Localism - Communities and Local Government Committee Contents

Examination of Witnesses (Questions 226-256)

20 DECEMBER 2010


[MR CLIVE BETTS in the Chair]

  Q226  Chair: Good afternoon and welcome to our further evidence session on localism. Just for the sake of our records, could you say who you are in the organisation you represent?

  Eugene Sullivan: Eugene Sullivan, chief executive of the Audit Commission.

  John Kirkpatrick: John Kirkpatrick, director of studies and policy at the Audit Commission.

  Jessica Crowe: Jessica Crowe, executive director at the Centre for Public Scrutiny.

  Steve Freer: Steve Freer, chief executive of the Chartered Institute of Public Finance and Accountancy.

  Q227  Chair: You are all welcome. Certainly you'll have a chance to have your say, but if you happen to agree with what's been said, you needn't say it again. You can just say "I agree" and we are more than happy to put that in our records.

  We've got a very centralised democracy in this country. A lot of our resources come from the centre, and therefore accountability is back to Government for the spending of that money. Can localism ever really work in such a situation?

  Steve Freer: I think we can have a form of localism in that situation, but I do think that for localism to work really effectively we need to align local decisions with locally raised resources. I think that's when localism works most effectively, because I think that's the arrangement that local people can get their heads around, as it were. They can see who's responsible. They can see where they need to put pressure in order to secure accountability. I think where we have a mixture of local decision taking but resources raised at the national level and allocated to local authorities, sometimes accountability can get quite confused.

  Jessica Crowe: I would agree with that, and say that even in a centrally driven performance framework you could have more localism than we have at the moment if there was a clear focus from the centre on outcomes, but leaving it to locally elected bodies to determine the how; because people at a local level know the problems at local level—know what to achieve. There may be some congruity with what the national Government wish to see achieved, but they should state that more in outcome terms and not try and set out how it should be done at local level. They should leave that more to those who understand their areas better.

  One of the problems that we have in our system is that we don't really have a definition of, or a clear agreed consensus on, what local government, as opposed to local administration, is for. I think it's quite difficult to talk about some sort of localism in the absence of that clarity.

  Eugene Sullivan: I broadly agree with colleagues, and particularly with Steve's point about the purest form being linking spending powers with tax-raising powers. Notwithstanding that, one could go further in moving away from state and central control to engage more with local citizens about the services and priorities in their areas. I think the question is: how? How far do you go, and what arrangements do you put in place to deal with the accountability arrangements?


  Q228  Mr Clive Betts (in the Chair): What arrangements do you think there should be, then?

  Eugene Sullivan: First, at the local level, the people responsible for spending the money should be accountable not just for the money that they spend but for outcomes for the people they serve. Their first duty is to give an account of their accountability, and they can give that through financial returns and reports, by publishing performance data or through their newsletters. Those who gave the money are entitled to hold them to account, and they should hold them to account for the same sorts of thing. As the Centre for Public Scrutiny said, that holding to account should be proportionate. It should be less onerous the less important the sums involved are, and a bit more rigorous if it's material sums.

  Q229  Mr Clive Betts (in the Chair): Even if we move to a more localist agenda, and even if we take the point up and if perhaps there is more responsibility for raising finance at a local level, we're still going to have quite a proportion of money always coming from central Government, even if it's only that element that deals with balancing up the different needs, deprivations and resources of different authorities. In terms of accountability for that spending, should that come to Parliament, as opposed to Government? Should there be a different form of accountability to Parliament for finance that comes from the centre, if we are going to get away from the idea that the Government control everything at local level?

  Eugene Sullivan: There is a well-established pattern for accountability to Parliament for the moneys voted by Parliament for the purposes for which it was to be used, and I don't think that should change. At the moment, that comes in large part through the regime of the Audit Commission, and through the oversight of that through the National Audit Office. I still think that would be there, but it's a question, again, of what would be proportionate. At the moment, about £73 billion of local government spend comes from Parliament, and it gets that assurance through the existing accountability mechanisms, so there isn't heavy scrutiny from Parliament of that money.

  Q230  Mr Clive Betts (in the Chair): I would probably challenge that. There's scrutiny of particular aspects of spending from time to time, isn't there? The National Audit Office does it, and the Audit Commission gets involved through comparative value-for-money studies.

  Eugene Sullivan: Yes.

  Q231  Mr Clive Betts (in the Chair): But Parliament itself does not devote a great deal of time to holding spending to account at local level, does it? All that money, and very little time in Parliament, proportionately. Is that something that's going to have to change?

  Steve Freer: I think I would draw a distinction with demonstrating proper stewardship, which I think is the appropriate description. If moneys come from the national level down to local level, I think it's reasonable to demonstrate proper stewardship in relation to that money. As I think Eugene was hinting, one of the primary mechanisms for that is through audited grant claims. I think that's really what he was referring to. I think the primary accountability for that expenditure should still be to the local taxpayer. The fact that it's now my income tax or my VAT that's being spent, not my council tax, seems to me to be a mere detail. It's still taxpayer resources that have been spent locally, and for which there should be proper and primary local accountability.

  Jessica Crowe: To add to that, I think one of the things this Government have said they're interested in is shifting from a bureaucratic form of accountability to a more democratic accountability. If you were going to move along those lines, not only should there be more scrutiny by democratically elected representatives at local level, as I think Steve is suggesting, but there could usefully be more co-operation between scrutineers at national level—yourselves—and scrutineers at local level to get that balance and understanding right, so that lessons can be learned with regard to how a policy is rolled out on the ground, and how money that was voted by Parliament is transferred down through the Departments. How is that developing on the ground? Is that money being spent well? Is it delivering what it was intended to? That sharing of evidence between the national and local could perhaps add something to what we have at the moment.

  Q232  Mr Clive Betts (in the Chair): Do you have any practical examples of how that might work?

  Jessica Crowe: If a Select Committee was investigating a particular policy, or looking at how a piece of legislation had worked and whether it had delivered what was intended, it might call for evidence from local authority scrutiny committees, to say, "Have you investigated such issues?". We have a library at the Centre for Public Scrutiny of scrutiny reports from local authorities, and it contains more than 3,000 reports, so there is quite a rich source of data about issues that have been investigated and evidence that has been gathered locally, which could perhaps usefully inform work at national level, and vice versa; local scrutineers understanding more about the national policy-setting agenda and influencing it could be valuable.

  Q233  Simon Danczuk: Do we need national minimum standards for services, to reduce the possibility of a postcode lottery in terms of localism?

  Eugene Sullivan: For some services, you may well do; people talk about the postcode lottery. We may have some variation of services at the moment. The important question under localism would be: is the variation intentional, and is it agreed locally and held accountable locally, or is it just something that happened? I think that it's quite important for the Government, in their definition of localism, to decide exactly where to draw the boundaries around those standards.

  Q234  Simon Danczuk: Are there any particular services that should or should not have standards?

  Eugene Sullivan: One tends to think mostly about the services for vulnerable people. Again, the Centre for Public Scrutiny made the point that most complaints about a postcode lottery are about health, and you can understand that. There is a general tendency for this nation to want fairness, and fairness seems to mean equality of treatment wherever you happen to live, understandably.

  Jessica Crowe: A lottery implies that there is no rational basis for the choice that has been made, and I think that if there was a process by which the choice could be made—and, importantly, influenced before it was made—then it would feel less like a lottery for people. When I was a councillor, I always found that even when people didn't agree with the decision that you made, if they'd had the opportunity to have their say and understood the basis for the decision it made quite a difference to them and it felt fairer, even if they didn't agree with the final decision, so I think that it is having that opportunity for influence and being clear about the reasons for a decision that matter. I think that that could be most appropriately done by elected representatives who can be held to account for making that decision, informed by professional advice where that's appropriate.

  Q235  Simon Danczuk: Do you think that there should be some national standards, or not?

  Jessica Crowe: Yes, I think there should be. As Eugene said, it is where the sort of "life and limb" services, and vulnerable people, are involved. Equally, it is entirely proper for a national Government, with a mandate, to wish to set up some things around equalisation of resources and that sort of thing. That's entirely proper. However, as I said at the start, it should be around those outcomes, rather than setting standards around processes and inputs.

  Steve Freer: It is proper that there is consideration of national standards across a range of services, really. I think that the critical issue is to what extent you then put in place arrangements to try to performance manage those standards and ensure that they are applied on the ground from Land's End to John O'Groats, as it were. In a sense, that is the mistake that we make too frequently: we over-engineer those performance arrangements. I think that the challenge for us is to step back from over-elaborate arrangements for monitoring and to try to get back to the sort of fundamentals of trusting local accountability to tell us whether appropriate standards are being delivered on the ground.

  Q236  Simon Danczuk: In terms of refuse collection, fortnightly or weekly? That is a national standard. I know that's slightly tongue-in-cheek, but should central Government be setting that sort of standard, or is it for local authorities to decide? It is not a "life and limb" service, or one involving a vulnerable group, is it? Briefly, what is the panel's view?

  Eugene Sullivan: We certainly do not think that the Audit Commission should be setting those standards, and haven't done. But I think, again, that that is a matter for local discretion, and I think that you see that with the exchange of views around that particular subject up and down the country.

  Jessica Crowe: Yes. I agree with that. It's not an outcome; it's an input.

  Steve Freer: Yes. I agree with that. Again, I would emphasise that I think it's for local accountability to exercise judgment as to whether the local authority has made the right choice in that area, or the wrong choice.

  Q237  David Heyes: Steve, you have referred several times to the importance of local accountability. Should that be through the ballot box? What are the limits of ballot-box accountability?

  Steve Freer: The ballot box is obviously very important, but it would be a huge mistake to put all our emphasis on one mechanism around which local accountability operates. We want to see local authorities straining to improve accountability every day, in every transaction and in every service. For the core of accountability, you have to seek to establish a dialogue with local people and try to engage and involve them. You have to listen very hard to what they say, and either respond to their requests in a positive way or explain why it's not possible to do that.

  Q238  David Heyes: But what do you see as the framework for doing that? Do you see it as a supplement to the ballot box, or even in some cases as a replacement for the ballot box? How does it work?

  Steve Freer: A whole range of different options are available to local authorities, and they are being added to all the time. There are councillor surgeries, public meetings, and websites that invite people to tell the local authority where it can save money and how it can improve services. There is a whole range of different options.

  Jessica Crowe: I endorse that. The centre produced a piece of research earlier this year called "Accountability Works", which identified many different forms of accountability. The ballot box is a very important one, but in between elections there need to be other forms of accountability. Those could be regulation and inspection, or internal performance management. We would obviously say that scrutiny by elected representatives and non-executives is a really important form of accountability. It could be about publishing your information and being held to account by the public, or indeed the media. There are lots of different ways of being held to account and we think it is important that there should be a sort of web—we described it in the research as a web of accountability—where those forms interact and work together. As Steve was saying, accountability needs to be supported by transparency and involvement, and we identified those things as the three really important figures that support and bolster representative democracy. They all have the potential to work in more participative ways; you need all three of those things working together.

  Eugene Sullivan: I agree with most of what has been said, but I would add that periodic elections are not going to be a perfect mechanism for dealing with the views of citizens about the services they currently enjoy. Performance information is very important, as is engagement through some of the mechanisms that Steve talked about. There are also referendums on key subjects, and some people have even piloted work around budget and citizen stakeholder groups, to get people involved in the decisions, priorities and choices that are available.

  Q239  David Heyes: Forgive me, but I have not heard any drastically new ideas emerge from that. Those are all worthy things and worthy ways of supplementing the democratic process, but most of the local authorities that I am familiar with already practise many of the things that you advocate. What else can we do?

  Jessica Crowe: One very practical thing would be to reinforce the position of councillors in what you might describe as the democratic wing of the big society, about which we hear a lot. We should see democratically elected councillors as being at the heart of a lot of those mechanisms and accountabilities, with stronger powers than they have at present, to look at a range of different service providers, whoever they might be—the council, the voluntary sector, or the private sector. We are going to see greater diversity in service providers and decision makers. If all those people recognised that they could potentially be held to account by people who have been democratically elected and who would provide information to them and respond to their recommendations, that would give a strong and consistent set of powers that we don't have at the moment. That would be a new thing, and there is a real opportunity to bring that in at the moment with the Localism Bill that is about to start going through Parliament.

  Steve Freer: You ended with the phrase, "What else can we do?", but it is actually about what we should stop doing. Through a variety of different mechanisms over the past few years, we have put all this emphasis on upward accountability. We could stop doing that and encourage local authorities to major on some of the things that they already do, but—as was said by the previous witnesses—tend to exist as illustrations of good practice rather than standard practice across the sector. If we remove some of the upward accountability, put the focus on local accountability and really encourage local authorities to major in that area, a lot of these techniques would be used more widely and we would end up with a healthier system and a stronger relationship with local people.

  Q240  George Hollingbery: I was going to ask in a moment or two about accountability. As we have strayed on to it, I shall develop it with a couple more bells and whistles that I wanted to talk about. We have got armchair auditing of £500 and so on and so forth. That has its attractions for certain people. In my local authority we have one or two people who constantly challenge us in great detail and with great vigour, which costs a great deal of money to deal with every year. It did when I was a local councillor. I would appreciate some comment on how much challenge can reward and how much it can damage local authorities, particularly in times of restricted budgets.

  I wonder about the emphasis on £500: that is fantastic and transparent, but is it really what people think about when challenging their local authority? Or is the fact that the carer did not arrive this morning, or that there is not as much money this year to clean street X? A constituent said to me this morning: "Why don't we just open up all the intranets of the all the local authorities across the country and let everybody see everything about how the decisions were made about a particular issue?" Obviously, some bits have to be confidential. What do you think of that idea?

  John Kirkpatrick: We've done a fair amount of work on different forms of transparency. Some people are interested in everything that has been published, and is increasingly being published, on the £500 basis. That is a good way to identify some things that may have gone unidentified before, such as the duplicate payments and other such stories that we have seen. There is potential in that. If people are interested in how good the value is from the services, we would argue that only publishing sums over £500 is not going to help much with answering that. People need a bit more context, they need to understand context and performance, and about all the money that is being spent in a particular area, rather than just that bit.

  There is a way to go before transparency can achieve the aims set out for it. As to whether there could be more transparency and how much it would cost, there is some evidence in research from the US that, as more is published voluntarily online, that reduces a bit the burden of responding to freedom of information and other requests. We may be in a period of turbulence while we introduce the measure. Some of that might settle down over a longer period of time. We don't know that yet, but there is hope that that might be the case, as transparency becomes more embedded and useful, and people become used to using it for the purposes that you described your electors and constituents as wanting.

  Jessica Crowe: You've hit on the crucial point, which is not just how much money is spent but what was achieved as a result of that spending. Otherwise, you know the cost of everything and the value of nothing. You need a bit more. There could be potential in this move to develop, as John just suggested. The important thing is what people do with the information that they discover. There could be a strengthening of the relationship between the public and elected representatives, if people can go to their councillor and say, "I spotted this," because there will always be people who have particular interests and hobby horses, who will want to invest the time and will spot things. The matter needs then to be delved into, to uncover whether it is a legitimate form of expenditure and has achieved what it was supposed to. By investigating, listening to service users about their experience, listening to how the service is provided and how other people do it, you can analyse and decide whether that money is being spent to good effect. Councillors are in a good position to do that, in partnership with the public.

  Steve Freer: You've made the distinction between the small number of local enthusiasts—

  George Hollingbery: Yes, enthusiasts.

  Steve Freer: You've made the distinction between the small number of local enthusiasts and most people. These are early days in this transparency process, and I'm sure that it will develop, but at the moment, the emphasis is on publishing lots of raw data. That probably will work quite well for enthusiasts, but much less well for most people. The challenge, therefore, is to start to move from raw data to something more informative, to good information about local public services that enables you to form judgments about whether your local services are quite as good as they should be—comparative data and so on. I hope that's the direction in which we will move over the period ahead.

  Q241  George Hollingbery: But intermediation is always dangerous because you get one particular person's view of what a standard is. I accept that. The difficulty with financial data is that they are very raw and, for a lot of people, very intimidating, but if you could look more deeply into the mechanisms of a council and see pieces of paper where decisions were made and you didn't intermediate that and say, "This is how we're going to judge these across councils," you could see why someone denied you that service or denied your area that service and then maybe you might come to accept it a little more. My constituent made a very powerful case to me this morning, and I was somewhat taken with it, I have to say. Can you see us getting there?

  Steve Freer: That sounds like an enormous leap. I think it would be an interesting approach to try to pilot in some areas, but it does seem to be a very big leap from where we are at the moment.

  Jessica Crowe: I think as well there are perhaps distinctions between the developing of policy and working up of policy and considering options, and it would need such a change in the culture of how policy debates are discussed and, indeed, reported. Decision makers have to consider, sometimes, unpalatable options and have to consider all of those to carry out due process and due diligence. I can see that people would be nervous, in having those debates in the full glare of the public, that the debates would be misinterpreted and that hares would be started running that didn't need to be. As John was saying, a whole change of culture is perhaps required in how we make policy and take decisions, to have that more mature understanding that your constituent wants and that I think is right, but my worry is that we're not in a place where that could happen at the moment.

  Q242  Chair: In terms of accountability, we seem to be talking about community groups and other types of organisation that aren't elected and therefore aren't accountable in the same way, operating beneath unitary or district councils. We probably don't often mention parish councils, which tend to exist in rural areas, although there are one or two ideas about parishes appearing in London now. Is that another way forward, whereby localism could really be enacted, or is it a bit of an artificial creation to say, "We don't want all these disparate community groups; we'll make them organise themselves into parishes"?

  Jessica Crowe: Superficially, that is a clear and attractive approach, but I'm quite nervous about parishes in urban areas where there aren't distinct geographical communities; there are communities of interest. It's very difficult to decide where those boundaries might lie. When I was on the Councillors Commission, we looked quite closely at the role that parishes could play, and I think they do have an important role where you can identify the community that they represent, but we also heard from witnesses that there were weaknesses, that a number of parish places were not filled through elections and they were co-opted, so there wasn't that strong accountability through elections that you might hope for. I don't think they're necessarily a panacea for all areas. What is really important is that whoever the organisation is, the way it operates is open, accountable and transparent. That's the crucial thing.

  Q243  Chair: Do you generally agree with that, Steve?

  Steve Freer: Yes, generally. For me, it's probably principally an efficiency test as to whether we focus localism at parish level, at district level, at borough level or at county level, but I'm not hugely optimistic about the capacity of parishes to take on significantly greater responsibilities.

  Q244  Simon Danczuk: I am particularly interested in accountability as it relates to vulnerable marginalised groups, homeless people, whoever they might be. It was suggested earlier that we needed national standards for certain services, particularly those that related to vulnerable and marginalised groups. Is that because they don't have a voice and they struggle in terms of accountability with local authorities? Is that why national standards are being suggested in terms of services like that and/or how do vulnerable, marginalised groups hold local authorities to account? What can be done in that regard?

  Jessica Crowe: I think there is a need to make sure that it is clear how all sorts groups can influence decisions. And there will be groups that are not always organised or able to shout the largest. So there is that worry if you've got a very local system that those groups that are more organised will be able to exercise more influence. As I said just now, the important thing is that all organisations are clear and transparent about how they will make decisions and can show that they have taken account of how those groups that might not readily be able to access decisions will be heard. At CfPS we are developing something we are calling at the moment an accountability charter to help organisations work through their multiple accountabilities and set out in a very clear, simple form: this is how we will take decisions; this is how we will work; this is how you can influence us. That could work for a local authority, for a partnership and for all sorts of things. We think it is really important that organisations set out how they are going to do that, and can then be held to account for that, as well as for how they make wider decisions.

  Eugene Sullivan: For vulnerable people, the degree of accountability, the degree of voice, the degree of engagement and how far you go on that is a choice. Sometimes it's a risk. Sometimes you can afford to risk failure. It is less acceptable to accept failure when you are dealing with vulnerable people. That is an important aspect of it all, which is why inspection regimes are kept in place for some part of that regime.

  Steve Freer: I have nothing to add.

  Q245  Stephen Gilbert: From my way of thinking, accountability has to be slightly more than just being transparent and clear. I would have thought that any working definition has to include the ability to change the decision taker, which is why, I guess, the democratic process is our touchstone. You can't fire a spreadsheet. You can't sack a committee of councillors. It is very difficult to break up a partnership. So when we are looking at a much more complicated, evolving architecture on a local level, perhaps simplicity, with that ability to sack the decision maker, comes with the model of the elected mayors. At the end of the day—it is a point that you were making earlier, Mr Freer—the buck stops there. That is where people will recognise that that is the case. Do you have any thoughts about elected mayors being the way forward to solve this conundrum?

  Steve Freer: I thought you were going to make a slightly different point there. This is quite interesting. The point I thought you were going to make was that—

  Chair: That's a politician's way to answer the question.

  Steve Freer: Go with me; it is interesting. I thought you were going to make a point about complex, innovative partnerships and their role in delivering local services. Obviously they have a great currency at the moment. I am bound to say that there is potentially a governance problem with those sorts of complex arrangements to deliver local services. You use the word "simple". I think that fundamentally, good governance requires clarity and a degree of simplicity. I don't particularly agree that that has to revolve around a single individual. I think it has to focus very strongly on a single institution. That critically for me makes the case for the local authority's leadership role in a locality.

  Jessica Crowe: I was a councillor in a mayoral authority, and I think mayors bring great strengths, like clarity, accountability and the ability to speak for a whole area, not just the council, when they've been elected by their peers on the council. There are great strengths to mayoral models of governance, but you have to have something that works in between elections and ways of bringing to the fore and exploring the decisions that are made in those four years so that the public have a kind of evidence base on which to decide whether they should re-elect someone at the end of their term of office. The mechanisms of accountability, transparency and involvement that operate in between elections are also important and can support electoral accountability.

  Eugene Sullivan: I agree with Steve's point about leadership, but it's not just about local council leadership; the leadership position—whether we're talking about the leader of the council or an elected mayor—is very important. It should be chosen with that in mind, it should have a job description, it should have its own accountability framework for evaluation within the council to the council, and it should pay a rate for the job. Therefore, the expectations of the leader will be higher, and the leader paying the price if something is their fault would be more acceptable. So I don't think these things are unthinkable.

  Q246  Stephen Gilbert: Just to follow on from that, I have served with a councillor from Haringey, where just over half the borough is of one political persuasion, and it always provides the ruling party, while the other half of the borough takes a different view. One half of the borough has no ability to influence decision making, which, almost by tradition, reflects the institutional vested interests of the other half. I'm not quite sure how any accountability arrangement would address that problem in the structures going forward.

  Jessica Crowe: I think you've illustrated the weakness of relying just on an electoral mandate. You need those mechanisms to involve people who may not be represented. That comes back to your question about vulnerable groups, which may not even vote. You need other ways of hearing a wider range of voices and being clear about how decisions can be influenced by those whom the decisions then affect.

  Q247  Stephen Gilbert: But without that electoral gun at a politician's head, you can't change the decision taker. You can explain the decision that's been made, and you can have a clear and transparent look at the process, but without that mechanism, you won't actually be able to effect change, will you?

  Steve Freer: I think, in a way, this links back to setting minimum standards and so on. In a way, setting minimum standards and some of the other architecture of legislation is about ensuring that a council, once elected, is there to represent all the constituents, as it were. Also, this is about the obligation to serve and make decisions in the public interest and, where councillors fail to do that, about their being challenged accordingly. Those are the other sorts of controls that apply, but I am bound to say that most of the politicians I've worked for have been very keen to persuade non-believers to vote for them in the future. Therefore, they've often been very keen to get into dialogue with people who are not natural supporters of their particular party.

  Q248  Chair: In this more complicated world, central Government grant—we talked about this earlier—goes to local authorities, so there has to be accountability in some form about how that grant is spent, as well as accountability to local people. But if we look at the Total Place projects, where we start to look at total Government spending in an area or at community budgets, which the Government are going to pilot in a more limited field, money is allocated—by Parliament, ultimately—down different income streams. Councils aren't ultimately responsible for it, but they may be responsible for helping to spend it. How do we deal with financial accountability in that sort of situation? Is this a lot more complicated?

  Eugene Sullivan: It is. There has been some discussion of that. Part of the problem with Total Place is that people need to pool budgets in some way and look at their total resources. There has been some success around that, but there have also been some exceptions, which Whitehall doesn't always play in the Total Place budgeting. A lot of the money that's going in, that could influence an initiative or a programme there, isn't necessarily within the control of the group that's there. I know Gus O'Donnell was talking at one stage about budgeted programmes that cut across the Whitehall boundaries of accounting officers, down into place-based budgeting or programme-based budgeting. I think that there's more scrutiny there if you've got a programme where there's one accountability line. People are not happy giving up their budgets, and even more so at a time of cuts. It's going to be very difficult to get partnership to come to the table on total budgeting. But the accountability can be worked through if the willingness is there to work together.

  Q249  Chair: Do you think you can?

  Eugene Sullivan: Yes.

  Q250  Chair: In all aspects? It's fairly easy, if your organisations share a building. You can divvy up the costs and it's quite straightforward. But if you start to get into, "Well, we're going to spend more from the health budget on helping to keep people out of hospital, because that's going to help us with the cost in the long term"—but that's local authority expenses, because they are delivering social care—doesn't that start to confuse lines of responsibility?

  Eugene Sullivan: It does. The single conversation that the Treasury was starting around the Total Place pilots, I think, tries to address that. Also, I think, the net cost to the Exchequer should be the prime goal but you need to make sure that there aren't winners and losers. So, on estate management, it could be having some sort of equalisation account or whatever, so that winners and losers can be evened out, and what you're left with is the net gain to the Exchequer. But we have to be more creative about how we do that.

  Jessica Crowe: Yes. The powerful message that came out from Total Place was that we would all save money if some of these budgets were pulled. It showed that money spent by one agency would save another agency, and therefore the total amount of public spending. The sums of money were just so significant. It's clearly something that has to be done, but I think it's right that it's going to be more challenging at the moment.

  I also think that there are lessons about things to avoid from the past analyses of how partnerships have worked—that they haven't been open or transparent in how they've worked. Nobody has known quite how the local strategic partnership reached its decisions on spending the money that came for expenditure by LSPs. I think we need to learn those lessons and not repeat them, and so if shared budgets do emerge—and I think it will be tricky, for the reasons that Eugene gave us around people not being willing to give up their control and local empires—I think it will be very important that there are clear governance mechanisms.

  It was clear from some research that we did, looking at the Total Place pilots, that nobody had really thought about that yet. They'd done the mapping and they discovered this information, and they reached positions in principle about what needed to be done, but nobody had yet thought about how the decisions would be made going forward. And I do think that some thought would need to be given to that, so that there are very clear decision-making structures. I've referred to our accountability charter, which could help organisations think those things through. I think that's really important.

  Steve Freer: I think the mindset of the pilots in this area needs to be different from the mindset we normally have in relation to pilots. Rather than seeing this as something we want to see working in a few areas and then rolled out across the piece, we should expect these pilots to show us some of the positive benefits that might come from a more joined-up approach, but also to expose more fully some of the real problems that you have alluded to. I think then it will be very interesting to see what the right kind of solutions are for the problems that are exposed: whether this can be done simply by sticking broadly with our existing architecture within the public services, and just wiring it up better with different protocols, or whatever, about sharing resources; or whether—and personally I suspect we will have to do this—it will take us to a position where we conclude that we have to simplify the architecture, improve the structure of our public services, and have fewer agencies responsible for delivery of public services.

  John Kirkpatrick: May I just add one point to that, from our research? If those pilots were to do as Steve suggests and illustrate a variety of different ways in which things might work, one of the things we could do is to compare them with what we see now. Let's not pretend that what we have now at a local level in many of these areas is an ideal situation. We've done work that shows that a youth worker in many places is, for example, spending somewhere between a quarter and a third of their time on working out how to feed the different arrangements for different funding streams coming into a single youth work project. At the moment, there are people spending a lot of time, which they could be spending on actually solving the problems that they'd like to solve, working out how to make all these arrangements that we currently have work. It may be that that's the way it has to be, but as Steve says, if we can find different ways and compare them with that, we may find that there is indeed a better way coming out of that.

  Q251  Chair: So, fewer income streams and fewer agencies responsible.

  We move on, then, to another aspect of localism, which is about getting more organisations involved in service delivery as opposed to just involved in the consultation process, whether they be voluntary groups, community activists or social enterprises. How do we ensure that accountability is properly organised and effective with regard to those organisations, which could end up spending considerable amounts of money at local level?

  Jessica Crowe: If they were commissioned to provide services, there's a clear accountability mechanism through commissioning arrangements. I spoke earlier about the importance of embedding the local councillor as a key part of accountability at a local level. In a way, it doesn't matter how complex the service delivery arrangements are if it's accepted that local councillors can ask more questions about what they're doing. Making sure that councillors have comprehensive powers to ask questions about services that are being provided by anybody spending public money would go a long way. It would also have the virtue, as Steve identified, of being quite simple. People would then know that if they had a question or a problem with any service provider, they could ask their local councillor, who could look into it. I do think that that's got to be an important principle for any new way of delivering services.

  Q252  Chair: Are there concerns about evidence already of voluntary groups probably not doing things in a criminally wrong way but simply not being as tight in their control of money, and not necessarily always understanding the protocols to go through? That might give concerns unless bigger attention is paid to this before we embark on a bigger roll-out of spending through these mechanisms.

  Eugene Sullivan: There is that problem, and there is the fact that because they're voluntary groups, the normal disciplines don't apply sometimes, or they think that way. But voluntary groups themselves are starting to think more about not getting the money from grant or fundraising but through contracts and the commissioning role. The commissioning role, I think, is an accountability itself between the buyer and the deliverer. Not only is it easier for others to monitor the accountability; it actually gives a clearer accountability between the two parties.

  Q253  Chair: Is there a concern, maybe, that in this brave new world lots of organisations will spring up and demand to have the right to deliver services whether they are commissioned to do so or not? On the other hand, it might be that local authorities say, "All right, this is localism. We're being encouraged to pass things down, so we're going to get rid of a lot of our responsibilities. We can say to community groups, 'Here's the local library. Go off and run it. We'll encourage you, and maybe give you a bit of help, but it's all yours now,'" even when those groups may not have the wherewithal actually to do it.

  Eugene Sullivan: I think the opening view of all this was that localism has got opportunities but carries risks with it. The accountability framework for localism has to be in place. It has to be proportionate, but there still has to be an accountability framework. At the moment, I don't think a lot of the money would be channelled through local authorities, so I don't think they could ever say, "It's nothing to do with us." It's a question of what mechanisms they put in place to get accountability for the funds they pass on. As a commissioner, they couldn't divest themselves of that accountability.

  Steve Freer: Yes, I think it's about national standards and a minimum of standards, isn't it? In each service area, we should be clear about whether we can afford to adopt a laissez-faire approach and risk failure, or whether there are certain standards that have got to be maintained. If we had greater clarity in that respect, local authorities would be clearer about the amount of risk they could take in the sort of transaction you've spoken about.

  Q254  George Hollingbery: Do you think that any transaction of this sort—the community right to buy or the community right to run whatever it is—should have a clause built into it, so the group can demonstrate how they are going to be held accountable? Is that an absolute requirement?

  Jessica Crowe: Yes, absolutely. We did some research a couple of years ago, looking at different forms of commissioning and contractual relationships, and how councillors could hold those contractors to account. It was very clear that, unless it was built into the contract right at the start that the contractor was expected to come and supply information to scrutiny from the start, it tended to be quite easy for the client-contractor relationship to be quite cosy. The contractor could just say, "Well, we're accountable to our client", and the client would say, "Well, we're making decisions and we're holding the contractor to account", but that is not very transparent to everybody else. So it has to be built in right from the start. Where that does happen, however, you can develop quite a constructive relationship, particularly if it's a long-term partnership, which you can see. You then get a good understanding from the contractor and the supplier of what the council as a body wants to see, and you get a process of dialogue. I think that that's much more healthy.

  Q255  Chair: Thank you very much. Is there anything you would like to add that you think that you haven't managed to say yet?

  Steve Freer: May I just make a point about that very last issue? It is something that we didn't mention. I think that there is an important principle about public audit in relation to all these satellites, as it were. I think you have to be able to follow the public pound and audit it through all those layers, no matter how remote they are.

  The other point is that your suggestion that there should be a requirement in terms of how you would demonstrate accountability is important, but there are clearly a series of other requirements—aren't there?—about demonstration of competence. It is also critically important not only that you can demonstrate that you can acquire the service, but that you can maintain it over a significant period of time. So you have to demonstrate long-term thinking as well as short-term ability to act, as it were.

  Chair: Thank you very much indeed for coming and thank you for your evidence.

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Prepared 9 June 2011