UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1668-ii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Communities and Local Government Committee

Performance of the department for communities and local government in 2010-11

Wednesday 14 December 2011

Eric Pickles, Greg Clark and Grant Shapps

Evidence heard in Public Questions 93 - 157

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Oral Evidence

Taken before the Communities and Local Government Committee

on Wednesday 14 December 2011

Members present:

Mr Clive Betts (Chair)

Heidi Alexander

Bob Blackman

Simon Danczuk

David Heyes

George Hollingbery

James Morris

Mark Pawsey

Heather Wheeler

________________

Examination of Witnesses

Witnesses: Rt Hon Mr Eric Pickles MP, Secretary of State, Rt Hon Greg Clark, Minister for Decentralisation and Cities, and Grant Shapps, Minister for Housing and Local Development, Department for Communities and Local Government, gave evidence.

Q93 Chair : Good afternoon, Secretary of State and Ministers. You are again most welcome to our Select Committee to have a look at the work of your Department over the last year and at what may be in store in the future. When we had the Permanent Secretary before us recently, we talked to him about why the Department was ranked 15th of 16 of the main Departments in terms of employee engagement. He said he thought it was simply the major change of focus in the Department and that things were likely to get worse, rather than better, in the short term. Are you satisfied with that?

Mr Pickles: First of all, can I say, Mr Betts, what a pleasure it is to be here? I cannot think of a better way to start the festive season than appearing before your Committee.

I think Sir Bob has shown exceptional leadership in the Department. It is never easy downsizing, and it is particularly difficult when you are saying to a whole bunch of people, "You have been doing a series of work"-and doing it very well, it has to be said-"but there has been a change of emphasis. We have moved on to localism. There are things that you have been doing for years we no longer want you to do." By the nature of taking the number of Directors General down to three, with the composite changes that have taken place with Directors and Deputy Directors, that is not an easy process to go through. I would like to pay tribute to the considerable skills that he has exercised in doing that, but it is sadly inevitable that it is disruptive when people are worried about their posts, their jobs and their future. The robust and very straightforward way in which he went about it minimised that disruption; nevertheless, we need to be realistic about it.

Q94 Chair : I think what Sir Bob was saying to us was that the main justification, as well as the general reduction in public spending, was that your Department had probably taken a bigger reduction in personnel than most other Departments because of the transfer of responsibilities under the localism agenda out to local government. Do you think it is fair, if that is the case, that local government should itself have taken a disproportionate share of public expenditure reductions-28%, compared with the overall cut of 19%? They are now taking on all those responsibilities that you do not need staff for any more.

Mr Pickles: I think that local government really came up to the plate, if you will forgive me for using that phrase. All those stories about mass redundancy, about an inability to cope, proved to be completely incorrect. I think local government showed enormous leadership through these times. They are, of course, a quarter of public expenditure, and I think now, having seen the scene with regard to our economic circumstances, there are many in local government who are pleased that we started the process very early, because it leaves local government in a much stronger position by doing that.

Q95 Chair : We may come back to the issues with local government in a little while but, just in terms of your Department, are you absolutely certain, therefore, that you have sufficient resources and staff to deliver on all your priorities in the coming year?

Mr Pickles: Yes. Mr Betts, I would be distraught if I did not think that were to be the case, because I would be accountable to you. We did go about it in a very careful way and by the time the process is through, we will have a much stronger Department and a Department much more focused on the Government’s key objectives.

Q96 George Hollingbery: We heard from Sir Bob last week that a new mechanism had been put in place to close the gap left by the abolition of the Government offices and the RDAs, such that there was some sort of accountability between the Department and those delivering the agenda of the Department out in the regions. How is that going to work?

Mr Pickles: I think we sent you a breakdown of people’s responsibilities. I certainly hope that is the case. We found that people within authorities who were in a particular area really wanted to talk to people who were decision makers within the Department. We were able to give that service at a much cheaper rate than the Government offices for the regions. Of course, you have to understand, we are performing a very different function. The Government offices for the regions were part of the previous Government’s command and control agenda. When you are starting to push things down to a locality, you are looking for a much more collegiate and co-operative process.

It certainly works extremely well during times of crisis. There were some specific problems during the year. You will recall some localised flooding and the sad business of the riots. It certainly proved to be a very robust relationship in which we were able to provide information very quickly.

Q97 George Hollingbery: At this stage in the Government, new programmes are rolling out; crises, other than things like environmental issues such as flooding, have not yet occurred. If there is a serious problem about the delivery of principles from the centre-the policy set has not been delivered by local government-how are you going to interact? How are you going to impose your will to make sure that something happens, or is that just never going to happen?

Mr Pickles: If 2011 is about anything, in terms of being positive, I think that local government was sorely tested, both in terms of the reductions in its expenditure and in particular in having to deal with some particularly difficult and sensitive times. I do not think there can be any suggestion that local government did not rise to those local challenges. I actually think that was a better test of localism, though obviously we would not have wanted the precise circumstances to have been created.

Being part of the process of seeing those effects in August, people were genuinely surprised by how well local government managed. That was partly because of confidence and trust and certainly, even during the recent oneday strike, my Department was in a very good position in terms of knowing exactly what was happening on the ground because of those good and harmonious relationships.

Q98 George Hollingbery: A particular case in point-then I think I will leave it there-is the Supporting People budget. The Department has made it very clear to local councils that there is no excuse for cutting Supporting People budgets. It is clearly something that the Department cares about very much, but there are certainly councils out there where Supporting People budgets, or at least what those budgets went to, are being cut. How will you try to manage that situation when you are clearly in conflict with what is going on on the ground?

Mr Pickles: The previous Government of course did remove the ringfencing of the Supporting People budget in the previous year. I believe the previous Government were right to do that. By and large, the Supporting People budget was to deal with problems and challenges within the locality. Actually, a surprisingly small number of authorities took the opportunity to take out a Supporting People because, after all, the actual reduction-Grant may be able to tell us-we are talking about was I think 1% over the period.

Grant Shapps: Yes, less than 1% in cash terms in each of the four years. It is absolutely true to say that there were some authorities who, in my view, should not have raided that budget as they did. Nottingham springs to mind. On the other hand, there were some authorities who should be commended for the fact that they increased their Supporting People budgets, and that happened in several places as well.

Mr Pickles: Sunderland did particularly well and should have received some praise.

Q99 George Hollingbery: So you are saying to the Committee now that, in such a circumstance-we would like to treat this as a generic circumstance rather than a particular one-you are happy to sit back and let certain things happen on the ground, even if it is against stated Government policy.

Mr Pickles: Localism means you need to have local determination. We are certainly offering deals and help with regard to our cities. The Conservative party does not control many cities, but we are very content to see local determination and local power. In terms of the kind of civic power and dynamism that exists, that is something we should encourage. If in our cities we are not turning out mini Margaret Thatchers, that is a matter of regret to the ministerial team but something we are prepared to live with.

Q100 George Hollingbery: When we took evidence from Sir Bob last week or the week before it began to sound like there was replication of Government offices happening among teams in the DCLG. I am sure you think that is not the case, but it certainly had that flavour. Could you describe how that works?

Mr Pickles: I read Sir Bob’s testimony before I appeared here and I did not form that impression. I thought Sir Bob was very robust in saying exactly the opposite. It is not just because it is cheaper, although it is £200 million cheaper than before; the function is different. That is the important thing. It is a function that we are doing. In many ways, it has strengthened the Department, because we have very senior colleagues with an intense knowledge of the personalities and a particular locality. They have certainly found it easy to just cut through a lot of the bureaucracy to get decisions very quickly for those areas, in a way that the regional Government offices were not able to do.

Q101 Chair : Just two points about the ERDF, one follows on from the removal of the Government departments in the regions. In the past, where those departments have been responsible for ERDF spending, or overseeing the spending, and problems have arisen, they have been there to try to sort those problems out. I have a case in my constituency at present, of a complaint that money is now not being properly used that was allocated a few years ago. Is your Department now able to pick up all those individual problems that were previously being picked up in the regional offices?

Mr Pickles: I have to say, Mr Betts, there were, I think, three big financial problems that we inherited and had to deal with very quickly, one of which was ERDF, which was in a complete Horlicks. The second obviously was FiReControl, when you yourself were very helpful in coming to a solution. The other was the unacceptable payment going out to our Finance Director. ERDF was so badly managed that, as you know, the whole process was suspended by the Commission. We found ourselves initially facing a clawback of potential liabilities of £235 million, which to date we have managed to pull back to just a little under £60 million, and we continue to go through the process of doing so. I certainly found it humiliating that we were not in a position to be able to answer the Commission’s legitimate problems, and that records have been wholly inadequate in that system.

Since we have brought it into the system that you described, we are in a much stronger position in the current programme. I think that about two-thirds have been spent, and we are very confident of being able to do that. This is just from memory, but I am sure it is right: when we started, we were paying out something like £3 million a month, and we have managed to get that rate up to £9 million a month. We can be reasonably confident that we are in a much stronger position than the one we inherited. I would just like to say that Lady Hanham-Joan Hanham-played a very important part in getting that into some kind of order.

Q102 Chair : If there are to be complaints about any allocations in the past, your Department now is in a position to pick up and look at those to try to resolve them.

Mr Pickles: In a way that we were not. The programme 2000 to 2006 was in a very serious mess. Just going back to the earlier point, in the way in which we were able to bear down on it, we found that local authorities had a much closer idea as to what had happened than regional government. Yes, we are in a much better position, but if you have any suggestion that there is anything awry, do let me know.

Q103 Chair : I certainly will. The second point is that when the Housing Minister came to the regeneration inquiry evidence session, he made the point, I think with a lot of support from the Committee, that the Government’s intention was to spend every penny of ERDF. Is that still the Government’s intention and is the Government on track to do that?

Mr Pickles: I think so, yes. Given the problems we had to overcome, we managed to increase the spend per month, as I said, from £3 million to £9 million. We are two-thirds in terms of the spend. There is obviously a lag because of the problems we had with regard to the clarifications that we had to make. I am very confident that we should be able to do that.

Q104 Simon Danczuk: As well as being Secretary of State, you are also chairman of the board, aren’t you?

Mr Pickles: I am.

Q105 Simon Danczuk: You chair the Department’s management board. Could you say a little bit about that role? Does it involve providing administrative direction? Do you decide where resources go? Do you take some responsibility for operations within the Department?

Mr Pickles: In terms of the way in which the board operates, clearly Ministers determine the general policy, but the revised board has proved to be extremely good at dealing with a number of specific issues, and it has been good that we have been able to attract people from outside the local government world to give some of the commercial disciplines. I have found the challenge that the board has offered to be extremely helpful. Managerial and operational points of course are matters for the Permanent Secretary, and neither Ministers nor the board interfere with that.

For example, at the last board meeting-in fact, they are published online-we had a discussion with regard to our housing strategy, discussions with regard to our integration strategy and some of the practicalities of making sure that we deliver that. It goes back to the point that Mr Betts made earlier, which is that this is one of the checks to make sure that we can deliver the Government’s priority and that the place runs reasonably well.

Q106 Simon Danczuk: Some other Departments organise by having two different boards: a supervisory board that is chaired by the Secretary of State and a management board chaired by the Permanent Secretary. Did you consider that alternative model?

Mr Pickles: The Permanent Secretary does meet with members of the board, and they take a particular interest in aspects of the general running of the board. It is reasonably free in the process. I will be absolutely frank: my experience of the board when I first arrived was not a particularly happy one. I did not feel that it was entirely focused. Under the new arrangements, and particularly with Sir Bob’s presence, I feel that the board has proved extremely useful. We have Baroness Hanham from the ministerial team there permanently, but other colleagues come and go. Perhaps they might share their experiences of the board.

Greg Clark: As the Secretary of State says, there is a permanent representation. I have attended from time to time, when particular policy issues have come up and the Department’s likely approach to them. I think it has been helpful discussion. It is useful to have outside people as part of the Department.

Q107 Simon Danczuk: I was reading some of the minutes and, at the June 2010 board meeting, you said "the Department had to react with pace". You had a board meeting in July 2010 and then did not meet again until January 2011, which does not suggest pace. You talked earlier about commercial discipline. I suspect there are few commercial organisations as big as the DCLG, in terms of budget, etc, that meet as rarely as that. What is the reason for the gap?

Mr Pickles: I kind of hinted at it. The reason was that we were in the process of getting new people on the board. We wanted to turn it into a better, more effective unit, and I think it is a much better and more effective unit. In a polite kind of way I suggested why I did not think it was enormously useful to have meetings until we got the new people on the board, particularly as quite a significant number of the old board would be leaving the Department fairly soon. I am putting it as nicely as I can, but I think you know where we are on this.

Q108 Simon Danczuk: Finally, what do you think the impact of not having those board meetings has been?

Mr Pickles: Not having the kind of board meetings that the first one was had absolutely no impact whatsoever, but the new form, where we are meeting on a regular basis, where we have people who are there over the long term, people who are challenging us, I feel is really adding value to the set-up in a way that perhaps the old board did not.

Q109 Bob Blackman: Secretary of State, you seemed at the end of last month to have had a bit of a spat with the Institute for Government and the Local Government Chronicle over performance indicators and the business plan. I do not necessarily want to go into the details of who is right and who is wrong-I am sure your figures are absolutely correct-but does this not indicate that there is a problem, in relation to the publication of the details, from the Department’s perspective?

Mr Pickles: No, I do not think that at all. I will tell you what I do think. The Institute for Government were very cheeky in measuring a delay of 10 days for the introduction of the Localism Bill 11 times. It was a delay of 10 days to fit in with the parliamentary timetable and know that everything was ready. To count one item 11 times seemed to me to be a bit cheeky, particularly as if you did not do that, we would be pretty much close to the top. Although it is like that school thing; it is not that it matters, it is taking part that is important. But it would have been nice to be close to the top.

Q110 Bob Blackman: At the moment, the position is that you set your own targets and you assess yourself against how you have performed. Do you think that is the right way for the public to look at the performance of the Department?

Mr Pickles: We go through a very rigorous process within Government between the Treasury and the Cabinet Office. We go through a regular assessment with regard to achieving targets. It is really important. I have taken the view, and I know my colleagues take the view, that targets should be challenging but you should not get yourself hung up on them. If for example, we had to wait 10 days to introduce the Bill, does it really matter? Is it really important that you miss by a few odd days? I think it is much better to produce a quality product than get yourself terribly hung up if you do not make a particular day.

For example, we actually delivered the Localism Bill ahead of target, despite it starting later. It is the first major Bill of this Parliament, or I think even of the last Parliament, of this size to get through without a single Government defeat, which is an enormous tribute to the persuasive nature of Minister Clark.

Q111 Bob Blackman: You have set out great stall for local government to be transparent and, indeed, set out the requirements for publication of expenditure so that the public can assess how their council is doing. Do you accept that the same principles should apply to your Department, so that the public can assess how well the Department is doing?

Mr Pickles: What would you like us to publish that we do not?

Q112 Bob Blackman: The key concern at the moment is that the data are hard to access and hard to interpret. Maybe there is a process of simplifying that, so that the public can easily assess that.

Mr Pickles: I think you make a very reasonable point, and it is partly a byproduct of the way in which we dealt with local government. The biggest way of delaying getting information out is perfection. It has to conform to a particular process. I can remember when I sent the letter out to local authorities; I used a phrase that made one or two people’s eyebrows raise, which was, "I do not expect you to get it right, but I do expect you to try." I did take the view that, if you have got the raw data out, there were plenty of people in different professions-or people who are just really interested in that kind of thing-who would devise ways of being able to do the comparison. I think your point is a good one and that is something that we will start to do, but it is terribly important to get out the actual raw data. Indeed, we are releasing all the Government procurement card information below £500. That will be out, if not today, in a matter of days.

Q113 Bob Blackman: Finally on this section, do you think there is any case for any external validation of your performance against the targets that you have set, apart from the Treasury and other Government Departments?

Mr Pickles: The Treasury and the Cabinet Office are pretty difficult. You good folks are looking at what we are doing. In the Lobby, one or perhaps all of you occasionally come up and say, "We have seen this. What is going on?" That is something that we might want to be able to talk about in terms of making sure that we are not ticking just boxes but actually doing stuff. In terms of me and my two colleagues, this is not a practice. We are not interested in ticking boxes; we want to be able to deliver that real change.

Q114 Mark Pawsey: Secretary of State, I wonder if I might ask you about the comments of another external body, in this particular case the National Audit Office, which has raised questions about capability within the Department and the ability to predict demand. It particularly draws attention, I understand, to two projects, one being the mortgage rescue scheme, where it was unable to predict the amount of demand. The other issue is FiReControl, which you have already referred to, where the project has not gone ahead, and has led to substantial waste. I wonder if you could comment on both of those and perhaps tell us whether the Department is in a better shape now to deal with those kinds of issues moving forward.

Mr Pickles: I will do FiReControl, and the Minister for Housing and Local Government could perhaps take us through mortgage rescue.

Grant Shapps: I think the mortgage rescue scheme was not best thought out when it was introduced, if I can put it politely. I think it was in 2009, although I need to check the date. I remember it being introduced and not having been fully worked through with the sector. The National Audit Office quite rightly picked up on that, and I think they were by and large right about it. I do not want to spend too much time over what went on prior to this Administration, but there were problems and they have been identified quite correctly.

Q115 Mark Pawsey: Given that staff numbers have been reduced and perhaps experience has been lost from the Department, are you perfectly happy that such an issue could not happen again?

Grant Shapps: I do not think there is any suggestion that there are any management or resource issues with it at the moment. In fact, off the top of my head, I can say that, in the programmes that I am responsible for, I have never had a member of the civil service or an official come to me and say, "Sorry, Minister, we just do not have the resources to do this," at least not in a showstopping way and certainly not on that programme. That referred to things that had happened before our time.

Q116 Mark Pawsey: Secretary of State, what about FiReControl?

Mr Pickles: I agree with every word of the National Audit Office report. It was an absolutely frightening project in terms of the way it was executed. I am just looking at what the Public Accounts Committee said. This is what they say: "The project was rushed, without proper understanding of costs or risks. The leadership relied far too much on external consultants, and the frequent departures of senior staff also contributed to weak management and oversight of the project … [It] ended in complete failure. The taxpayer has lost nearly £0.5 billion."

If it is about capacity, and we shared an awful lot of this with the Chairman, the truth is, if we are really blunt, that is right. There were a number of times when the clear advice coming to Ministers, not us but the previous set, was to abort it-to stop it. For various reasons, for a process of grand design, they did not bite on the bullet. Your Committee is obviously aware and the books are open to the Committee; in private, we had to go through a process of negotiating our way out of that project, and that is what we successfully did, but it is a classic study of Government being out of its depth, and when it is out of its depth, drowning not waving.

Q117 Mark Pawsey: Secretary of State, are you confident that such a problem would not occur again, and finally, what will happen to these redundant centres?

Mr Pickles: We are in the process of flogging them off, including the magnificent cappuccino machines obtained at enormous sums of money on your behalf. I am a bit uncertain in terms of whether we have made an announcement about the sale of one or we are about to make an announcement of the sale of one, but we will gradually go through the process. Putting these centres into mothball was the cheapest option and actually delayed that kind of natural co-operation that was taking place between our fire authorities.

I think we will come out with something much stronger but, by Jove, it was a very expensive mistake, which I did battle with. Again, we owe an awful lot to Bob Neill’s really hard work and really tough negotiations, because it really was, in terms of the money that we did manage to get back in compensation, right down to the wire.

Q118 Chair : My thanks to you and Bob Neill for the way you shared information in confidence with me on that issue. Of course, it was the Select Committee that referred the matter to the Public Accounts Committee to have a look at the whole issue.

Mr Pickles: They did a great job. They did a great job.

Q119 Heather Wheeler: Secretary of State, as we have mentioned already, it was announced that Sir Bob Kerslake is going to become the Head of the Civil Service in the new year, a twodayaweek job. When he gave evidence to us, he said that you had supported his application. What were your reasons for that?

Mr Pickles: Because, as many around this table know, Bob is a person of the very first order. He is a person of enormous capacity, a chief executive who then moved on to the HCA. He is one of the few people I know at a high level in politics who I have never heard anybody say a bad word about. The way in which he ran my Department was straightforward, with an understanding of what is and is not important, and he is somebody in that tradition of being able to tell people bad news and not to sugar the pill. I am a bit softspoken. I am shouting a bit, but normally I can be a bit quiet. He is a bit quiet so, at times, it does sound like both of us are about to announce Emerson, Lake & Palmer on The Old Grey Whistle Test. I did not have any doubt that he would be able to break down the silos that are Whitehall, and he would give leadership to the civil service at a time of great change.

Q120 Heather Wheeler: It is very interesting that you refer to silos, because clearly one of the main drivers for this Government is localism. How do you think Sir Bob is going to be able to drive that through, opening up those silos?

Mr Pickles: He is a very charming man and he has enormous judgment. I think there are a significant number of people within Whitehall that want to see this happen. I think we have made quite some progress in the last 12 months. In fairness to our predecessors, they had recognised the problem and were trying to move things along. It is the same problem in local government. What does help is if you try, when you are dealing with things, to get very much involved in issues and to make the issue the orientation. We have seen examples of that with the work that Greg has been doing on cities and the stuff we are just starting on troubled families, which I am sure we will come on to. You need to break down the silos to be even vaguely successful and that is the way you move things along. Forgive me, because I know a lot of folks here have said the same thing before: you break down barriers by moving on the issues. Do not look for a structural solution, because the structure always gets in the way.

Q121 Heather Wheeler: Can I turn to Minister Clark? Tony Travers from the London School of Economics wrote an article in the Local Government Chronicle where he talked about Britain’s political elite being "trapped in a vortex of centralism". At the same time, a report came out that talks about Government being responsible for the finance, planning and structure for local government, but we are meant to have localism. Are you not stuck in that vortex? What is the difference?

Greg Clark: Part of our challenge is to reverse what has probably been a century of progressive centralisation in this way. To go back to what the Secretary of State said about Sir Bob, I remember when Sir Bob first came to the Department from the HCA and we had a conversation. He said that one of the things that attracted him most to coming into the civil service was the agenda of localism. This is a man, as you know, who spent most of his career in local government.

The Secretary of State is right: you need to break down these silos. It is enormously helpful to have the Permanent Secretary of our Department now responsible for the whole of the civil service. In the past, this Committee has made some suggestions that the Department should punch at and above its weight. I think this is a big help in that, but our purpose in so doing is to crash together a lot of silos that have been established over the years and to do so pretty firmly.

Q122 Heather Wheeler: Just to absolutely clarify that, central Government says that "the Government…decides expenditure priorities and standards for improvement", but you are letting localism have its head?

Greg Clark: We have done too much of that in the past. One of the reasons that we have got rid of the CAA regime, for example, has been to prescribe less, and to monitor less in detail from the centre as to what local government should do. One of the reasons we got rid of so much of the ringfencing of funds is that this should be down to the discretion of local authorities. The review of local government finance, on which we have been consulting, is to have a greater connection between what authorities do and what they are able to retain. The New Homes Bonus allows them to retain rather than simply send up to the Treasury a lot of the benefits of development in housing.

This is absolutely the direction in which we are going. I think it has been going in the opposite direction for 100 years. Through the Localism Act and the various reforms that we have made in the last year to 18 months, we have begun to reverse that, but we have begun the journey rather than ended it.

Q123 Heather Wheeler: Those quotes-forgive me, I should have said at the beginning-were actually from the Cabinet Manual, so do the Sir Humphreys need to change the Cabinet Manual?

Greg Clark: The agenda on which we are embarking is a profound challenge to Sir Humphreys across Government. I make no bones about it. Part of the reason the Prime Minister and Deputy Prime Minister adopted this agenda was to have a central Government project to decentralise, which you might regard as paradoxical. The explanation for that is that sometimes, if things are centralised, you need a force of effort at the centre to relinquish the fingers on the levers of power.

Mr Pickles: I suppose you could say that many of us have experience in our own way of our own political constitution, whether it be in parties or in unions. If you have to look at the rulebook, you are already in trouble.

Q124 Simon Danczuk: Secretary of State, there is a view out there, and possibly in here, that you are very strong on evidencebased policy, so I was wondering if you are not disappointed about your Department using what can only be described as a fundamentally flawed methodology in terms of local procurement. I am referring of course to the Opera Solutions methodology, which said that there could be savings of £10 billion in terms of procurement bills. Are you disappointed in your Department using that research?

Mr Pickles: I looked very carefully at what you said to Sir Bob and at the issue of Opera Solutions when you asked for things you wanted to talk about. It seems to me extremely clear in the press release that it is Opera’s methodology and that we are not endorsing it at all. I do not think we need to apologise in any way for urging local authorities to improve procurement. After all, the Local Government Association have been most robust about the amount of savings that can be made from procurement. They are suggesting £50 billion, so I am entirely relaxed by Opera Solutions suggesting this, as indeed the Permanent Secretary is.

Q125 Simon Danczuk: You are not endorsing it; you are not saying it is accurate. What you are saying, Secretary of State, is that you will put on your website, on your Department’s website and in a press release any old gumpf and detail that is not accurate. Is that right?

Mr Pickles: I am shocked at that suggestion.

Simon Danczuk: You are suggesting it.

Heidi Alexander: It is accurate.

Mr Pickles: We are very relaxed at using information. After all, all we are saying to local authorities is that there is money to be saved in terms of procurement. There is general consensus out there. "Here is an interesting suggestion," but do not place it on a higher level of us endorsing a particular methodology. We will often refer to our great friends in the Local Government Association, but I do not think we would go through their methodology. Things can appear on our website that would not come under the category of old guff.

Q126 Simon Danczuk: Finally then, what sorts of savings do you think local authorities could make in terms of procurement savings?

Mr Pickles: The Local Government Association says £50 billion, but I think, and I would be interested long term in your views on it, that in a way you can look at all kinds of procurement. We have reduced the cost of our print cartridges by a third. Now that is kind of cool; everyone is very happy and it is dandy that we have done that. But if you are going to really make significant movements in procurement, we are going to have to be a lot better at commissioning. The Government, the Health Service and local government are not as sophisticated at commissioning as we could be. In terms of the next big thing, to put it in those terms, I reckon we should be pushing and encouraging people to commission.

I can remember actually receiving evidence-it might have been in this room, from where you are sitting-that in terms of procurement and contracts, it is a bit like walking on water; it was easy provided both were frozen. Where people get into a lot of trouble is when the initial commission was not the right process, but there is nothing to make me believe that the Local Government Association’s figure is wrong.

Q127 David Heyes: You will know, because you have read Sir Bob’s testimony to our Committee a few weeks ago, that we questioned him about the cost of the interim Senior Finance Director. You said yourself it was one of the three big problems you inherited and have already described it as "unacceptable". The appointment was made in March 2010, just a few weeks before the general election, but that person was still in post 16 months later at a total cost of well over £500,000. Why did it take so long to sort it out?

Mr Pickles: It is a problem that I think you will have seen me refer to in many reports. There is a problem within Government of people having the appropriate accounting qualification. We went out to trawl twice, by way of advertisement, but we did not get anybody of the appropriate calibre. I will probably have this testimony sent around in his Christmas card, but it was not until Bob came in and started that process of actively headhunting, and we managed to get Sue in, that we were able to release this process.

The cost was unacceptably high. I was agitated about the appointment almost from day one, and we had weekly conversations about dealing with this, but we are responsible for rather a lot of money. The Treasury and the Public Accounts Committee make it absolutely clear that the Director of Finance must be a senior person with experience of government, and must have the appropriate qualifications. We have started getting some senior people to go through the process of getting that qualification, but I certainly hope that one of the things Sir Bob will tackle in his wider remit is that this is something Government has to seriously address.

Q128 David Heyes: You found out about it on day one, I think you said. Is that right?

Mr Pickles: No, not on day one, I have to say.

Q129 David Heyes: When did you find out about it?

Mr Pickles: I think I found out about a month in, when we were going through what people were paid. I kind of asked about the process, but I was assured, "Don’t worry; we are going out to get things. It will be only a matter of weeks and we will have somebody in place." When that did not happen, I said, "Why don’t we look around in terms of sharing that post with another Department? That would make sense." Indeed, we remain ready to share that post with another Department.

You have to understand that it was at the point when we were making all those changes and taking that money out, and we needed the assurance of somebody there who had the appropriate qualification. Indeed, Mr Park was a very senior guy who had held that kind of position in Government for a very long time, but I remained very unhappy with the contract and would not have signed the contract. You have to take into consideration, one, the risks that you might have financially for not having the appropriate person; and, two, terminating that contract when you did not have a replacement, whether or not that would have been seen to be reasonable. If you are asking me whether it got my goat and was I a grumpier Secretary of State because of it, yes, I was, and my colleagues will testify to that. It was personally very irksome to see that money going out.

Q130 David Heyes: We know about this case because it came out in the remuneration report. Are any other people employed in similar circumstances on similarly high rates of pay, at high cost?

Mr Pickles: No, no. There are not, to the best of my knowledge and belief. If there are, I can guarantee you that I will have an attack of the vapours. I find it very irritating.

Q131 David Heyes: It does kind of suggest, though, that the difficulty you have in recruitment-you also inherited a nonexistent succession planning policy for replacement of these people-is perhaps because people are not very attracted to the idea of working for you.

Mr Pickles: Well, I think that is a tad unkind. I know my then Permanent Secretary left after three weeks, but he did tell me he had made the decision before I arrived. It is a problem right across; the serious answer is that it is a problem right across Government.

Q132 David Heyes: Maybe you do not pay them enough. Is that the problem?

Mr Pickles: That is basically right. Someone with this qualification and that kind of experience can earn significantly more in private industry than they can here. This has happened because of a reason. We just simply need to get more people within the civil service to do the accounts. To be blunter, there were people in my Department who could have done that job and who were very good at the figures, but they did not have the qualification. We did start the process of getting people through the examinations, so there is some poor civil servant who is having to take the necessary exams.

Q133 David Heyes: My local government colleagues tell me that they have similar recruitment problems for posts like chief executives and chief finance officers. It is interesting that your colleagues sometimes are very critical of the rates of pay that local authority people get in posts comparable to this post that you found it so difficult to recruit for.

Mr Pickles: Mr Heyes, I think you are treading on difficult ground, given the money and times of constraint. In terms of the responsibility and in terms of the pay, we are within that area whereby you recognise that those of us in the public sector can never match the kind of pay that is available in the private sector.

Q134 David Heyes: Yes, I will not comment further, except to say the contradiction in what you say is pretty clear.

Mr Pickles: I am on the side of the taxpayer, Mr Heyes.

Q135 George Hollingbery: Turning to the Housing Minister, there was a report some time ago, I think back in April, in Inside Housing, that talked of a Government briefing to a small group that the Government was going to target 450,000 new homes a year, and that would be announced in the housing strategy. Can we just agree between ourselves now that that was, shall we say, ludicrously ambitious? You won’t disagree there.

Grant Shapps: It was never true. I never had that conversation-never. I had not even thought about it.

Q136 George Hollingbery: No, indeed; it is not attributed to you. It was apparently given out by somebody close to the centre, but we can agree that is a ludicrous number.

Grant Shapps: Like so many stories in newspapers, it was complete nonsense.

Chair : We were just going to welcome it.

Q137 George Hollingbery: You have made some statements about what is a realistic target. Can we repeat them here, just for the record?

Grant Shapps: What we know is that we need to build a lot more homes in this country and that the record low house building rate, crashing to the levels of the 1920s, under the old topdown system and, it should be said, under the enormous slowdown in the economy when the recession hit, is not sustainable if we want to house our nation. Most people will recognise you have to be building 200,000 plus, maybe more, homes a year-something in that region. Unlike the previous Administration, we have not attempted to set annual targets, because of their very illustrious history: 3 million by 2020 was a good soundbite, but it did not deliver any more homes, in fact fewer.

Q138 George Hollingbery: Laying the Foundations has put several mechanisms in place. Can you elaborate on those?

Grant Shapps: For one thing, we have said that we want to see 170,000 affordable homes built by 2015. Actually, we said 150,000 at the time of the spending review. We subsequently revised it up, because we have laid the contracts by and large now and we know that we are going to overdeliver on what we thought might be available. Separately, we subsequently announced in the housing strategy that we will encourage the sale of 100,000 council homes by a return to Right to Buy, by increasing discounts and caps in particular, and use all of that money to replace, on a oneforone basis, every one of those homes. That is another 100,000 from that.

Q139 George Hollingbery: Very quickly on that particular issue, the one for one sounds wonderful. Is it one for one locally or is it one for one nationally?

Grant Shapps: We will shortly consult on the precise mechanism. That is not to be evasive; it is just that we want to hear what local government and others think about the best way to deliver it. The reason is that we tend to think, sitting here in London, that there is enormous housing demand everywhere, and indeed there is over much of the country, but not over all of the country. It is possible that homes might be purchased in places where there is no waiting list at all-literally no demand-so it might be wrong to put in a blanket requirement to always build in the same place. Then again, as has already been discussed this afternoon, we are heavily in favour of localism. If I have an inclination, it is to try to do things locally and therefore more efficiently. That is all part of the subject of the consultation.

Q140 George Hollingbery: In certain rural constituencies, for example, there are villages where we may very well see some of the existing final remains of affordable housing stock going, which would be terribly difficult to replace one for one.

Grant Shapps: Yes, I think you are right to recognise the problems of rural areas, which might require a different approach, a more localist approach or a combination with things like the community right to build, for example, which are coming down the track as a result of the Localism Act.

Just to finish off the list, there are then another 100,000 homes from the bringing forward of public land. Just to remind the Committee, we have now met four of the other Government Departments, plus our own, and identified enough space for 82,500 homes on Government land, largely brownfield. We have yet to start a process of discussing with the rest of the Government Departments and all their arm’s length bodies-when you think about people like the Royal Mail and Network Rail there is lots of land there-and then going back through all the Departments and looking at the kind of plots that we did not include in the first trawl, which were those that might be suitable for fewer than about 40 homes. We think there is a long way to go on this. From what I am saying, you can be reasonably confident of meeting, perhaps even exceeding, the 100,000 new homes on public land. You have that as well.

In the housing strategy, there are two sums of money that are nearly £1 billion. There is the Growing Places Fund, which had previously been announced and is described in more detail in the housing strategy. That is £500 million to unlock the larger infrastructure projects that could enable housing, in many cases, to go ahead. Separately, there is the Get Britain Building fund. Actually I should tell the Committee that the housing strategy announced £400 million on Get Britain Building. I should point out two things. Number one, actually it is £420 million; we have actually added a little bit to that in the autumn statement. And when I say it is Get Britain Building, the £420 million is entirely to get England building. There is then the Barnett formula on top of that for the devolved Assemblies and Parliament. There is quite a lot of money to come from that. That again is actually to unlock sites that are shovelready but have been held up, perhaps by the slowdown. I am very keen that they go to not just the big builders but the smaller and mediumsize ones as well, because they are often the ones that are overlooked by these large Government programmes.

I should say on that cash as well that we intend to get perhaps 60% of it back and recycle it later on. In other words, it is loaned as a way to get the cash flow going. If we achieve that, it will be about double what happened through the previous Kickstart programme rounds, which only aimed to recycle 30%. We aim to get more bang for our buck. There is a series of other things. Perhaps I am getting into the minutiae, but Get Britain Building is £420 million, so it is probably 16,000 or 17,000 homes. There are the plans, for example, to Build Now, Pay Later, and a series of other things that would add to those numbers, but it gives you a flavour. We are talking about quite a lot of house building.

Q141 George Hollingbery: I want to register slight concern about the mortgage indemnity scheme potentially leading to house price inflation, but I do not think we have time, unfortunately, to discuss that now. Also, you talked about smaller builders as well as larger builders with that particular scheme. Smaller builders will surely find it more difficult to put together the financial vehicles that might be required, but perhaps I could leave that with you. Would you just give us a flavour of roughly how many this year and how many next year? Finally, on HMR areas, I think you have indicated that anyone in any of those areas will now be able to bid. How will they find out? What are the criteria? How does that work?

Grant Shapps: Sorry, I did not mention mortgage indemnity but I should have done that. We are looking to bring 100,000 people into the mortgage market. This is really the other side. There has been a tendency to have a lot of supplyside measures; in other words, let’s just put money into building affordable housing, and let’s just put money into securing the land. Actually in this marketplace, what we have to think about is that builders are not building and lenders are not lending. Actually, buyers are not buying, and the reason buyers are not buying is that they cannot bridge these enormous gaps to get the deposit together, so the mortgage indemnity scheme, which you are right to raise, aims to bridge exactly that gap and solve that problem for up to 100,000 buyers.

On the smaller builders and Get Britain Building, I should mention that, in addition to recycling 60% rather than just 30% from earlier schemes, I have also dramatically cut the paperwork. I think we have probably halved the amount of forms, prospectus and what have you that we required, to ensure access for those smaller builders. As you say, if they are not a Barratt or a Taylor Wimpey, they are not going to have people on hand to start working on these Government forms, with great bureaucracy and great requirements. If you are building 20, 40 or 100 homes, you are focused on that task. I am trying to make this a much more straightforward, lighttouch approach. You will need to have planning permission in place. You will need to have met certain criteria, but it is nowhere near as onerous as previous schemes.

You asked about housing market renewal as well. Since the Committee last met, or at least since I was in front of it, we have launched a £71 million programme for housing market renewal. That is actually since the Committee released its regeneration report. That is aimed at ensuring that there will be no street in the country where over half the street is empty, and people are then expected to continue to live in that street. That housing market renewal money has been widely welcomed. It was £35.5 million; I added to the figure, the £30 million that we originally talked about. The £35.5 million is matchfunded by local authorities to give the £71 million. Certainly housing market renewal areas are benefiting from Regional Growth Fund money, for example in at least two of the former HMR areas. The Regional Growth Fund of course has been added to, which is another thing we should mention as well-another £1 billion to that. You can see how these different funds are coming together and there is every opportunity that HMR areas will benefit.

The final thing I should mention, just to try to complete that picture-there are so many different parts to it-is that the New Homes Bonus has been bringing lots of empty homes into use. The figure is 22,000, off the top of my head, on the allocation of the New Homes Bonus. I have just announced £430 million on that funding. It is great to see. I know there have been lots of TV programmes about empty homes recently, which I absolutely welcome. We are very keen to use up this scandalous waste of property and house people who are on the waiting list. I very much welcome the drop in the number of empty homes for the second year in a row in this country. I think we are seeing things like the New Homes Bonus contributing to that.

Q142 Heidi Alexander: I have some questions about the supply of new social housing and affordable housing, but I do not think you answered Mr Hollingbery’s question that 450,000 homes per annum may be unrealistic, but what is a ballpark figure for what you are expecting?

Grant Shapps: I explained that you have to be building, ideally, 200,000 plus. Projections are very difficult in this area, because they depend on all sorts of things, not least the fact that under the previous Government’s analysis, they said that in 2016, of the 240,000 homes a year they said would be required, up to 70,000 would be required for people who are not yet in this country. If our changes to immigration policy, for example, are successful, and we hope they will be, that would change the outlook for that previous set of projections. Projecting forward is very difficult.

What I think we can all agree is that we are not building enough, although I can report to the Committee that the New Homes Bonus reports that either new build or those homes brought back into use came to 159,000 this past year, which may be quite a bit higher than the figure that most Committee Members may have in mind for the number of new homes and those brought back into use. I think we need to go somewhere north of 200,000.

Q143 Heidi Alexander: Thank you. I think Inside Housing, back at the beginning of December, reported that social housing leaders believed that the sector is in crisis and that the situation is likely to get worse. I think that those concerns are understandable. What can you say to reassure them?

Grant Shapps: I have no doubt that you can always find somebody who will say anything in any sector. If the allegation is that the industry or sector as a whole thinks that is true, that is entirely wrong, and I will tell you why. There was some fuss a couple of weeks ago about the number of affordable home starts that there had been; indeed, because there was a hiatus between the two systems, we had seen a big drop. I can report to the Committee this afternoon that there are now 94 providers that have been contracted for £1.5 billion to build 75,000 affordable homes. They are all in the system now, contractually in the system, so we are going to see those numbers revert.

The top 50 housing providers came to see me not long ago, and that did not feel to me to be a room full of people who were depressed about the future of affordable housing. In fact they were saying it is great that we are able to get on and build homes again. I am very proud of the fact that by the end of this Parliament, we will have a net increase in the number of affordable homes for rent, which we have not seen for many years.

Q144 Heidi Alexander: You just touched on what I think you described as a fuss a couple of weeks ago about the Homes and Communities Agency’s figures on the new starts for social housing. Of course in London, in the first six months of this year, there were 56 new social rented homes started. It is obviously a city of 7 million, and even compared with the same time the previous year, that was about 2,500 down. It is not a great start to your watch, is it?

Grant Shapps: I think everybody here accepts-well, at least on some sides of the House and certainly throughout Europe-that you cannot carry on spending money that you have not got, and you have to find a new way of doing things. We recognise that the oldfashioned system of massively subsidising the building of social houses for rent simply was not tenable, not if we did not want to go bust as a country and pay much higher interest rates as a country and the rest of it. As you know, because you have studied it before, we created the Affordable Rent programme, the product of which is a large number of those 170,000 homes, though not all of them; some of them will still be traditional council and housing association-type homes. Inevitably, if you are putting a new scheme in place, you have to fund it; you have to negotiate it and you have to put contracts down.

Those figures were enormously hyped up in a rather cheeky way by the BBC-who I think were sold a bit of a pup, possibly, by those who wanted to misinform them. The figures are-shock, horror-down. I can tell the Committee that the BBC incorrectly gave the impression that the UK Statistics Authority was going to be investigating this and all the rest of it. In fact, as it happens, those figures were not national statistics at all. They were what you might think of as internal management information, which nobody, I think, in the wider media has ever published before, ever. I look forward in another six months, when the figures will be dramatically and impressively larger-because of all the contracts I just told you about and the 75,000 homes that are now in contract-to going back on and going, "Wow, it is up by 90%." We can all play with figures, but at the end of this Parliament in 2015, what matters is have we had a net increase of social housing or a net decrease? I want there to be a big net increase and there will be.

Q145 Heidi Alexander: I am sure our Committee will hold you to that assertion, Minister. Can I ask you finally whether you have any concerns about the costs of building new homes through the Affordable Rent model? Are any costs being shifted on to the Housing Benefit Bill?

Grant Shapps: By the way, just to complete the previous answer, I should say that there will have been 50,000 affordable homes built in London by next spring, and I think that is an impressive record for the current Mayor.

Your question is quite interesting about the future of Affordable Rent-I guess that is what is being asked. First of all, yes, I think it is a great model for this Parliament. Housing associations have an enormous capacity to bring in external investments. We have seen massive bond issues by people like Hyde Housing; I think £300 million off the top of my head. We have seen, for the first time ever, stock market money raised to support housing associations. That means that what they are doing is bringing in external money to support Government cash that we, as a nation, do not have at the moment. Obviously, it is wise to bring new money into the sector.

Your question goes to the heart of whether this is a switch from supporting the capital to supporting the housing benefit. The modelling on Affordable Rent is very interesting, because what it shows is contrary to what a lot of people immediately think that it might show. A lot of people think immediately that if you are charging a higher intermediate rent-which in London, of interest to you, is 65% of the market rent-surely housing benefit bills are going to go up. The reality is that a lot of the people who will be living in those new Affordable Rent homes are at the moment, in the private rented sector, paying 100% of the market rent. We actually see a reduction in the Housing Benefit Bill in those cases and overall a few tens of millions’ increase over the Parliament, but it is not a dramatic shift.

What has happened with the Affordable Rent programme is quite wise. It brings money into the sector from the private sector that would not have come in before. In terms of what happens next, and how it is repeated or whether it is repeated, I am very keen to be as innovative as possible, but I cannot write the 2015 onwards spending review right now.

Chair : I think some of that is probably relevant to the housing finance inquiry we are conducting.

Q146 Bob Blackman: Secretary of State, your Department gives out £31 billion to local authorities. Almost all of it goes in via the formula, which is horrendously complicated. Very few, if any, people understand it. It is certainly not transparent. When are we going to get a replacement that people can understand, examine and test for its appropriateness?

Mr Pickles: Imminently.

Q147 Bob Blackman: Would you like to put a date on it for us?

Mr Pickles: Sooner than quite soon. Imminently.

Q148 Bob Blackman: When will local authorities start to receive the formula?

Mr Pickles: By April 2013 we will be operating in a different regime. Quite right: the system is utterly corrupt. I do not mean that in a financial sense. I will say this about Nick Raynsford: it was not his fault. I think he put together a perfectly sensible system that would have worked but, once the dedicated school grant came in, it never got a chance to operate. Then when it became pretty obvious that things were wrong, there were two suggested reforms that never really got off the ground at all. We had to then produce the dampening mechanism.

Some of the stuff in terms of the criteria is years old. People are producing relative needs but it is old information; it does not reflect what is happening. As you know, we had a very productive meeting some time ago, and we started to talk in terms of going over it in terms of retention of domestic rates. That at least does have the advantage that it is almost real time; you will be able to see, every quarter, where things are and start to apply the other mechanisms of government when authorities are in a position where they are not able to generate enterprise and new businesses.

We hold on to the grant regime, feeling that there is some legitimacy. It is basically a grant regime that never really got a chance to operate; it was inadequate and the previous Government quite sensibly tried to prop it up by doing other things, because the formula was not quite working. Actually what I was told when I first arrived was that there were only three people within the Department who understood the grant mechanism but, sadly, they had never met one another.

Chair : I would be pleased if there were four people who understood the consultation document on business rates.

Q149 Mark Pawsey: Secretary of State, can I ask you about something that is relatively small beer in the context of things? A decision was made in January 2011 to cancel the Citizenship Survey, which had been carried out over a period of 10 years and came to a stop abruptly. Given that we are encouraging localism and we want to know how the Big Society principles are working out, what was the benefit? How did that decision come about and how will we measure those things later on?

Mr Pickles: It just seemed a tad expensive. I am sure it has many values. Of course, if other Departments wanted to fund it or wanted to make a contribution to it, then of course it could continue, but we had to make some very difficult decisions. It was a large sum of money and we felt that there were other priorities in terms of keeping things going. In fairness, a number of other Departments said they would like us to keep it going, and we said, with as much charm as we were capable of mounting, "Absolutely. If you would like to make a contribution, I am sure we could come to some arrangement." The conversation then was terminated.

Q150 Mark Pawsey: Is Government centrally understanding whether the localism agenda is working and how the Big Society is happening? Are there other mechanisms in place that will enable us to find out what is going on?

Mr Pickles: Yes, there are other surveys that do take place, but it is almost like saying when a tree falls in the forest, does it make a sound if there is no one there to hear it? We need to get out of this idea that if we cannot determine it from the centre, sometimes it is not legitimate. You have to make tough decisions in Government. It is a very large sum of money, and we decided that it was not as high a priority as a lot of the other stuff we were doing, for example ensuring that we manage to keep Supporting People to a 1% cut in cash terms. All these things add up.

In an ideal world, we would do everything, but we demonstrated that we were quite happy to transfer it to another Department or to accept a partpayment from another Department. It is a reflection of our economic circumstances and the level of debt this country has to repay. Sometimes nice things have to go as well as things that are not efficient. We mourn its passing, but we do not have sufficient dosh to be able to pay for it.

Q151 Heidi Alexander: Secretary of State, can I ask you about bin collections?

Mr Pickles: Oh, yes, I would love to talk about bins.

Q152 Heidi Alexander: I knew you would be excited. Why is your Department funding weekly collections of black bags, when it is obvious from DEFRA’s website and councils’ own websites that councils with a fortnightly collection of residual waste actually have higher recycling rates?

Mr Pickles: We have not announced the scheme, so I am amazed that you seem to have some kind of insight into the scheme that we producing. We will be producing it in early January. We hope we can. We are basically trying to do three things. We are trying to increase procurement, which we have just been talking about. There are a lot of small authorities that collect waste that perhaps are not getting the best deal, so we are encouraging them to pull together. The second thing we are doing is we are prepared to pay upfront for some capital equipment, for stuff where it is now possible to mechanically separate biological waste. We are also interested in encouraging incentive schemes to recycle.

To cut across all this, I think it is an example where we, as a political class, have got out of kilter with what the public want. What I want to do is to see increasing rates of recycling but try to go with the grain of what people are doing. I know sometimes I talk in folksy and tabloidy terms and I apologise. I am not going to do that, but what I basically want to do is to ensure that we are not going to have some stinking carcass kicking around for a fortnight. I want to be able to remove that biological waste for all kinds of reasons. Actually, if you will forgive me for saying this-strangely for a Conservative talking to a Labour-I think it is almost a class issue. It is kind of okay if you have got a biggish house with a big garden, and you can put the remains of food down at the back of the garden. If you are in a terraced house and it is right next to you, that is not a pleasant experience. All I am seeking is that authorities that want to do so, without sacrificing recycling, can deliver to the public what the public wants and to make conditions such that we do not force people into recycling by making their life unpleasant.

Q153 Heidi Alexander: Can I take from what you are saying that in the details of the scheme that you will announce in the new year, if a local authority wanted to bid to the fund to buy brown bins, for example, so that they could carry out a food and garden waste collection service, that would be acceptable under the fund?

Mr Pickles: You are tempting me to announce a scheme. I feel we should announce a scheme to Parliament generally. I think we should get this out. I do not want to get into trouble with Mr Speaker Bercow, so you should stop tempting me. I think he would be pleased with the scheme. People have got themselves into a kind of: "You will be defied; people will not do this." I do not mind. It is a local decision. I just do not want people to be taken down this line against their will by a process of grinding them down and making their life unpleasant: "If you do not do this, if your bin is slightly askew, we will fine. If you do this, we will fine you." I think we should treat people with respect. It is as simple as that. We will see the scheme. We will have plenty of chances. I think you might be quite pleased with it.

Heidi Alexander: I look forward to it

Q154 Chair : Yesterday, the Electoral Commission gave very strong advice that referendums on council tax increases should not go ahead next year, because they were not satisfied that appropriate procedures could be put in place in time. Are you going to accept that advice?

Mr Pickles: It is law now. I am afraid the Localism Bill was passed. That exists and we shall be moving along. I do not think it is going to be very difficult to be able to work out that neither I nor the Electoral Commission can stop the referendum. However, I think there is very good news, Mr Betts. Because of the magnanimity of the Chancellor and the money that is available for the council tax freeze, it may be an academic process.

Q155 Chair : We might also ask why appropriate arrangements were not in place for referendums to be held in a way that would satisfy the Electoral Commission.

Mr Pickles: I think it is perfectly possible to do so. I will clearly study what the Electoral Commission has to say on this in great detail, but it has been my experience-I say this as someone who has taken the Electoral Commission to court and been taken to court by the Electoral Commission in my previous day job-that sometimes they are right and sometimes they are wrong. Without being personal about it, on most issues where we have clashed, it has turned out that they have been wrong.

Q156 Chair : Finally, we have exchanged letters in the past about the appointment of local government ombudsmen. Indeed, we have had several hearings with the Committee arranged to confirm hearings that never took place. I understand from the Permanent Secretary that the process has now been terminated. Do you accept that, nine months after an interview has taken place, it has not been the best of processes for your Department to be involved in?

Mr Pickles: A number of things have been taking place that made that inevitable. First of all, because of the changing nature of the role, we were looking to change the role much more towards a consumer champion. Also the ombudsman has been looking at their future. There is a view that there should be just one ombudsman, not a load of separate ones taking on the managerial capacity. One option that we are actively considering as a way forward might be to make no new ombudsman appointment and to restructure the Commission’s internal management, appointing a chief operating officer to relieve the ombudsman of any administrative and executive roles, showing much more focus on their ombudsman role. Actually, if we do that, we will probably save the ratepayer and the taxpayer 50 grand a year. Perhaps a few months’ delay is worth saving a bob or two.

Q157 Chair : But the essence of the service, in terms of aggrieved members of the public, will still have its integrity.

Mr Pickles: Yes, absolutely. I think it will be much more consumerorientated, Mr Betts. Once it was pretty clear, I was worried that we were about to make an appointment against a system that was about to change. I think it was right that we did so and I hope the Committee finds that satisfactory.

As it is the last question, could I wish each of the Committee a very happy Christmas? I hope you spend lots of time with your family and have a good rest, because I can guarantee that in the new year you are going to have lots of fun and new things for us to talk about.

Chair : On behalf of the Committee, Secretary of State, I wish you and your Ministers a very happy Christmas and new year.

Prepared 21st December 2011