Localism - Communities and Local Government Committee Contents

Examination of Witness (Question numbers 481 - 563)

RT HON GREG CLARK MP

14 FEBRUARY 2011

Q481   Chair: Minister, thank you very much indeed for coming; you are most welcome. Quite appropriately, you are the last witness in the final evidence session of our inquiry into localism. For the sake of our records, could you just introduce yourself?

Greg Clark: I am Greg Clark, Minister for Decentralisation.

Q482   Chair: Thank you very much indeed. The appropriate first question is about decentralisation. The Committee is looking at localism. We understand that there are people also interested in the big society. Are these different concepts or are they all part of some genuinely joined-up thinking?

Greg Clark: They are related. I see localism as the ethos, if you like, to try to do everything at the most local level. I see decentralisation as the way you do that. If you start from a relatively centralised system, you decentralise to achieve that. You might have seen the guide I wrote for that. If you do that seriously and comprehensively then I think you move from a position of a very centralised state to something that we have called the big society. Therefore, localism is the ethos; decentralisation is the process, and the outcome is the big society.

Q483   Chair: When we heard evidence from the New Local Government Network, Simon Parker talked about the difference in his view between localism and decentralisation. He drew a distinction between the extent to which one was passing down powers and responsibilities to local government, which then sought to devolve power further to local citizens and communities, and simply passing power from the centre down to local citizens and communities, bypassing local government. Do you draw a distinction? Are they two different processes?

Greg Clark: I think there are different models of it. The process of decentralisation that we have adopted, set out in the guide, is both. It involves transferring powers from central Government to local government, a clear example of that is getting rid of a lot of the ring-fencing. But it also imposes some requirements on local government to transfer powers to communities, so the right to challenge neighbourhood planning in the Localism Bill takes what was, as it were, the monopoly preserve of local government and gives people in communities the power. Therefore, it is both; it is a double deal, if you like.

Q484   Chair: The double process is one that many people could feel comfortable with. I suppose there has been some concern when the process bypasses local government altogether. The idea of a Secretary of State sitting there and somehow having a direct relationship with individuals in the community does not necessarily seem to be an even-handed position or one where communities can exercise as much power and responsibility as they might do if they worked with their local councils in a more devolved framework involving the councils.

Greg Clark: I am a fan of local government. I should declare an interest as a former local councillor.

Chair: Join the club.

Greg Clark: That goes for many members of the Committee. I am quite impressed that we do not see some pallid faces among all those members of the Committee who are simultaneously members of the Localism Bill Committee. I am impressed by what has obviously been a healthy weekend of fresh air.

I think it is a question of both. Even when we are empowering local communities, for example as in neighbourhood planning, I very much see a leadership role for local councillors. This provision is not excluding local councillors by any means. Just as we all hope our political and community leaders in our own constituencies will play their part, we expect ward members to play that part in taking advantage of the rights that are available to communities. But I think it is a combination of both. It would be wrong to see this just as a shift between central and local government. It would be equally wrong completely to ignore local government and put the focus exclusively on individual citizens and communities, so there are various aspects that do one or the other and sometimes both.

Q485   Simon Danczuk: Minister, let me start by wishing you a happy Valentine's day.

Greg Clark: Thank you, sir. It is the first time I have been wished that by an MP colleague, so I am grateful.

Q486   Simon Danczuk: I cannot think of anything I would rather be doing now than talking to you about localism.

Greg Clark: I was going to say it was mutual, but I have been rather looking forward to this session.

Q487   Simon Danczuk: What international examples have the Government drawn upon for its approach to localism?

Greg Clark: There is a whole range of examples. If we start by looking across the world, as I am sure you know for your hearings, we have one of the most centralised systems, whether it is the centralisation of finance or the planning system. For example, if you look at the Dutch planning system, in which we have been very interested, there is much greater involvement by communities at that level. If you look at some of the rewards that come from development and planning, you will see that, for example, in the Danish system there is greater community ownership. If you look at the US, for example, as I said on Second Reading debate on the Localism Bill, I think it would be considered extraordinary if you were sitting in Colorado and were told that the detailed rules governing the behaviour of the local council were set by a member of President Obama's Cabinet. Wherever you look you come to the ineluctable conclusion that we are very centralised to a dysfunctional extent.

Q488   Simon Danczuk: So, in terms of examples, Manchester will end up more like Århus in Denmark. What are the examples of countries that we will become more alike under the Localism Bill?

Greg Clark: I think we will be more like the rest of the world. I do not think there is a particular, single model of which we are trying to turn the UK into a clone. We have different traditions.

Q489   Simon Danczuk: But have we borrowed examples from any particular places?

Greg Clark: Mayors, for example. You mentioned Manchester. One of the things that impels us towards the idea of mayors for our bigger cities is to look around the world. We observe that the strongest cities in the world, whether it is Paris, Lyon and Marseilles or New York, Washington and Chicago, have figures who are rallying points and represent in a very personal way their cities. That has been very influential. As to planning, I think the Dutch system has been very influential. If you look at some of the community rights, again across Europe there are different approaches to this, but there is always a consistency that there is a sense of entitlement and of checks on the monopoly use of power, whether it is at the centre or even at local government level.

Q490   Heidi Alexander: I hope you will forgive me if I don't also wish you a happy Valentine's day. My fiancé might have something to say about that.

Greg Clark: I'm devastated, Heidi.

  Heidi Alexander:I would like to turn to how localism is going to work over the next five years. In your vision for localism, do you see local councils having fewer or more powers and resources in five years' time than they do currently?

Greg Clark: I certainly see them having more power and greater control over their resources. What they have will be increasingly up to them in a way that it is not at the moment. In terms of more power, the general power of competence establishes the right default that, rather than local government existing almost literally to do the things that central Government tasks it to do, you should turn it the other way round and say that local government should be able to do things other than those things that are explicitly banned. If you think that way, that is literally a general power which would enable councils to operate in different ways. Some will choose no doubt to go further than others in terms of innovation; some will be innovators; some will be imitators and some will be rather more cautious. Therefore, I certainly see local councils having greater powers.

As to resources, one of the decisions we took, which is reflected in the Bill, was to replace capping for council tax, for example, with a local referendum whereby if a council wants to make the case for a higher than usual increase in the council tax, presumably for a particular purpose, it can make that case. I think that policies like the new homes bonus and the change we are making to the community infrastructure levy are about getting more local control of finance. I am sure that in future sessions you will take an interest in the review of local government finance, when it is very much intended that that process will continue. Therefore, I would say it is both.

Q491   Heidi Alexander: As to how it will work, perhaps you could take the example of your constituency. Is it Tunbridge Wells?

Greg Clark: Yes.

Q492   Heidi Alexander: Tell us what you see councils and different layers of civil society, perhaps community groups locally and nationally, doing in five years' time. What will the delivery of public services look like in five years' time in your constituency? Do you have any ideas about what those different layers will be doing?

Greg Clark: That is a good question. For a start, I think the county council and borough council—we have a two-tier authority—will be able to distinguish themselves from perhaps their neighbours and do things in different ways. For example, they might choose to target the town of Tunbridge Wells, which has a lot of potential as a tourist destination. It also has a degree of potential in some of the new media centres, so, for example, they could use the powers they will have, whether it is to vary business rates or promote particular aspects of the local economy. They can do that and make a pitch for distinguishing themselves from neighbouring councils. In other words, they are not just a vehicle for delivering services; there can be something more tangibly Tunbridge Wells about it.

What I would also hope and expect to see is a much greater engagement and partnership with local communities and voluntary groups. It should be easier for them to access the provision of services. I think it should be less of a situation in which they are dependent on just the grants programme, but those boundaries around the town hall should be chipped away at so there is a greater flow. On planning, for example, I would like to see a good proportion of the neighbourhoods in Tunbridge Wells—the whole constituency, not just the town—express a vision of how they would like their community to be in the future. Therefore, I would like to see greater civic engagement from the grassroots and a greater sense of local difference, I suppose.

Q493   Heidi Alexander: Some people might argue that rather than decentralise from the centre, the Government might be better off perhaps decentralising to local authorities and allowing them to make the decisions about how to decentralise to the community beyond that. What would you say to those people?

Greg Clark: I understand their case and it is a very rationalistic view that you devolve just to one level and then leave it up to them and that, just as people can make decisions about who forms the Government, they can make decisions about who forms the council. We advisedly chose a different route to combine the devolution to communities as well as to councils. It comes down to this: whether it is central or local government, I think there is a degree of power that if unchecked means that those people who are not the best performers—they will do these things anyway without this—may, without safeguards, choose not to give powers away and empower communities. I think that imbalance of power between those who have it and those who are excluded from it needs to be addressed. That is why we need a programme of Government to make that happen, because unless you do, people, frankly, are pretty pleased to have the power they have. Sometimes you need almost physically to prise their fingers off the levers of power if you are to make that difference, so I think it is right to push it further than local authorities.

Q494   George Hollingbery: I was intrigued by your description in response to Heidi's question about what Tunbridge Wells would look like in five years' time after passage of the Localism Bill, because it sounded to me that there was nothing in what you said that could not be done now. It seemed to me to be absolutely what could be done now. You did not mention community budgeting and much greater integration of local delivery of services between local councils and local budgets, the health service and so on. I just wonder whether or not localism has become a matter of tone for this Government rather than forcing Government departments particularly to start to do more locally with each other.

Greg Clark: I think it is a big difference. If you consider the status quo and talk to elected members or officers of any authority, they will tell you in all candour—it is not particularly a party-political point—that not just over the last decade they have become increasingly constrained in what they can do by having to abide by CAA, by having funding coming in into tightly specified pots of money so that they could not exercise the degree of discretion that I said was a more desirable precondition to doing things differently. Therefore, I think it has required that change. It is certainly true that the good councils engage with their communities and often help to nurture and support a very diverse range of civic organisations. I regard my council as a good one; it does a lot of that already, but it needs to be something that is not exceptional or relies just on the good will of the council. I think people should have the right to do things differently.

One of the key reforms that shoots through a lot of the different measures is to go beyond the idea that this should be discretionary on the part of councils and to give rights to people in communities. Members will forgive me if I have said this before, but I think it comes from the Sustainable Communities Act whose principles are one of the most revolutionary pieces of legislation introduced by Parliament. The power is very simple: first, that people in communities below levels of Government, whether local or national, should have the right to know what is being spent and done on their behalf; and, secondly, they should have the right to suggest alternative ways of doing it and be reasonably considered rather than just abruptly refused. We have tried to continue the ethos of that Act, as it is now, in the Bill, and I think it is revolutionary.

Q495   George Hollingbery: Therefore, localism has become a stick for local communities to hold over their councils' heads, and if they do not delegate or consult enough or do not deliver what people want them to deliver, the people can challenge them on that. Is that what you mean?

Greg Clark: I do not regard that as a stick so much as an opportunity. I believe very strongly that the best ideas are not the preserve of elites, whether they are in Whitehall, Westminster or, frankly, necessarily the people who occupy the upper echelons of the town hall from time to time. I think lots of people in communities and working with their communities have great ideas but often they do not have either the influence or access to the mechanisms available to those in power and authority in order to achieve what they want. Therefore, it seems to be incumbent upon us as a Government and also upon local government to make some of the resources and support that we have to make our ideas fly available to people in communities with good ideas. I am absolutely certain that if you do that over time and across the country people will, if they have their head, do things in ways that represent innovations and will be a motor for progress that can be tremendously exciting.

Q496   James Morris: Minister, I think that in evidence you gave to the Committee previously you commented on your cross-departmental role and said that in a sense there was a paradox in that there was a Minister for Decentralisation at the centre trying to decentralise power. Given your experience since the Government has been in power for eight to nine months, what blockages have you found in terms of making sure there is a commitment by Government to decentralisation, because a lot of the evidence we have heard is that one of the barriers to localism is the sense of cultural inertia in Whitehall.

Greg Clark: Yes. It is one of the reasons that I really welcome this inquiry. I hope that if the Government needs a nudge, you will go beyond that and give a firm shove to all of us in Government just to reinforce the need to make this change. To start with your first point, Mr Morris, it is a conscious paradox. For the reason I said, if people have power at the moment, often it takes quite an effort to make them give it up. That is why I think you need a dedicated programme to do that. When the Prime Minister appointed me, he asked me to work obviously primarily for the Department for Communities and Local Government but to try to help the process of decentralisation across Government and indeed to report back to him in July on how different departments were doing.

I have shared with Members that one of the first fruits of that is the guidance we have put out for people who may think that decentralisation is a rather abstract term to which it is easy to pay lip-service, but how do you put it into practice. We have broken it down into the six actions that you see there. Whether it is getting rid of central impositions or having a determination to be much more transparent in data, they are actions that not only can be taken by different departments but can be judged against, so the reply that I will give the Prime Minister in July will judge them against that, and some will do better than others.

Q497   James Morris: How would you resolve a particular tension that existed if you thought that a department was taking decisions that did not support the decentralisation agenda? Hypothetically, I think of DWP. We have had evidence to suggest that the Work programme being implemented by the Government is in essence not really a localist programme; it is determined very much from the centre. How would you go about resolving some of those tensions, or are there certain areas of Government policy that you would not be able to influence directly?

Greg Clark: I cannot direct them but I would hope to influence them. Before Christmas, I wrote to different departments asking them to set out how they were doing against these actions in order to bring together what they have achieved so far. Therefore, having that remit and the opportunity for those conversations does, I think, give one influence across Government.

Sometimes it requires a conversation because, just as we have not taken what I would regard as a very crude form of decentralisation going just from Whitehall to the town hall, it is fair to have a conversation about some of the necessary safeguards. Therefore, child protection is clearly an area in which, reasonably, it is not possible to say that however a council discharges its child protection services will be purely a matter for the ballot box four years hence. I think that if there is something wrong with it, people should know early and there should be decisive intervention. Therefore, I think it gives rise to an intelligent conversation but gives an opportunity for some of these issues to surface so you can make sure you are casting it in the right way rather than in a way that does not reflect the differential circumstances.

Q498   James Morris: To what extent do you interact with the Cabinet Office? It seems that the Cabinet Office has responsibility for, as it were, cross­departmental monitoring, if I may put it that way, of implementation and performance. Do you have a formal relationship with the Cabinet Office?

Greg Clark: You are absolutely right. I do not know how formal it is, but, for example, I spend a lot of time with Oliver Letwin, the Minister for Government Policy. I do not think you have taken evidence from him. He is closely involved in the structural reform plans, for example, and assessing new Government policies. In Opposition, he and I worked very closely on this agenda over many years. We have frequent and close interaction on this, so not much goes on in terms of other departments that has an aspect of decentralisation that I do not know about and in which I have not been involved in a very flexible way.

Q499   Chair: I want to pick up just a couple of points. As to the letter you sent out, I would be very interested to see what reply you get from your colleagues about the progress they are making. Perhaps you can tell us which departments do need a shove in agility in that regard. We have already asked the Minister for care services whether he could think of any other issues where decentralisation might be on his agenda. The Minister of State for the Department for Work and Pensions could not think of any either, and the Police Minister with a bit of prompting thought that perhaps some elements of criminal justice might be appropriate. Does it disappoint you that there is not enthusiastic thinking going on about future issues that could be decentralised?

Greg Clark: I do not see it quite like that. If you look at what other departments are doing—I do not deny that there are leaders and laggards—and take education and what is going on in terms of the schools agenda, I think it is very radical; ditto on health. In social care, for example, the move towards personal budgets is very ambitious. But the opportunity arising from this request by the Prime Minister is to do a bit of cross-fertilisation in advance of July. If there are approaches on, say, transparency that have been made in one department that another department may not have thought about, or not thought about enough, it gives the opportunity to say, "These three departments are taking these steps to make information more transparent and available. Why are you not doing it in yours?" It may be the case that it simply never occurred to them, and to have a framework against which they can be judged provides a greater degree of rigour.

The report that I shall issue in July is something in which I would hope all departments would want to appear favourably, so they have an interest—I hope an incentive—to learn lessons from other departments in Whitehall before then so they can present a picture of good practice. After all, this is one of the principal approaches of the Government—the power shift, as the Deputy Prime Minister described it. I cannot think that there is a department that would consciously want to be without that.

Q500   Chair: To paraphrase, a few minutes ago you said decentralisation was about transferring powers to local councils or communities.

Greg Clark: Correct.

Q501   Chair: GP commissioning hardly seems to fall into either of those, does it?

Greg Clark: I think it does. It takes away a level of bureaucracy that was unaccountable in strategic health authorities and PCTs and gives much more influence to local people as to which GP they can go to, for example.

Q502   Chair: But the real commissioning decisions are not going to be influenced by local people, are they? GPs are not going to be accountable in any way.

Greg Clark: They are in effect because if you give people the choice of GP, the performance of GPs in commissioning is something over which people will have a direct influence in a way that they simply do not at the moment. In years to come we will look back to the devolution to GPs as one of the most empowering things we have done for local people.

Q503   Chair: I represent an urban constituency. If I represented a rural constituency and the next GP was 20 miles away it probably would not seem to me to be an enormous transfer of influence and power.

Greg Clark: I am sure that even those GPs would want to serve their communities well and have the good opinion of them. Everywhere has geographical margins and I am sure that they would want to make sure that even in those areas of competition they were doing well. But, more than that, my view of professionals, public service professionals in particular, is that the reason they follow their vocation, whether it is in the health service or in education, is that they want to do well; they want to exercise their professional judgment for the benefit of their patients. That is why you take the Hippocratic oath if you are a doctor. I have never met a teacher who was attracted to teaching other than because he felt he had a gift and talent for transmitting knowledge and inspiring people to learn. I think the more you circumscribe and describe centrally how you do that, however good the intentions—I recognise the reason for it is to have a degree of standardisation that seeks to improve standards across the country—you reach a period of diminishing returns, in that most professionals would say that the degree of prescription and control has taken the edge off the calling that brought them into their profession in the first place.

Q504   George Hollingbery: You talked a little about the process of your driving through this change. The last time you were with us we asked you a similar question. You talked about wanting to say to local authorities and other groups in the community, "Come to us and make suggestions." To what extent should local communities and their representative authorities be reaching up to draw down, and to what extent should central departments be pushing out?

Greg Clark: I think it is both. In terms of reaching up to draw down, I think that if you establish the right to do things differently that is the correct way to do it. To take neighbourhood planning as an example, it would be the wrong approach to impose a requirement that every neighbourhood across the whole country had to adopt a neighbourhood plan on a particular date. It would be over-prescriptive and would not reflect the reality that some communities might be perfectly happy with the way their local planning authority's plan sets out their needs. But to give communities the right to do things differently is the correct approach; similarly in terms of the provision of services and the right to challenge.

If the way things are being done is pretty much perfect and no one would want to change it then presumably people will not come forward with challenges, whereas if there is a case to be made that things could be done better, it will be made. Therefore, to give people the right to do things differently but not forcing them to do so is a reasonable way, but it is right to put some safeguards into the system to ensure that, whether it is central or local government, it does not stymie people's ability to take up to those rights.

To go back to the Sustainable Communities Act, one of its principles is about information, requiring more information to be disclosed so people can make that assessment about whether things are being done properly or could be done better. A second is to make sure that bureaucratic procedures cannot be used to frustrate the will of communities among those authorities or departments, hopefully quite small in number, that would rather not be challenged.

Q505   George Hollingbery: I take you back to the example of Tunbridge Wells. From the evidence we have received there is a fairly strong suspicion that the greatest result localism can produce is the pooling of local budgets from Government departments. You are not talking about that. Evidence we received on our most recent field trip is that somehow the Government system is not yet fit for purpose in terms of the localism agenda. There were a number of examples where local organisations and/or councils wanted to reach up and make budgets work together and the silo guardians at that stage said, "Well, I'm afraid that I haven't had that authorisation; I can't spend the money that way." Therefore, from the evidence I have heard there is a lot of work to be done at the centre to ensure that people lower down the chain in Government are prepared to offer a mechanism to local people to take control.

Greg Clark: That is exactly the right approach to take, and I would like to extend the principle that people have the right to do things differently and prevail against a reluctant bureaucracy. Just as we are establishing that against councils, I think it should be established against central Government. I completely agree with that. I think it should be done at the initiative of different communities. There is also a programme of bringing people together as a matter of deliberate policy, but I think there should be the space there. It runs throughout the document I published that people should have the right to do things differently and make a reasonable case for that.

Q506   George Hollingbery: You have put up structures around things where communities can draw power down—for example, local planning, right to challenge and so on and so forth—but you have not done that around central Government budgets that are being spent locally.

Greg Clark: We are, and I think we should do more. The 16 pilots for community budgeting that we have started with are designed to work out what changes you need to make to central Government machinery to make that happen with a view to rolling it out nationally, but the initial pilots concern families that place great demands on local authority services. But I agree with you that the approach you have described is the one I favour and I intend to see it as the way that communities can access money.

George Hollingbery: I would like to press you further, but my colleague has a question that I suspect might touch on this.

Q507   Bob Blackman: If I may press you further, roughly 10% of total Government expenditure in any one place is controlled at local level. Clearly, we have the pilot areas looking at community budgeting. What is the end game here? How much of total Government spending at local level do you envisage being controlled at local level?

Greg Clark: It is hard to give a precise figure, Mr Blackman.

Q508   Bob Blackman: Try between 10% and 100%.

Greg Clark: I think Nick Clegg got into trouble when he tried to put numbers on something a bit different like that and to be invited to say "no more than", so I am not going down that route. But it accords with Mr Hollingbery's point. If you establish the right to do that then it is up to local communities to take it up. My sense is that it is a lot more than is done at the moment. In my discussion with Miss Alexander I talked about the fact that other countries had a much greater local control over finances than we do. My objective is to establish the right to do that. I am confident that if you do that, people will take it up and we will transform the system.

Q509   Bob Blackman: Can you envisage the day when we will be looking at a much larger proportion, say 50%?

Greg Clark: You are very beguiling in your temptation.

Q510   Bob Blackman: Say, 50% of the money spent at local level could be given to the local authority to decide on local priorities and local expenditure, possibly within the requirement that, "You will spend money on health and various different things," but they could decide on the degree to which they spend.

Greg Clark: I honestly have not thought about what is the right ballpark figure, so it would be misleading of me to come up with one, but we can agree that it is more than 10% and more than it is at the moment.

Q511   Bob Blackman: To quote an example, on one of our visits we considered the example of looked-after children where a vast array of different departments and Government agencies intrude on one young person's life, yet at local level there is hardly any control whatsoever. Can you envisage that being turned round to being one agency that looks after this?

Greg Clark: I think you put it very powerfully. That is the vision that I have. Whether you can get it down to one person, you should certainly have far fewer than we have at the moment. It reminds me of the old adage of Tip O'Neill, who said that all politics was local. I have just been struck over the past year in talking to councillors and people in communities how it has gone even beyond that. Policy at least is increasingly personal. I mean it in this way: you are a former councillor, Mr Blackman. Are you still a councillor?

Bob Blackman: Not now.

Greg Clark: You will know in your community who are the individuals and families—you know their names and where they live—who have a disproportionate call on public services. I think that is the experience across local government. People know personally those who need help. The frustration is that, in order to put the required offer of help together, first of all they may not be able to do so, even though they know what is best required. Even in so far as they can, it is such a tortuous knitting together of different strands of funding that it is completely wrong. Therefore, I think we should act on the principle that problems and policy often require to be personal and work from the bottom up and design Government around that, rather than try to make our most vulnerable people fall into line with the structure of central Government departments that were set at the beginning of the 20th century.

Q512   Bob Blackman: I can assure you that you do not lose that knowledge when you cease to be a councillor and become an MP.

Greg Clark: Absolutely; it is the same in my constituency.

Q513   Bob Blackman: To press you on one other area, as we have talked about, there is quite a lot of fragmentation between the services delivered by Government departments at local level. Is it not a higher priority to rationalise those than to decentralise so we get some consistency in approach rather than the fragmented approach we seem to have with various different Government departments?

Greg Clark: I think that is one of the advantages of the right-to-challenge approach, if I may call it that, where you give the right of initiative to people to do things in different ways, whether it is to provide a service or to control budgets in that way. I see the principles of community budgeting being similar to those of the right to challenge, just as Mr Hollingbery said. If you do that one of the most important outcomes is that I hear local people saying, "Well, there is this money being spent on this service and on this other service over here and something else over here. We have an idea that we can pull it together and provide a better service for the people at whom it is aimed." I think that a lot of the exercise of these rights, whether it is to have a community budget or deliver services, will be to de-fragment, consolidate and bring together a more coherent service for those individuals.

Q514   Bob Blackman: Some would say it would be better for the Government to bring those services together in single delivery units and then decentralise rather than decentralise all these fragmented services and hope that local people do bring them together.

Greg Clark: I think that is a very perceptive point. You are absolutely right that the debate is whether you design it from the top and crash things together so everything flows down to a local level or whether you give people the right of initiative locally to do things in a different way. I think there is room for both. What the Prime Minister and our colleagues have said about vulnerable families, for example, is a particular approach to try to bring together the relevant budgets for that in a very deliberate way. I think that should be supplemented with the ethos we are establishing whereby communities themselves can suggest different ways of doing things.

Q515   Bob Blackman: I accept that, but can I be clear what your position is as Minister for Decentralisation? Is it your priority to decentralise or to bring these services together?

Greg Clark: Clearly, I want to decentralise and allow local people to bring them together locally, but I also see the need for particular services - some of the narrower services. The Bill Committee had a discussion with people in the voluntary sector who deal with people with particular disabilities. In that respect, the community may not be the same as a spatial community. There may be people with particular needs that can be serviced across quite a wide geographical area. In that case, one probably needs to bring budgets together at a higher level than the geographical community, so I think there are different approaches depending on the different communities. Therefore, where you have a geographical community, there is a strong case for that, but if you have communities of needs, shall we say, it might require a slightly different approach.

Q516   Steve Rotheram: If I may follow up what both Mr Blackman and Mr Hollingbery said in regard to the Minister being reluctant to be tied down on the range between 10% and 100%, at a philosophical level would it be the aim to achieve as near as possible 100% freedom.

Greg Clark: I do not come to it with that perspective. I think that if you establish a right, I genuinely do not have in mind a figure that people should get to. They should be able to get to whatever level they want; there should be no maximum level. But it is a bit like neighbourhood planning. If people are pretty happy with the way things are and do not want to change it, that is cool; they should be able to continue with that. It is the same with community budgets. If they are satisfied with the services that are provided, fine, but if they think they can do things better, they should be able to.

Q517   Steve Rotheram: The reason for my hesitation is that I have never been on a Select Committee before, so I apologise if I get some of the protocols wrong. In regard to what you have just said on this question now and earlier, even though you are reticent to get tied down to a specific figure, is the aim to release as much as possible and, therefore, achieve as nearly as possible 100% freedom in regard to any budgeting responsibilities, or are there some issues that you think are outside the scope of that which need to continue to be ring-fenced?

Greg Clark: I really do not have a figure in mind. I think it is about giving people the right to do things differently. I do not think in that way. If you have a particular figure in mind then, to be frank, that is rather corrupting of your purpose because then you tend to try to drive everything to get to that figure and end up being more directive than empowering. I would rather give people the right to pool budgets and challenge the way things are done but genuinely not drive them to get to a particular percentage.

Q518   Chair: I think the "fragmentation" argument is a really important issue. As to the problem of central Government silos—we have heard descriptions of how they still operate right down at the lower level with the involvement of Government officials—is there also a danger that by not using local government as a focal point for decentralisation in all respects in creating the elected police commissioner, the free school, the community trust and the neighbourhood planning arrangement you create fragmentation at local level where there is nobody overseeing all these issues and trying to pull them together in some kind of coherent approach to local service delivery?

Greg Clark: You raise a very interesting point, Chairman. My view is that if you have people responsible for the things for which they are responsible—on other words, the police commissioner responsible for approaches to policing—people will get to know who is responsible for what. In our lives we regularly operate in a situation in which different people are responsible for different things. As long as you know they are and you have some relationship with them and can replace them, or can go elsewhere, then in my view that is fine. The position we are in at the moment is that things are done to people without them knowing either who is responsible for them or, even if they did, being able to do anything around them. I take PCTs. I daresay that all of us as Members of Parliament have experienced a situation in which there is something wrong with our local health economy. We talk to the Secretary of State who says it is the responsibility of the PCT. We talk to the PCT and they say it is the responsibility of the Department of Health. Naturally, you are lost and frustrated in the midst of it, so in this case I would rather have responsibility for commissioning with GPs so that people know who it is and that they can go elsewhere. I do not think it is beyond people to know that actually their GP is responsible for where they go to access the health service.

Chair: They will probably still get their MP to go to the Secretary of State, so we may still end up in the same place.

Q519   Mark Pawsey: My question is to explore this direction of travel that has been started on under localism and what the limits of localism might be. You have already spoken about the right for local people to take control wherever possible. We have the community right to buy which is part of that. If a local authority looks at the delivery of services that remain with central Government and believes that it might be able to deliver those better would there be a right to challenge Government and for the local authority then to take that over? Is that a logical extension of the process we have already started?

Greg Clark: It goes back to what I said at the beginning. It is about power being at the most appropriate level. It is not an extremist approach that all power resides at the neighbourhood level. I think different levels should be responsible for different things. To take a case in point, I do not think the borough of Tunbridge Wells should be responsible for its own defence policy, for example. I think the standing army in Tunbridge Wells might be quite a scary thing. I don't know, but it might be more Dad's Army than a killer force. But I think for that reason, whether it was scary or not, I think it should reside nationally. As you go through services the question is: what is the most appropriate level for this?

Q520   Mark Pawsey: This is part of the "0% to 100%" question that Mr Hollingbery and Mr Rotheram raised. Who determines what is the most appropriate—central Government?

Greg Clark: This is why my answer to Mr Blackman was meaningful in the sense that, if you tot up defence spending and all the other things, what would be a realistic percentage even if people did exercise all these rights? I think there is an exercise to be done there. Perhaps the Committee's advisers might identify what is the maximum level. I think there are judgments to be made. I am not in favour of abolishing this Parliament. The fact that this Committee is looking into localism means that one of the underlying questions, I daresay, is: what are the limits? What services should be decentralised and what should not? I give an example of defence; earlier I gave the example of child protection. My view is that the answer on child protection is that the delivery should be decentralised but there should be pretty tight reporting requirements and powers to intervene if that goes wrong. I think it does vary. I do not have a generic answer as to what the proportion is.

Q521   Mark Pawsey: If we accept that defence is not on the agenda, in evidence to this Committee local authorities have said they would like greater powers in dealing with the question of worklessness. That is not included within the Localism Bill. If local authorities are able to make a convincing case for them to receive powers in that field what would be Government's response?

Greg Clark: I think that goes to community budgeting essentially. I think you took evidence on that. I think local councillors do have a sense of who in their communities need help and often what type of help. We all know that the type of help in one particular area can be very different from what is required in another, so I would like to see those services subject to this "right to challenge" approach. On the other hand, there is a desire—that is why it is I think a conversation—to have a system where contracts are let and there are national providers. To build in the degree of opportunity for challenge is what we need to establish case by case.

Q522   Mark Pawsey: So, is that the Localism Bill No. 2?

Greg Clark: I think it is a sensible suggestion, Mr Pawsey. I do not think this is the end of it by any means. This is an important step down the road to a more decentralised country, but if this Committee meets in a couple of years' time I hope it will be able to look back and think that this has been another big step forward in the progress we make on community budgets. No doubt the review of local government finance will be another contributor to this. I think you are absolutely right to suggest that it will not all be done and dusted by this Bill.

Q523   Heidi Alexander: It could be argued that many local authorities are already doing localism, just as it could be argued that we are already doing the big society. Can you explain to me how you see the localism that is being promoted by your Government as being different from those examples in parts of the country where it is already happening? You have talked about things like neighbourhood planning. If local authorities have gone about putting together their core strategy in the right way there would have been a huge amount of local community involvement and engagement. You have spoken about the community right to bid to run services. Again, in many local authorities who are working with the community and voluntary sector some of that will already be happening as well. Therefore, do we really need the Localism Bill?

Greg Clark: One of the classic questions in relation to any Bill and reform of this sort is: because the good practitioners follow these principles anyway, why do you need to introduce anything that makes it more widely available? I think the answer to that has two components. The first is that I think it should be available to everyone, perhaps especially in those areas where people might be living under a local authority, or indeed areas of national Government, that need to be challenged as to the way they are doing things because they do not represent best practice. I do not think it should be random and depend upon whether you happen to live under a progressive council or that you are dealing with a Government department that takes an enlightened view of these things.

Q524   Heidi Alexander: But that would be a local decision by the local electorate.

Greg Clark: It is really what we have talked about. There is a purist view that it is all about moving things up and down the scale between central Government and local government and it is just the ballot box. I take a different view. It is similar in my view to the approach we take in the private sector about having laws against the abuse of monopoly power. You can say that companies exist; they are free to trade; it is really nothing to do with us whether they act in an abusive way using their dominant market power. I think there is an acceptance not just in this country but across the world that you need a framework in which the people lacking power enjoy some protection against those who do have power and abuse it, or have the capacity to abuse it. In competition law, the concept is the abuse of a dominant position, so you can have a dominant position but you should not abuse it. I think it is a similar thing here. Therefore, I think we should have protection for people in communities and voluntary groups so they cannot be abused in that way.

But I would also say it is not just about protecting those people against abuse who might be subject to it, but a lot of what we are doing extends new powers and flexibilities to everyone. In terms of neighbourhood planning, to have a neighbourhood plan that has force in the planning system as a neighbourhood plan is not available at the moment. Its principles can be reflected in a local plan but nowhere near as directly as the opportunity is here. If you take the ring-fencing of funds, every local authority had to comply with the Government's intentions as to how money was spent and report in a way, so even our greatest critics among the members of the Local Government Association from perhaps rival parties would agree that all of local government was being held back by some of the existing provisions. Therefore, I think it is a question of removing as many of those restrictions as we can and in giving rights, to make sure that they cannot be overridden.

Q525   Heidi Alexander: I am sure that we will spend a lot of time over the next couple of days talking about neighbourhood planning, but let me put it to you that under the local development framework an authority, in responding to community pressure, could have decided to do a piece of supplementary planning guidance for a neighbourhood area and could involve the community in that, making sure that that piece of supplementary planning guidance was in general conformity with the local development framework for the area as a whole. Do you ever worry about the fact that, with the neighbourhood plans and forums that you are setting up, you are stoking up expectation among local communities that may inevitably be disappointed?

Greg Clark: I do not think they will be disappointed, but in terms of continuity we deliberately modelled neighbourhood development orders on the local development orders introduced by the previous Government. It was very much modelled on the right for a local authority to create, as it were, a special planning zone in an area, and we have learnt from that. What we have established is the right for a neighbourhood to do that even if the local authority is resistant to it, and there is a process of dialogue and agreement. I think it is a good example of making use of a procedure that is not entirely novel but entrenching rights for people to do it. This is not the occasion to talk about the failures of the planning system that we have collectively inherited, but I think everyone would concede that the opportunity for local engagement is not what it might be and, more than that, has been one of the principal reasons for so much antagonism in the planning system. I think most people would accept a greater degree of local participation. It is hard to imagine that there is anyone who could not think that was a good thing.

Heidi Alexander: I am not sure that that antagonism will necessarily go away but we will leave that for another day.

Q526   Chair: Is there a model of how neighbourhood planning works elsewhere in the world on which you have drawn and we could look at?

Greg Clark: As I said in response to an earlier question, we have not modelled these reforms by just taking off the shelf another country's approach and adopting it, but in planning, the Dutch approach, in terms of its opportunities for neighbourhoods to come together, provides some lessons from which to learn.

Q527   Simon Danczuk: Do you intend to devolve more responsibility in decision-making powers to directly elected mayors than you do to other local authority structures?

Greg Clark: We are considering what package of powers might be available to mayors. We have said that as the Bill progresses we will come forward with some suggestions as to the powers they might have.

Q528   Simon Danczuk: Anything in particular?

Greg Clark: It is probably premature to talk about that, but I will happily come back to the Committee to set it out with the reasons when we have put it together.

Q529   Chair: Is there any timescale for that?

Greg Clark: It is during the passage of the Bill.

Q530   Chair: It would be helpful to have a note on that.

Greg Clark: Yes, absolutely.

Q531   Chair: Where you have the elected mayor taking the executive decisions and the public deciding on the budgets through a referendum and the community deciding on various things to do with planning, what is left for the local councillor to do?

Greg Clark: The role of a local councillor is significant in many ways. In a mayoral model there is a very important scrutiny function, for example, just the same as in Parliament. You do not need to be a member of the Government in order to play a useful role as a representative of local people both as a community champion and community leader. We all exercise that responsibility very actively, but in terms of debating the things that the mayor—the Government for the purposes of comparison here—might be doing, we are also important contributors to what is in the Government's or the mayor's mind, and scrutineers of that.

If I may be so bold, your Select Committee is a good example of that. Its members are not members of the Government but, as I said at the beginning, I very much welcome this inquiry and will take very seriously the conclusions you come to; they will influence my thinking and, I hope, that of my colleagues in Government. You will also, quite rightly, pass judgment on whether you think the Government is doing the right thing and well enough.

Q532   Chair: I accept the point that if you are not a member of the Executive you can still contribute, but generally we do not have direct referendums constraining our decisions in Parliament in the way referendums will potentially constrain how local councils operate.

Greg Clark: The referendum for a council tax increase, for example, follows a proposal from the council leadership or mayor to have an increase that is beyond the level at which it would have been capped, so I would assume there would be pretty vigorous discussion as to why this was desirable and what it would be used for. Therefore, it is not a true reflection of the model to say that the decision as to what the council's budget should be is, as it were, put out to the community to decide on and then the mayor and council just implement it. There is a proposal put out for ratification, if you like.

Chair: It would be interesting if we could have put the VAT increase to a referendum, but perhaps we will not go down that road today.

Q533   George Hollingbery: Minister, you mentioned a couple of times local government finance and the review that is going on. Let us set aside for a moment the argument about community budgets and national income and focus entirely on local government. As a former local councillor, it seems to me that there is really no localism without fundraising locally. One of the great problems we have had recently is that only 5% or so of what I could do as a local councillor was something I could control. The only way to remedy that is to have the money raised locally and for local councillors to be entirely responsible for that and to be held accountable for it. What options do you think the review of local government finance should look into? Are you an enthusiast, like the Deputy Prime Minister for example, our close colleague, for a hugely increased role for tax-raising locally for local government?

Greg Clark: The first thing to say is that local government finance and the opportunity for councils to make meaningful decisions over the finances is not just about tax raising. Getting rid of ring-fencing so you can make local decisions and be accountable for the money you get from central Government is an important part of that. I think there is a very important component for participating in and being given the right to access some of the money that at the moment slips through the fingers of local government and goes straight to the Treasury in effect, so the new homes bonus and the community infrastructure levy and the reforms we are making there to require a proportion to be spent in neighbourhoods make for a much more meaningful discussion about spending than we have had so far. We have council tax referendums rather than the capping of council tax. There are big steps forward there, but it is well known and well established that that is a direction we want to go in, and you are absolutely right to say that the more localist you are, the greater the reflection of councils' behaviour is in financial matters.

Then you come to the question of local revenue raising. Again, this goes to one of the themes about localism. You could imagine a very crude way of thinking whereby we just make every local council completely independent of the state and not bother about what it can raise and spend and say, "You are on your own." That would be crude. The fact is that we all know that the local government financial settlement and system involve two things. One is revenue raised locally but the other is an equalisation. For better or for worse, there are different parts of the country that have a different capacity to raise revenue from others and often have needs that are also different. It is often the case that they point in opposite directions, so places with very high needs might have a reduced ability to raise the funds necessary for that. Therefore, it would be nice to imagine a circumstance in which we did not have to think about that but we do because it is real, it exists, and it would be wrong just to cast everyone loose.

Q534   George Hollingbery: One accepts there will always be councils that need help. I totally understand that. There are issues about buoyancy of taxation and all sorts of other technical issues. Is the direction of travel that you personally as the Minister for Decentralisation would like to see towards more local raising of taxes or not?

Greg Clark: Yes.

Q535   George Hollingbery: And not just NDR but allowing councils to raise more of what they then spend?

Greg Clark: That is the direction of travel. The point about a direction of travel is that you need to consider the actual steps to get you there and they are not without complication. What we have said initially is that we will look at an NDR regime, which in some ways is a microcosm of the system. There are authorities that raise a lot of money in business rates and pass them to the Treasury and have fewer demands than others. If we start with the clear intention, as we have done, of making it more worthwhile for communities to respond positively to business that is the right way to start. The direction is clear, but I think we need to proceed with it sensibly.

Q536   Chair: Therefore, you are on the side of the Secretary of State or the Deputy Prime Minister?

Greg Clark: Everyone is always very keen to find differences of view and opinion, but the territory we are in genuinely does represent an area in which there is very strong commonality of views between members of the coalition and, if we leave aside our party colours, a lot of people across Parliament. One of my predecessors, John Healey, suggested recently that things got a bit too centralised and the drift needed to be corrected. I do not regard this as being a dividing line.

Chair: It is one of the few issues on which I might actually agree with the Deputy Prime Minister.

Q537   Mark Pawsey: Minister, you have argued that the process of localism is about better decision making locally. You have not spoken about this being a financially driven matter, but what are the costs of localism? Will localism save money or cost local taxpayers more?

Greg Clark: I do not think it will cost taxpayers more because, if you take the right to challenge for example, and give local people an opportunity to say how things could be done differently, that approach will be taken up only if it can do a thing better for the same amount, or do the same thing for less. One of the virtues of unleashing this type of reform is to bring in the possibility of innovation driven by the bottom up that is absent from the present system, where things have to come from the top down.

I am not someone who abuses the motivations of those who introduced the system we have; it arose genuinely because people took the view that you needed to distil a set of operating instructions in an expert way at the centre and then require everyone to follow them and that would bring up performance - I think that is why people did it. However, one of the reasons we have to change the system we have inherited is that the centralised approach, even with the best intentions, is quite an expensive system to operate. If you are to promulgate instructions from the centre you need people to do that; you need people who receive those instructions in the subordinate institutions, as it were, and turn them into practice. They then need to report on how they are doing what they are told to do, which involves more people, and then you need people at the centre who receive those reports and presumably analyse them and look for deviations and exceptions. You then send people in to correct them. It is quite an expensive system.

One of the reasons the Local Government Association pressed for the repeal of the CPA regime and various allied aspects was that it was very costly, quite apart from being dysfunctional. Therefore, I think that getting rid of this and allowing for innovation offers the opportunity to save money.

Q538   Mark Pawsey: On the one hand you get rid of the cost of bureaucracy, but is not the danger that on the other side you have lots of smaller organisations going about doing their own thing; they are not joined up, and on issues such as procurement the economies of scale get totally lost? Is there not a danger that that additional cost, and perhaps people championing local causes and drifting off with grandiose schemes, might compensate for the savings made by this bureaucracy?

Greg Clark: Take the right to challenge, which is perhaps one of the purest expressions of this, if it is going to cost more money you would not do it unless you thought that the transformation of service to the people in receipt of the services was so pronounced that it was worth it. Therefore, I do not think that is going to happen, because if it costs more money you would not take it up. It is a right to challenge rather than a right to insist. More than that, just because something is done differently and locally does not mean to say that it necessarily costs more money. Often there is a greater sense of economy that comes from people operating in a way that is closer to their community. The more insulated people are from people on the ground, the more inefficiencies can creep in and be undetected. It is also the case—I do not want to labour this—that there are opportunities to have joint procurement even when you have a decentralised number of providers. I think the free schools network is an example of this. I imagine there would be quite a lot of joint purchasing among the independent schools.

Q539   Mark Pawsey: Following on from that, is it going to impede the success of localism or is it a good thing that we are doing it in a time of austerity?

Greg Clark: It is certainly not a good thing. I think it is something that is actually unrelated to it. The reason I was given this job was that I wrote a pamphlet in 2003 on the drivers of centralisation as I then saw being established six years into the previous Government. That was at a time of relative plenty and prosperity. At that time, I was arguing that that would suppress people's initiative, make for a less dynamic and diverse way of doing things and would turn out to be costly. Therefore, it is a set of reforms that was needed whatever the circumstances. We happen to be in difficult economic times. As it happens, I think that getting rid of some of the apparatus of the centralised system, such as the CAA regime, releases some funds that might make a useful contribution to the economies that people have to make anyway, but I would want that done at any time.

Q540   Simon Danczuk: Decentralising even further down local government and getting services delivered, as you have just been saying, by local people sounds on the face of it potentially a good thing. A number of us met with the Council for Voluntary Service in Exeter. The chief executive was concerned about large national charities coming in to deliver local services. My question is: what safeguards are you putting in place to stop that happening? He was comparing it with the cloned town centre where you have lots of national charities taking over local services as opposed to the local voluntary services taking them over. What are the safeguards against that happening?

Greg Clark: I am not sure I agree with the description that these are cloned services nationally. My experience—I do not know about other Members—is that even with national charities, when they have local branches, they tend to have quite a local character to them. I think of Age Concern in my constituency, for example. It is part of a national network but is absolutely local and is run by people who are part of the community, know everyone in the community and are really in touch with the needs of that community. I think this goes for some of the other charities. I think of the Alzheimer's Society. Again, it is part of a big national network but has a very intimate relationship with local people.

In terms of spreading opportunities to do things differently, I think a good national charity can be a lot of help to communities that need assistance. The common denominator of a lot of these national charities is that they are in business to make a difference to people and help them. Therefore, if they spot an opportunity, that here is a part of the country where services are not being provided terribly well at the moment, and therefore by implication people, often quite vulnerable, are not being as well looked after as they might be, it is completely consistent with their mission to say, "We know how to provide services; we've done it successfully in this and that part of the country. Let's see if we can turn things around there."

I think the consequence of doing that would be to do what we really take for granted in private business. If someone has a good idea, it spreads like wildfire across the country. I would like voluntary organisations to have the same thing rather than a fantastic success in one place. It is a nightmare; it becomes almost impossible to replicate that in other places. I would like the opportunity for successful voluntary organisations to be able very quickly to work their magic in other communities, confident in knowing that, almost without exception—I cannot think of any—the way they tend to do it in my experience is very much with the grain of local people anyway.

Q541   Simon Danczuk: Therefore, there are no safeguards for this to be a stepping stone to the privatisation of services, so they go from the public sector monopoly you talk about to the voluntary sector of social enterprise, and if there is a failure at that level, it then goes to private provision. There are no safeguards for that either.

Greg Clark: There is no difference compared with the present situation. The right to challenge is just available to voluntary organisations and social enterprises. We are debating the definition of this. We could have made it available to businesses. We chose not to do that; we wanted it to be a community right to challenge. We had the discussion we have just had as to whether you should ban national voluntary organisations from this but, for the reasons I have said, we concluded that it could help communities, especially those suffering particular problems. But we have not established any means for private companies to access this right.

Q542   Simon Danczuk: So, in terms of that provision if it went to the voluntary sector it could not then go off to the private sector after that?

Greg Clark: No; it stays with the voluntary sector. If they were to give up the contract or whatever, it would be just as same as anyone giving it up at the moment. It goes back to the authority. There is no requirement for it to go elsewhere.

Q543   Bob Blackman: One of the exciting things about this for people at local level is the opportunity for community assets to be transferred to organisations, but often those will be dependent upon one, two or possibly a slightly larger group of individuals who are keen to make things happen at a particular time.

Greg Clark: Yes.

Q544   Bob Blackman: How will you make that sustainable in the long term and ensure this is continuous rather than that someone comes up with a bright idea and says, "Yes, we'll do this," and suddenly they either move away, get fed up or decide to go off and do something else?

Greg Clark: I think all communities have community leaders. There are people who are more active than others. The idea that someone, or a group of people in their community, inspires other people to participate is the way things have always been. If you look throughout our history, people have been motivated to make a difference and have organised people to come along with them. I think we are creating more opportunities.

One of the things you considered was the MORI survey. I am pleased you have alighted on it in this inquiry because when I talk about decentralisation it is one of the slides I take around. At the moment only 15% of people think they can have any influence on decisions made about their community; 85% think they have no influence over that. Even more alarming in some ways is that of the 15% who are involved in decision-making bodies in their communities, more people who are involved think that they have no influence over decisions made in their communities than do, even among the people who actually sit on the boards of these things. Therefore, we inherit a situation in which the vast majority of people feel they have no influence over the future shape or organisation of their communities. Even of the people who are active, 56% think they cannot have any meaningful influence.

What we are doing in providing these opportunities and rights—things that have a bit of edge to them—is doing something that I hope will transform that situation and that more people will think there is a reason to get involved because there is something you can do about it; and, hopefully, even more, that the people who are involved will think there is a purpose in being involved rather than just being a name on a list.

Q545   Bob Blackman: One of the other issues is that local authorities in the budget round this year are often deciding to reduce funding to voluntary organisations and close down community facilities. The Localism Bill will not take effect for the best part of a year. Therefore, the opportunity to do some of these exciting things in the community will be reduced because the funding, the people and support will not be there. How do you answer that?

Greg Clark: First, I think it is premature to say that this typical or the majority. As you know, councils are considering these matters. Every day there are examples of councils that reflect the kind of discussion we just had: that there are opportunities to engage with their local community that offer to do things better and sometimes more cost-effectively. I think it is a bit premature to say that most councils have not decided to do that.

It comes back to the discussion Heidi and I had about whether you need these safeguards and protections and whether you cannot just rely on the good will of all councils to do the right thing no matter what. My view is that there should be these rights, and if they had been enacted five years ago, there would not be the same power in these councils at the moment to make these decisions. They would have to act in a way that reflected the power that the community has.

But I share Heidi's view that more councils than perhaps is perceived to be the case recognise that to cut disproportionately the voluntary sector would not just be the wrong thing to do but would be a bizarre and counter-intuitive thing to do. I hope this will be quite a prominent issue in the election campaigns coming up and people will feel the consequences of their electors if they behave in a way that is unnecessary.

Q546   Bob Blackman: That is quite difficult in London when we do not have elections until 2014. Perhaps I may press you on what happens to community assets that are closed down by local authorities now in the current budget round and before the Localism Bill becomes an Act of Parliament and therefore the community right to challenge is ingrained. What happens to those community assets if local authorities just dispose of them?

Greg Clark: I would expect and hope that every local authority seeing the provisions that are to be introduced in the Localism Bill act consistently with the principles that are being established as public policy. As you know, the Government simply do not have the means to direct particular authorities to do particular things. The Government never have had those means and have not had them for many years, so it is not as though we have powers that we are not using. But the expectation of the Government is very clear. We have set out in terms of the transparency regime that we expect councils to make a full account of what they are spending on the voluntary sector. When the average reduction in budgets is 4.4%, councils that cut disproportionately and first, rather than look for opportunities to involve the voluntary sector more widely, are bad councils and ought to be castigated for that.

Q547   Bob Blackman: My final question, because I see that others are twitching to get in on this, is are you saying that the Government are powerless to stop the closure of these community facilities in the current year and there is no action that local people can take?

Greg Clark: No. What I am saying, Bob, is that it is no different from how it has been for the last 40 years. There were never powers to require councils to invest in a particular community centre. Even if I were to be introducing these in a Bill, which I am sure you would castigate me for in this Committee, that could not be done overnight anyway. Therefore, I think it is important to send a message—I hope this Committee will want to send a message—to every council that to choose not to involve the voluntary sector more is the mark of a bad council.

I was just reading a letter that I got today from the leader of Reading Council, which has chosen to increase the budget for the voluntary sector in anticipation of this. Last week I was talking to the leader of one of my local councils who said that his proposal to his budget committee would be to increase the budget for the voluntary sector for precisely these reasons. I hope and have some degree of expectation that that will be more typical than is perhaps thought at the moment before we get to the time when actual budgets are being set.

Q548   Heidi Alexander: Have you instructed your officials to look at the definition of best value in relation to the disposal of community assets?

Greg Clark: Not specifically. I think the question of best value is being looked at generally.

Q549   Heidi Alexander: It seems to me that quite a significant amount of work probably needs to be done in order to start to help councils address the conundrum they face in the transitional period, between what might be happening as a result of budget decisions taken in the next few weeks and before the Localism Bill is enacted. It would be quite interesting for our Committee to understand what work is taking place in your department on that.

Greg Clark: Perhaps I could drop the Chairman a line.

Chair: That would be helpful.

Q550   Steve Rotheram: I have to say it is slightly disingenuous for the Minister to use the national average of 4.4% and say that therefore if anybody makes cuts—

Chair: I do not think we accuse the Minister of being disingenuous, even slightly. Can you rephrase the question, please?.

Q551   Steve Rotheram: Okay. I think the Minister is mistaken if he believes that councils are bad purely because they cut. If there is a national average of 4.4%, not all councils obviously get that. If it is an average, obviously some are under and some are over, some significantly over. Some councils are facing double that particular cut, so it is a full 8.8% reduction. Believe me, the last thing any council would want to do is make cuts to the voluntary and community sectors, but there are councils that are having to do that and make those awful decisions. Simply because of the front-loading and the formula that is used to determine it, the councils most in need of assistance and help seem to be the ones that are being clobbered the hardest. Therefore, the community and voluntary sector is the ones on which they will have to rely on the most and yet they will have to make cuts to that particular budget line. Therefore, it is not good enough to say it is a 4.4% cut and therefore nobody should suffer more than anybody else. There are people whose budget allocation is significantly less than that.

Chair: We are perhaps straying a little from the main issue.

Greg Clark: We could have another discussion of local government on the settlement. Did you have the Secretary of State before you?

Chair: Yes.

Greg Clark: I recognise that 4.4% is the average and some have more than that; some have twice that, but I think there is a more general point. Just to parcel this out proportionately is to miss the kind of opportunity that the Localism Bill embodies, which is to see whether the voluntary sector can help.

The principle of the right to challenge is that the voluntary sector and community organisations should have the opportunity to say whether things could be done differently. Sometimes that will save money; sometimes it will not, but if things can be done better, there is no need to wait for the Localism Bill to be implemented. Therefore, any council that is considering reducing the budget to the voluntary sector should not think just in terms of having a kind of wall around the funding and saying this is the voluntary sector budget. First, they should be taking down that wall, looking across its services and saying, "Are there opportunities for you to do more in other areas, even if we are not going to do the same in this area?" so they can break out of that corral, if you like.

Secondly, they should reflect before making a decision and voluntary organisations should be given the chance to make suggestions and representations as to how the whole of the budget can be better managed. I am saying it would be wrong to say, "The budget is being cut by a certain percentage and we're going to allocate it evenly." I think they should invite voluntary organisations to sit down and say, "This is our budgetary situation. What could you do? Are there any things we are doing in a certain way that you think could be done in another way?" I think that good councils—as Heidi says, across the country they are mostly good councils—will do that.

Q552   David Heyes: If you succeed in prising local authority fingers off the levers of power—a phrase you used earlier—and service delivery is pushed down to community groups, voluntary organisations and the private sector, how will those bodies be audited?

Greg Clark: Mr Heyes, it is no different from the present situation. They will be providing services under contract to the local authority.

Q553   David Heyes: Much of what is being proposed here, genuine localism, will remove the local authority from the scene; they will be bypassed and services will be delivered directly by community groups, voluntary organisations and others outwith a contractual arrangement with the local authority.

Greg Clark: No; they would all be within the contractual arrangement. The provisions in the Bill give people the opportunity to say they should be able to be considered for providing a service, but if they are accepted then it is subject to the contractual regime of the council, and quite rightly so for the questions of accountability that you implied.

Q554   David Heyes: There is much talk about them being held to account by local people. How would that be achieved?

Greg Clark: The councils?

Q555   David Heyes: The groups, voluntary organisations and others that deliver services in future will, you say, be held to account by local people.

Greg Clark: The decision to make use of them will rest with the council. They do not have the right to displace the existing way of doing things without the council agreeing to it. The council must accept that different approach, so it is the council's decision that is relevant. Therefore, the council should be held to account for making that decision, and it is also subject to the contractual system that the council practises.

Q556   David Heyes: If you are comfortable that this audit will be achieved through contractual arrangements that is not a view shared by the Public Accounts Committee. I do not think it is a view Sir Gus O'Donnell shares, is it? Has he not tasked your permanent secretary with looking at precisely where accountabilities will lie in future? Sir Gus is quoted as saying three weeks ago, "I think this is something we need to sort out." Are you saying that it is sorted out and it is not a problem? What is it that needs to be sorted out?

Greg Clark: I think you will find that when Sir Gus comes to look at it across the piece the reporting lines for the use of public money are established and are as robust as they are. I was on the Public Accounts Committee in the last Parliament when we considered these matters. We did an interesting piece of work to ask whether there was any greater record of fraud or mismanagement on the part of voluntary organisations than on the part of either the private sector or public sector. The advice of the Comptroller and Auditor General at the time, based on an inquiry that he conducted, was that there was not any greater track record. Mistakes were made by the public sector, private sector and voluntary sector but there was no increased incidence. I think it is really important that we do not inadvertently and unthinkingly suggest that there is something more risky in terms of the use of public funds in contracting with a voluntary organisation than with any other type of organisation. Empirically, there is no greater loss of funds with them than anyone else, and I think we should be rigorous about the use of public funds across the board rather than in some way finger voluntary organisations with suspicion.

Q557   David Heyes: Therefore, was Sir Gus mistaken in asking your permanent secretary to look at this? Sir Gus said three weeks ago, "We are doing some very new things here; payment by results for a lot of contracts will create some issues about precisely where the accountabilities lie. I think that is something we need to sort out." You are saying that is just a mistake, misunderstanding or failure to realise that local authorities will do this through contractual arrangements.

Greg Clark: That was for local authorities under the right to challenge. Payment by results is more about the welfare-to-work reforms. As he said, these are different arrangements from how they have been done in the past. It seems to me perfectly reasonable, in fact unexceptional, that the Government's accounting officer would want to make sure that the oversight he had was as good as it always had been, but I do not think there was any implication in what he said that he had any reason to believe that they were not. He reasonably said as the Government's chief accounting office that as payment mechanisms change you need to make sure that your guidance as to practice of oversight reflects that.

David Heyes: I will not press you because of time constraints.

Q558   Chair: Is the report going to be made public?

Greg Clark: I did not even know there was going to be a report. You are better advised.

Q559   Chair: You will understand that we get all our intelligence from the Guardian.

Greg Clark: My understanding, as I just said to Mr Heyes, is that it is a reasonable thing. I think Sir Gus was appearing before the Public Accounts Committee and was asked about accountability where there were different and new payment mechanisms. My understanding is that he reflected back that, of course, as accounting officer he would in the normal course of things make sure the practice was up to date. I do not think there is any formal inquiry with a report. It was reflecting what he would do as Government accounting officer.

Q560   Chair: I think that in his evidence to the Public Accounts Committee Sir Gus said that he would he happy to pass this on to the Committee, so can you make sure we have it?

Greg Clark: I think you might invite Sir Gus to do that.

Q561   Chair: Okay; we might ask for that. Finally, was the term "guided localism" a carefully thought-out policy in which you were involved or a throw-away line by the Secretary of State?

Greg Clark: I think what Eric meant by that was really what we have been talking about. There is a version of localism that says everything goes to the neighbourhood or the local authority. It is guided in the sense that we are establishing certain rights. Sometimes these are rights that people in power would rather did not exist, but we are nevertheless going to insist on them. I suspect that is what he was referring to.

Q562   Chair: Is there not a dilemma here? All Ministers and Secretaries of State are politicians and have views on things, but if responsibility is handed down to local authorities to decide on their refuse collection policies, or the ring fence is taken off the Supporting People programme so local authorities can make choices and decisions, when they make those choices they are immediately castigated for making the wrong ones. Is not localism also about a cultural change as well as a legal change?

Greg Clark: You think it is that. I have a very clear view on that. I think it is the right thing to decentralise and not respond to every situation by taking yet more powers to the centre. But does that mean you do not have an opinion on things and you regard anything that is ever done as being for the best in the best of all possible worlds? Clearly not. What the Secretary of State has said on occasions, whether it is to do with bins or whatever, is to express his view, but you will notice that he has not taken a power to require weekly bin collections. As I have said to you today about voluntary organisations, I will not be slow to say that I think it is a mistake for any local authority to cut funds to the voluntary sector and they should as a matter of good practice—it is bad practice if they do not—make sure they have a proper, open discussion with the voluntary sector now to anticipate the rights in the Bill and invite it to say how it could do things better. I think I am entitled to express that view. All of us in public life are elected to give an opinion on things, especially if we see things that could be done better.

Q563   Chair: But do you accept that if we are to change the culture and localism is a force that will continue then there is a responsibility on all politicians, particularly at national level, to give a clear impression to the public that they not actually responsible any more for some of these matters and real responsibility rests somewhere else?

Greg Clark: I think that is right, but it is also a time—I think it was alluded to in some of the other questions—of robust debate. One of the great things about localism in my view is that things are not driven by some invisible bureaucratic process in which people are given the result. There will be discussions as to what is the best thing to do and those discussions on occasion—Mr Danczuk made the point—will be pretty robust and vigorous. The Secretary of State in all my years of experience with him specialises in that.

Chair: On that point we have probably reached agreement. Thank you very much indeed, Minister.

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Prepared 9 June 2011