to attend an interview to assess whether people are capable of
working in particular ways. I think in Manchester, again, that
is something we would have done several years ago, if we had had
the ability to do that. So it is not about the benefit level,
it is how you use the benefits system.
Q170 Anne Main: Can I just expand
that? You have just used one that has already been agreed, that
you agree with, but would you, for example, say that in Manchester,
you would have to do community work to get your benefit, for example?
Or any other city. Would you say that the benefit level may not
alter, but what you do to get your benefit may alter, is that
what you are saying?
Sir Richard Leese: That is what
I am saying. The particular example you have given, I have not
thought about, but I will go and think about it, because it might
be a good idea for us in some parts of the city.
Q171 Anne Main: How about the other
cities that are here? Would they say that again, you would still
get the same amount of money, but what you have to do to get it
may be different from city to city, or area to area?
Mr Hughes: We are doing some of
those things; the Working Neighbourhoods Fund, part of it is being
used to ease the transition from benefit to work, so extending
benefit for a period of time once they are in work, because that
is a key issue. But the issue around welfare reform I think is
a really important one, because one of the biggest problems about
getting people back into work is about raising their aspirations
that there is a different way of living their lives other than
one that they are currently on, and that is about changing the
basis of incentives. Within the proposed reforms, there are opportunities,
I think, for doing pilots along the kind of lines that you have
just suggested, and certainly Birmingham is very interested in
doing some of that. If we can find a mechanism whereby, by doing
certain interventions, which has the impact of reducing the benefit
burden overall, some of that can be captured, at a local level
—
Q172 Chair: You mean the money could
be captured?
Mr Hughes: Yes, if we reduce the
benefits of people in Birmingham —
Q173 Chair: Because you get them
back into work, so they individually do not get less.
Mr Hughes: Yes, and then with
some flexibility about how the rules work, so that we can make
effective interventions which will drive down worklessness numbers,
but give a public sector benefit, but we need to see some of that
benefit at a local level.
Q174 Chair: Financially you need
to see the benefit?
Mr Hughes: Yes, because otherwise
we cannot do the interventions which have that result.
Q175 Anne Main: Can I take you to
another group then, not just people who are seen as being workless;
what about, for example, community offenders, or people who are
somehow in the system where they have committed some sort of crime,
do you think that locally you should be able to decide what they
do, because currently there are strict guidelines on what you
can do with people who have offended in the community; would you
like to be able to have the autonomy to do something different
there?
Mr Hughes: Through the local area
agreements and the partnership arrangements, we are already having
quite close conversations with the Probation Service about how
community service can be used to meet local area priorities, so
that work is already taking place.
Q176 Anne Main: But could you see
that maybe if I lived in Manchester, and you might decide, I am
not talking about a Mayoral chain gang out weeding flowerbeds,
I do not know, maybe you are: if you are talking about that, could
you see that there could be a conflict? In one area, you may be
in the Probation Service and you do not have to do anything, and
step over the border and I am there weeding flowerbeds in my yellow
boiler suit.
Sir Richard Leese: That already
happens, even within existing sentencing guidelines, the policies
of Magistrates Courts in some towns and cities is different to
Magistrates Courts in other towns and cities, so you already get
that differential.
Q177 Anne Main: Yes, but how broad
do you want to make it? That is the point.
Sir Richard Leese: If we wanted
to find new ways of taking offenders and rehabilitating offenders,
there are punishments, there is restitution, I think we are interested
in rehabilitation; if we could have the power that allowed us
to innovate in new ways of doing that, then that would be something
we would be very interested in.
Q178 Andrew George: First of all,
my apologies, I got on a train in Penzance at 10.00 this morning,
and I have only just arrived, so I do not come from a city, I
am sure you understand. I understand that you have covered issues
regarding city regions, but I am interested, Sir Richard, in your
comment earlier regarding equalisation of budgets, where you were
saying there was a de facto nudge and wink as far as the
RDA appears to be concerned, that those deficit councils seem
to be compensated by the RDA. I just wanted to explore the dynamics
between local, central and also regional government, and what
messages you are getting from central government, and what encouragement
you are getting, that you can take a greater control both financially
and in terms of the kind of provisions you are taking.
Sir Richard Leese: I think that
is not what I was saying, but I would also say that given the
condition of the West Coast Main Line, in the past I have set
off for London and not arrived at all, so it is not just coming
from Penzance that can be a problem. What I have said is there
are other ways of being able to equalise that are not through
funding formulae, and I gave the RDA as one example of how it
currently chooses to allocate its funding.
Q179 Andrew George: But not based
on need at all?
Sir Richard Leese: No, it is not.
Andrew George: They are not based on
need, they are based on deficit budgeting.
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