Uncorrected Evidence m40

Memorandum from Westminster City Council (BOP 40)

1. Summary

1.1 Westminster City Council welcomes the opportunity to contribute to the Communities and Local Government Select Committee inquiry into the balance of power between central and local government. We intend to focus our submission on three elements of the inquiry - our use of existing powers, where we would seek further devolution, and where we think there is a case to be made for greater financial autonomy.

1.2 Our headline argument is this. Local government has proved itself to be the most efficient and effective part of the public sector. Excellent councils like Westminster are part of a new generation of local authorities who listen to their communities, take an evidence-based approach to understanding them, and build strong partnerships locally to deliver good-value services that best meet their needs.

1.3 We know that most people's direct interaction with the state comes through local government. But when citizens ask local authorities to direct resources towards their top priorities - whether these are more police officers by the tube station at night or better affordable housing provision - too often they are told that the decision is out of their local representatives' hands. It is hardly surprising that they become frustrated and disengage.

1.4 We want to bring our citizens back to the table and reinvigorate their support for local democracy. We call this "localism with purpose". In our submission, we seek recognition of the current limitations of the power of well-being and propose the granting of a general discretionary power to councils.

1.5 With a general discretionary power, excellent councils such as Westminster would be given full freedom to spend according to local priorities using un-ring fenced and non-prescriptive Area Based Grant. They would be able to raise a greater proportion of their expenditure locally, including through a supplementary business rate, and retain a greater proportion of their business rates and housing subsidy to meet identified local needs.

1.6 In addition, under a general discretionary power, councils would have far greater autonomy in target setting, the authority to compel partners to share data, and an improved ability to hold other public agencies to account.

1.7 We justify our proposal using strong examples of where we are using our existing powers to secure better outcomes for local people and by highlighting where the lack of further devolution from central government or financial autonomy is acting as an impediment to our further progress.

2. Use of existing powers

2.1 The power of well-being

2.1.1 The power of well-being promotes local authorities' community leadership role, allowing them to undertake any action to improve the social, economic and environmental wellbeing of their area. However, the power is limited by the fact that councils are prohibited from charging for services, restricted to covering the costs of providing specific services, and required to charge at a level determined by central government.

2.1.2 Its effective use is also hampered by the loose definition of how the "duty to co-operate" applies to partner authorities[1]. For example, police borough commanders have to balance and prioritise the community safety priorities agreed through the LAA and the separate targets set centrally by the Home Office.

2.1.3 Westminster City Council has taken the lead in establishing strong local partnership arrangements. The Leader of the Council chairs the Local Strategic Partnership, through which a wide range of local agencies and individuals have committed to jointly delivering the objectives of the Sustainable Community Strategy (SCS) and the improvement priorities identified through consultation on the new Local Area Agreement.

2.1.4 The council recognises that there will be some local issues and priorities that are not picked up through these consultation methods. Westminster has therefore introduced a new neighbourhoods programme that gives greater voice to communities by empowering ward councillors to act as more effective champions for their local area. This is a year ahead of the new "duty to involve" which comes into force on 1^st April 2009.

2.1.5 Case Study: Neighbourhoods

The council has introduced neighbourhood budgets of Ł100k per year for each ward for the next two years (2008/09 and 2009/10). The neighbourhood budgets give all Westminster's wards equal scope to address local issues and have both increased the influence of frontline councillors and acted as a catalyst for increased civic participation.

In addition to devolved budgets, Westminster's neighbourhoods programme:

- provides a new dedicated team to support councillors' enhanced role through data and analysis, action chasing and casework progression;

- assigns a senior council manager to each ward to act as a champion and help to "unblock" issues;

- creates new neighbourhood profiles, bringing together data on public priorities, satisfaction and service performance at ward level, as well as information on planned local service delivery, projects and partnership working;

- empowers councillors to more easily arrange bespoke engagement events on local cross-cutting issues.

To date, all wards have discussed with residents their spending priorities. As a result, we have seen the number of residents who feel that the council takes account of their views when taking decisions increase from 41% to 47%. There has also been a 50% increase in turnout at the council's Area Forums (regular consultation events).

2.1.6 The council is leading a new programme of work to establish how the Local Strategic Partnership can better exercise the power of well-being, while making efficiency savings. Described as an audit of the totality of public spending across Westminster, the project involves:

- Consulting LSP partners, relevant government departments and other major "spending" organisations in the city to establish a headline position of total government spending over the past three years.

- Disaggregating information to ward level and matching activity to spending.

- Working with partner organisations to collate and analyse results, and develop proposals for increasing efficiency and effectiveness across local public services.

2.1.7 We are also exploring the development of an online bulletin board for community recommendations. This would provide residents with real-time information about their local area, allow them to report streetscape, crime and other issues to the council, and make recommendations for local improvement priorities via online fora.

2.2 Specific examples of use of the power of well-being

2.2.1 In 2008, our top priorities are closely aligned to the principles of the power of well-being. The following case studies outline the issues we face in Westminster and how we will be addressing them. They highlight our commitment to community leadership, the strength of our partnership engagement, and the legitimacy we draw from addressing the stated priorities of our residents and customers.

2.2.2 Case study: Families at Risk
What is the issue?	Approximately 3% of Westminster's families are at high risk of social exclusion, which has a disproportionate and negative effect on local communities. Some are involved in crime and anti-social behaviour, while others suffer from health inequalities. Others have problems with housing, schooling, unemployment or substance abuse, or a combination of the above. Although individual services in Westminster are rated as excellent, lack of effective co-ordination means the combined effect of their interventions is weaker than it should be. Duplication of effort and intervention only when problems have become entrenched also results in higher costs to the tax payer.
What do we intend to do?	We will: - Identify the top 3% of families who are most resource intensive for the council and its partners. - Map their circumstances and needs and the services they receive from all public sector agencies - Integrate services by establishing local multi-agency teams.
What partners are involved?	Council services (Children's and adult services, housing, welfare and benefits, community protection, youth services, schools, substance misuse services, mental health services); police, NHS, voluntary sector.
How does this exercise the power of well-being?	The council is exercising its community leadership role by bringing together partners to tackle social and economic disadvantage among Westminster's most vulnerable residents. The project is in line with the stated aspiration within the SCS to create "a city of opportunity where everyone can improve their life chances, well-being and health".
What currently hinders our ability to act? What changes would we seek?	There is currently a lack of clear guidelines for information-sharing which hinders partnership working with families. We would encourage the Government to work with local authorities and their partners to develop these. We would also seek a more effective working relationship with the Department for Work and Pensions (DWP) and Job Centre Plus (JCP) to support our efforts to tackle worklessness and to provide a seamless service to residents (see section 2.2.4).

2.2.3 Case study: Community Build
What is the issue?	Demand for affordable housing in Westminster is high. Westminster has experienced population growth of 15% since 2001, the highest of any local authority in England and Wales. High land costs make it very difficult to develop housing that is affordable to most residents and, as a densely developed urban area, there is little scope for new development. Overcrowding is a severe challenge. The census shows nearly 5,000 overcrowded households across all tenures.
What do we intend to do?	We will - develop new housing opportunities within our existing stock, with an appropriate mix of unit sizes and tenures; - undertake a programme of early and detailed local consultation to gauge other related needs, such as childcare, training space, and health facilities; - take these needs, as well as environmental and sustainability considerations, into account when taking forward developments.
What partners are involved?	Council, CityWest Homes (the council's ALMO), Local Area Renewal Partnerships, community organisations (such as the Dolphin Square Charitable Foundation).
How does this exercise the power of well-being?	The council is taking an innovative approach to addressing one of the top local priorities for residents, working together with a range of partners. This project is in line with the stated SCS principle, that "addressing the shortage of affordable housing and high levels of housing need including homelessness and overcrowding, are key issues in maintaining and improving overall quality of life in Westminster". There are also two LAA improvement priorities linked to housing need.[2]
What currently hinders our ability to act? What changes would we seek?	Setting up this scheme has proved very complex as we need to take the finances off the balance sheet to relieve the Public Sector Borrowing Requirement (PSBR) and need to make the programme tax efficient through the creation of a charity. Greater powers to extend the council's tax umbrella to other council owned companies would greatly assist.

2.2.4 Worklessness
What is the issue?	Worklessness has a significant impact on the health and economic well-being of Westminster's residents. Around 18,000 residents in the city are out of work and claiming benefits and a similar number of residents have no qualifications. Benefits payments paid to out of work residents in Westminster cost approximately Ł135m per annum (equivalent to the council's combined expenditure on adult social care and community protection). Westminster has an impressive track-record in reducing the number of young people not in education, employment or training (NEET)[3] and supporting local job-seekers into work - over 5,000 into work via brokerage agencies in the last 7 years. However, additional support is required to make a difference in the areas where worklessness is concentrated in order to build on the achievements to date.
What do we intend to do?	We are taking a multi-agency and cross-border approach to tackling worklessness under the Westminster Works project. This includes: - additional employment outreach to families in areas where worklessness is highest; - neighbourhood enterprise schemes to support entrepreneurs and businesses in renewal areas; - 'super' advisors to help low income and workless families make sense of benefits entitlements to supplement incomes; - peer support networks providing workless families with encouragement and mentoring; - a new package of measures to engage local businesses, council contractors and employers with the worklessness agenda; - shared management systems between agencies to ensure that we are able to track the progression of families on their journey into work and once in employment . The council is also introducing a new apprenticeship programme locally while developing proposals with local partners for an innovative Group Apprenticeship Programme for Central London.
What partners are involved?	Council, Paddington Waterside Partnership, Paddington Development Trust, Colleges, JCP, LSE, London Development Agency, Adult Education Service, private sector and Local Area Renewal Partnerships
How does this exercise the power of wellbeing?	The combined impact of these schemes will improve the life chances of the next generation of Westminster residents, while providing a cost-effective solution to skills shortages.
What currently hinders our ability to act? What changes would we seek?	The council has signed up to improvement priorities to reduce worklessness via the LAA, yet budgets are largely out of the Partnership's control. DWP manages the contracts for key services and there is no local accountability and connection to highly effective services; such as Paddington First[4]; sponsored by the City Council and the LSP. JCP does not reference the LAA targets within its business plan, although the Council has instigated a memorandum of understanding setting out roles and responsibilities. The outcome is a dual commissioning strategy: commissioning by the Government via DWP/JCP and commissioning by the Council and the LSP. This is confusing for residents looking for work and messy for services operating within this structure. We would seek: - working with the London Development Agency as a broker between local authorities and JCP, to establish a local commissioning board, (possibly covering more than one local authority area) which would include DWP; - to have a budget drawn from existing DWP expenditure in an area; - powers to influence contractors and be accountable to local residents; - for JCP / DWP to share anonymised data of their customers with partners charged with strategy.

2.3 Trading powers

2.3.1 The Local Government Act 2003 provides local authorities with the explicit power to trade for a profit with public bodies and private organisations.

2.3.2 Westminster City Council is making full use of this power. Using expertise from its highest rated services; including communications, parking, CivicWatch (community safety), and finance and performance management; Westminster offers practical and consultancy support to other local authorities, consultants operating within the sector, and commercial third parties.

2.3.3 Westminster has set up a limited company, WestCo Trading Limited, to act as its trading arm. The WestCo "offer" includes direct services such as:

- a fixed price review of any service which the customer believes has capacity for improvement;

- "off the shelf" operating models for the customer to work towards;

- seconded staff from the council to operate an improved service or transfer their skills, knowledge and experience to the customer's own staff;

- licensing to the customer the right to use the systems that have been developed by Westminster and its partners.

2.3.4 In addition, WestCo is exploring options for trading a range of indirect services to partners to support their own bids to local authorities and joint ventures with commercial third parties.

2.3.5 Case study: Communications

Westminster's communications team offers a consultancy service under powers originally in the 1972 Local Government Act, and from more recent legislation. This allows local authorities to trade with other public authorities, as long as they do not subsidise them nor make an 'excess surplus' from these activities.

Over the past five years Westminster's team has developed a trading operation billing fees of Ł1.4 million 2007-8. The surplus, about 15% of the total fees, is ploughed back into council services.

Westminster offers a range of communication services to clients, but one of the key skills is the ability to reduce costs and improve outputs. Projects and advice to re-organise disparate communications functions to make them more efficient have been undertaken for councils including Oldham, Birmingham, Hillingdon and Southwark.

The council sees three benefits to this work. First, it shares knowledge with other authorities. Work in reviewing and recommending improvements to communication functions including Merton, Richmond upon Thames and the Isle of Wight has led to improvements in the communication functions of these authorities. Second, it retains income and knowledge within the sector rather than losing it to the private sector. Third, it enhances the quality of Westminster's staff through the experience of the consultancy work that they undertake.

2.3.6 By utilising its trading powers in this way, Westminster is taking a proactive and innovative approach to meeting the financial challenge posed by the changing nature of the local population and the settlement received through the latest Comprehensive Spending Review. As an indication, WestCo's target turnover for the financial year 2008/09 is Ł1 million.

2.3.7 However, it would be possible for the council to do more if the Government clarified the procurement rules surrounding the purchase of services by public bodies from local authority trading companies. Westco has encountered some confusion amongst different local authority procurement departments about which purchases have to be competitively tendered in accordance with the EU Directives, and which purchases are excluded from these Directives. Clear and encouraging guidance from the Government on the procurement of services from other local authorities and their trading companies could significantly increase the use of shared services between local authorities delivering efficiency savings through economies of scale.

2.4 Charging powers

2.4.1 The Government is concerned that local authorities are not effectively utilising their charging powers[5]. However, Westminster's use of these powers to raise revenue is well-documented. Examples include parking charges (for cars and motorcycles) and fees for local land charge searches.

Parking charges

2.4.2 In 2007/08, the council's net revenue from on-street parking was Ł38 million and net revenue from off-street parking was Ł4.1 million. This funds transport-related expenditure throughout Westminster, including road maintenance, car park maintenance and improvement, and helps to subsidise residents' parking permits.

2.4.3 The council has recently introduced charges for motorcycle parking, responding to an identified need. Occupancy surveys conducted in March-April 2008 indicated that on-street motorcycle provision remained significantly over-subscribed, despite a 25% increase in the latter half of 2007. The revenue from charging will be used to fund an additional 900 spaces in the council's off-street car parks as well as on-street security devices (to prevent theft) in residential areas.

Land charges

2.4.4 Under the terms of the Local Land Charges Act 1975, councils provide solicitors, conveyancers and their clients with information about the land or property they are interested in acquiring in exchange for a fee. In the past, councils have had discretion around the level of charge they can impose for official searches. This has allowed Westminster to generate a surplus which has been used to modernise and improve data systems. However, the government is currently consulting on proposals to only allow councils to recover costs.

2.4.5 Our ability to generate a surplus has been significantly reduced by competition in the property search market. This situation would be exacerbated if set fees were to be enshrined in legislation. National monitoring of charges also contradicts the Government's commitment to lifting the burden of monitoring on councils through the new performance framework.

2.4.6 We believe that all charges for property search services should be deregulated to individual council level. This would allow us to generate a surplus that could be used to fund future investment.

3. Further devolution and financial autonomy

3.1 The examples above demonstrate how Westminster is effectively using its well-being, trading and charging powers to deliver better outcomes for local people.

3.2 We believe that this makes a strong case for further devolution. Whilst central government has a legitimate interest in national minimum standards, we believe that all places are different and all require local solutions, mandated through local democratic accountability structures.

3.3 We would argue that central government should devolve decision-making on most issues to local government and provide local authorities with fiscal autonomy to match their decision making. This could be achieved through the granting of a general discretionary power. This approach would truly empower communities and their democratically elected representatives to determine local priorities and direct service provision accordingly - localism with purpose.

3.4 There are three headline categories under which we make our case: strong and sustainable communities; fairness; and economic development. Under each category, this submission will provide examples of the particular local issues we face, outline what is hindering our ability to act, and make practical suggestions as to how a general discretionary power would allow us to deliver better outcomes for our local communities.

3.5 Strong and sustainable communities

3.5.1 Population
What is the issue?	The population base used to drive national funding formulae does not take into account short-term migrants or "part-time" residents and therefore never reflects the totality of the population which the council serves. In any case, the population figures used for funding and determining the most basic socio-economic features such as unemployment rates are subject to such significant revisions that there is a widespread loss of confidence that they reflect reality.
What is hindering our ability to act?	The inflexibility of the definition of the population base imposed.
What change do we seek/how would a general discretionary power help?	In areas with very high levels of migration or part-time residents we would wish to be able to use a more realistic population base derived from administrative sources for funding, planning, and performance purposes. This would be tenable if agencies were obliged to share details which capture resident numbers with the council.

3.5.2 Community safety
What is the issue?	Community safety is a major issue for Westminster as for London as a whole. Residents continue to identify reducing crime and anti-social behaviour as their top priority in Westminster's annual City Survey.
What is hindering our ability to act?	Funding for partnership community safety activity is provided to the council in piecemeal fashion and subject to a variety of different restrictions and accountability structures. In particular the methodology for granting Safer Stronger Communities Funding (SSCF) and Basic Command Unit (BCU) funding outside of LAA arrangements is flawed. This hinders our ability to plan projects and be proactive. To give a specific example, the fact that BCU funding is controlled by the Borough Commander with no lines of democratic accountability, means that agreed local community safety priorities may be usurped at short notice by a directive from the Home Office to the police. Similarly, the target setting process for CDRPs is contradictory. The process for the most recent round of target setting (for 2008-11) required us to nominate 'spotlight indicators' for specific focus prior to any public consultation taking place. This goes directly against the concept of the LAA and removes our ability to focus on local concerns.
What change do we seek/how would a general discretionary power help?	We would seek a formal, agreed degree of influence over resources, autonomy in target setting and the ability to hold the police to account for their performance. The first step toward this would be to stop the Metropolitan Police from having their own target setting and accountability processes separate to LAA arrangements. This would force CDRPs to be held accountable as a partnership, not as individual agencies controlling discrete resources.

3.6 Fairness

3.6.1 Redistribution of housing subsidy
What is the issue?	Our residents tell us that housing is one of their top priorities (3^rd top in 2007) and we have two designated LAA improvement priorities linked to housing. The current financial system doesn't allow us to meet that need. Our HRA tenants' top investment priorities for their estates are improved estate security, working lifts and environmental investment that is not funded through the present system.
What is hindering our ability to act?	The current funding regime under-funds the real cost of maintaining our stocks by up to 40%. It fails to recognise the wider environmental needs of the council's stock which is predominantly made up of flats (94%). This includes investment in lifts, digital television, estate roads, security, works on common areas, and other costs associated with a predominantly high-rise inner London stock. Westminster's asset management plan identifies the need to invest Ł1.3bn on council homes over the next 30 years but the subsidy system allows us to spend only Ł900m. From 2011 we will have to start paying money back into the government pool and overall will have to pay back Ł177m over 30 years. Over the next 5 years we need to reduce our investment programme by about Ł50m.
What change do we seek/how would a general discretionary power help?	We would argue for a fair and equitable funding regime that fully recognises our need to spend and allows local determination around our own priorities and a self-sufficient Housing Revenue Account.

3.6.2 Provision of temporary accommodation
What is the issue?	Recent developments in housing policy have tended to benefit households entering the social housing system over existing tenants. For example, homelessness legislation enables new arrivals, often with only a limited local connection, the opportunity to secure valuable long term public housing. Meanwhile, targets to reduce bed and breakfast usage and temporary accommodation have resulted in fewer transfer opportunities for existing tenants. In Westminster, this has contributed to problems such as long waiting times and significant levels of over-crowding. Community cohesion is adversely impacted when the perception develops that new arrivals get priority for housing. Finally, the cost of providing accommodation for new arrivals falls on local taxpayers.
What is hindering our ability to act?	The cap on subsidy is set at a level which doesn't cover costs which means that the shortfall has to be met by the council tax payer.
What change do we seek/how would a general discretionary power help?	We would seek the ability to set the cap on subsidy at the appropriate market rate for Westminster. We would also encourage the government to review the local connection measures in homelessness legislation.

3.7 Economic development

3.7.1 Retaining business rates
What is the issue?	As London's "shop window" Westminster is responsible for keeping the most visible part of the capital clean, safe and attractive. Maintaining incredibly busy streets like Oxford Street incurs significant expense. Business rates are one source to support us in fulfilling our place-shaping role in relation to business areas. However, the link between business ratepayers' contributions and the service improvements or investments that they perceive in their areas has been weakened significantly in the present national business rates redistribution system. It is difficult for local authorities to predict the level of funding available for economic development as they are managed by various central government departments, and may be bid-based or only available for a short period of time. For example, the Local Authority Business Growth Initiative (LABGI) was set to be a key contributor to delivery of the Oxford, Regent and Bond Streets' action plans. However, the total level of resources for the whole of the CSR07 period is only Ł150m, which represents an 85% reduction compared to the previous spending review period. In addition, the government will be using a new methodology to distribute LABGI in 2009-10 and 2010-11, with a stronger focus on distributing resources on a per capita basis rather than individual authorities' performance on economic growth or business rate contributions. This means that business hubs in major cities such as Westminster will receive a much smaller share of the LABGI grant compared to the previous scheme.
What is hindering our ability to act?	Westminster currently contributes over Ł1bn in business rates to the central pool for re-distribution to other local authorities; however, the City Council only receives about Ł154m of business rates income via formula grant.
What change do we seek/how would a general discretionary power help?	The City Council would be in favour of modifying the business rates system to develop a partial re-localisation of business rates. In the shorter term, we would argue that the new LABGI scheme should place a stronger emphasis in the distribution methodology on business rates or economic growth contribution.

3.7.2 Supplementary business rates
What is the issue?	The Government has committed to introducing the Supplementary Business Rates (SBR) scheme from 2010.
What is hindering our ability to act?	For London, the power to set the levy and the income will be retained by the GLA to contribute to the CrossRail scheme.
What change do we seek/how would a general discretionary power help?	We would argue that all local authorities, including London boroughs, should be able to set and retain a local Supplementary Business Rate.

4. Conclusion

In this submission, Westminster City Council has made a strong case for further devolution and financial autonomy for local authorities.

We have highlighted a number of specific examples where the existing powers, regulations and cultures in government hamper our ability to deliver better outcomes for local people. These include:

- contradictory target-setting processes, for example between the council and police, which makes it difficult to address community safety concerns;

- lack of support for data sharing between central government agencies, such as Job Centre Plus, and local authorities, which impedes us in accurately counting the local population and developing appropriate strategies to tackle worklessness;

- lack of autonomy to raise income and manage funding locally to support new housing and economic development activities.

- restricted ability to hold partners to account for their performance in addressing local priorities, including community safety and worklessness.

We have argued that excellent councils such as Westminster should be granted a general discretionary power which would allow us:

- full freedom to spend through un-ringfenced and non-prescriptive Area Based Grant;

- more influence over partnership resources;

- the ability to raise a greater proportion of our expenditure locally, including through a supplementary business rate;

- to retain a greater proportion of our business rates and housing subsidy to meet local needs;

- autonomy in target setting

- and stronger authority to compel partners to share relevant data with us and to hold them to account for their performance.

We base our argument on evidence of the excellent use of our available powers, including our well-being, charging and trading powers.

We believe that by bringing decision-making back to local democratically-elected representatives we stand the best chance of delivering "localism with purpose": better outcomes for our communities and reinvigorated support for local democracy.

September 2008

[1] Partner authorities are described as persons or bodies that must be consulted by a responsible authority when it prepares its LAA, must co-operate with the responsible authority to determine LAA targets, and must have regard to LAA targets it has agreed.

[2] LAA 7 "To increase access to good quality affordable housing"; LAA 8 "To meet housing need and tackle the consequences of housing shortage".

[3] By January 2008, 235 young people were NEET (5.1%), ahead of the Westminster target of 8.5%.

[4] A local job-brokerage which delivers employment support in community venues based on estates. It is run by a private sector led partnership and matches the skills of the job-seekers to those of the employer. Over 5,000 people have been supported into work since 2001.

[5] "Only one in five councils are using charging to the full potential. Not just to cover costs but to shape their area". John Healey, Minister for Local Government, in a speech to the Local Government Association, August 2008.