UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1083-i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

COMMUNITIES AND LOCAL GOVERNMENT Committee

DECENTRALISATION

MONDAY 15 APRIl 2013

RT HON GREG CLARK MP AND RT HON DON FOSTER MP

Evidence heard in Public Questions 1 - 61

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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 15 April 2013

Members present:

Mr Clive Betts (Chair)

Bob Blackman

Simon Danczuk

Mrs Mary Glindon

James Morris

Mark Pawsey

John Pugh

Andy Sawford

John Stevenson

Heather Wheeler

________________

Examination of Witnesses

Witnesses: Rt Hon Greg Clark MP, Financial Secretary to the Treasury, and Rt Hon Don Foster MP, Parliamentary Under-Secretary of State for Communities and Local Government, gave evidence.

Q1 Chair: Welcome, Ministers, to our session on decentralisation. Thank you very much for joining us this afternoon. I suppose the first question, to Greg Clark, is a pretty obvious one. It is just over two years since you came and told us about the report that you were producing for the Prime Minister on the performance of various Departments on decentralisation. It took rather a long time to get into the public arena, didn’t it?

Greg Clark: It did not, Chairman. Can I just say what a pleasure it is to be back in front of this Committee? It is like old times. It is actually down to the Chair of the Committee that it is in the public domain at all. As you will remember, Chair, this was a private and personal assessment that I promised to give to the Prime Minister, a year after we took office, in terms of the performance of Departments. I think I let slip that I was providing such an assessment, and, being beady­eyed, you then asked the Prime Minister in the Liaison Committee if he would publish it. I think that was in about November of 2011. He said he would think about it, and then thought about it, and thought that he should. However, he asked that this be agreed with other Departments that were subject to my commentary. We sent it round, and got comments back.

My original advice to the Prime Minister was on the first year of the reforms. As is the nature of these things, by the time we got halfway through the second year, colleagues perfectly reasonably pointed out that they had done different things since then, which they wanted in. Eventually, it was a bit longer than was ideal, but I think you got it at the end of last year.

Q2 Chair: The slight worry is regarding the fact that Departments have to agree to the report. They are not going to agree to anything that is too damaging, are they? If you initially felt that there were things going particularly badly wrong, they are going to have those written out by the time it gets to the public domain, aren’t they?

Greg Clark: You will not be surprised to hear that there were some suggestions that I temper the scoring that I gave, and the assessment that I gave. However, I cannot remember that I agreed to any of them. In fact, I had some conversations with fellow Ministers in which they implored me to put them up a notch, and, I think without exception, I turned them down.

Q3 Chair: You have said that the recommendations are your views. To what extent does Government now own them? Have they accepted them and said, "These are the things we are going to do"?

Greg Clark: It is an unusual report, Chair, as you know. It was an entirely personal assessment to the Prime Minister that you caused to be put into the public domain, so it is not as if it were a report from an inquiry that was commissioned, to which the Government responds in a formal way. You have known me long enough, and had me before your Committee long enough, to know that I am passionate about this agenda of getting power away from the centre and into communities. Everything that I recommended in this report I stand by, and I will continue to press and agitate in public and private for them to be adopted. However, its genesis was personal advice, rather than official advice that had been commissioned and that needed to be responded to. I think it is reasonable that the Government does not respond in every detail through a formal submission.

Q4 Chair: We have Don Foster with us, so he can respond to at least one specific. That is the recommendation that we have an annual report on decentralisation, and a date in Parliament with a statement by a Minister. Is that something that is going to happen?

Mr Foster: No, I do not think it is.

Q5 Chair: That is not a great start, is it?

Mr Foster: That was one of the recommendations made in this private report, which you, Chair, caused to be made public, that is not being accepted by Government. There has been a change. We do not have a decentralisation Minister as such now working across Government. There is not anybody fulfilling that role now. I think it is more important to suggest-to you as Chair of this Committee, to members of the Committee, and to all other Committees-that this now provides an opportunity for them to raise those issues. Of course, through the Joint Committee, the Chairs have an opportunity to raise these issues as and when relevant select committees think it is appropriate. Of course, I would be very delighted to come before you on a very regular basis to tell you the very good news story about what is happening in decentralisation as it affects DCLG.

Q6 Chair: So we are not having a decentralisation debate, or a decentralisation report?

Mr Foster: The current intention of Government is not to produce a further report. That is pretty clear.

Chair: Yes. It seemed to be a clear recommendation, and a sensible one.

Mr Foster: I do think that one of the key roles of the select committees is to address this issue. It is very important across Government. Government has made it very clear that the decentralisation agenda is one we take very seriously. Holding Government Departments to account to look at that issue from time to time, as and when they think it is appropriate, is an important role of select committees.

Q7 Chair: It would be very difficult to get a co-ordinated approach to that. We can obviously have you, as the responsible Minister in DLCG, before us. It is an impossible task to have Ministers from all the Departments in.

Mr Foster: I was suggesting that might be done on a Department-by-Department basis. Of course, it would be perfectly possible for the committee that brings all of the committee chairs together to raise this issue with the Prime Minister.

Chair: That is some way away from the report we had here, which is helpful and useful to all committees because it draws everything together. Clearly, we hear what is being said, and we will reflect on that.

Q8 James Morris: Greg, I was just wondering whether your definition of decentralisation is synonymous with localism. Are the two interchangeable terms?

Greg Clark: Before I explain that, can I just give a comment on the report? My recommendations speak for themselves in terms of the debate in the report. There is also a suggestion in the report that the Cabinet Office, through the Structural Reform Plans that each Department has, reflects progress. At the expense of incurring the displeasure of my ministerial colleagues in other Departments, I would suggest that the Committee may want to consider inviting Cabinet Office Ministers in the future to look at decentralisation within Structural Reform Plans.

To turn to Mr Morris’ point, there are various words used, such as localism, decentralisation, and indeed "the Big Society". I have always thought of it in this way: we start from, in my view, an excessively centralised state. Too many decisions are taken in the centre. The process by which you move from a centralised state to a better state of affairs is decentralisation. It is the process of taking powers away from the centre and vesting them in communities. Localism is what I would describe as the ethos. In approaching this, the localist question should be: "What is the most local level that it would be appropriate to devolve the powers to?" If you like, decentralisation is the process, and localism is the ethos.

Q9 James Morris: In the report, you quote three different examples of decentralisation in practice. There was one-I had not heard of this one-that was something called the Big Tree Plant. You also quoted fixed-term Parliaments, and, I think, the minimum retirement age as examples of decentralisation. In what way do they fit into that definition? Aren’t they more like deregulatory measures, at best?

Greg Clark: Some of them are. However, if the Committee remembers my first publication on these matters, one of the things I said is that decentralisation is a word that everyone can sign up to. It is a reasonable thing, and people can say, "Of course we believe in it," but it does not get you very far. How do you decentralise?

Q10 James Morris: Do you think the DWP have signed up to your definition?

Greg Clark: Let me just explain the point. I broke it down into saying "How can you assess whether Departments and Governments have decentralised?" and so I set out six different components. The first is to lift the burden of bureaucracy: if you are imposing central diktats on civil society or local government, then it is hard to expect them to exercise initiative. The second is to positively empower communities to do things in their way, rather than others’. The third is to increase the local control of public finance, which I think has become too centralised. The fourth is to diversify the supply of public services. The fifth is to open Government up to greater public scrutiny, and the sixth is to establish accountability to local people. Taking the DWP as an example, the situation that was inherited was that the predecessors of the employment programmes tended to be very centrally run, national schemes. Under the Work Programme, it has moved from that. It is now done through a series of regional contracts, in which voluntary organisations are participating-not as much as everyone would like but, nevertheless, it is a big change from the past.

Q11 James Morris: Isn’t it the case that, if you look at the Work Programme and most of the initiatives that have been initiated by the DWP-whatever the merits of the policy-it is stretching the definition to say that they are part of your broad definition of decentralisation? Whatever the merits of the Work Programme as a policy, it is a centralised way of dealing with the issue of long-term unemployment.

Greg Clark: Implicit in decentralisation is a comparison with where it was. It is the process through which you move from a centralised state. I feel very strongly that the move to have different contractors, and to have the voluntary sector able to play a role in that, is very tangibly decentralisation. It was much more centralised. In terms of scoring the Departments, as I did, which was very subjective, as you know-

James Morris: I would be interested to know how you went about doing that.

Greg Clark: I gave the DWP three stars, but it is important to look at what that means. Three stars accords to a label of decentralisation being in the pipeline. That is to say that there has been significant process on individual reforms, with a full programme of reforms still in development. I do not think that is an unreasonable assessment of where the DWP is at.

Q12 Simon Danczuk: Greg, you state that through the Localism Act and LEPs, the Government is-as you put it-"putting communities back in charge of their economic destiny". How do these measures compensate for the 30% cut in local governments’ budgets over four years?

Greg Clark: One of the things that I have always thought about the process of decentralisation is that some people ask, "Can you do this at a time of financial stringency? Is this the best time to do it?" In my view, if the cake is shrinking-as it undoubtedly is and, for reasons that we all understand, there is not the possibility of increasing local authorities’ resources in particular-then there is an additional imperative to give local people and local councils more control over what is actually there in the first place. That is why I think that the need for it is particularly great at the moment.

Mr Foster: I think I could be helpful. Backing up what Greg said: if you look at what we have done in relation to local government, we have removed a very large number of barriers that were reducing their ability to operate. For example, all of the regional structures, the RDAs, the Regional Spatial Strategies and the regional assemblies have been abolished. We have removed the vast majority of the assessment procedures that have affected them. We have removed the vast majority of the ring­fenced grants, and given them greater flexibility with their funding. We have reduced by a quarter the amount of data that they are required to provide centrally. In addition to that, we have transformed the financial climate by giving them much greater ability to retain 50% of the business rate, so they have a real benefit from becoming involved in economic development in their local areas.

Yes, it is right that the amount of resource being made available has been reduced-as it has been right across Government-but, equally, we have given them much greater flexibility to be able to use the resources that they have got.

Q13 Simon Danczuk: I am glad you mentioned economic development. Professor Tony Travers points out that local authorities are effectively prioritising social care with the more limited resources that you guys are giving them, which is completely understandable. In return, they are prioritising social care. They are not prioritising pro-growth areas such as economic development, housing, planning, culture, town centres, or high streets. The central cuts at a local level-the decentralised level-are causing the economy to stall. Do you not agree with that?

Mr Foster: I do not accept that assessment at all. If you have a look at the change in local government finance settlement in relation to business rate, there is now a real incentive for local authorities to be involved in economic developments in their area. We should also remember not only the removal of the RDAs but also their replacement with the much more local LEPs-local enterprise partnerships-in which local authorities play a key role, and the resources made available to them.

Simon Danczuk: They do not sit on them.

Mr Foster: They certainly do. If you bear in mind the next stage of development, based on the recommendations of Lord Heseltine, regarding moving to a single pot with more flexibility for the LEPs, then with the involvement of the local authorities in those, there is a real role for local authorities.

In relation to housing, it has to be remembered that we have actually changed the funding arrangements in respect of housing, so that local authorities that have retained council housing are able to retain the receipts and borrow against the receipts from rental income. Effectively, we have introduced the HRA arrangements. In addition to that, with the New Homes Bonus, we have provided them with a real incentive to be engaged and working with local housing associations involved in housing. To suggest local authorities are not involved in economic development or housing is, I think, erroneous.

Q14 Simon Danczuk: Finally, Don, there have been major cuts to local authorities and loads of money to LEPs through the Single Local Growth Fund, shifting spending from the democratically elected to quangocrats. Why are you doing that?

Mr Foster: Again, that is not quite the scene that I recognise. Through the work that is being done through the Whole Place budget scheme, which I hope we will get an opportunity to come on to, our local authorities working with neighbouring authorities and Community Budgets, I have found that by decentralising-giving more power to local authorities; giving them fewer ring-fences and greater flexibility-local authorities have been able to reduce the costs and improve the quality of service delivery for a lower quantum of resource. The implication in your question that we are reducing the ability of councils to do things is, I think, incorrect.

Simon Danczuk: Thank you.

Q15 Chair: I just want to follow up on one thing there, because I think it is an important one. It is not that many of the measures that have been taken are not welcome, but let us look at the LGA. Sir Merrick Cockell has made it clear-there is a lot of analysis, and Tony Travers has done this as well at the LSE-that once you have taken into account the statutory duties that local authorities have to do, such as the care of the elderly, looking after children, and emptying the bins probably once a fortnight, then regardless of all the powers and initiatives on the local economy and growth, there will not be any money to do any of that. It is all gone. It is squeezed out.

Mr Foster: We have had this discussion in this Committee before. I fundamentally disagree with the so­called graph of doom, which is what we are referring to.

Q16 Chair: Is it possible to get a response from the DCLG, then, where it actually says in very detailed terms why you disagree with it?

Mr Foster: I would be very happy to provide that. It is beyond the debate that we are having now, but I would be very happy to come before this Committee and to debate with this Committee the way in which local authorities are now responding to the economic challenge that the whole of the country faces. Let us remember that they spend a quarter of all public spending. If we have to reduce the quantum of resource available, then inevitably there is going to be a reduction there. Regarding what we are seeing with local authorities, I can remember the same thing from the 1980s, when I served on a local authority. We were saying then that the world was coming to an end, as previous Governments were making reductions. It has not, and I do not believe it will now, because they have taken on the challenge.

Q17 Chair: It is probably a lot worse than the 1980s. Can we have a Departmental response, a note, about the response to the graph of doom and why you think it is wrong?

Mr Foster: I would be very happy to arrange for that to happen. I would love to then come and discuss it with the Committee.

Chair: I am sure we will be looking at ensuring that you can.

Greg Clark: Can I come in on this?

Chair: Of course you can.

Greg Clark: Your own city of Sheffield is an example of where there are economic development initiatives going on that have been in response to City Deals. There is a TIF scheme in Sheffield, as you know, that is able to invest in the city centre on the basis of future business rate revenues brought forward to allow that investment today. That is one feature of it. A lot of the other things that are being done-and, again, Sheffield is a good illustration of this-involve taking funds that are currently not available to local government-that are deployed nationally-and giving the local authorities some influence and, often, control over those funds for the first time, especially when they can work with their neighbours. That is one way. Whatever level of local government spending is decided, I think the feature of City Deals in particular is to allow access to some of the funds that were tightly locked down in central Government before. That is quite a big breakthrough.

Chair: I think that is absolutely right. I shared a platform with you at the Centre for Cities report launch the other week, where I said that. That is very positive indeed.

Q18 John Stevenson: Bringing in the Heseltine report, No Stone Unturned in Pursuit of Growth, his view is that local authorities and the LEPs can be significant players in developing and promoting growth. The Government is also supporting the Single Local Growth Fund. What difference do you think that will make?

Greg Clark: Can I answer first, and then perhaps Don will come in? I think it will make an enormous difference. One of the regrettable transformations that has taken place over a very long time in the relationship between central Government and local government is that, year by year and decade by decade, central Government has absorbed powers and funding, and has depleted areas outside Central London of the initiative that they once had. In terms of the Heseltine report-colleagues will have seen it-the first page has a very fine portrait of Joseph Chamberlain and a quote from him. It says, "Unless I can secure for the nation results similar to those that have followed the adoption of my policy in Birmingham … it would have been a sorry exchange to give up the town council for the cabinet."

Thinking back to the history of our great cities, the capacity to do things differently in a distinctive way, to initiate policy, and not to have to go cap in hand for permission to do things from central Government was one of the things that distinguished our country. Our cities in particular, but also areas across the country, were where ideas were formed, and they were introduced to the nation through that. We have very sadly seen a decline in that, and we need to revive it.

Q19 John Stevenson: Can I follow that up? You said "local government having to go cap in hand". What the Government is saying is that, to obtain an allocation under the Single Local Growth Fund, local authorities will have to demonstrate credible and compelling economic leadership, and to work more efficiently and effectively across the LEP area.

Greg Clark: Yes.

John Stevenson: That is basically saying that they have to justify themselves to central Government before they can get the money. How can you call that decentralisation?

Greg Clark: I have used the term "deals" for the City Deals, and the response we have made to Lord Heseltine’s report is to talk about growth deals. There is a reason for that: I think there is something in the idea of a deal that actually captures something quite significant, which is that there has to be something in it for both sides of the transaction. If you have funds that are currently held centrally, and you are going to hand them over to a city or a collection of local authorities, it seems to me that you should be able to demonstrate that it is in the interests of both sides: the interests of the local economy, and the interests of the national economy. I am convinced that in a vast number of cases, you can demonstrate that, but it needs to be rigorous. You need to be able to demonstrate, for example, that you have the capacity to deal with what might be very significant sums of money, such as transport spending.

Q20 John Stevenson: But you are still accepting the premise that central Government will effectively have the final say on the allocation of funds.

Greg Clark: It is a negotiation on both sides, but it is to overcome what was always a kind of veto that central Government had in the past. It would say, "We would love to decentralise funds, but looking across the country, there are certain authorities that just do not have the capacity to be able to manage these budgets. Therefore, since they cannot, then no­one can have it." The City Deals have helped us to break out of that. That is no longer an objection. It is to give a bespoke approach and to say, "If this city can demonstrate that it is perfectly capable of managing its resources-perhaps even better than Whitehall over the year-why not give it the funds?" That allows you to do that. As long as they can demonstrate that they have the capacity to manage those budgets, they should be able to do it. That is the presumption.

Q21 John Stevenson: You are wanting them to demonstrate leadership and ability to manage those funds. Lord Heseltine also suggests that one way of achieving that in efficiencies is through unitaries, and he is also a big supporter of elected mayors. This, in my view, creates responsibility, accountability and transparency. Would you agree that that is the way forward, as well?

Greg Clark: I totally agree with it. In terms of the authority boundaries, one of the things that we know across the country is that some of the administrative boundaries, especially within cities, have kind of Balkanised their true economic geography. If they can come together and combine forces as combined authorities, or unitary authorities-whichever they prefer-then they can mass their power together and compete. Competition in the global race these days is very much between cities around the world, so Newcastle is competing with Bangalore and Shanghai for investment. If they can do that, so much the better. As you know, Mr Stevenson, and as the Committee knows, I have long believed that having a visible leader as a mayor can help that.

Q22 John Stevenson: That leads me to my final question. Great emphasis has been placed on LEPs. LEPs, in my view, seem to lack a strong degree of accountability, whilst unitary authorities with an elected leader or an elected mayor have clear and direct accountability to the public. Where does the accountability of LEPs lie?

Greg Clark: The LEPs include the local authorities in the area.

John Stevenson: They are in a very small minority.

Greg Clark: The majority are the business representatives, that is true, but it requires the consent of both parties to proceed, much like the Coalition. The voice of local government is very strong there. Practically, looking across the country, local authorities are very actively engaged in that. The boundaries of the LEPs reflect what the local authorities and the businesses proposed. Michael Heseltine’s proposals include a lot to be said about LEPs, but they do have recommendations for local government, and we accept them as much as we do the proposals for LEPs.

Q23 Andy Sawford: I just wanted to follow up on this, Greg. It seems to me that you are very effectively championing localism and decentralisation as almost a lone crusader in government, which is why you have been able to take a brief to a new Department and shape something around cities, and win sufficient flexibility as a Minister to drive that forward. In complimenting you on that, the obvious counterpoint is that lots of areas in the country-particularly those without a city or a significant urban centre to drive them-are left out of what limited localism you are able to drive personally forward in the Treasury. What would you say to that?

Greg Clark: First of all, I am grateful for the kind words. I was waiting for the "but". I thought it was about to appear. What I would say, Mr Sawford, is this: we have described decentralisation as being a journey without end. It is not just a programme for two years or five years. There is a long way to go. In taking on the responsibility for cities, we started with the eight largest cities outside London. That was not because this was the limit of our ambitions, but because, if you want to have the intensity of work and the personal engagement with the leaders, you need to have a manageable number. We worked with the core cities group to start with that, and we have since extended that to another 20, so 28 in total.

The response to the Heseltine report that was commissioned by the Chancellor and the Secretary of State for Business, Innovation and Skills effectively extends the City Deal approach to every area in England that is covered by the LEPs. We are proposing a negotiated deal, drawing on the lessons from the City Deals, for every part of the country. That is exactly what I hoped might be the case, and we have been able to get that.

Q24 Andy Sawford: Which other Ministers have approached you to offer spending powers that lie within their brief in the City Deal arrangements?

Greg Clark: The Department for Transport, for example, has been particularly keen on this. They quite rightly see that for officials in Whitehall to be making decisions about prioritising transport investments, away from the places that are having those investments, is not the ideal state of affairs. They have been very enthusiastic participants. I have been talking quite a lot, and perhaps Don might want to come in on this.

Q25 Andy Sawford: Could we have more than one example, though?

Mr Foster: For BIS, if you look at the Local Growth Fund idea, it is to bring together elements of skills, housing, transport, and so on. That is three different Government Departments already working together. There are many examples where, over the last two or three years, we have seen the problem you are describing of people being potentially left out not happening in practice. If you take the Enterprise Zones, you have seen an Enterprise Zone in, for instance, Bristol that has actually shared the proceeds from that into neighbouring areas. There are enterprise areas linked to it. If you have a look at the way in which the Whole Place budgets are working, you are getting a number of areas that are bringing together urban and rural and looking at the delivery of services very effectively.

If you have a look at the successful LEP work that is being done, they are already bringing local authorities together-which, as we have heard, are well represented on them-to work together, particularly on areas that are related to growth and especially in respect of transport, where the rural areas are not losing out. There are ways in which people are coming together in different consortia to address some of these key issues that affect people in both urban and rural areas.

Q26 Andy Sawford: We are not surprised that your cup is half full, but in each of those areas, what we see is very limited progress. We can celebrate that limited progress-for example, on Whole Place Community Budgets-or we can say that there has been very little progress around the country in most areas.

Let me ask a specific question on governance, because I have jumped in and we have got a lot to get through. Could you tell us, Greg, what the difference is between a combined authority and an Economic Partnership Board? Is it for the LEPs themselves in the second round of bidding, where they are not in the same position as the core cities, for example, where there is a wider range of authorities, to indicate to you which governance model they want? Who will decide that? I am concerned about that.

Greg Clark: Let me just say one brief thing about your earlier question. I do not want to pretend that there is not a battle to be fought amongst Departments to insist that they are prepared to transfer their budgets where appropriate, and to decentralise arrangements. That is why you need an initiative for decentralisation, and why we have established a cities team to give the people who are not represented in Whitehall a voice in Whitehall, in order to battle that way. We will continue to do that.

In terms of the governance, if you look at why our cities in particular and other parts of this country have not performed as effectively as, for example, their continental counterparts, time and again you see that the leadership-not just on the personal level, but in terms of the ability to lead an area-has sometimes been compromised by the particular administrative boundaries that are there. I have said right from the beginning, when I started negotiating the City Deals, that this should be addressed, and I have continued to talk about it throughout decentralisation. Tony Travers has written about this in the context of London: having a Mayor of London has brought a lot of disparate voices together. If you know that is a problem that is holding you back, then face up to it.

We have not said that we are going to impose a particular solution. We are not going to turn every set of authorities into a unitary authority. However, there is available on the statute book left by the previous Government the possibility of creating combined authorities. We know that that has been a particular success in Greater Manchester. I think people should look at that, and look at the advantages of that. Andrew Adonis has just written a very good report into how the authorities in Tyne and Wear and Northumberland can do that. In Sheffield, Leeds and other places, they are following that route. Other ways of strengthening governance include the mayoral model. I was disappointed that we did not have more "yes" votes to mayors, but they have got one in Bristol, and that has made a difference to the politics of Bristol. In Liverpool, I think the leadership and profile of the city has benefited from that. There are different ways of doing it, and it is open to those authorities to choose it.

Q27 Andy Sawford: You did not touch on the Economic Partnership Board, but that is the model that SEMLEP, for example-which is my own LEP, who are hopefully going to make a winning bid on 2 May-are using. That is the model that seems to me to work more effectively across an area where you have got unitaries, upper tiers and districts. That is very much a viable option.

Greg Clark: Mr Sawford, that is exactly why we have not specified one approach. There are no two places that are alike in the country. You have city authorities where a combined authority is particularly useful. Where you have two-tier authorities that nevertheless operate together, then you would probably want a different solution. What we have said-and this goes to one of the themes of decentralisation-is that the initiative should be with the authorities. It goes to this concept of a deal that we were talking about with Mr Stevenson. We have identified that there is generically a problem with areas in Britain not punching at their weight, in terms of their governance and organisation. We have noted the problem and given a challenge. You address this: you come up with how you can best tackle that in your area. Some have done it through combined authorities, and some are doing it through mayors. No doubt there will be other ways that people can address it.

Andy Sawford: Thank you.

Q28 Mark Pawsey: I would like to come back to the relationship between central Government and local government, and ask you about the Political and Constitutional Reform Committee’s illustrative draft code for central Government and local government. We took evidence on that a matter of some weeks ago. It talks about what Sir Merrick Cockell calls a "more grown­up relationship" between central Government and local government. How do you view their proposals?

Greg Clark: I think the outcome of having a more grown­up relationship between central Government and local government, rather than one where central Government assumes it is the parent and sometimes thinks of local government as naughty children, is desirable. This is something that has persisted for decades now, and is at last on the turn. I think there should be a mature relationship there.

I think there is a lot in what Graham Allen and his Committee have recommended. I think it is the right thing to think about these issues. My own experience, after two and a half years in this job or in jobs that have been pursuing this agenda, is that specifics can sometimes be the best way to drive things, rather than a more abstract approach. This is why the approach that we have taken with City Deals has been to pursue agreements with individual cities. Sometimes, in negotiating, you find that you have created precedents there.

Q29 Mark Pawsey: Does it follow, therefore, that you see some support for the recommendation to move away from the 1,293 duties that are imposed on councils by central Government?

Greg Clark: In general, one of the most successful things that we did when I was in the Department was to get rid of a lot of the imposition of targets and responsibilities that were being imposed on local government. Some of them are necessary, as we all know. Some of them are very important statutory measures where you need to be sure that someone is doing it, and to check on that. However, it should not be the norm. I think we have made some success on that.

Q30 Mark Pawsey: Don, would you like to add something?

Mr Foster: I think this may be helpful: the Department has obviously very much welcomed the report, and there is a lot of meat in it that we are very sympathetic to. Of course, we have moved in many ways in the sort of direction that the report is already recommending. In terms of the powers issue, the giving of a general power of competence to local authorities, the removal of the ring­fences and the other things I mentioned earlier are already very much in line with this sort of recommendation. We will be producing a formal response to that report in the very near future, and I have no doubt that you might want a separate session at a later stage on that.

Q31 Mark Pawsey: One particular part of that report referred to collaboration between local authorities. How would you envisage that working in respect of, for example, powers on planning?

Mr Foster: One of the things that has been very interesting is the way in which there have been a variety of models where local authorities have come together. I have referred to some of them already. There have been very good examples that we have seen through three out of the four Whole Place pilots: one of them was Essex itself, where it was just in one area. We have seen it through the work together on LEPs and so on, and we are now seeing it in a number of them where they are looking at shared services, back­office arrangements and so on.

There is a variety of different models that are already developing around the country. The Whole Place budgets, I am sure, will be taken more widely. There are different models of working, and I do not think we would want to impose a particular model of how co­operation between local authorities will develop in the future. However, we are certainly sharing best practice. As you know, the Secretary of State issued a document of 50 ways in which local authorities could save money. A number of those related to ways in which local authorities could work together.

Q32 Mark Pawsey: Sticking with planning, we are encouraging more planning to be done at a more local level-through our neighbourhood plans, for example. How would you see that tying into local authorities working collaboratively?

Mr Foster: I think there are different aspects. If you have a look at the removal of the Regional Spatial Strategies and the regionalisation of planning, and the move to a local level, that still allows for the possibility of an even more specific local level through neighbourhood planning. Over 500 parts of the country are now developing neighbourhood plans at some stage. It is perfectly possible to have local authorities working together on their wider plans, looking at their local plan and their core strategies, and then having lower levels with more detailed discussion being brought in.

Q33 Mark Pawsey: What regard would one authority have for a neighbourhood plan produced in another? How would that work?

Mr Foster: They are already working together on just that. There are a number of neighbourhood plans that are crossing local authority boundaries, and we have already laid down very clearly in legislation how that is to be treated. It is perfectly possible to do, and it is being done.

Greg Clark: The duty to co-operate places a statutory obligation on authorities to co-operate with each other in production plans.

Q34 Mark Pawsey: Can I ask you what your views are of putting the relationship between central Government and local government on a firmer constitutional basis? We have a constitutional arrangement in respect of devolved parts of the UK. Should the relationship between central Government and local government be regulated in much the same way?

Mr Foster: Can I just share with you my personal thoughts? These may or may not be reflected in what the Department says when we come to write our final report. I was always a great fan of there being a constitutional settlement for Europe, when that debate raged. It seemed to me right and proper that we stated very clearly what it was responsible for and what it was not responsible for. I believe that should apply across all spheres of governance so we are very clear, provided you also offer the general power of competence to be able to do whatever you want subject to you being banned from doing it. I think the combination of those two would be a helpful way forward, but that is not necessarily the view of the Department.

Q35 Mark Pawsey: What does Greg think about the idea of a constitutional basis for this relationship?

Greg Clark: We have already done things that are constitutional. Don refers to the general power of competence: clause one of the Localism Act is a constitutional principle that has been established. There are other ones, and I refer to them in my report, such as a right to challenge. I think that there is a good case for local government having a right to challenge central Government and public bodies, and to take on powers that they have. The right of initiative is another example, so that policy­making does not have to always and everywhere originate in Whitehall. There are certainly constitutional principles that I think should be adopted and, in some cases, have been adopted. I have not formed a settled view regarding the debate that Graham Allen has launched as to whether there should be a single Constitution, with a capital C. I suppose I am more interested in its individual content, to make sure that we have got that in place.

Mr Foster: What must ultimately matter is outcome and not process. The problem was that, under the previous Government, we did have the concordat between central Government and local government. That was a process document that got, frankly, nowhere. We really have to focus on the outcomes that are in the best interests of local people in the communities that local government serves.

Q36 Mark Pawsey: Greg, you referred earlier to the perception within central Government and Whitehall that councils and councillors were naughty children. Are you convinced that that attitude has changed now?

Greg Clark: Yes, I think it has changed. I was referring to a century­long progression to that view, which is a caricature of the view. A lot of the decisions that the Government has proposed and Parliament has adopted-for example, to give a general power of competence-show that that is no longer the case. You would not give a general power of competence to local authorities if you did not feel that they were grown-ups, to put it in that way. You would not be negotiating City Deals, peer to peer, if you did not think that your counterparty to that deal was at the very least the equal of a Minister in Government. Often, the capability of personal and institutional strengths and experience of leaders of local government is greater than that of Ministers.

Mr Foster: Can I add one other thing? I agree with Greg that the general power of competence is very good evidence of the confidence that Government has in local government and those who serve on it. The other big change-leaving aside others that I have mentioned, such as the retention of business rate-is prudential borrowing, which gives greater opportunity for local authorities to make their own decision as well. I think that is another freedom, demonstrating the confidence that we have in local government to deliver.

Mark Pawsey: Thank you.

Chair: It does not apply to the Housing Revenue Account, but we will move on.

Q37 Andy Sawford: I wanted to ask you about the role of the Treasury, Greg, now that you are a Treasury Minister. Was the Treasury not included in the review because the commentary you would have had to provide was, frankly, too difficult for you?

Greg Clark: As a Treasury Minister?

Andy Sawford: No, in your previous role. I suppose you overlapped into the two roles, didn’t you? Why was the Treasury not in the review? You could not give it a star, could you?

Greg Clark: It was never included in the beginning, long before it was ever contemplated that I might end up in the Treasury. It was not part of the original list of Departments covered, because it is not an operational Department in that sense, compared with the others. Having said that, in writing the report and in the recommendation that I made-which I drafted before I went to the Treasury-I recommended that if there were a future report, which there should be, the Treasury should be included.

Q38 Andy Sawford: How many stars would you give the Treasury?

Greg Clark: I would actually give it a high number of stars. Thinking of the City Deals programme, for example, if you are taking money that is currently spent at the national level and devolving it, this requires the involvement and consent of the Treasury. Even before I was in the Treasury, I found-rather to my surprise, because the Treasury has this fabled centralism and reluctance to believe that any good can come of letting go of resources-quite the opposite. I found that my dealings with the Treasury, and with George Osborne and Danny Alexander in particular, were very much to encourage the initiation and completion of the City Deals. This reflects what I think is a big change historically, having read various histories of the Treasury. It reflects a view that you can get better value for money, and that decisions taken locally can be more acutely determined. You can bring in more resources if, for example, local authorities or a collection of local authorities know that they have the control that enables them to get development partners involved. The idea that there is better value for money is now present in the Treasury.

The other point that I would make-which, again, I think is a really important one-is that, in the discussions that we all have about growth, clearly the macro-economy needs to be right, and a lot of the debate is around that. Micro-economic measures in terms of incentives and the right tax rates to encourage that are also important, but there is a place­based contribution to growth that cannot be, and must not be, ignored. Just as a nation can be one that fosters the ability for business to invest and grow, so particular places can either be good for businesses growing and creating jobs, or they can be inimical to it. This clear perception that what happens in particular places can make a difference to growth, and therefore to the national economy, is now firmly embedded in the Treasury. I hope, since I am now there, that is now reinforced.

Q39 Andy Sawford: The particular measure of success that you would have been looking to a future report to assess in relation to the Treasury is around social innovation. You say that that is progress around helping local authorities to take the risks of social innovation, and have a fair share of the financial rewards. That is what you are looking to the Treasury to do. Can you give us an example, or some examples, of social innovation and where this has been successful?

Greg Clark: That is one of them, but it is a whole number of different issues. Having a perception that growth can be locally driven is another criterion. On that point, something that the Treasury did participate in with alacrity even before I was a Minister was the negotiation of the Greater Manchester City Deal. The idea of an earn­back in which, in return for up to £2 billion of local investment, there could be a dividend from the improvement in growth that comes from that, paid for out of what would come to the Exchequer in terms of higher tax revenue-it could be rebated to the city-was a huge innovation. As Members here will recognise, that is not the way that things have been done for decades.

Q40 Andy Sawford: When you took on the role, I remember seeing you present to the Society of Local Authority Chief Executives within months. I would have said at that time that your ambition was greater than, two and a half years on, being able to come here with one example of where the Government have freed up local authorities to invest in social innovation.

Greg Clark: I think we have massively changed that. If you look at the City Deal-

Q41 Andy Sawford: What are the other examples, then?

Greg Clark: Look, for example, at the Chair’s area of Sheffield. You have a model for skills there that is getting local employers and local authorities taking on powers that were previously with central Government and investing in equipping the next generation with the skills that they need. Further down the road, in Leeds, the authorities there are setting up an apprentice and training facility that allows small businesses that would not have the critical mass to take on apprentices to get together and to combine, so that for the first time they can participate in apprenticeship schemes. That is going on.

If you look at Liverpool, what you have got there is a transformation happening in the profile of Liverpool. They have got their International Festival of Business that is being planned, and they want it to be a great success. That came from Liverpool.

Q42 Andy Sawford: The Committee is interested in a couple of specific questions. The Political and Constitutional Reform Committee have made a series of recommendations around local authority resources. In particular, they recommended that councils should be given the same freedoms as a plc to borrow. Would you support that?

Greg Clark: It is a bit more complex and difficult than that, in the sense that a plc’s borrowings are not part of the public accounts. The fact is that the way things are, internationally, is that the borrowings of a local authority are part of our national debt and deficit.

Andy Sawford: I think they are very aware of that.

Greg Clark: They are aware of that, and that is how it is. One might wish that it were otherwise, but whilst it is, central Government is clearly going to have to take an interest in the overall level of borrowing of local authorities.

Q43 Andy Sawford: The other question is around the recommendation that, on people’s income tax slips, the amount of income tax that goes to fund local government is printed. Do you think that would be a good innovation? I suppose it is like how, on our council tax forms, we see what goes where. On our income tax forms, could we see what goes where?

Greg Clark: We do, and there is a very long­standing debate about having breakdowns of income tax on this. I certainly understand the argument for it, and one of the actions that I proposed as part of decentralisation was greater transparency in how expenditure, for example, was made. The difficulty of that, of course, is that income tax is not the only tax that funds local authorities or public services generally. VAT, corporation tax, and all of the others do as well. There is a danger that you give a slightly misleading view as to what is going on there, but these are debates. It is right that it should be put forward for debate, but I do not think the resolution is as straightforward as one might hope.

Q44 John Pugh: Can I just follow through to a line of questioning that we started earlier? As I listen to you carefully, Greg, I get the impression that the Government is strongly supportive-in fact, we all are strongly supportive-of the collaboration of local authorities over the LEP partnership footprint, and there are strong economic, strategic and financial reasons for doing that. But coupled and riding with that is a preference for a particular sort of governance structure. You mentioned the need to have a figurehead for whatever collaborative arrangement exists, and this puts me in mind of the concept of city-region mayors. Now, of course, in order to have a figurehead, you do not necessarily need to have a city-region mayor, do you? Derek Hatton is a lot better known than Joe Anderson, although he was never actually a mayor. What we are talking about is a collaboration that results in the concentration of power in a single individual, aren’t we?

Greg Clark: I do not see it as that. I have a personal view on this, which is not identical to the Government’s view, as you know. The Government had instituted a set of referenda on whether there should be mayors, and it was for people to decide. In terms of that debate, I take a strong personal view that there are great advantages to having a mayor. There is obviously something in the points that you make about personalising it and clearly elevating one figure above the others.

However, if I just look at the experience of London, London has had a mayor of three parties: I was going to say two parties, but I think the first term was as an independent, wasn’t it? I think it is indubitably the case that London has benefited from having such a figurehead. I know, as a Minister, that the authority that the Mayor of London commands in being able to demand attention for what he-or in the future, perhaps, she-would want is very considerable. I look around the world. Take Birmingham, for example: Birmingham’s twin cities are Frankfurt, Chicago, Milan and Lyons. All of them have mayors who are very high profile, who speak on the international stage for their city, and I think there are some advantages to that. However, what we have decided as a Government-and I have no problem with this-is that this should be a matter for local people to decide. In the case of Liverpool, they resolved by resolution of the Council to become a mayoral authority. In Bristol, they did it by voting "yes" to a referendum.

Q45 John Pugh: Just following on from that, are we not in danger of committing the cardinal error that Whitehall politicians make, which is extrapolating from London to the world at large? It is rather like the Darzi clinics in the health centre: they worked very well in London, and we got them everywhere else. Would it not be the case that if we have a strategic city-region mayor, for example, in the Bristol area, people end up making decisions for the people in Bath? Your colleague may not be as comfortable with that.

Greg Clark: All I will say is, in terms of extrapolating, you are extrapolating as much from the rest of the world as you are from London, and I think there is some merit in looking at how successful cities operate around the world.

John Pugh: But they work within different political systems. Therefore, we need to exercise caution in that regard.

Greg Clark: They do. I am suggesting that we have the opportunity to change that. I am in favour of it, but I do not know Don’s view.

Mr Foster: I think what my colleague Minister is trying to point out is that he thinks that it is right that we look at the experiences around the world and elsewhere in the country, and that then it is local people who take on board the review that they have carried out, and they make their own decision. The crucial bit to remember is that it is the Government’s position that decisions on whether or not to have a mayor are made by local people at the local level. In all of the things we have done, we have tried to find ways of improving accountability for local people, whether it is in terms of getting rid of the previous Government’s insistence that the decision­making process be set up in a particular way, whereby you have to have cabinets or executives, or whether it is creating greater transparency by publishing any expenditure above £500-incidentally, DCLG goes down to £250, to set an example-and so on. It is about local determination, whatever your views might be on this issue, and you imply absolutely correctly that I have a very different view about the value of mayors from that of Greg.

Q46 John Pugh: Greg also mentioned earlier Joseph Chamberlain and the golden days of local government. Of course, the litmus test of localism is whether central Government and local government know their proper province. I can remember in the days of Bonar Law-well, I cannot remember those days, but from my study of the history of those days, I do not remember Ministers of state worrying enormously about the refuse collection arrangements of Birmingham or anywhere else. We do have evidence that this has been done recently. Can I put it to you that the boundaries are not clear, and ought to be made clearer?

Greg Clark: I am not in favour of people knowing their place. I like a degree of insurgency, and people challenging the way things are done. If the outcome of some of these deliberations is that there is a strict delineation of responsibilities beyond which you must not dare stray, I do not think that is compatible with, for example, the general power of competence. I want a bit more vigour in this. Speaking of vigour, the Secretary of State for Communities and Local Government is vigorous on the subject of bins and collections.

Q47 John Pugh: Is that appropriate?

Greg Clark: It is.

Q48 John Pugh: Why is it appropriate?

Greg Clark: Well, I am going on to say. He has not taken powers to order-still less to issue an order-any local authority to move to daily, weekly or whatever kind of collections. What he has expressed, in his characteristically robust terms, is his view that people should have the choice, and to provide ways in which they can exercise that choice. That seems to me to be in marked contrast to how things happened in the past, in previous Governments, and clearly, I must say, in the last Government. When Ministers wanted something to happen, they took powers for themselves to insist that it did happen. I would rather have the robust approach of the current Secretary of State, where he can argue it out with some controversy and state his position, but not reach for legislation to oblige people to do what he might prefer.

Q49 John Pugh: But he is prepared to financially advantage some councils that do as he wants them to do, because he provides money to incentivise them to go down a particular route, doesn’t he?

Greg Clark: He provides the money to finance them to do that. Allowing people to take that option financially is a world away from ordering them and compelling them to do it.

Q50 John Pugh: What do you make of the debate over the council tax referendum, whereby the Secretary of State set arrangements about what would trigger a council tax referendum; found that local authorities behaved in a particular way, setting below the trigger point for a referendum; and then vowed legislatively to change the rules that he had set in place? People have compared this to setting a speed limit, and then castigating people for going just under it. What is the difference?

Greg Clark: Again, Dr Pugh, we started by talking about decentralisation from where it started. The council tax referendum replaced-and I was the Minister who took this through Parliament-council tax capping, whereby councils were ordered that they could not, even with the consent of their electorate, increase council tax by more than a certain amount of money. The discussion we had around that at the time was that it should be possible for an authority to make a recommendation to the people to increase council tax, and if they could demonstrate that they had got consent for that, then they should proceed.

Q51 John Pugh: But when you set rules, and people act within those rules, and then you say-because you do not like the way in which they behave-you are going to change the rules again, are you not just being plain autocratic?

Mr Foster: There has been no attempt to change the rules again.

Q52 John Pugh: There is a threat. Quite explicitly in the media, there is the suggestion from the Secretary of State for Communities and Local Government that he will change the rules that councils are currently observing.

Mr Foster: The newspapers over the weekend told me that all ministerial posts are about to be shifted around in a reshuffle in a few weeks’ time. I do not believe everything I read in the newspapers.

John Pugh: I think it was a quote from the Secretary of State.

Mr Foster: We are talking about a Secretary of State for local government who has presided over more decentralisation measures, not only to give increased power, flexibility and responsibility to local councils, but to give additional powers, help and support to local communities as well. There has been a transformation in terms of devolution of power under this Government and under the Secretary of State for Communities and Local Government.

Even on the issue of bins, remember that what we are debating is a situation where the previous Administration was effectively mandating councils not to have weekly bin collections. They were mandating what councils had to do. Here, you have a Secretary of State with a strong view, who gives people the opportunity to do it. Here, you have a Secretary of State who has removed council tax capping, but has-in my view, rightly-said that if you want to increase council tax beyond a particular level, which is determined by Government, then it will be local people who determine whether or not a good enough case has been made by the local council to do it. That is not mandating. Nor has the Secretary of State said, implied or suggested at any point that he is going to reintroduce what you are implying would effectively be a form of capping. That is not the intention, and it has never been stated.

Q53 John Pugh: I am just making an observation, and I think it is a reasonable observation, that the boundaries of localism are not always as clear as they might be. Can we move on, though? The other areas in which the Government has taken an appreciable number of initiatives are the police, schools and the health service. Do you think that the changes in the police arrangements, the school arrangements or the health services are actually going to help the integration of services locally, or hinder them?

Mr Foster: What you have got, if you take the reform of the health service for example, is the additional responsibilities local government now has with its Overview and Scrutiny Committee. The integration of health and care is taking place very effectively; it has already happened in some areas through local authorities working with the NHS and their PCT locally, and they are developing very good models, which are now being spread out right around the country. You have greater opportunity for local involvement in decision­making about the health service. The same is true in the real opportunity that people had through the Police and Crime Commissioner elections to be able to have a say in the type of service delivery that they wanted to see there, and so on. I think that they are all models of further decentralisation and greater power being handed to local people.

Q54 John Pugh: That is not quite the same as integration, though, is it?

Mr Foster: No, but in terms of the health example, I have given a very good way in which I think integration has taken place between health and care. You can have a look, for example, at another of the bits of work that is being done by DCLG in terms of troubled families. The work that we are leading on is bringing people together-including the police and crime commissioners and their work-and bringing together a range of different agencies to work together to deal with a very serious problem in this country. This has already had a great deal of success, and is another example of integration taking place.

Let me give you a third illustration, which is the work that is being done in the 12 pilot areas of community budgets. You are actually getting parish and town councils, other community groups, business organisations and other agencies coming together to find solutions to common problems in a very specific area. We have some that are doing some fantastic work bringing agencies together.

Q55 John Pugh: Specifically on the police, obviously these are early days for the arrangements, and police commissioners are a relatively new phenomenon. What had been in place was that police authorities had council representation, and their representative reported back to their local councils. There is no similar formal structure existing between the police commissioners and local authorities as of now. Do you think that is an area for further development? Whether a police commissioner liaises well with a local authority, talks to his local authority or has good relations with his local authority cannot be guaranteed in the current arrangements. They are now separate, not entwined, bodies.

Mr Foster: To be honest, this falls way outside my areas of responsibility. I have no particular comment on this, other than to say that it is very clear that this was the first time round for a new policy. There will no doubt be a lot of consideration as to how it can be developed in future years before we come to the next elections for PCCs. I do not think it would be appropriate to say more than that.

John Pugh: Thank you.

Q56 Bob Blackman: One of the things we did as part of the review of the Localism Act-or Localism Bill, as it was at the time-was, obviously, to produce a report on that Bill. One of the things we said as a recommendation was that local authorities should have the right to challenge central Government on delivery of services. I am very pleased, Greg, that you mentioned it earlier and indeed raised it in your report: we clearly had some input into your report as well, and no doubt, of course, you endorse that particular view. What progress, however, has been made towards this worthy aim?

Greg Clark: Well, Mr Blackman, you make me embarrassed that I perhaps did not cite the influence of the Committee, although I obviously channelled the advice of the Committee in giving my advice to the Prime Minister. My understanding-Don may have something to say about this-is that the Government is considering how best it can do that. I am strongly in favour of it: it seems to me that what is good for local government in terms of being subject to challenge should be good for central Government too.

Mr Foster: That is an absolutely correct answer. We already have in place the right to challenge in respect of local government services. There have been a number of proposals: for the employees of Blackpool, for instance, to run youth services, or for Ventnor on the Isle of Wight to run car-parking services. In Kent, there is a voluntary service group looking to run care support services, and so on. I think there are about 55 organisations that have come forward and are being given some support to look at possible options. In the light of those experiences, we are also looking at the proposals that were in Greg’s report, to look to see about ways of developing that further to central Government services. It is very actively being considered, and we will bring forward some proposals in due course, but we are not at that stage yet, as we are looking in detail at the implications and the effects of the right to challenge that currently exists, rather than just going forward anyway.

Q57 Bob Blackman: The community right to challenge was enacted through an Act of Parliament; that had to be implemented to make it happen. Do you envisage a similar type of Act of Parliament-primary legislation-being required?

Mr Foster: We are still looking at whether or not there are vehicles that exist already to make that possible. As you know, we are already providing a lot of help through various Government agencies to voluntary community services to take on running various services, the establishment of mutuals, and so on. A lot of help is being given to them, and it would be a logical next step to look at organisations like that being able to take on the running of some central Government services. I think it is too early to decide and give you a definitive answer on what the legislative vehicle is that will get us from where we are to where we want to be. We will be bringing a report forward in due course.

Q58 Bob Blackman: What is the timetable for this? Will there be a report first, and then possible legislation?

Mr Foster: The first stage is that we want to make sure we have got detailed work done and lessons learned from the right to challenge that currently exists. As I say, we are in the fairly early stages of that. If you look at the various community rights that were made available under the Localism Act, and specifically at the area of neighbourhood planning, over 500 organisations were there. We are already learning a lot of lessons from that. Regarding the community budgets, there were only 12 pilots, and we are hoping to move that forward in the very near future.

The community right to challenge was rather slower off the start, because it is much more complicated for organisations to have the support and develop the confidence to put forward bids, and so on. That is now beginning to happen. If you had asked me a few months ago, I would have said there were none, but we now have 55 organisations looking at it. Until we have seen this develop a bit further, it is too early to even give you a timetable, but we are very actively considering it, because we think it is a very important recommendation in Greg’s original report.

Q59 Bob Blackman: But there is clearly a difference between a community­based organisation, who have to get their act together and get quite a lot of ducks in a row before they can actually pursue this, and a local authority that is already delivering services on behalf of their community. They are organised, and they are ready to go.

Mr Foster: Of course, now, with the general power of competence, local authorities are enabled to set up companies to deliver various services. It may well be that we can move fairly quickly without legislation, as you say, to be able to get there. I do not want to give you an indication of the time scale, when at the moment I have not got one to give you. I would be making it up, and I do not want to do that.

Greg Clark: I think it is fair to say at this point, Mr Blackman, that the City Deals embody a certain aspect of the right to challenge. That is to say that you have currently got money spent centrally, and then the negotiation initiated by the cities-and, in future, all of the LEPs-is to say, "We think we could do it better." Through that, I have brought in the right to challenge before it has been legislated for.

Q60 Chair: Finally, there could not be anything more local than an extension being built in a back garden. Given that there is virtually no national strategic importance that I can possibly see in the process by which an extension should be agreed, wouldn’t it be very sensible in a localist way for the Government to accept that extending permitted development rights should be a matter for local councils to decide?

Mr Foster: I think it is initially a matter for Parliament to express a view on, and they will have the opportunity to so tomorrow afternoon, Mr Betts.

Q61 Chair: The Government cannot see a localist way forward on this?

Mr Foster: The Government has a localist way forward. It is worth recalling that those local authorities that do not wish to see the permitted development proposal that is coming forward in the Growth and Infrastructure Bill have a route that we have made available to them to stop it, which is an Article Four directive. It is worth reminding the Committee that since this Government came to power, 274 Article Four directives for one thing or another have been proposed, and not a single one has been prevented by central Government. It is not particularly difficult for a local authority to prevent something from happening if they are not happy with it. However, it is for Parliament to decide on this matter, and, as I say, Parliament will be exercising its right to make that decision tomorrow afternoon.

Chair: On that point, thank you both very much for coming and giving evidence this afternoon. Thank you.

Prepared 23rd April 2013