Examination of Witnesses (Questions 464-479)
RT HON
NICK RAYNSFORD
MP AND BARONESS
HAMWEE
8 DECEMBER 2008
Q464 Chair: Thank you very much, particularly
Baroness Hamwee who has sat through the session. I want to start
really by asking each of you, do you think the balance of power
is in the right place at present between central and local government?
If not, where should it go?
Mr Raynsford: If I can kick off
and say that I do not think it is. I must apologise that because
of other commitments I have not been able to sit in here for the
rest of the proceedings so far today, but I did hear the relevant
part of Lord Heseltine's comments and I found myself very much
in agreement with him. We still have a position where ministers
in central government too readily believe that they should and
can take decisions that ultimately should be taken locally if
we want to have a vibrant local democracy. I do believe the balance
should continue to shift if we want to have effective local government.
Baroness Hamwee: I think it has
moved enormously and it is now so ingrained in the culture of
local government that they cannot do things, they cannot use powers
which probably they have; the finances are so restrictive that
the focus is always on the council tax and not necessarily on
the overall budget. Frankly I see council colleagues almost as
ground down by what has happened over the last few years.
Q465 Mr Betts: We have had various
witnesses in front of us and most will be arguing persuasively
in favour of more devolution to local authorities until we get
to ministers. That would be true of current ministers, past ministers
and no doubt future ministers of whatever political party. Why
is that the case?
Mr Raynsford: Let me try to give
an answer to that because I think when I was the relevant minister—the
local government minister—I put together a white paper which
was published in 2001 and which did advocate a substantial series
of devolutionary measures. That was part of a package which was
also about giving clear incentives for improved local government
performance. What I believed was absolutely crucial was the need
to demonstrate to colleagues here that local government performance
could improve and that they could have confidence that local authorities
would respond well on the kind of issues they are concerned about.
While they take a view that on the whole local government is not
going to do things very well, while they feel nervous that their
priorities are not likely to be implemented successfully at a
local level, I think there is very little chance of getting them
to agree that there should be more devolution. However, we did
put in place in that white paper significant devolution measures.
I slightly take issue with Baroness Hamwee because frankly local
authorities were very, very slow to make use of many of those
powers. Where I would agree with Baroness Hamwee is that I think
there is a degree of deference in local government. Whether that
is something that has been acquired over a period of years or
whether it is something to do with the local government psyche
I do not know, but too often local government waits to be either
told by central government to do something or to be given explicit
sanction. Too rarely does local government, in my experience,
take the initiative and try to do things which often they can
do within the powers they have available, including the power
of well-being.
Q466 Sir Paul Beresford: Recently
in particular local government has had from central government
checks, re-checks, audits, boxes to tick, stacks of paper, et
cetera, et cetera. The comment made by many people
in local government is that the fun has gone out of local government
because they cannot do their own thing without being checked on
constantly. In fact when you were talking about it, you were talking
about checking local government.
Mr Raynsford: Yes, but I do not
think it was very much fun if you were a resident in Hackney (which
was a disastrously run authority under Labour control), in Walsall
(which was a disastrously run authority under Conservative control)
or in Torbay (which was a disastrously run authority under partly
Conservative and partly Liberal Democrat control). I make those
observations because there is nothing party political about this.
Poor local government performance both irritated local residents
hugely—quite rightly so—and also was the key factor
that prevented central government ministers accepting the validity
of the case for more devolution. I would say there has been a
significant improvement in local government performance in recent
years. I do not go along with all the checks and all the details
but there is no question that the comprehensive performance assessment
framework that was put in place to give a more rigorous performance
management regime to local government has helped raise standards
and that, in my view, is fundamental to getting central government's
agreement to a devolutionary agenda.
Q467 Sir Paul Beresford: It is possible
to use the stop gap, that is if local government was appalling,
whatever its political complexion, Government could step in. Therefore
it was possible to give them the freedom but still have that stop
gap at the very end if needed.
Mr Raynsford: We did and we have
actually intervened in Hackney as you know very well. I think
that was absolutely the right thing to do but we were also extremely
reluctant to intervene unless it was absolutely the last resort
and there was no other way of getting a result. That should be,
in my view, the correct relationship.
Q468 Chair: One of the witnesses
that we had earlier—Baroness Hamwee will have heard him,
Vernon Bogdanor—was saying that actually if you look back
to the 19th century municipalities were competing with each other
to be the best not the worst and that therefore, his argument
was; if you freed up local authorities there is no evidence that
they would compete to be dreadful, they would compete to be good.
Baroness Hamwee: Yes, I think
they would compete to be good but at the moment the focus is so
much on playing to the performance indicators, doing the things
which are going to be measured and which they know are going to
be measured and, as I say financially, on council tax. When I
was a councillor in Richmond my ward bordered on Wandsworth. On
my side there was local authority housing and quite large houses
on the other side of the road in Wandsworth. Richmond council
tenants were paying much more in council tax than people in Wandsworth.
You could explain it but you would lose them within 30 seconds.
There were good explanations (I am looking at Sir Paul Beresford)
but how can you ever take people along with the complexity of
that. I think that that undermined people's confidence in local
government enormously.
Mr Raynsford: I do not think any
local authority starts out to be a bad local authority but unfortunately
the evidence is that some local authorities failed very seriously
in performing their responsibilities. It is essential to have
a mechanism to keep local authorities on their toes. Unfortunately
the financial regime we have is one in which it is so opaque—I
agree absolutely with Sally's view—that it is very difficult
for the average voter to have an idea as to who is responsible
for either an unpopular council tax increase or a failure to deliver
a service which they want because in some cases the council will
say it is the responsibility of central government and we are
not given enough grant, in other cases they will say, "Actually
it is nothing to do with us, it is the county council, a precept
from another body that is responsible for the increase" and
the public are absolutely mystified. I often tell the story how,
in 2003, when council tax increases were provoking a lot of anxiety
in various parts of the country, I went to attend a public meeting
in Exeter. There were a lot of very angry people there. The four
components of the council tax increase levied in Exeter were the
district council which had levied the smallest increase but got
most of the flack, the county council which levied a much larger
increase and got a certain amount of the flack, the fire authority
which levied a precept which was even larger than that and which
was virtually unscathed, and the police authority which levied
the largest amount of the lot whose chairman actually said she
was concerned that there was a risk of public unrest because of
high council tax increases.
Q469 Andrew George: Can I take you
back, Mr Raynsford, to your comment that you had not been here
for the other evidence and in fact we gathered from the other
evidence—four academics and Lord Heseltine and certainly
the written evidence as well which is clearly all moving in the
same direction—that powers have been denuded from local
authorities. You have advanced here at the end of our evidence
session the argument that in fact what we need to do is to continue
to shift the powers back to the local authorities as if in recent
years those powers have been shifting. The evidence which we have
had from a variety of people points out the prescriptive nature
associated with legislation, the proliferation of targets and
performance measures, the role of inspectorates backed by the
threat of intervention from central government, the centralised
financial arrangements, the movement of functions away from local
authorities to locally appointed boards and quangos, the proliferation
of requirements on local authorities to submit plans to central
government as well as, I might add, the competition for funds
and awards and other means by which money is not actually given
directly in the basic grant. How can you possibly argue that there
has been a tendency or a trend towards the decentralisation of
Government?
Mr Raynsford: There are a whole
series of controls over local government that central government
had previously put in place which were removed. I will go through
them: the power of well-being I have referred to already gave
greater power for local authorities to do things if the wanted
to; there was no longer the problem of ultra vires. The
borrowing approval regime which had severely restricted local
government's ability to borrow was replaced and the prudential
borrowing regime was introduced. There were a whole series of
other measures. I remember introducing the ability of local authorities
to remove discounts on empty second homes, a very popular issue
among local government, and again we gave them more power to be
able to charge for discretionary services they had not previously
had. If we want to sit here for a great deal longer I could go
on over a whole series of other changes that have been made. That
is why I say there has been a wish to give greater say, greater
control and greater power to local government but it has not been
easy without the confidence that local government would perform
well which was, in my judgment, necessary to convince colleagues
that it was right to go down that route.
Q470 Andrew George: Are you concerned
that you are the only person who has presented evidence to suggest
that the trend has been going in that direction? Do you disagree
with any of the list which I read out to you which came from the
written evidence of Professors Jones and Stewart? Do you disagree
that there has been a trend in the direction that I have just
listed?
Mr Raynsford: I do disagree for
the reasons I have just explained. Obviously there has been, as
part of the principle that I have set out, the application of
a performance management framework to ensure high qualities of
performance in local government. I do not pretend that every aspect
of the comprehensive performance assessment and what replaced
it has been right. There has been, in some cases, too much supervision
and probably too much targeting and some of it is probably not
focussed on the right things, but that was the quid pro quo
for substantial additional powers to local government for the
items I have described to you which I think Professor Jones and
his colleagues might not want to say because they have a different
agenda, but they would have to admit that a number of the previous
restrictions on local government have been removed in the last
ten years. I think the Government has been quite right in doing
that.
Q471 Sir Paul Beresford: The answer
from local government was that on the face of it you are right
but in respect of the actual actions you have taken instead of
it being front door checks it was back door checks and there are
checks on everything so that you can prove to yourself presumably
and to local government and to your other ministers that local
government is successful. All these checks and so forth that Andrew
George has just read out still exist; they exist behind it. As
for the borrowing side, well of course there is always a revenue
side to capital and that automatically restricts it for the local
authority in any event.
Mr Raynsford: I think there are
a lot of people in local government who would agree with my analysis.
I point you no further than the editorial in the latest issue
of the Municipal Journal which says something very much
along those lines. It is up to local government to prove in the
aftermath of the Haringey incident—Baby P—that local
government can be trusted and will deliver a good service. I think
that is absolutely right; I want to see that happen.
Q472 Andrew George: Can we nevertheless
agree on this, that we need to push decentralisation out still
further? Even if we disagree with the analysis of what has happened
in the last ten or so years, we still agree that more needs to
be done. If that is the case, then where should we start? What
should be the first things that any government should be doing
in order to achiever greater decentralisation?
Baroness Hamwee: It seems to me,
the impression I get—I may be quite wrong about it—is
that either the releasing of powers or indeed the imposition of
more responsibilities on local government comes from Whitehall
with next to no discussion with the local government world and
I think to start I would like to see a local government bill drafted
by a joint working party coming from the two areas. I would love
to see a minister standing up in Parliament and saying, "I
am sorry, I cannot answer that; it is a devolved matter".
At least one hears it a bit on London now; that does not seem
to stop people asking questions about London, even in Parliament,
and trying to pin responsibility on ministers. However, more joint
working because it should not be top down, it should not be Government
saying, "We've been sitting in our department for however
long and we've come up with this idea, now you react to it".
I do not think it should work like that. Local government is being
told to work in partnership all the time and it would be nice
to see that applied at a higher level or at any rate negotiation
for announcements. Again, I may be wrong but I do not believe
that there was discussion with local government before the announcements
about money for swimming and what local authorities should do
about providing free access to pools for older people and younger
people. That sort of thing should come from joint working I think.
The issue of secondments has arisen earlier this afternoon; I
would like to see a lot more secondment. There seems to be very
little understanding among civil servants of what it feels like
to be working within a local authority.
Mr Raynsford: I would differ on
that. Firstly I would say that in the course of the period that
I was in Government we brought in some very, very senior civil
servants. The civil servant who headed the Department dealing
with local government matters in what is now CLG (it was then
ODPM, Office of the Deputy Prime Minister) came from the LGA where
he had been working for the previous seven or eight years on secondment.
We brought in others directly from local government; it was a
deliberate policy. I have to say there was detailed discussion
with local government about all the major changes we introduced.
I remember the discussion about a comprehensive performance assessment
went on for more than a year to ensure that we continued to refine
and change the system to get it better. So I do not accept the
argument that there is not proper discussion between central and
local government. In answer to the question about what is the
key thing, it must come down to finance. While it is not clear
to the electorate who is responsible for decisions—whether
it is central government because of the large control they have
over grant, whether it is different authorities because of the
system of precepting, whether it is local government because of
the share of the council tax that it ultimately determines—it
is simply not satisfactory at the moment. Until we get a larger
balance of funding within the control of local government and
local government can be seen to be responsible for its financial
decisions, I do not think we will ever get a framework of really
good, effective and accountable local government.
Q473 Mr Betts: How would you achieve
that? I agree with the points you are making about the powers
being pushed incrementally in some cases to local authorities
and they have to use them and show that they are willing to, but
I agree that the financial question is absolutely vital. We are
really left with the same system we had in 1997 and almost everyone
seems scarred by the poll tax and what happened and nobody dared
touch the whole arrangement. We had a possibility with the Lyons
Report that we would have some radical change. The one thing they
looked at really was the issue of the business rate and they even,
in my view, bottled out on that, which would have been the first
obvious step to take towards rebalancing. We have got the situation
where we cannot even manager to revalue, can we, for the Council
Tax and I know that you are bitterly opposed to that decision,
which you spoke on quite vociferously. What should we be doing
then, in practical terms to try and get this rebalancing?
Mr Raynsford: I do think it has
to be incremental. I think the evidence of the poll tax gives
a very clear warning against trying to do big bang changes in
local government finances. I think the work that was undertaken
in the balance of funding review which then led onto the Lyons
Report set out options for an incremental series of changes partly
to do with reform of the council tax, partly to do with the introduction
of additional revenue sources and we at least are seeing the introduction
of an element of Supplementary Business Rate which is a very modest
step in the right direction. For someone who advocates an incremental
approach I am pleased to welcome the small bit of progress that
is being made; I would like to see that built on.
Q474 Mr Betts: What would you do
about capping?
Mr Raynsford: Capping is the one
element in the 2001 White Paper that I was unsuccessful in carrying
forward the pledge that we would remove capping progressively.
I will tell you quite openly why. We said that we would start
by exempting authorities that secured an excellent category in
the comprehensive performance assessment. In the run up to 2003
we saw those very large council tax increases I have referred
to in which the largest single increase in the country was posted
by Wandsworth council which increased its council tax by 50-plus
per cent, having cut it by 25 per cent the previous year which
happened to be election year. That left me as Minister in a position
where it was clearly completely irrational for me to cap other
authorities when the authority that was responsible for the largest
increase in council tax in the country could not be capped because
we had pledged that we would not cap excellent authorities that
year. That forced us into a position of reconsidering the pledge
and that is the one pledge in the 2001 White Paper that was not
implemented. The other devolutionary measures were all implemented.
Q475 Chair: Why could you not just
have scrapped the whole thing since it demonstrated exactly how
councils can play around with it? In fact, if they cut it by 25
per cent and increased by 15 per cent, then over a two years they
had actually cut it—
Mr Raynsford: It was 50 per cent,
not 15,50, five o.
Q476 Chair: So it had gone up, but
it demonstrates that the whole system is ridiculous. Why was it
not said that it was unworkable and get rid of capping full stop?
Mr Raynsford: That was the background
for the setting up of the balance of funding review. I have already
alluded to the work we did in that review over the period through
2003 and 2004 to try to establish a way forward. Sadly that work
was not completed before the 2005 general election and subsequently
I was out of Government. All I can say is that the subsequent
work that Lyons did I felt was generally going in the right direction
and I supported it.
Q477 Sir Paul Beresford: The problem
with your argument I think was pointed out to you by John Humphrys
on the Today programme when he pointed out that 50 per
cent of not very much is still not very much and Wandsworth still
came in with the lowest actual average council tax throughout
the country. Therefore the answer still stands. Capping should
not have been there.
Mr Raynsford: It did not stand
at all because clearly if the Government was to take action and
there was genuine concern around the country about the high level
of council tax increases (I have alluded to the public unhappiness
in Exeter but there were many other parts of the country where
that applied) and we were being called on to use to the capping
powers which still existed, it was not feasible to use those powers
if the authority with the largest increase could not be capped
because of the pledge that had been given. That was the basis
on which we had to withdraw that particular pledge.
Q478 Andrew George: If we were to
move, taking the incremental argument, from a situation where
local authorities were less dependent on central government support
as a proportion of their overall expenditure and more to a larger
extent on locally raised income, in order to ensure the evening
out of the inconsistencies across the country as a whole, what
is the lowest level do you think that central government, if you
like, support grant can be brought down to in order to assist
the kind of system you are talking about?
Mr Raynsford: There have been
changes since I left Government and changes can affect these issues
quite dramatically, for example the changes in education funding
has been a very significant one. Certainly at the time when I
was conducting the balance of funding review we felt there was
little or no difficulty in achieving a position where, on average,
local authorities should be able to account for at least 50 per
cent of funding within their area without that interfering with
the equalisation system which most Members of Parliament would
agree is fundamental to achieving a fair distribution of resource.
Q479 Mr Betts: Did you ever look
at an alternative to capping? We have just been to Denmark and
Sweden looking at their systems. In Denmark the central government
takes the view that local authority expenditure is important simply
in terms of its macro-economic policy and the amount of taxation
that has been levied on its citizens and therefore it sits down
and agrees with local government as a whole through the local
government association what the total expenditure and taxation
for the local authority should be and then leaves it to the association
and its members to work out that arrangement between themselves.
It is a completely different way of doing things.
Mr Raynsford: I will just remind
you that we did pledge in the 2001 White Paper that we would progressively
end capping starting with the excellent authorities and, assuming
that all went well, then extending to other authorities. That
was the pledge in that White Paper. It was not conditional on
other things, it was a pledge. Unfortunately it backfired for
the reason I have explained and it gave a lot of my colleagues
here, I am afraid, a view that local government, if given the
opportunity, would actually increase council tax unreasonably.
In that situation we are back to a position which is further back
from what I would ideally like to see than we were in when we
set out that pledge in 2001.
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