House of Commons - Work of the Committee in 2008-09 - Communities and Local Government Committee

Work of the Committee in 2008-09 - Communities and Local Government Committee Contents

3 The Committee's effectiveness

9. The Liaison Committee's core objectives and tasks for departmental select committees provide a framework for examining the effectiveness of our work. The four core objectives are to examine the policy (A), expenditure (B) and administration (C) of the Department, and to assist the House in debate and decision (D). In addition to those core objectives, the Liaison Committee also set 10 core tasks to assist in monitoring the work of departmental select committees. A table showing how our work this year has addressed these tasks appears at Annex 1. A fuller account of our activities in relation to the core objectives may be found below.

Examining departmental policy

10. The central focus of our work was on examining current and possible future government policy, relating primarily to the departmental responsibilities of CLG. Although we focus on the policy responsibilities of CLG, the cross-cutting nature of the issues for which the Department is responsible means that we inevitably touch upon a broad range of government policy. This session we have particularly found ourselves moving into territory covered by our colleagues on the Treasury Committee, as we considered the measures necessary to deal with the effect of the credit crunch on housing policy, and the role of the Financial Services Authority in regulating local authority treasury management advisers. Our inquiry into traditional retail markets, meanwhile, noted the potentially beneficial effects of markets for a range of government policy, from health to the economy.

Housing

Housing and the credit crunch

11. Over the course of summer 2008 it became increasingly apparent that a major preoccupation of CLG's work this year would need to be addressing the effect of the credit crunch on its housing policies. The ability of the Government to achieve its ambition of "everyone to have access to a decent home at a price they can afford, in a place where they want to live and work" was already being questioned before the economic downturn, and is now certainly at risk of failure in the new economic circumstances. Our inquiry into Housing and the Credit Crunch studied the achievement of the Government's housebuilding targets, both for market and for social housing; the financial viability and ongoing business of housing associations; and measures to help existing and prospective homeowners affected by the credit crunch. We concluded that the steps the Government was taking towards meeting the challenges posed by the economic downturn were welcome, but that further action was needed. In particular, we found that CLG, both at official and Ministerial level, needed to maintain pressure on the Treasury to ensure the measures to revive the mortgage markets were implemented as soon as possible. We also recommended that local authorities develop a comprehensive and imaginative strategy for meeting housing needs in their area and take a comprehensive approach to making advice available to people in their area on the options available. The Government's response to our Report was broadly positive.

12. Throughout our Report, we indicated that we would return to the subject later in the year. This we duly did, and our second housing Report, Housing and the credit crunch: follow-up revisited the subject and studied the Government's housing provision in the 2009 Budget. We reiterated our support for the Government's housing targets and the importance of capacity retention in the housebuilding sector. The availability of private mortgage finance is crucial, and we were told that the key to unlocking that finance was the Treasury's asset-backed guarantee scheme. We again recommended that CLG Ministers and officials keep up the pressure on the Treasury to bring forward new measures to get the mortgage markets moving. We also looked beyond the immediate problems of the current housing market, and recommended that the Government address some of the long-term questions of housing policy, such as the balance of tenures, which had been moved to the back burner during this period of economic turbulence. We continued to pursue these issues in our session with Ministers in November on CLG's Departmental Annual Report, and will have more to say in our report on that inquiry.[3]

Decent Homes

13. We launched our inquiry Beyond Decent Homes on 22 July. In the context of our predecessor Committee's Report Decent Homes of May 2004, we decided that it was an appropriate time to scrutinise the Government's performance against its target to improve decency levels in social and private sector housing by 2010. We also felt it was necessary to inquire into the Government's plans after 2010: would the programme be continued and enhanced, or another backlog of repairs be allowed to build up? We have received over 50 submissions from interested parties and taken oral evidence on five occasions so far from a variety of social and private sector interlocutors. We have also made a visit in the current Session to Stockport, hosted by Stockport Metropolitan Borough Council and its Arms Length Management Organisation, Stockport Homes. We expect to report early in 2010.

Council housing finance

14. Meanwhile, we took the opportunity to examine another aspect of emerging Government policy, on council housing finance. A long-running review of this crucial aspect of housing and local government finance policy finally reported in July this year, and the Government came forward with proposals for fundamental change in the way in which council housing is financed.[4] Given the extensive review which had been undertaken by the Government and the consultation it had carried out, we did not consider a full inquiry appropriate: instead, we invited the Minister to appear before us to explain and justify his conclusions.[5] We maintain our interest in this area of policy and await keenly the results of the consultation on the Government's proposals.

LOCAL GOVERNMENT

Relationship between central and local government

15. As already mentioned, the centrepiece of our work this year has been our inquiry and report The Balance of Power: central and local government. The inquiry tapped in to both the constitutional reform and the "localist" agenda, considering the case for granting local government greater powers and responsibilities for the shaping of local areas, and means of entrenching its position in the governance system of this country. Our Report sought both to scrutinise the work the Government was already doing—finding a substantial mismatch between the Government's own view of its progress and those held by other stakeholders—and to lead the debate on how policy in this area could be developed further. We recommended powers for local authorities to commission health and policing services in their local areas; further cultural change within central government to facilitate a lasting shift towards a more decentralised balance of power structure; and consideration of options for allowing local government to raise more of its own money. We also recommended a constitutional settlement to put the European Charter of Local Self-Government on a statutory basis; and the creation of a Joint Committee of both Houses to oversee the new constitutional arrangements.

16. The Government's response so far—by agreement the Government responded only to some of our recommendations,[6] and we await the conclusion of analysis of the responses to the Government's Strengthening Local Democracy consultation for a response to the rest—has been underwhelming, though we note that the creation of a Joint Committee formed part of the proposals in Strengthening Local Democracy. We recognise, however, that we are playing a long game. The sort of change which we recommend in The Balance of Power will not come overnight, or even in the few months it takes for the Government to produce a formal response to our report. To move the debate further forward and encourage wider consideration of our conclusions, we hosted a seminar in November, held in conjunction with the London Councils representative organisation, to bring together some of the leading players to discuss the conclusions of our Report. Meanwhile we were encouraged by the response of the new Secretary of State for Communities and Local Government to our questioning on this subject during our inquiry into CLG's Departmental Annual Report, which suggested that the Government may be prepared to go further with the sorts of change we recommended.[7] We will be watching developments with interest, but do not intend to remain passive observers of the process. These changes will require sustained political will, and one of our roles will be to keep up the pressure on the Government to act, and go on acting, to decentralise power and strengthen our democracy.

Local authority investments

17. Our other examination of policy in the local government field was of a very different nature. The sudden and dramatic collapse of Iceland's entire banking system in October 2009 thrust the hitherto obscure world of local authority investments into the public gaze. Local authorities invest around £30 billion of their cash reserves annually, yet local authority investment practices appeared under-regulated and little audited. We launched an inquiry soon after the collapse, not simply to focus on the Icelandic banks, but to study in detail the esoteric world of local authority treasury management.

18. Following the potential loss of up to £1bn of local authority cash in the failed Icelandic banks, we were very far from being the only ones scrutinising this area of local government practice. Nevertheless, we found that the application of a political perspective to events brought a valuable extra dimension to the debate. First, by endorsing the findings of the Audit Commission's inquiry into the Icelandic bank collapse,[8] we were able to bring some credibility to their conclusions, which had been called into question as a result of the Commission's own potential losses of up to £10m in the Icelandic banks. We were also able to scrutinise the Audit Commission's own role in the audit of local authority treasury management practices. Second, the appearance before us of private sector local authority treasury management advisers exposed confusion, and perhaps some deliberate ambiguity, about what services they offer, and the need for local authorities to treat these services with much greater care than had hitherto been the case. Finally, we considered the role of the Financial Services Authority, and—after some toing and froing with the Authority[9]—have identified a gap in the regulation of treasury management advisers which may need to be addressed. We will return to this subject following the Authority's response to the follow-up letter from our Chair sent in the wake of its formal response to our Report.

PLANNING

Planning for town centres

19. We, and our predecessor Committees, have a longstanding interest in planning for town centres. We last considered the issue in 2004, when we discussed with Ministers a range of issues relating to the direction of Departmental thinking ahead of the publication of the existing Planning Policy Statement 6 (PPS6) in 2005.[10] We were therefore keen to consider the implications of the Government's plan, arising out of the Barker review of land-use planning,[11] to remove the stand-alone "need test" from town centre planning policy. We took evidence on that proposal in May, during the consultation period on the draft new Planning Policy Statement 4: Planning for prosperous economies, which was to incorporate the revised version of policy previously contained in PPS6, and reported in July to meet the consultation deadline.

20. In our report, Need and impact: planning for town centres,[12] we concluded that the case had not been made for the removal of the "need test", and recommended that it be retained as a stand-alone test alongside the new "impact assessment framework" under which plans for development affecting town centres were to be considered. Regrettably, the Government rejected our conclusions, and intends to proceed with the removal of the "need test" as a stand-alone test in town centre planning policy; albeit that the Department insists that need will continue to be considered in the new "impact assessment framework". The Government's response was, however, more positive in respect of our conclusions and recommendations about the monitoring of the changes, which will be crucial in ensuring that their effect is to enhance the protection of town centres, as the Government claims. We recommended in our Report that our successors in the next Parliament consider the changes again 18 months to two years after their introduction.

Skills and labour shortages in planning

21. Need and impact reiterated a number of the recommendations which we made in a report of last session, Planning Matters—Labour Shortages and Skills Gaps.[13] Although, as we noted last year, the Government's response to that report accepted a number of our recommendations, we have been disappointed with progress since then. The Chair of the Committee wrote to the Minister for Planning in July ahead of the Ministerial session in November on the Departmental Annual Report raising a number of concerns, particularly about the performance of the Academy for Sustainable Communities (now the Homes and Communities Agency Academy). Regrettably, and despite his reply to the Chair's July letter, the Minister appeared largely unaware of those concerns when he appeared before us on 2 November and was unconvincing in his replies to our questioning.[14] We are continuing to pursue this issue, which will be crucial if the skills and manpower are to be available to local authorities to enable appropriate development to assist the economic recovery and attain the housebuilding targets necessary for a growing population.

REGENERATION

New Towns

22. Last Session we undertook some follow-up work on a report of our predecessor Transport, Local Government and the Regions Committee on the New Towns. The resulting Report, New Towns: follow-up, concluded that there was a continuing need for further research, both into the reinvestment needs of the New Towns and to learn the lessons from their experience for current and future large-scale urban development. Since then, we have received and reported on the Government's response to our follow-up work.[15] The response represented a qualified success for our continued work in this area. It indicated that the Government would "commission further work to evaluate the successes and benefits that Britain's biggest planning experiment [the New Towns] brought", the focus of the research being "targeted towards social and retail infrastructure".[16] Although it fell some way short of the full examination of reinvestment needs and lessons to be learnt for which we had called, we nonetheless welcomed the new research, and are pleased that our follow-up work has borne such fruit.

COMMUNITIES

Public toilets

23. Another report of last year to which we received a response in this Session was that on the provision of public toilets.[17] The Government's response, which we received in January this year, was broadly supportive of the main recommendations, many of which were put forward in the Government's Strategic Guide on toilet provision. Our main recommendation was that local authorities should be given a duty to develop a public toilet strategy. This recommendation was, unfortunately, rejected by the Government: but we found another opportunity to pursue the point, on which we report below.[18]

Markets

24. Our inquiry into traditional retail markets, launched at the end of the 2007-08 Session, took us into a policy area which we felt was not receiving the focussed attention of government. The inquiry considered the social and economic effects of covered and uncovered markets serving local people in urban and rural areas, and the support that local and central government might offer. During the course of our inquiry we held four oral evidence sessions and received over 40 written memoranda from local and central government, the markets industry, consultancy firms, private operators, and market traders. We visited Ridley Road Market in Hackney, Chapel Market in Islington and Leicester Market. We also ran a web forum aimed at market traders which proved the source of a number of useful insights.

25. Our report, Market failure?: Can the traditional retail market survive?,[19] emphasised the important contribution of markets to the economic and social lives of communities and highlighted examples of renaissance and renewal in the wider picture of a difficult economic climate. We concluded that government had a strong interest in supporting markets and made various suggestions for the ways in which local and central government should take the initiative to lead and support policy in this area. We were pleased when the Department responded to our recommendations by setting up a cross-Whitehall coordination group to lead central policy and report to the Minister for Local Government in CLG and Minister for Regional Economic Development and Co-ordination at the Department for Business, Innovation & Skills, and to the Minister for Food at the Department for Environment, Food and Rural Affairs. We will continue to monitor the progress of this new body. However, we were disappointed that the Department rejected our recommendation on enhancing planning policy guidance to emphasise the wider non-economic benefits of markets. We were also concerned that the optimism expressed by the Department on the vitality of town centres was not backed up by data covering the period since the start of the recession.

Supporting People

26. Our inquiry into the Supporting People programme attracted substantial interest from a wide range of stakeholders. This inquiry looked at the effectiveness of the SP programme since its inception and considered how changes in the local government landscape, along with the lifting of the ring-fence on SP funds, would affect the programme's viability and effectiveness in future. Our inquiry confirmed the importance of housing-related support and we made a range of recommendations aimed at protecting these services, whilst retaining local flexibility in commissioning and delivery. Our recommendations supported greater joined-up working at local and national levels between housing, health and social care and also highlighted the urgent need for greatly improved joint commissioning and procurement by associated agencies. A response from the Government to the report, which has been well-received by the main stakeholders, is expected in January 2010.

Preventing violent extremism

27. Also in this Session we have invited written evidence on one further inquiry which falls under the loose heading of "communities": on the Government's Preventing Violent Extremism programme. This relatively new agenda, which represents one of the four key elements of the Government's counter-terrorism strategy, has been the focus of much media attention and public concern in recent times. Written evidence received for this inquiry has been published on our website;[20] oral evidence has now begun and we expect to publish a report in March 2010.

Expenditure and administration of the Department

28. In all our work we seek to consider the extent to which the Government in general, and Communities and Local Government in particular, are applying resources to the best effect; whether promised outcomes are being delivered; and whether the Department is being administered effectively in support of its planned outcomes. We place the administration and expenditure of the Department under particular scrutiny in our annual consideration of the Departmental Annual Report.

29. In previous years we have concluded that the Department "needs urgently to tackle persistent concerns about its ability to deliver across the range of policies for which it is responsible and its ability to influence its strategic partners".[21] Last year, we were able to be more positive, noting an encouraging "direction of travel", but concluding that there was still further to go before CLG could be said to be operating at the highest achievable level of effectiveness.[22] We have taken another look at the Department this year and will be considering what progress the Department has made, and whether it is yet able to provide the "consistent and sustained evidence that the Department possesses the full range of skills required for the effective formulation and delivery of the policies for which it is responsible" which we said last year that we would be seeking.[23] We expect to report early in 2010.

DEPARTMENTAL EXPENDITURE

30. The main focus of our consideration of Departmental expenditure this year was our questioning of Ministers and officials on the major budget changes in the Department needed to deliver the Prime Minister's "Housing Pledge". These changes involved not only transfers of budgets from other Departments but also reprioritisation of previously allocated funds within CLG itself. We sought, and received, clarification in writing of the changes being made very soon after they were announced, in advance of our sessions on the Departmental Annual Report.[24] We then used the opportunity of those sessions to explore the justification for the significant transfer of resources into new build and away from the refurbishment of existing homes which the changes represented.[25]

31. Meanwhile, we continued throughout the year to consider the Department's Main and Supplementary Estimates, examining both the Estimates themselves and the accompanying explanatory memoranda, and requesting further information from the Department as necessary. Explanatory memoranda and further Government responses are routinely published on our website,[26] and will be printed with our Report on CLG's Departmental Annual Report. We have also continued to examine the Estimates relating to the Government Equalities Office, and memoranda from that Office are also published on our website.[27]

PUBLIC SERVICE AGREEMENTS AND DEPARTMENTAL STRATEGIC OBJECTIVES

32. We have continued to examine the performance both of CLG and of the Government Equalities Office against their Public Service Agreement and Departmental Strategic Objective targets through consideration of their departmental annual reports and autumn performance reports. The memoranda we seek from the Government following those Departments' own assessment of their performance are routinely published on our website,[28] and those from CLG will be printed with our Report on CLG's Departmental Annual Report.

33. Substantive comment on CLG's performance against its PSA and DSO targets can be found in our regular reports on the Department's Annual Report. Last year, we commented not only on CLG's performance against its PSA targets, but also on the nature of the targets themselves:

We agree [...] that PSAs have shaped the Government's priorities and galvanised action. By the Department's own admission, however, they have failed to provide fully transparent accountability [...] If CLG's Public Service Agreements are to serve their purpose not only as a means of expressing the Government's priorities and galvanising action, but also of enabling Parliament and the public of holding the Department to account for the £34bn of public money for which it is responsible, it must be possible to rely on the Department's reported performance against them as a true measure of its performance.[29]

We concluded

[...] next time the Secretary of State comes before us to discuss her Department's overall performance, we do not expect her to have to rely on complaints about the nature of the indicators which have been set in order to explain apparently poor performance. We look forward to seeing [...] a performance framework which provides genuine accountability both to Parliament and to the Department's many stakeholders for the whole range of its work.[30]

This point will be considered further, in the light of the evidence given by Ministers and officials during our inquiry into CLG's Departmental Annual Report for 2009 and its performance in the past year, in a report which will be published in early 2010.

Scrutiny of executive agencies and non-departmental public bodies, and scrutiny of major appointments

34. The role of the two new executive non-departmental public bodies overseen by CLG—the Homes and Communities Agency (HCA) and the Tenant Services Authority (TSA), both established on 1 December 2008—has continued to be crucial to CLG's main preoccupation in the past year: the response to the effects of the credit crunch on the Government's housing policy. We accordingly invited the Chief Executives of those two organisations to give evidence alongside the Minister at both the original evidence session in December 2008 and at the follow-up session in June, where we questioned them on their approaches to encouraging housing and regeneration and to protecting tenants during this difficult period for the housing market.

35. We have also scrutinised the work of the Fire and Rescue Service, for which CLG has responsibility. We questioned the Permanent Secretary and the Chief Fire and Rescue Adviser on a number of aspects of the work of the FRS at the session on the Departmental Annual Report, following this up with later questioning of the Minister responsible for the FiReControl project. We will be following up the particular issue of the FiReControl project with a brief inquiry to be held in early 2010.

Pre-appointment hearings

36. This session saw us hold our first pre-appointment hearings in line with the procedure proposed in the 2007 Governance of Britain White Paper[31] and later agreed between the Government and the Liaison Committee.[32] We have held three such sessions with the Government's preferred candidates for the posts concerned: Chair of the Infrastructure Planning Commission, on 16 March 2009;[33] the two Deputy Chairs of the same organisation, on 20 July 2009;[34] and the Local Government Ombudsman and Vice-Chair of the Commission for Local Administration in England, on 12 October 2009.[35] On each occasion we endorsed the proposed appointment.

37. We found each exercise a useful opportunity to question the candidates and to assess their suitability for appointment. This was particularly the case in respect of the Infrastructure Planning Commission (IPC), a new body established by the Planning Act 2008 to consider proposals for nationally significant infrastructure projects. The IPC will be taking decisions previously taken by Ministers—a point made on a number of occasions during passage of the Bill which established the body[36]—so the incorporation of an element of democratic accountability into the role is of especial importance, as we pointed out in our Report on the appointment of the Deputy Chairs.[37] Not only the IPC but also the Local Government Ombudsmen play an important role in "protecting the public's rights and interests":[38] we were therefore pleased to have been able to question the candidates for those roles on behalf of the public.

38. During these three hearings we also took the opportunity to question the candidates on their plans for each role and on the work of the body they would be leading, or helping to lead. In the case of the IPC, which was formally established as a functioning organisation on 1 October 2009, it was our first opportunity to do so, and we are sure that our successors in the next Parliament will wish to consider taking an early look at the work of this new body. The Local Government Ombudsmen have been the subject of earlier inquiries by our predecessor Committees:[39] we questioned the candidate for this post on some of the issues arising out of that previous consideration, including customer service and the ability of the Ombudsmen to secure redress for complainants.

39. Nevertheless our experience of pre-appointment hearings has led us to question whether the process is enabling Committee members to play a full and appropriate role in these important public appointments. In a letter to the Chairman of the Liaison Committee, reproduced as an Appendix to this Report, our Chair has reported concerns that Committees do not have available to them all the information necessary to enable them to decide whether a candidate ought to be recommended for appointment. Some Members feel that it is not possible to come to a decision about whether the person in front of them is the best candidate for the position in the absence of any knowledge of the other candidates. We have noted that a project is under way to review the experience of pre-appointment hearings so far: a number of us hope to speak to the researchers, and we look forward to seeing the results of the project.

Assisting the House in debate and decision

40. One debate has taken place in Westminster Hall on our Reports this session. Our two Reports on Housing and the Credit Crunch were debated together on 16 July 2009, enabling Members to discuss the Government's response to the effects of the economic slowdown on its housing policies. We also assisted the House in debate by securing an Order Paper "tag" for our 2007 Report on Local Government Finance: Supplementary Business Rate, and the two follow-up Reports on the same subject, for the Second Reading of the Business Rate Supplement Bill.[40] Regrettably, the arguments we put forward in those Reports for granting local authorities far greater freedom were not accepted by the Government or the House, and the power to raise a supplementary business rate provided for in the Business Rate Supplement Act 2009 is much more limited than we would like to have seen. This is a point to which our successors in the next Parliament may wish in due course to return, whether in the context of post-legislative scrutiny or otherwise.

41. Meanwhile we were successful in securing a debate on the central recommendation of one of our other Reports, The Provision of Public Toilets, in another manner. That Report recommended that the Government place a duty on each local authority to develop a strategy on the provision of public toilets in their areas, which should be drawn up following consultation with the local community and should be reviewed annually.[41] This recommendation was rejected by the Government, but consideration in the House of the Local Democracy, Economic Development and Construction Bill offered us the opportunity to have our proposal debated. An amendment to the Bill was tabled in the name of our Chair, supported by a cross-party group of members of the Committee, and was selected for debate at report stage of the Bill on 13 October 2009. Unfortunately the amendment was not accepted by the House but we were pleased to be able to air in the Chamber the issues which had animated that Report. We note the recent Report by the Procedure Committee which recommends that a procedure be instigated which would enable amendments to be tabled to Bills (and motions) in the name of the Chairman on behalf of his or her select committee, which would make clearer in such circumstances that the proposal originates from a Committee.[42]

3 Oral evidence on CLG's Departmental Annual Report taken on Monday 2 November 2009 (HC (2008-09) 1038-ii), Q190ff. Back

4 Reform of council housing finance: Consultation, Department for Communities and Local Government, July 2009. Back

5 Oral evidence on the Review of council housing finance taken on Monday 13 July 2009 (HC (2008-09) 915-i). Back

6 Government response to the Communities and Local Government Select Committee report into the balance of power: central and local government, Cm 7712. Back

7 HC (2008-09) 1038-ii, Q157ff. Back

8 Audit Commission, Risk and return, English local authorities and Icelandic Banks, Cross-cutting National report, March 2009. Back

9 HC 164, paras 116-120; First Special Report, Session 2008-09, Local authority investments: Government, CIPFA, FSA and Audit Commission Response to the Committee's Seventh Report of Session 2008-09 (HC 1013). Back

10 Twelfth Report of the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Committee, Session 2003-04, Draft Planning Policy Statement 6: Planning for Town Centres (HC 952). Back

11 Kate Barker, Barker Review of Land Use Planning: Final Report - Recommendations, December 2006. Back

12 Tenth Report of Session 2008-09, HC 517. Back

13 Eleventh Report of Session 2007-08, HC 517. Back

14 HC (2008-09) 1038-ii, Q216ff. Back