Session 2012-13
Publications on the internet

Oral Evidence

Taken before the Political and Constitutional Reform Committee

on Thursday 9 December 2010

Members present:

Mr Graham Allen, in the Chair

Mr Christopher Chope

Sheila Gilmore

Andrew Griffiths

Mr Fabian Hamilton

Simon Hart

Tristram Hunt

Mrs Eleanor Laing

Mr Andrew Turner

________________

Examination of Witnesses

Witnesses: Sir Howard Bernstein, Chief Executive, Manchester City Council, Andrea Hill, Chief Executive, Suffolk County Council, and Stephen Hughes, Chief Executive, Birmingham City Council, gave evidence.

Q157 Chair: Thank you for coming this morning. It’s very nice to see you. I think you’re probably very well aware what we’re trying to do in the Select Committee: we are looking at the relationship between local government and central Government. You will probably be aware of our sister Select Committee, the Communities and Local Government Committee. We’ve had a number of witnesses who have been to them first or are about to go and see them, so we’re working very closely together. They are doing more of the localism stuff-more of the nitty gritty-and their Chair, Clive Betts, is going to talk to us at some point about how that works and what the interface is with the work we’re doing.

We’re probably being a little bit more stratospheric, in that we’re looking for the constitutional and the political change angle. So it may well be that you will feel at liberty to think a little bit more long-term on those concepts, about where you would like to see local government, maybe, in five, 10, even 20 years’ time, since constitutional matters tend to grind along exceeding slow. However, having said that, we are a brand new Committee, so don’t worry about lobbying us for the first time. You may be bored with lobbying for your particular viewpoints, but for us it will be new, and we will be doing a very serious report at the end of this, which I hope will be imaginative and creative and give you the sort of vision from Parliament that many of your colleagues have told me they already have for the future of local government.

I will just kick off with one question and then ask my colleague, Simon, to come in. It is a gentle lob question to get you warmed up, about local government’s attitude itself. We have had some excellent witnesses but there doesn’t seem to be a unified, clear campaign on behalf of local government as a whole-at member and officer level-about where local government ought to be. Is that because we’re not looking in the right places or because we’re novices, or is it because on the day-to-day business you have to do intimate negotiation rather than step back and pose a broader vision? Anyone like to start?

Stephen Hughes: Yes, we concentrate on what we need to get done, and the art of the possible, but that doesn’t mean we don’t think about it. I would start from four principles, which are: first of all, local politicians are very passionate about their area, and often central Government underestimates that; secondly, what matters, in terms of accountability and delivery and so on, is where the money is and where it’s coming from; thirdly, I would accept there is a paradigm within local government, and probably central Government, that complex social problems and economic growth are best dealt with by multi-disciplinary approaches designed and delivered at local levels. Finally, I don’t think all local authorities have the same capacity. I think part of the problem in thinking about how to design things is that you have to design something that is fit for the smallest district council and the largest city, and not take into sufficient account the complexity and differences between them.

If you want stratospheric, there are some good examples. I was always taken by what Bilbao did, or the settlement for the Basque region in Spain, which is essentially that the Basque region got to raise all the taxation and the national Government precepted on them. It didn’t necessarily change how much money went to the national Spanish Government relative to what was kept regionally, but it changed the politics and the dynamics of the relationship quite fundamentally, and on the back of that they were able to lever in quite a lot to do the regeneration of the city. It’s something like that. A radical solution might be that local bodies-hopefully local councils-had all the money that was spent in their area, and they commissioned other agencies, even central Government agencies, to deliver, because what that would give you is the power and authority to get things connected and designed specifically for local solutions. That would be my ultimate ambition, but you have to live with the world of the possible. We live in a very centralised country, and although there is some shift and certainly the rhetoric of everyone is on that journey towards devolution, we still have a way to go before we’re going to be there.

Andrea Hill: I think there is a huge groundswell from local government that they want to be set free from central Government. If you don’t hear it it’s probably because we’re so fed up with saying it over the last two decades, and nobody taking any notice, that you’ll forgive us for sometimes feeling that it’s not worth saying it again. But local government needs to be trusted by central Government. It’s absolutely able to deliver on the ground in a way that central Government will never be able to, because local politicians understand their area. They need to have their democratic legitimacy recognised by central Government. I agree with Stephen: I would absolutely go for a radical approach where local government is given all of the money for health and police, and everything that happens in their area, and they have a board within the locality that argues about local priorities and how that money is allocated. Central Government needs to stop controlling local government. It has had such a managerial agenda over the last 15 years that local government has become an arm, a franchise, of central Government-a service delivery arm-rather than being recognised in its individual right.

Q158 Chair: Just a quick one, which probably other colleagues might come back to, which is: if you retain local income locally, in very large part, what mechanism would you see for equalisation?

Andrea Hill: It’s an interesting question, because Suffolk would be a loser if we kept national non-domestic rates in Suffolk, and we’d lose this year by about £10 million. But I’d still advocate that it is better for local government to keep business rates, because it provides an incentive for economic development and it creates local accountability to businesses. At the moment we don’t have this strong accountability-either to the electorate or, particularly, to businesses-because there is no local taxation relationship. While 66% of our grant comes from central Government, only 26% of it comes from the council tax. Even then we’re not free to set what council tax we want, because it can either be capped or you can have a more subtle approach from Ministers about what level is seen to be an appropriate level this year. I think we do have to have the ability to raise taxes locally. I’m not sure it needs as much equalisation as we’ve had in the past. There is an obsession with national standards and fairness, which diminishes the strength of local democracy, because everything has to be the same everywhere, so what’s the point in local citizens having an active part in local democracy?

Q159 Chair: Presumably the small group of civil servants, currently at Eland House, who do this equalisation, could be TUPE’d across to an organisation that local government itself created, and their expertise would be marshalled by yourselves rather than Mr Pickles or Mr Prescott, or any number of people?

Stephen Hughes: I’m not sure we need them, because I think we have the capacity to do it all ourselves.

Chair: I’m just looking out for them, trying to make sure we don’t have too many losers out of this process.

Sir Howard Bernstein: Can I just say a few things, to add to the analysis that has been put forward? I think there are three things: first of all, I’ve never seen-certainly over the last 10, 15 years-a powerful narrative about what Government sees as the role of local government. Part of the problem has been that it’s about local government determining for itself what it sees as its role. I believe that has become an important part of how we develop a much more focused, integrated localist agenda going forward: how does Government see the role of local government in shaping places where people want to live, people want to visit and people want to invest?

Moving on from that, part of the reason why we haven’t made as much progress as we might have is also related to-as Stephen has hinted-our preoccupation with this "one size fits all" approach to change: the idea that what works in Manchester and Birmingham can also work in smaller local authorities. That doesn’t work, because when we talk about devolution there has to be a layering around devolution. I think we’ve recognised in our own places that if we’re going to deliver more on labour market productivity skills, transport, then we have to operate as economic areas. Labour markets don’t respect administrative boundaries, so we have to work, rightly, with partners within those economic areas. What happens at a local authority level also needs to be related to what happens at a neighbourhood level. Therefore, increasingly, the role of local authorities needs to be almost as a "first among equals" in relation to a whole range of public sector partners, and increasingly I see local government exercising a commissioning role, for and on behalf of communities, so that we get that integrated approach, which not only achieves maximum value for money but is also increasingly related to reducing the cost of demand for high-dependency services. That means tackling deprivation, which is also very important for fiscal rebalancing going forward.

Q160 Simon Hart: Can I just pick up on the devolution point and be-as I am I’m afraid every week-rather unashamedly parochial about that line of questioning? The scenario that exists where I live, which is in Wales by the way, is this: we have a Labour-Plaid Cymru coalition in the Welsh Assembly; we have a Liberal Democrat-Conservative coalition here; we have an independent council in at least one half of the constituency; and, to put some icing on the cake, we also have a National Park Authority, which obviously has some bearing on local government. It would strike some of us that devolution, as far as it takes decision making from Westminster to the Welsh Assembly, hasn’t changed much at the customer end. There is an argument that the Assembly is more accessible than perhaps Westminster is, but has it taken decision making closer to the people who pay the bills? Even after 10 years I think my particular jury is out on that. On the devolution point, I wanted to ask you whether, simply taking one bureaucratic institution and giving it a Welsh postcode ticks the devolution box and satisfies you?

The next point relates to-

Chair: Can we deal with that one, Simon?

Simon Hart: Okay. That’s fine. There is a second one, which I’ll come back to-a brief one.

Sir Howard Bernstein: I think that is part of the answer. I think you’re right: devolution by itself, in the absence of cultural change, is not going to deliver you all the outcomes that are being sought. I genuinely agree with that. One of the single biggest problems we face in this country in developing a very strong localist agenda, and one which embraces the pluralist model of local government, is cultural issues, particularly at the centre, where there is a mistrust of local government, where local government is seen to provide the opportunity for reputational risk, where it can’t always be trusted to deliver, can’t always be trusted to prioritise. I genuinely believe that what we need to do here is not just look at the devolution agenda in the context of powers and responsibilities but attack the cultural issues as well, because ultimately that’s the key to transforming services. All of us, in our own way, over the last 10 years or more, have spent a lot of time leading cultural change in our own organisations, working with our partners in our own localities to secure better skills; better approaches to customer engagement; better approaches to how we work together to deliver change on the ground. I don’t believe that process of transformation and organisational change has quite hit the centre yet.

Andrea Hill: I don’t know if I feel qualified to talk about Wales or Scotland, because I don’t work in either of those systems, but I absolutely agree with Howard about cultural change being at the centre of what is needed. Every local initiative that central Government has tried over the last few years has been turned around into another opportunity for centralist control. For example, with local area agreements, where Councils were going to be able to set their local priorities, that was fine, but the Department for Children, Schools and Families insisted we had to have 18 mandatory children’s targets. There is a cultural interpretation from the centre, wanting to tell us not only what to do but how to do it, and at the heart of that is this issue about trust. Local councils do have to be trusted to be able to govern their areas. I’ve never yet come across a local politician who wants to reduce school standards or not help vulnerable children or better the environment.

Q161 Simon Hart: Or a national one, I would hope.

Andrea Hill: Yes. It’s almost like central Government believes they are the only people who are interested in those things, and you can’t trust local government to set its own targets and standards that relate to its own local needs.

Stephen Hughes: I don’t know Wales very well, but I have a number of colleagues who work in Scotland, and the feeling is that the point about accessibility to the national Parliament is quite a powerful one. The closer the Government is to local working has helped, and certainly we recognise that in a local government context. I absolutely agree with what Howard and Andrea said about cultural change. But there is nothing like you making the decision and having the local people who are directly affected invading your council chamber, or whatever, or putting lobbying pressure on councillors, to bring home to you the directness of the decisions that you’re making at that local level to local people in a way that rarely happens in the context of national decisions.

Sir Howard Bernstein: Apart from today.

Stephen Hughes: Yes, and the other point is the one that I made at the beginning, that local politicians are passionate about their area, they care, and that is why they go into politics in the first place. That is why they get elected. You wouldn’t choose it as a way of authority out of choice. It’s a difficult thing to have to do, you have to go around and knock on people’s doors and get them to vote for you, and then you have to give them promises that you deliver on. It’s not something that sounds natural, really.

Simon Hart: We all do that.

Stephen Hughes: Yes, I know.

Q162 Simon Hart: One follow-up: I think the direction of travel in Wales is towards a situation-indeed, the Secretary of State said it last week-where to some degree tax raising powers for Welsh people probably ultimately reflect those in Scotland. I think that is an inevitability and not necessarily an unwelcome one, to be honest.

One last question, to go back to the theme of codification: does codification help clarify the rather complicated scenario that I illustrate? Does it give local authorities and local government more power or more accountability or both? The straightforward question is: is codification something that we should be embracing in whatever form of local government we might be involved in, and indeed in the devolved regions?

Stephen Hughes: Two points I’d make. First of all, if you do codification and consolidation around the current situation and settlement, then I think we have lost something. We’re clearly on a journey whereby there is further devolution to take place, and I think you’d want to get to a position where that was a bit more settled, rather than fix a current structure and then have to think about how you do more. I think the situation in Wales and Scotland is slightly different, because you have those devolved powers and you can do something about it.

The other point is that it’s not, I don’t think, about raising taxes. The interesting thing about devolution is that Scotland haven’t used their flexibility to raise income tax. The interesting thing about something like supplementary business rates is that I’m not aware of any council using that power since it has come in. So it’s not about the ability to raise tax. It’s about the control of the resources that are in the area. It’s not control for the sake of power. It’s control because we believe that you can design services that better meet the needs of the people by bringing together multi-disciplinary approaches to it, rather than tackling it in silos.

Andrea Hill: It’s an interesting question, because the answer is that it depends what you write down. If you write down what we currently have, no, it’s not going to help us at all and we’d rather you didn’t. If we can use codification as a way of having a conversation about the rights and equal responsibilities of local government with central Government, then, yes, absolutely, I think it’s worth doing. I think that’s the question behind your question, isn’t it?

Simon Hart: Yes.

Andrea Hill: I don’t think anything that we’ve written down so far-even the Concordat or even the European Charter of Local Self-Government-goes far enough. But certainly the European Charter is much better than the Concordat, which has made no difference on the ground whatsoever.

I think the time is also right. There is a sense in what the Government are saying about localism; there is the action of doing away with the Audit Commission, reducing a lot of the monitoring and inspection. It tells me that the culture is changing and this probably is the moment to grasp it and to write something that is a future vision for local government. But if you are going to do that, and it’s going to be effective, you also have to change the performance management and relationship with health and police and central Government, because health and police are local delivery arms of a nationalised service. They need to be locally accountable; they need to genuinely set local priorities with local government, particularly in times where there is less money, because there is an enormous amount of waste and duplication at local level. But in local government we don’t get the real, full integration of health and police, because they look to central Government for accountability, they don’t look locally.

Sir Howard Bernstein: Can I just add to that? We did an exercise in Greater Manchester earlier this year and it showed that last year there was something like £24 billion of public expenditure being spent in Greater Manchester, and less than 15% of that total came under the direct influence of local government. I’m sure my colleagues will be able to provide a very similar pattern in relation to their own areas. I think that brings into clear, sharp focus the extent to which we are witnessing not just a local government system but fundamentally a national operational delivery system as well.

Our capacity to tackle deprivation is inextricably linked to integrating work programmes to tackle worklessness. That’s our biggest priority, certainly in Manchester and Greater Manchester, and yet we have almost no influence whatsoever on Departments of state who are responsible for administering those programmes, because they are national models of delivery. I believe that what we have to move towards is not a position of calling for additional tax-raising powers-because certainly in the current economic climate, as it has been for the last 20-odd years, in my view it is one step too far-but fundamentally a role for local government ensuring that public expenditure, which is being spent in their areas, is integrated to achieve maximum outcomes on the ground. I think that is the key not only to efficiency but also the key to public sector improvement and reform as well.

Chair: Just quickly on this, Fabian, before I ask anyone else.

Q163 Fabian Hamilton: Sorry, can I just challenge something that Andrea said about the Police because, whereas I agree with what you said about the health service, which obviously started locally and was then nationalised in 1948 and has been increasingly so over the years, we still jealously guard our local police forces and their local accountability. I can’t speak for your area, but I can speak for West Yorkshire-because I’m an MP for the other great city in the north, Leeds-and I know that there is a great deal of local accountability and of course the Chief Constable, as do all Chief Constables, gets annoyed when the Home Office and the Home Secretary try to interfere. But, by and large, there is a great deal of local accountability, so I don’t agree with the point that you made, that they are not accountable to local people. I think they are. We have local area meetings, right down to much smaller than ward level, where local people can come in and challenge what divisional commanders are doing directly and, of course, we have councillors on the Police Authority at the moment until that becomes-

Chair: You have a point of view, but do you have a question?

Fabian Hamilton : My question is that, surely, what may apply in Suffolk doesn’t necessarily apply in Greater Manchester or Greater Leeds or the Metropolitan districts; do you agree?

Andrea Hill: Very hard for me to comment on other areas rather than the area that I know well. I can see entirely what you’re saying about the police’s accountability locally, particularly through Safer Neighbourhood Teams and mechanisms like that, and I think they do work very hard. But they will still prioritise national targets, rather than coming round the table and talking with local government about local targets. That’s where their performance regime is.

Q164 Chair: Just before I bring Andrew in, all the witnesses have mentioned the question of timing and codification. In a sense, Stephen, you can’t wait until the perfect moment and then start doing this job, because then the perfect moment will have gone. But I think-to pick up Andrea’s point-that if we start to do something about this now it’s a really good moment, because we have a Government that seems to me to be determined to devolve; to push more responsibility to local government; to have community-based budgeting; to have a whole number of initiatives, with general power of competence, and so on. So to do a codification at a high watermark is obviously politically more sensible than when they are on the decline, because trying to sell codification at that moment when central Government are trying to retrench would be very difficult.

Stephen Hughes: Howard made the critical point around codification, which is that you have to have a vision of what you want local government to be and then write that up. At a time of fluidity, there is a risk that you draw too heavily on old thinking and old views of what local government is capable of. I don’t disagree with your point that now is a good time to write something, because the atmosphere is very different and has changed rapidly, but I think it has to be forward thinking and not simply an attempt to codify where we are at the moment.

Chair: Of course, yes. Andrew, you have been very patient. Thank you.

Q165 Mr Turner: Can we start with something which seems to me to be obvious but you haven’t mentioned it yet? What is the power that the Government has and that Parliament has, compared with your powers? Can you change anything without our approval? More importantly, we can change things without your approval-is there any way round that?

Sir Howard Bernstein: Can I have a first go at that? I think for the most part what we have at the moment is a very clear set of specific, statutory responsibilities where local government is concerned: you do this on roads; you do that; you do the other. But on the really transformational stuff it’s all permissive: we are going to secure the duty to co-operate, a well-being power, but it’s still permissive. I still have to go, or my colleagues will still have to go, to the local manager of employment services and say, "I think it would be a really good idea if we could integrate your programmes around work with my programmes around children and families, to provide people with a level of support." I believe, while people have the right to say, "Well, no, this is a national model, I’m delivering a national model, I have no local flexibility," the vires associated with us engaging only applies with the consent of the other partners. What I’m looking for is, in effect, a statutory duty on the part of partners.

Q166 Mr Turner: If I may-even given the statutory changes, which you’re calling for, we can change it back without a word of your approval, can’t we?

Stephen Hughes: Yes, in terms of-

Sir Howard Bernstein: You can do that with devolution, can’t you?

Mr Turner: Yes.

Stephen Hughes: Of course, at the moment Parliament is supreme and can do anything.

Q167 Mr Turner: Can that be changed?

Stephen Hughes: Only if you write the constitution for the country as a whole, I suspect, and put some constraints on Parliament. That is ultimately the only thing you can do. But I think-and we found this through what was then called "total place" and is now called the community-based budgeting process-one of the key things is the process of having accountable officers to Parliament, and that drives an awful lot of the approach that central Government Departments take to how funding streams are managed, because, quite rightly, Parliament wants to know how every penny is spent. If you make Permanent Secretaries of national Departments the accountable officers for funding streams that are meant to be delivered locally, you get a regime that translates right down to the local level. A way around that-and maybe community-based budgets are an example where it could work-could be that you create a budget at a local level and you create someone at a local level to be the accountable officer.

Q168 Mr Turner: Would that be a local, local person, or would that be a local person on behalf of localities?

Stephen Hughes: I would argue of course that it should be the former. But almost anything would be a step in the right direction relative to where we are at the moment.

Q169 Mr Turner: Yes. Andrea, you were talking about bringing police, health, dustbins and education all to local people. The trouble is that, at the last meeting, and this one, we have had people from large cities; there has been nobody here from West Dorset, or from parts of Northumberland, and I’m very worried that what we are getting is local-centric rather than national-centric-it’s not local-dispersed. Do you understand?

Andrea Hill: Yes.

Mr Turner: How could you put that right?

Andrea Hill: For most of my career I’ve worked at district level rather than at county council level, and of course Suffolk is a county area with very different parts to it. I think you have to have a level of government that is sufficiently large at a local area to be able to command respect and resources. You also have to have the connection between a true identity of a place and its governance. So I’ve worked in towns that are much smaller than Suffolk-Colchester, Cambridge city-but places with a history and a university and a sense of belonging and identity that gives them a local accountability to local people, because local people identify with the area. I’ve also worked in districts in North Hertfordshire, which aren’t like that. In North Hertfordshire, there are four towns exactly the same size, and they have a municipal area that was agreed in one of the local government reviews. It’s not a real place, and then you don’t have the mandate of people to do things. There is an argument that there should be local governance at a level where people can identify with the area.

Q170 Mr Turner: Yes, so if there was a Rutland County Council-maybe there is one, I’m not sure-

Andrea Hill: It’s a unitary, isn’t it?

Mr Turner: It is a unitary, yes, but it has all the responsibilities, is what we are saying.

Andrea Hill: I’m not into a "one size fits all". That has been one of the difficulties with Governments for the last 15 years: they have been compelling everybody to have the same system regardless of local difference. I mean some of your previous witnesses have talked about the Marbella Beach question, which is a sense of: when you’re abroad where do you say you live? I think that’s a very sensible sort of example.

You can absolutely write down what the power relationship would be, and you can absolutely write down that you’re then not going to change it. I mean one of the questions you’ve been asking is about entrenchment. If you codify the relationship between central and local government, in such a way that you write a bold vision for the future of localities and then you say that Parliament cannot change that, unless there is agreement on both sides, well that would be entrenching the powers, but I think that would be a very good thing, because it would protect localism.

Q171 Mr Turner: If you have something different to say, Sir Howard?

Sir Howard Bernstein: Can I just make a point? I think that has been quite an interesting part of the evolution of thinking in Greater Manchester, and other parts of the north-west, over the last five years or so; how do you create a scalable proposition around devolution that fairly and accurately respects individual localities? I think if you start to look at economic functioning areas, labour markets, you will see in Greater Manchester at least 10 different places agreeing that in certain areas we need to work together to drive competitiveness, to drive the labour market, and so on. Equally, individual local authorities can then draw down quite a lot of what we’ve secured, in terms of concessions or new innovations as a result of discussion with Government, about how we tackle new ways of working with partners at local level as well as neighbourhood level. I think it’s possible to work in that way and at the same time respect the identity and independence of individual places.

Q172 Mr Turner: But that means you can have a health service that doesn’t allow abortions to take place in some counties.

Sir Howard Bernstein: That’s a function of whether or not you have a debate about what are regarded as acceptable minimum standards of provision, which are-

Q173 Mr Turner: No, but, sorry, who is deciding?

Sir Howard Bernstein: That could be Government.

Q174 Mr Turner: So it’s all right for Government to choose?

Sir Howard Bernstein: I think, at the end of the day, there is a debate to be had.

Q175 Mr Turner: What I am trying to understand is: of course, there has to be a decision but is it right that it should be local or is it right that it should be national? That is the difference.

Stephen Hughes: That is a matter of broad philosophy. There are some countries where all the decisions are taken at a very local level and some countries where they’re taken at a national level.

Q176 Mr Turner: Yes, but the whole point of this exercise is to try to work out where we’re meant to be, and I’m trying to work out how we work out where we’re going to be.

Stephen Hughes: What I was going to go on to say-and I’m picking up on Howard’s point-is that I think local government will live with the situation, where national Government set the broad outcomes and objectives that it sought to achieve but gave the local areas much more freedom and flexibility about how they were achieved. In a sense, what we did on local area agreements, although they are hideously over-bureaucratic, was a step in that direction. The problem with it was that they wanted to set targets for services rather than outcomes for people. If that is the constitutional settlement that you want to put in place, that’s fine. There is a part of me that occasionally, when I’m feeling mischievous-now is as good a time as any-says, why not abolish national Government altogether, apart from, say, Defence and the Foreign Office, and let local areas do everything? It’s a point of view. That’s a bigger debate than the one we’re perhaps having now.

Andrea Hill: I have to say, the more I’ve thought about national standards, the fewer national standards I can think of. The only one I keep coming back to is that people should be free from terrorist attack no matter where they live. I wouldn’t even go as far as school standards or educational standards. I think all of those could be determined locally. I think it depends on your point of view, and I think local government has got itself into a cultural position where it believes it will always be subservient to central Government, and it shouldn’t be.

Q177 Mr Turner: The problem is that if we-this Parliament-made a list, being a Conservative majority with some Liberal support, we would have a different view from Labour and then there would be an attempt to reverse it. How do you make it permanent or is it not possible?

Chair: Can I just go back one stage, Andrew, and say we are an all-party Committee, and we would be making recommendations, which we would hope would find favour with all parties, and that is why we’re here? But whether it’s a codification or ultimately a written constitution-I don’t think we’re going to get there in the next couple of years, so let’s say a codification-it is not the end of all argument. It is a framework of principles and there will be interactions at the junction of those principles; you mentioned abortion, Andrew. My assumption there would be-and I don’t think anyone as yet, none of our witnesses as yet, propose doing away with the Human Rights Act or the European Convention on Human Rights or the power of the judiciary-ultimately, if we can’t agree with each other, local and national, to intervene and make a reconciliation. But I think this isn’t about every individual problem being solved on a list. It’s more a set of principles about the powers, the finance and those issues. I don’t know whether witnesses feel that is the way to go. But, Andrew, any further questions? Do you want to come back later?

Mr Turner: Just this one point: it is actual things that matter. It is not principles; the things are what matters to people around this table, because we are people who make the laws and it has to be very much on our side. That is my view. I realise you may have different views.

Chair: No, no.

Andrea Hill: If I may, I think the biggest shift in the legal framework would be to have an assumption that local government can do anything in its area that is for the benefit of local people, unless there is a law that stops it. Our legal framework is the other way round at the moment: we can only do something if we have the statutory framework to do it. The idea of the economic, social and environmental well-being power that was given to us wasn’t followed up in terms of the legislation, so it’s very difficult to use it.

Stephen Hughes: That has been a theme through local government for a while. I mean some time ago some people might remember there used to be a thing called the "Free 2p", which of course wasn’t free, the taxpayers had to pay it. But it was free in the sense that local government were supposedly allowed to use it on anything they wished, and the well-being power was an attempt to make that wider, and the general power of competence the same. But on many occasions what has happened is that the judiciary has taken a very narrow interpretation of those powers every time they’ve come up. Of course the latest one that you might be aware of was when a number of local authorities-I think they were in London-decided to get together to form a mutual insurance company and use their general well-being powers to do so, on the basis that they were saving money for the taxpayer, which must be in the taxpayer’s interest, and lost in court. It is an extraordinary decision, because local authorities frequently self-insure, so it’s not something that we didn’t have the power to do, but the grouping of a number of local authorities together to do it collectively was deemed illegal. That’s the kind of madness that happens from time to time.

Q178 Mr Chope: Following up your point about saying it would be reasonable for central Government to set the outcomes that central Government wishes, and then it would leave local government to do whatever it wanted to do to implement those outcomes, can I ask you to set that against one particular policy, for example: grammar schools? Do you think that that principle would enable local authorities to decide for themselves, and should they be allowed to decide for themselves whether to have grammar schools and selective education?

Andrea Hill: That is not an outcome. I think that’s a very good illustration, if I may, of the difficulty with the relationship between central and local government. An outcome might be-

Q179 Mr Chope: Sorry to interrupt, but surely the outcome is raising standards of education?

Andrea Hill: Yes, exactly-

Mr Chope: And the best means to that outcome might be seen by some local authorities as to introduce selective and grammar schools, while other local authorities might have a different route. But, applying your principles, shouldn’t it be left to local authorities to decide that themselves?

Andrea Hill: Absolutely.

Mr Chope: So you’d be in favour of that?

Andrea Hill: Yes.

Q180 Mr Chope: Can I ask, Sir Howard-I agree with you about that as well, but that’s by the by-

Chair: He’s looking for an argument.

Mr Chope: Sir Howard says in his evidence that for many years the Manchester approach has been to create wealth through the private sector but also using public sector reform to reduce welfare dependency. I wonder whether you have any figures to show how successful you’ve been in the city of Manchester in reducing welfare dependency?

Sir Howard Bernstein: Not as successful as we have been unfortunately in creating private sector growth, because we created something like 50,000 jobs over the last decade, or more, all of them private sector jobs. We now have one of the lowest proportions of public sector jobs to be found anywhere outside London. Unfortunately, our capacity to drive change in our communities, to tackle worklessness, has been more of a problem for the reasons I explained earlier, because we’ve not been able to secure the engagement and the alignment as much as we would like with the Department for Work and Pensions, Health, and others, in being able to provide an integrated approach where individual people and families are concerned. I believe that is one of the most important requirements we have to deliver over the next few years.

Q181 Mr Chope: Following on from that, do you think it would be reasonable in this new settlement between central and local government to enable a council, such as the one that you run, to decide on its own levels of housing benefit and entitlements to housing benefit, and also to things like income support-you could regionalise that? Both those issues feed directly into the issue of welfare dependency. Would you like to take on that responsibility in Manchester?

Sir Howard Bernstein: In broad terms, yes, although I accept in the short to medium term that’s an unrealistic objective. What I think is an absolute requirement now is that the way in which work programmes are brought forward needs to be integrated with other public services in individual areas to support individual families. Let’s take welfare: in my experience, for many of the people at the moment who are out of work, some of whom have been out of work for a very long time, it’s not just about saying, "You have to get back into work." They will need support around skills development; in some cases they will need support around mental health; they will need support around complex family issues; they will need support around drugs and alcohol abuse. Those services are not just going to be provided by a contractor who is designed to move people into work. That is about how you deliver an integrated public service, a multi-agency approach that is tailored to the specific needs of individual people. In my view, that is where, historically, we’ve not succeeded particularly well in this country, and why I’m a passionate advocate-and I think my colleagues would endorse this-why we’re a passionate advocate of joined up, integrated, local commissioning, which enables public services to be developed in the most efficient way around the specific needs of families and people.

Q182 Mr Chope: So, for example, you’d like to be in charge of drug dependency services? You would like to be in charge of ensuring we get the right services to people?

Sir Howard Bernstein: What I’d like to be is a commissioner of those services. That’s what I’d like to be. I don’t have to provide all the services myself. I want to be able to commission local services in the right way to ensure that the people get the services they need to move them on.

Stephen Hughes: I think that’s an important point because, going back to what I said earlier, it’s where the money comes from that determines what gets done. You don’t have to provide these things to determine the way in which people work, because if you set out the method for co-operation and collaboration and the outcomes you’re seeking, and you only pay them if that is what they do, then you have a very powerful lever. You don’t have to deliver everything yourself.

Q183 Mr Chope: This my final point. I was a local government Minister at the time of what we might describe as "the Hatton experience", and it was quite difficult in central Government to see what was happening in a very important city in the country, and not to want to become involved. In the end we didn’t go in for direct control but we came pretty close to doing that. Do you think that central Government, and national politicians, have to sit back and ultimately trust the people and be prepared to have a few bad experiences in the short term for the greater good?

Andrea Hill: That is what the democratic system is about. I think, because we haven’t recognised an equal balance been local government and central Government, that effectively we’re stopping the democratic process taking place locally. We’re controlling all local authorities because of our worries about a handful of local authorities that may be poorly run, and we’ve develop such a heavy, centralist monitoring system for all local authorities that it is the inspectors who are making the democratic decisions about whether council leadership and administration is any good or not any good, and not the local people. Well, if we believe in local democracy, and we want active citizenship, we need to have things decided locally. Then people will be bothered about whether they go out and vote, because it makes a difference.

Stephen Hughes: If you want to use a national context, clearly national bodies are sovereign and they can do what they like, but if they step outside particular bounds you find that someone like the IMF comes along and tells you what you have to do, and other forces are at play, so even national Governments are subject to constraints of one kind or another. You can see a similar analogy if you had a different settlement between local and central Government in this country. The interesting thing about the Hatton experience was that in the end all those people who didn’t set a rate did. You didn’t have to send in anyone to make them do it. Ultimately, common sense shone through, even though there was a degree of madness at the time.

Q184 Chair: A number of witnesses have alluded to the necessity to have any changes that might come forward supported by improving the party political structures, which in some places are not as strong as they might be-let’s put it that way. Would you see that also as something that would be quite essential if we’re going to codify?

Stephen Hughes: My view would be that if you make the decisions that are being made at a local level more important to local people, then you’ll get the strengthening of local politics because other people will come forward who want to stand and take part in it. I think those two things go together. But it’s the same political processes that created you as MPs that create local councillors. It’s the same party structures at a local level, so you’re probably better placed than us-

Q185 Chair: Makes your case even stronger, Stephen.

Just to pick up one of the points that Chris was making: it isn’t either Whitehall tells you what to do or Town Hall tells you what to do; if there’s more independence at local council level, presumably, there would be a lot of interactivity between councils. I happen to care very passionately about early intervention, so if there is a way forward to improve early intervention in the UK one would imagine that a number of councils would co-operate together rather than people saying, "Oh, we have the answer," and reinventing the wheel everywhere. There would surely be a blossoming of treaty making between these free entities.

Stephen Hughes: I think one of the biggest strengths of local government is that we’ve all devised local solutions to similar problems, and the best ideas do catch on and then they become common. Whereas programmes where a "one size fits all" initiative comes down from central Government, and we all have to do it-sometimes they work, sometimes they don’t, but they usually don’t have the same kind of impact as something that comes from the grass roots upwards.

Sir Howard Bernstein: I would just endorse that, and also say that in my experience local government has an excellent record of self-improvement.

Andrea Hill: Yes, I agree entirely.

Q186 Fabian Hamilton: We took evidence from a number of different sources, and evidence we received from Professors Jones and Stewart in recent weeks, said: "The present Secretary of State is deeply committed to giving local authorities freedom from central controls, yet where he has strong views on how local authorities should act he proposes new powers to enforce those views". That rather sums up the dilemma that we’ve been talking about. Sir Simon Jenkins said to us, "You can’t have half democracy, it’s no good". So my questions are: firstly, if you were given the opportunity would you want to have tax-raising powers locally?

Sir Howard Bernstein: I would, yes.

Andrea Hill: Yes, definitely.

Fabian Hamilton : It would work on a county, okay. That answers that question but a lot of-

Chair: Are you speaking on behalf of your politicians as well, Howard?

Sir Howard Bernstein: Yes, I’m sure.

Q187 Fabian Hamilton : But we’re often told that there’s no great demand for increased autonomy, for codification, and that this isn’t coming from local government. This is what we’re told. So my next question would be: what do you think would be the impact on local councillors and councils of giving them unfettered power to raise revenue locally-complete freedom, as you’ve suggested?

Stephen Hughes: Meaning they can invent their own taxation system and put it in place?

Fabian Hamilton : Yes.

Stephen Hughes: To be honest, there are probably some things that we would do. I mean Howard and I would probably do something very similar, which is copy the continental system of charging a pound a bed per night for anybody who comes to the area; no one would notice it on their bill, probably, but it would make a significant difference. What I don’t think we would do is say, "Oh, great, let’s double the business rates now," because we know the impact that that would have. That would drive businesses out of the area, so we’d be more likely to cut it and find some alternative form of funding to make up the difference, because that would probably be a very powerful stimulant. I don’t think you can assume that if local government had unfettered tax-varying powers they would use them to a huge degree. They would take a very responsible view, because what they’re driven by is what matters for people in their area and how we deliver those benefits. That’s what makes a difference. If they were on their own resources to do it and had to make it do from within the area themselves, they’d be very careful about what taxes they raised and which ones they didn’t.

Q188 Fabian Hamilton: Isn’t the problem always, though, that when you have local authorities or local areas being able to charge differential taxation, you get people moving to the area where there’s a tax advantage, for example, on a local income tax rate and a local purchase tax?

Stephen Hughes: That is one of those matters that you’d have to take into account, and it also means that the areas that you gave this power to need to be carefully thought about. I think the point that we’re all making is that there is a big difference between different local authorities and local authority types. You think quite carefully about what the area might be, and it would probably make more sense to do it on an economic function geography, to give that area quite significant powers, and have within that structure other organisations delivering different things within that context. I don’t think you’d want to have every council having tax-raising powers.

Sir Howard Bernstein: Can I just pick up on that? I absolutely agree with Stephen. Let’s look at the places I know most about-the big cities, Leeds, Manchester, Birmingham. The absolute requirement over the next three, four, five years, more than ever is to drive growth, and private sector job creation. We need different mechanisms at our disposal, having regard to the fiscal position we are in, in order to connect existing funding markets to growth, because we know funding markets, as they stand at the moment, will not be in a position to do that by themselves. Having greater flexibility around business rate utilisation, development of new investment models-I think tax-raising powers possibly, but I guess not in the short term-are all going to be fundamentally important in maintaining that momentum for growth, and that is in the national interest.

Andrea Hill: Could I just say, we already have some local councils that have tax raising powers because parishes can set precepts? So in a non-city view, from Suffolk, we have over 400 parishes and town councils, and we have some areas that are not parished or have town councils at all. We don’t get people moving from the parished areas into Ipswich or Lowestoft, which are unparished, so that they don’t pay the extra tax. Local people are actually very happy paying a parish precept, because it is raised locally for specific things that are going to be done in a very local area. So I think you could give tax-raising powers, and it’s not as drastic as perhaps people think. I agree with my colleagues, councils will not suddenly put up enormous taxes because they have a view that things need to be good value for taxpayers.

Q189 Fabian Hamilton : This inquiry is about prospects for codification of the relationship between local and central Government. Would codification, do you think, begin to reduce the economic imbalance between the south-east and the rest of the country? Would it, in itself, be a driver for what you’ve been talking about, Sir Howard, about economic growth?

Sir Howard Bernstein: It is the way in which you write it down, fairly and accurately. We talked about it before-the specific roles or the different roles that different places have. The answer to that should be no.

Stephen Hughes: I think there are things around at the moment, and I’m thinking about how one could do some of that rebalancing. They’re not necessarily about what the codification is, though. They’re about, in our context, giving us some of the levers that we need to unleash some of the private sector growth that we know is there. So we have been-and of course cities generally have been-talking about the policy prospect of getting tax incremental financing in place. More than anything, that will probably help to do some rebalancing of the economy, because it will enable projects to get off the ground outside London that won’t work simply by private sector investment and need some public sector investment. In these times and conditions, you need mechanisms like that.

If giving us some ability to be innovative and creative about how we can drive growth is part of what happens in the codification, I would say that’s something that would help. But we are focused on very tactical things at the moment and thinking, "Well, that’s what we want to achieve; how are we going to get it, and what is in the Government’s policy menu that will help, and which things are going to work the other way?" And we ought to say, "No, that isn’t going to work; you shouldn’t do it." I suppose that’s where we spend most of our time rather than thinking, "What’s the future of local government?" So it’s refreshing to be able to come along here and talk about the broader issues.

Chair: Andrew, you were burning to come in. Are you still burning?

Mr Turner: I’ve gone all quiet. It doesn’t matter.

Chair: You are just embers at the moment, but you may ignite at a later point. Then I will choose a second Andrew to come in.

Q190 Andrew Griffiths: The whole idea of the discussion about codifying the powers of local government is all about making sure that local government works better, that the services and the support you give to local residents are improved. Listening to you today, the kind of powers that you’re looking for, the kind of things you want to do, the ability to commission services, the ability to be free of tick boxes and answering to the Minister rather than to your residents, all of those things seem to be, listening to the Secretary of State, things that he’s trying to deliver: the localism agenda of the Government, the idea from Andrew Lansley that he’s giving local authorities greater powers over commissioning, the drug strategy that was released yesterday, which talks about giving local authorities much more control over these things. Would you accept that so far the agenda of the Government seems to be to give you the kind of powers that you’re looking for?

Stephen Hughes: Howard has already given a couple of examples that don’t fit into that. The issue about worklessness is a classic one, where DWP’s programmes are going through a procurement process now, and they are being procured nationally. We have no idea what the commercial terms are, what the incentives are, what is going to happen at a local level until the local packages are agreed, and then we may be able to have a dialogue.

Another more specific example, which is exercising us at the moment, is that we know that one of the key shortages within the West Midlands is a particular kind of high-skilled engineer. We know that there are private sector companies-because they’ve told us-willing to invest billions of pounds in this country, which will create thousands of jobs, if they can get a supply of engineers of that sort, and if they can’t they’ll go somewhere else. I don’t mean somewhere else in the UK, I mean somewhere else in the world. What’s the context of that? Well, what influence do we have about the output of the universities, to create courses and incentivise them to recruit students to deliver that flow of engineers? We haven’t. It’s a national programme, and the priorities that are delivered at a national programme in that context are very different from the immediate economic needs of our area, and that is an example where we don’t have the commissioning power that, if we had it, would make a difference.

Sir Howard Bernstein: If I can carry on, on that, another hobby horse of mine. If we left it to the providers of training and skills, HE courses would have lots of hairdressers when actually we need level 3 qualifications in our economy over the next five years. That is what we’re being told by all the skills audits. Our capacity to influence or commission skills, is non-existent. Quite frankly, it is a major negative as part of our drive for private sector growth over the next five years.

Andrea Hill: I think the Government’s mood music is going in the right direction, but I can’t overstress the importance of the way in which culturally it’s being interpreted by Whitehall, and the way in which that plays out. I think civil servants struggle not to try and control local government, and they are struggling in the current changes. If I was to sit down with the management team of the primary care trust in Suffolk and talk to them about the changes that they’re going through in health, they don’t sound quite like the same changes that Andrew Lansley talks about, because they’re trying to control the transition and they’re trying to do it within organisational boundaries of health. So it doesn’t feel like things are coming across to local government. Health has a centrally managed transition programme now, where the people who are in health, who are managing the transition, are not the people who are going to inherit it. Our view about what the health and well-being board might be about and how GP commissioning might work, and how we might integrate that with social care, is a million miles from how the PCT sees the transition.

It is the centralising tendency of civil servants that needs to be addressed in the way that we write things down. Civil servants work to statute, so if we can have something that has a legal framework to it, it will change behaviour. You may not be able to win the hearts and minds, without first changing the system that makes them change their behaviour, then perhaps we’ll get the hearts and minds.

Q191 Chair: Could I distinguish, though, or can you distinguish, between the politicians and the civil servants? I think no one would see me as an apologist for the current Government, but I think the politicians are attempting something new as a new Government: they have a drive; they have new politics; they have the coalition; they have a number of other things. Above all they’re coming fresh to government, whereas the civil servants, come what may, were there two years ago, 10 years ago, and may be there in another 10 years. Do you see a distinction there? I’m sorry, Andrew, but I think it’s an important point to bring out.

Stephen Hughes: There is clearly a difference. What I think needs to be thought through a little bit within the coalition Government as a whole, is the extent to which the policies that individual Ministers are promoting play out with each other. There are one or two occasions-I’m trying to think desperately of one off the top of my head, but perhaps my colleagues will come up with one-where they don’t quite match. I know part of the localisation agenda is about organisations other than local councils, and I don’t think we have a problem with that in principle, but sometimes the policies don’t quite work out at the interface, and there’s some work needed on that. Hopefully, that will get straightened out over the next period.

Andrea Hill: Yes. I’ll give you an example: local economic partnerships. There has been a mantra that the new Government came in and they wanted to do away with regionalism, and we would be able to have anything that we wanted locally in the area that made more sense to us. But there was clearly a difference of view between BIS and CLG, and then we started to get, "You can have anything you like, but a LEP has to be bigger than one single county area." So we’re back into the old culture of, "You can eat anything you like so long as it’s McDonald’s."

Chair: Howard any comment?

Sir Howard Bernstein: No.

Chair: Sorry, Andrew, please continue.

Q192 Andrew Griffiths: If we’re talking about codifying the relationship between central Government and local government, would it also be in order for us within that to define the relationship between local government and its residents? The accountability factor is something that clearly we would need to address. For instance, Stephen, in your own authority, there have been problems with social services and a concerning case about a young vulnerable child. Where is the accountability there, if it’s your responsibility and not local government’s responsibility? When a child dies who is in your care, who is responsible then? Is it the Minister? Is it you as the chief executive? Where does the buck stop? What can the local residents expect, and how do we define that, when a serious breakdown occurs?

Stephen Hughes: I suppose in that particular case, it stands with the executive, which in a local authority context is a mix at the moment between cabinet members and the officer corps, and it might need some work on that to make it right. Within local government themselves they have developed quite a strong, powerful scrutiny role, which came in with the Act. A number of things are picked up and dealt with in that way including in the particular case that you have just referred to. Our own council did a very thorough scrutiny of the arrangements that had been put in place. The chairman who did the scrutiny report has now been given the job of sorting it out, so perhaps you should be careful of what you wish for. So I think there is a range. But you are quite right: those things would need to be thought through. The extent and the way in which local councils and officers were held to account to their local residents is absolutely critical. It is the heart of it.

Sir Howard Bernstein: For the avoidance of doubt, I’m very clear about that. If there has been a fundamental failure by a local authority, then that local authority must be held to account. In the particular circumstances which you’ve outlined, if there were-and there have been, of course-children who died, you get independent case reviews, you get a very clear assessment of what has gone wrong, what has gone right and who is responsible, and we must be held to account for those actions and those activities, going forward. There is no doubt at all about it in my mind.

Q193 Andrew Griffiths: Thanks for that. Just returning to what you were talking about previously, you were talking specifically about the general power of well-being, which I think everybody recognises didn’t give you the power and the impetus to be able to act in the best interests of your residents. How do you see the difference between that and the proposed general power of competence? The suggestion is that will overcome the ultra vires problem and will give you much more authority to be able to proactively act in the best interests of your residents. Do you see that as a positive thing?

Sir Howard Bernstein: I think the point has been made by Andrea.

Q194 Andrew Griffiths: What sort of things do you think that that will allow you to do that you can’t currently do?

Sir Howard Bernstein: Well, I think it will enable us to tackle some of the more intractable issues around growth, which at the moment we’re perhaps on the margin of legality with; it should make that clearer. But I’d go back again to the essential point I made earlier, that it’s still very much permissive. Having a general power of competence does not of itself secure the commitment and the joint working with key partners in our neighbourhoods that we need to transform those neighbourhoods. They can still say, "Sorry."

Q195 Andrew Griffiths: But if you have a good idea, you can sell it to them and get their buy-in?

Sir Howard Bernstein: Yes, I do that all the time. I don’t think transforming neighbourhoods should be a marketing exercise. I think that’s why we’re there; that’s why we’re employed as public servants, and I’m passionate that when people are operating in my place, which is Manchester, we ought to be working for Manchester. At the moment, while there is a great deal of commitment and professionalism by lots of public sector workers, we do not secure the level of traction we need in order to make the level of progress that is required.

Andrea Hill: I think that is absolutely right. I think you’ve hit the nail right on the head, because it shouldn’t be up to local government and chief executives to have to go and sell a good local idea to our partners. The PCT acts as a franchise for central Government. It’s a nationalised service. They pay scant regard to what local politicians want and, if anything, the relationship has been made worse by health scrutiny, which has brought in an adversarial arrangement where health come in and tell us what they’re going to do, and they humour us for a little while, making a few local points that they take no notice of and go and do what they were going to do anyway, because they’re driven by financial targets; they’re driven by national targets. Unless the culture of the health system changes-which I don’t believe the current changes go far enough to make happen-the culture will be that GP commissioners will also look to the national system. They’re part of a national system. What we need is for local government to be primarily about governance, not about service delivery, and about leadership of place, so there is an absolute right for local government to say what an area should feel like to live in; how the services would feel; what the priorities are, and that local partners-particularly health and police, as big statutory agencies-have to come to local government for the agreement of those priorities. Because then we have a basis, we have a settlement with local government, that gives us primacy in the locality.

My concern about the power of general competence, and it comes out today, doesn’t it, so we’ll see how many clauses it’s-

Mr Chope: It’s been postponed for another week.

Andrea Hill: We’ll see how many clauses it has written in, because the more clauses it has, probably the less general it’s going to be. But it will be challenged by a legal framework which doesn’t support an equality of relationship between central Government and local government, and until we get something that is written down, which gives an equality between local government and central Government, we’re putting sticking plasters on it.

Stephen Hughes: We will save some money on lawyers, hopefully, but one of the issues that is worth looking at, if you go back and look at the previous cases where this thing has come up, is the line the judiciary always takes, which is: local authorities are a body created by statute, so their mindset is only to do what statute allows them to do. So the wording of the general power needs to be carefully crafted if it’s not going to fall foul of that test, as has happened with each previous attempt to do this. We’ve been using the well-being powers to some good effect, particularly in the economic area. That has allowed us to do things that we wouldn’t otherwise have done. The general power may take us a bit beyond and deal with some of the risks that keep being pushed back every time we do try and use the general power of competence.

I agree with something Andrea said: that local government has to change as well. It has to be less of a direct provider of services and much more of an orchestrator of different service deliveries. We are too big a provider at the moment, and that does bias the approach sometimes on particular things. We get on better with our PCTs than you do, Andrea, I think, and we’ve done some quite good work with them. Our problem is more with the acute sector, and getting them to play in a local context and think about the issues that are broader than simply their immediate tasks. That is sometimes extremely difficult to get them to think about.

Q196 Andrew Griffiths: Just one final question, if I may. I suppose it is a question about double devolution, because I think one of the things that is happening is that power is not just passing down to councils; for instance, with free schools, it is passing power down to the parents, and I think the closer we can get decision making to the people it directly affects the better. Do you see other ways in which local authorities can pass power down to communities? How do you see that operating, and how do you think that would work within codifying your powers and the relationship?

Andrea Hill: Suffolk is working quite hard on a strategic direction that looks at divesting our service, so putting them into communities; putting them into social enterprises; transferring assets that used to be held by the council into communities, because we absolutely agree that that is the direction. We would agree that when we are a big service provider operational delivery always takes over from strategic leadership, because if you have a pressing problem, you have to fix that problem today; if it snows again today, we’ll be reorganising how the kids will get home early. That will take primacy over something that is a more strategic issue for three years hence. So I think it would be helpful to allow local government to move into local governance and to bring partners together, for us actually to do the double devolution. It is what makes sense to people and it is that balance. When somebody asked before about, "At what level do you have local government and how big is it?" for us, it’s the balance of having very localised assets and services where they make sense-so, much smaller than districts-and then having a larger council that can do the leadership, the governance of place, at a bigger level.

Sir Howard Bernstein: I agree with that. We’ve developed a very strong neighbourhood model of services, integrated local government services, and the Police are doing their level best to replicate that in the way in which they move to neighbourhood policing. But I have to say that the prospects of me seeing some of our assets embraced by some of the deprived areas we have in Manchester are pretty low. I will know I have achieved all that I would want to do for Manchester when our residents then decide they want to run their own schools. But, fundamentally, that strategic direction is absolutely right, and how we develop that neighbourhood model in a way that creates the real platform for articulating local need, which is very specifically focused on people in communities, is absolutely essential to moving forward.

Stephen Hughes: We have done a plan, particularly around community assets, I think, and neighbourhood working. One of the things that struck me in particular is, certainly in some of our more deprived areas, it’s about identifying and nurturing the talent for leadership among local people, and there is a distinction. There is evidence to demonstrate that the propensity for people to volunteer is positively related to the average wealth of the area, so deprived areas suffer sometimes from people struggling to live their lives, as opposed to helping with the wider community. One of the things that we’re looking at establishing-well, we have established, but in dealing with that issue-is a kind of leadership academy, designed to identify and bring on talented people from particular backgrounds in order that they can be the people who articulate and champion those local areas, because that’s part of what we need as local authorities, and particularly large local authorities. We need people from local areas to shout at us and tell us what they want to do; otherwise we become a bit paternalistic ourselves.

Q197 Sheila Gilmore: I was interested in what you said earlier, first of all, about not needing new tax-raising powers, but do you think that if there is not a shift in the balance of holding the purse strings a lot of this is not going to get very far? I don’t know if you’re aware of what has been happening in Scotland recently, but after the last Scottish Government elections, the Government announced it was going to have a completely new relationship with local authorities and give them greater freedom, ring-fenced all sorts of funds, and set up a concordat with national outcomes and local outcomes, and stuff like that. We’ve now reached the stage, three and a half years in, where this Scottish Government has said, "If you don’t perpetuate the council tax freeze and do certain other things that we want, then your cuts are going to be much worse than they would otherwise be. So you can get 2.9% cuts if you agree with this, 5.7% if you don’t agree with this." That to me comes fundamentally down to who holds the purse strings. Now, that may or may not be about tax-raising power. It might also be about the balance of grant. Can you comment on that?

Stephen Hughes: Can we swap? I mean, 5% sounds quite good to me. To me, I think the issue is not the ability of local government to raise additional funds relative to what it already has. You have to think about the context. Our council tax is just over £330 million, total collection, and our gross spend is £3.5 billion. In the big scheme of things it’s not the matter and it will take a big shift. It won’t just be about localisation of business rates or the freedom to raise council tax. It will take a big shift to change that. So the bigger prize is about greater influence over all of the money that has been spent in the area, rather than just the bits that get channelled through the local authority, because we can demonstrate that there are benefits to be had from getting connected programmes, addressing needs in the round rather than different aspects.

Howard pointed out earlier that the people who are long-term unemployed are often unemployed not simply because they can’t find a job but because of other complexities with their lives, and you have to deal with all of those rather than just one. That needs different agencies to work together, and it needs someone to take an overview, sitting above it, to try and orchestrate the other players to play together.

Sir Howard Bernstein: I agree.

Andrea Hill: Yes, I agree with that, and I also think it’s easier to do. Because there is £5 billion that is spent in Suffolk by the public sector, which from local government is 25%. That money is already there, and it’s not as difficult to do that as it is to say, "Let’s completely reverse the balance of power through funding," because if you’re going to say to me, "Well, Suffolk will get 26% of its income from Government grant and raise 66% locally," I think the shift that would be required to achieve that is probably too ambitious.

Q198 Sheila Gilmore: But how do you effectively prevent the body that does hold the purse strings and gives the grant from ultimately saying, "Well, we want this done"? Do you think codification would achieve that?

Andrea Hill: If you gave local government the ability to influence all of the public sector money that came into an area, it would make a fundamental shift in the way that local government worked, the way that local government saw itself and the efficiency of public sector funding. The expenditure would drop. Because, at the moment, there are all sorts of duplications and there are very few incentives for co-location of staff, co-management of the staff, agreement of objectives, and there are lots of disincentives to doing it, so people fall back into their organisational boundaries. At the moment, when everybody is facing cuts-local government has a 28% cut-they retrench into their organisational boundaries, because that’s the bit they can control, and people have to reach a reduced level of funding. We all have to set balanced budgets by the next financial year. We don’t have any alternative, so in the end, you will be pressed to make those savings; you will make them in areas where you can control them.

Q199 Sheila Gilmore: One of the barriers to achieving some of that is still: who holds the budget? So you’re talking about the budget passing. As an example, in my constituency there is a factory that the council has run for many years for disabled people; for blind people, effectively. The council wanted to close it because they have to put a subsidy in. There is an argument that says these people will then get benefits if they are made redundant, so the public purse isn’t going to save anything, but because there isn’t any joining up of the budgets, there’s no incentive at all to the council. That argument doesn’t bear a lot of fruit for them because they’re still £1 million out of pocket every year, and nobody is coming along and saying, "You could realign it." So you’re really talking about the responsibility for the budget passing.

Sir Howard Bernstein: Basically, yes, and for the avoidance of doubt, if we were made responsible for overseeing the deployment of funds, say where work programmes are concerned, I am sure we would accept very high targets, in terms of delivering people into work, which is fundamental to what we want to deliver anyway. So this is not just a process that is designed for us to achieve efficiencies, even though that is important. This also needs to be seen as a process that will be related to outcomes, which we will be prepared for and would need to be prepared to be subject to scrutiny on.

Q200 Sheila Gilmore: But are we not in a situation where our national politics is such that people-whether it’s national politics in Scotland or Wales or England-see themselves as almost campaigning on a lot of the issues that local government is operational on, so that political parties go forward on the manifesto of, "We are going to do this, this and this," so ultimately is that another barrier to achieving this? For example, there is a general consensus that early intervention and doing things early for children and families would be beneficial. Everybody signs up to that theory. But I’m trying to think in the Scottish situation how the Scottish Government would feel if one of our 32 local authorities announced that it was no longer going to provide or pay for nursery education, because they decided that that wasn’t particularly effective or efficient, and they would rely on voluntary effort or private effort to provide it. How do you stop the temptation of central Government coming in and saying, "You shall not do that"?

Stephen Hughes: I think it comes back to what we were saying earlier, that central Government, clearly in the current climate, has an interest and a legitimacy about saying, "These are the outcomes that we want to achieve for young children." I suppose the situation you have at the moment, though, is that local government have an obligation-in this case it’s a discretionary ability-to provide and administer education if they want to, but they don’t have to take responsibility, although I think they probably will do, for the outcome. So if you place statutory obligations on local authorities to provide services, but don’t place obligations on them to provide outcomes, they will provide the services they have to; whether they are joined up with anybody else’s services is another matter. I think that is the point that we’re all trying to get at: it is what matters for people on the ground, which is what we’re passionate about, and we think can only be done by joining up different service lines and redesigning them in a way that makes a better impact on the outcomes for them. But we have a system that devises policy by saying, "We need this service there, that service there," without the mechanism for effectively connecting them together.

Andrea Hill: I could give you a practical example about children, which is children’s centres. The Government decided not just that we wanted better outcomes for nought to fives, but how those outcomes were to be achieved. It said, "You’ll all build children’s centres and you’ll build them in the most deprived areas first." So we built 44 children’s centres in the last few years in Suffolk. We’ve started in the deprived communities. The Government has given us the money to do it, and there are some fantastic buildings, but in the deprived areas they can also be right next door to a brand new library, which we’ve also built. Because local government has been told what to do and it has been told how to do it. It has been given ring-fenced money that can only be spent on certain things, then it has had an army of inspectors and regulators to come and check that we’ve done exactly what it was that central Government told us to do, because Ministers think that they have to be held accountable for the state of well-being of every nought to five-year-old in the country. Now, that ought to be a local accountability, and if you hadn’t told us exactly how to do it, we wouldn’t have gone in these deprived areas and built lots of different facilities very close to each other that don’t bring the community together in many ways. They separate different groups in the community, because the only people allowed in the children’s centres have to be children under the age of five. It’s a nonsense. It’s not how you get effective governance in the country as a whole.

Chair: I am going to ask Eleanor to come in. One thing that you’ve told us, Andrea, which I think is a new line of inquiry, that we need to be quite careful of when we’re drafting is this general power-if it is such a thing as a power, but certainly relationships with other providers in the locality-and I don’t think we’ve picked that one up in the past. I think how that works in codification will need some careful drafting. Again, be careful what you wish for, because we’ll be looking to you to help us out on some of those words.

Q201 Mrs Laing: The point you just made about accountability is exactly what I wanted to explore. First, do we take it from what you have said that the first time the Daily Mail does a double-page spread about the postcode lottery, we all collectively say, "Too bad. This is local government, local accountability and, yes, the standards of services you get are different in one part of the country to another"?

Sir Howard Bernstein: Yes.

Stephen Hughes: Yes.

Mrs Laing: Yes?

Andrea Hill: It’s a completely false construct, and we should recognise difference and celebrate it. People choose to live in Suffolk or in Birmingham or Manchester because they like what Suffolk is or they like what Birmingham is. They don’t want them all to be the same.

Q202 Mrs Laing: If that is the case, then we come on to the other side of it, about who is accountable, who takes the blame, and where the buck stops. As Members of Parliament, we all know that every week probably about 50 or 60 people write or email complaining about local services. Now, as a Member of Parliament, do we then say, "Not me, Guv, nothing to do with me? Here is the address of your local councillor"?

Sir Howard Bernstein: You send it to me.

Andrea Hill: That’s what you normally do, yes.

Sir Howard Bernstein: Just send it to us.

Mrs Laing: Actually, to be perfectly honest, that is what I do, because-

Andrea Hill: Every MP does.

Q203 Mrs Laing: Well, exactly. Well, why do we do it? Now this is a point about local democracy and who takes the blame. I know that I do it because, with very few exceptions, where there are exceptionally good and conscientious councillors with time to deal with things in my own district council, sending it on to the district councillor is not going to have any effect in most cases, so I do exactly what you’re saying, you write to the chief executive and say, "This is the problem. Why hasn’t it been done?" and then of course a reply comes in that way, but where is the local accountability there? There isn’t any.

Andrea Hill: No, I think we do understand that. I think we absolutely do understand that at a local level. The chief executive is responsible for running the day-to-day organisation and we have statutory officers who help us in particular responsibilities, so the officer accountability is very clear. We’re accountable to the council as a whole, but we take the policy from the administration. Our council set policy and we have to implement it to achieve the things that they want to see achieved, but we advise them and help them with the expertise about the best way of implementing them, and if something really dreadful happened there would be some very serious conversations about accountability, whether that was the portfolio holder or the Director of Children’s Services or whether it was the leader or the chief executive.

Stephen Hughes: In the context you describe, which I suppose is commonplace, which is that there has been a service failure within legitimate expectations set by the elected Members, it’s the officers’ responsibility to put it right.

Q204 Mrs Laing: I entirely agree with you that officers are highly trained in what they are doing, do understand and behave accordingly. I wasn’t implying any criticism of the officials in local government. My concern is about the elected representatives and who takes the blame. If there is something to be criticised, well, let’s take the gritting of roads last week. I received piles of letters about gritting of roads. I have to say, I cannot bring myself to say to my constituents, "Don’t bother me about the gritting of the roads." I don’t say that, I say, "I will investigate this. I’ll find out what happens," but actually I shouldn’t be doing that. It’s the county councillor who should be doing that. Let’s not talk about personalities. I happen to have some very good county councillors in Epping Forest who do take this on. But I know that in one part of my constituency, it will be dealt with by the county councillor while in another part, the county councillor will do nothing and do we have to wait for four-well, I suppose we do-years to the ballot box for the accountability to be felt?

Stephen Hughes: I thought you were having a recall power.

Mrs Laing: Oh, right. That is complex.

Q205 Chair: There is a thread here from a number of colleagues, which is: we have Whitehall, and what we are not going to do is replicate loads and loads of mini-Whitehalls. There is also a political level, which runs alongside Whitehall, which some might say is underpowered, and certainly a political level that runs alongside local authorities that is massively underpowered. But, in a sense, isn’t this again a question of how we revive our political structures and our political parties? It’s not a question we can solve by asking officials to do things in certain ways and, in some ways, if either Government Ministers or local government Ministers, in effect, are not fulfilling their duties, officials at both levels will fill the vacuum. In a sense-and maybe I’m asking Eleanor, I’m making her a witness-we have to do both. We have to do the structures of local versus central and we have to also revive the capabilities of all political parties to engage in genuine political strategic thinking.

Andrea Hill: If I may say, I think that’s why the double devolution point is important, because one of the things we’re exploring in Suffolk, as part of a strategic authority, which is much more about community leadership than about service delivery, is the primacy of the local member actually to build bigger society within their county division, in our case, or ward in other cases. When that local member has a much bigger role and some discretion and flexibility about finance in a local area and is transferring assets, like: community halls, libraries, into the local community, then there is a fundamentally different relationship, which I think will generate a much more active, local councillor so that they’re all like the best ones. I think one of the difficulties now is that MPs are better known than local councillors. The portfolio holders tend to be known, but not necessarily the ward councillors.

Mrs Laing: Absolutely.

Sir Howard Bernstein: Yes, can I just tell you a little bit about what we’ve been doing in Manchester, because 10 years ago or more we moved away from the traditional approach of local government-committees and lots of papers-and I think that came as a little bit of a culture shock at the time, because what members were used to was going to committee meetings with lots of papers? What we’ve tried to do is start to redefine what the role of the elected member is in their own locality. I think that has become really successful, where members now see themselves as playing a very full and active part in defining local priorities in terms of services, where the gaps are, and how we work with other partners to help fill some of those gaps. As I’ve said earlier, that process has come with mixed success. But I genuinely believe that, certainly in the work that we’ve done-and I know it has been replicated elsewhere, perhaps even with greater success-fundamentally the role of the elected member in Manchester has brought them much closer together to the people they serve, and that’s been a very positive experience.

Chair: Eleanor, quickly and then Tristram.

Q206 Mrs Laing: Very, very quickly. Christopher Chope mentioned the Hatton experience. If local democracy works in such a way that an extremist party-and I don’t mean Hatton-such as the BNP, which in my patch had six councillors, which is a lot, could go to 26, and took control of the council, and implemented BNP policies, does central Government stand back and say, "Yes, that’s what you voted for; that’s what you’re stuck with"?

Stephen Hughes: If it’s a legal party that’s what democracy says, doesn’t it? Yes.

Sir Howard Bernstein: Other failings, I would suggest, for the reason for that.

Q207 Tristram Hunt: Very quickly, we’ve had a submission from the Core Cities Group, which suggests that what is really important-following on from Sir Howard’s comments-is the economic autonomy and the power of these cities, rather than nice constitutional concordats, which are very jolly but people can work their way around them. I think what you bring out, Sir Howard, in your paper, is that political power is dependent upon economic power, and the Manchester model of the last 20 years has been about rebuilding economic power. But everything we’ve seen, in terms of the literature on this, also suggests that you gain further economic power from political autonomy and political self-government. In that context, do you have an institutional view or a personal view, particularly for the big cities or the city regions, on the plans for mayoralties and mayors and the relationship between local and central Government?

Sir Howard Bernstein: The views of the council are the same as my personal views on this occasion. I’m very clear that a mayoral model should be part of the pluralist model of local government leadership in this country, and whatever people might think about Manchester, or indeed other parts of Greater Manchester, I think the one thing most people would agree is that lack of leadership has not been a problem. What has been more of a problem have been many of the issues we’ve talked about today: do we have the toolkit of the right size with our ability to pull the right levers to drive our economies going forward? That for me has been the fundamental part. So I would not regard a mayoral model in Manchester as being remotely relevant to our particular needs at the present time, but in four, five years’ time, that position may well change. So I would never say never. I think we should have the ability to determine our own leadership models, having regard to our needs and the circumstances at the time, and I think that would be my position. I think that’s probably the general view of my colleagues, but-

Stephen Hughes: Well, we’ve obviously had the conversation on Core Cities on more than one occasion. The last time I think we met everyone round the table was the same. That is the position. I think you’re right, I suppose, that there is a linkage between political power and economic power, but I’m not sure in this debate, because we haven’t seen the Localism Bill yet to see what it says. But if what you’re doing is replacing an existing governance arrangement-exactly the same powers and influence-with a different one, and nothing changing in terms of the structures, the power and the influence that we were talking about earlier, then it won’t make any difference. Okay, one person, you can see who it is. You’re just as likely to get someone who is not able to do that as you are to get someone who is. There are plenty of examples of both. So the critical issue is the influence of the entity as a whole, and what decisions they are able to make. The more important the decisions they are able to make, the more seriously people will get involved and the better the overall governance will be.

Q208 Chair: Presumably, one of the powers to codify it might well be the right of local government areas themselves to decide the way they wish to be led, the way they wish to operate an electoral system of their choice, whether they want a mayoralty or whether they want the old committee basis, that they might be themselves capable of deciding something like that.

Stephen Hughes: I think they probably would, yes.

Sir Howard Bernstein: I think they would.

Chair: I think that’s what you call a leading question.

Tristram Hunt: No, that’s fine.

Chair: Are you done?

Tristram Hunt: Yes.

Chair: Andrew, did you want to come back in on anything? Eleanor? I know I cut you short.

Mrs Laing: That’s all right, thank you.

Q209 Chair: Okay. Well, I don’t know-we have six minutes, it’s not very long-but whether you’d like to have a minute or two to wind up from your various perspectives, just to remind you, and my Committee colleagues, this is about the codification of the relationship between local government and central Government and you have very helpfully raised a number of questions. The question we had been thinking about before was about how you entrench such a code once it’s written, and what might be in that code. Again, we’ll be open with you: as a brand new Committee we want to do this job thoroughly, we want to do it properly. You’re all very experienced people and have made it clear you’ve made your proposals in other forums in the past. We’d like you to come to this with a fresh eye and help us come up with something useful, because to pick up some of the things that Andrew was raising, I think we are at a good moment right now. I think lots of good things have come through in the last few months, and I speak from an obvious position of not supporting the current Government, but I will say that, and I will happily say it on the record. So defining where we are at this moment through a code, might well be something that it is a very opportune time to do. That is our background. I don’t know whether you’d like any closing remarks?

Andrea Hill: I think there is just one thing that I read in some of the previous evidence, which was from Professors Jones and Stewart, about the sense of a degree of permanency. I think that is quite important, because it would be a great shame to do a lot of work to redress the balance of power between central and local government, and get it written down, and then find that it was overturned fairly quickly afterwards. I’m very grateful too that you picked up the importance of the relationship of other major public sector bodies, because I think that cultural side needs to be addressed as importantly.

Stephen Hughes: Yes, I think we would all probably agree with that. That is at the heart of it. I want to go back to a couple of points you made earlier. One was that if we’re on a journey, let’s ensure that what we’re codifying and writing down represents the destination rather than the stop along the way. I think that would be something we would all want. There is an opportunity here. To go back to the point I made right at the beginning, I think there needs to be a recognition that local politicians are passionate and care about their area, and can be trusted to do that job, and that what ultimately matters in the effective delivery of services is who has the responsibility for spending the money-the commissioning part of it, and not necessarily the service delivery.

Sir Howard Bernstein: Just one final point from me. I agree with the points both Andrea and Stephen have made. Whatever we bring forward in terms of a framework, I think needs to do two things: one, to be quite explicit about what we see as the role and the central functioning of local authorities in shaping and creating places-I think that is very important-and also to recognise that there are different layers of devolution or collaboration. It is around what works in an economic functioning area, that is labour markets; what works at an individual district level, and what works at neighbourhood level and directly to people themselves, and you get a different approach by applying that logic. Thank you very much. I hope you found it useful.

Chair: Normally, the process is that we will go away at some point and write a report, having heard all the witnesses. I’m just giving a little twist to that, in that I’m giving the witnesses some homework to do as well: now you’ve heard what we’ve had to say-and it’s very obvious you’ve read the evidence of other people too-we would be very interested in receiving your views on, having gone through that experience, if there were to be codification, how it would shape up, and what would be the key things. Again, it’s helping my Committee to come to a useful conclusion and I’m toying with the idea of before a final report maybe doing almost a Green Paper style thing that I can discuss with colleagues on the Select Committee and then possibly throw out again, so that we can get this absolutely the way that it works for both central and localovernment and for local government too. Thank you all for coming. Sir Howard, Ms Hill, Mr Hughes, thank you very much indeed. You’ve been expert witnesses and we look forward to continuing our relationship with you. Thank you very much.