Session 2012-13
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Oral Evidence

Taken before the Political and Constitutional Reform Committee

on Thursday 20 January 2011

Members present:

Mr Graham Allen (Chair)

Mr Christopher Chope

Andrew Griffiths

Simon Hart

Tristram Hunt

Mrs Eleanor Laing

Mr Andrew Turner

Stephen Williams


Examination of Witness

Witness: Mr Clive Betts MP, Chair, Communities and Local government Committee, gave evidence.

Q267 Chair: The time has come to allow Clive to come in and sit down. I think it is an extremely helpful thing that we’ve managed to get the Chair of a fellow Select Committee along. Clive, I think you know that we’ve been looking at the relationship between local and central Government, I don’t know whether it’s appropriate to say in perhaps a more stratospheric constitutional way than you are looking at it in your own Committee. We understand you’re looking at it in much more detail and at the practical workings and in line with the concept of localism. Our inquiry is going along gently. We know that the Committee Clerks and others are meshing and talking to each other, and you and I bump into each other in corridors and have a quick catch-up on what is going on.

I think it was very strongly the view of Members that we should go in lockstep with you as much as humanly possible so that perhaps we could come up with something that was seamless at the end of this process. So, part of that, Clive, is to invite you along to say a few words today and have Members ask you questions. I wonder whether you want to make an opening statement to let us know perhaps where you are in your own Committee work?

Mr Betts: Very briefly, Chair, because I’m more than happy to respond to questions. I think you’re absolutely right and thank you for the invitation. It’s an interesting experience after many years in the Select Committee to become the grilled rather than the griller, but that’s a different perspective by which to look at things.

I think you’re right-there are big issues around here about relationships in our democracy and about how our country is governed, which our two Select Committees are looking at in slightly different respects. We’re probably slightly more on the ground and immediately looking at where the Government is going to, what its philosophy and thoughts are, and its general direction in relation to specific policies about localism. As you say-and I notice the word you use, "stratosphere", which you used in a previous evidence session-you are taking a more long-term view of the generality of relationships between central and local government and how we can perhaps do something on a permanent basis with regard to them.

I think that builds on, as much as anything else, the Balance of Power Report, which as a Select Committee we did in the last Parliament, which again tried to look at that long-term view: what was the balance of power, how has it changed and what could we do to change it in future? So I think the three of those do mesh together, and I think if we are going to make some significant change in this area, it has to be with a general support of parliamentarians across-party. And I think, therefore, to have two Select Committees looking at issues-we have had our previous report-and to work to try and get some agreement, I think, is really helpful. Change is only going to come about through that sort of method.

Chair: Excellent. Well, we will ask the Members to ask their questions. Steve, I understand you have to leave, so you by all means go first.

Q268 Stephen Williams: I would like to go straight into local government finance, as that is an area that interests me as a former county councillor and councillor in the past. When we took evidence from Simon Jenkins and other people such Tony Travers in the past, they said that really one of the big differences between our local government system and those abroad is the ability to raise your own taxes and the breadth of those taxes in the many other authorities abroad. You might have a sales tax, property tax, income tax, business tax, hotel room tax, et cetera, whereas in Sheffield or Bristol we only have council tax, and we can only vary that slightly subject to a national cap and only within the bands set by Parliament anyway. So there’s not that much discretion at all. Did your Committee come to the conclusion that if local government is going to have more power and be of more meaning to its electors it really ought to have more discretion over its tax base?

Mr Betts: Yes, I think we had our report on the balance of power. We had a previous report in the Select Committee on local government finance in the last Parliament as well, so the two go together. I think very much we were of that view that if local government is going to have genuine ability to act on behalf of its communities in an independent way-all right, there will always be things that are prescribed from central Government that central Government requires local government to do, but if there is going to be a genuinely greater freedom at local level there has to be a freedom over financial resources.

We concluded in our previous report on finance that you did need an element of central Government funding to equalise the difference between needs and different resource levels in different authorities. Roughly speaking, you could achieve that if about one third of local government funding came from the centre, which meant two thirds would have to be raised locally. Then you look at what those possibilities might be. Obviously, council tax, we suggested, would remain. I know there may be slight difference of political opinion on that, but we felt that with some reforms it could be made more progressive. You can bring business rate back to local authorities, then you could probably give them the ability to raise some level of income tax but with a requirement, of course, that central Government would reduce theirs. So that’s the sort of direction that we travelled in on both our reports.

Q269 Stephen Williams: Did you look at things like locally set hotel taxes, for instance, in areas that have high tourist pressures? I know that has been discussed in the past.

Mr Betts: I think we probably felt that there wasn’t any general panacea around on those. There may be relevance to some authorities, and I think our general view was if local authorities wanted to do that, there should be a general freedom to do it, rather than the prescription from the centre. But in terms of the general freedom to local government it wasn’t going to come perhaps from hotel taxes. I think sales taxes are problematic with relatively small local government boundaries because people cross over them, but they’re not quite the size of some of the administrative units you get in the United States where it probably isn’t worthwhile driving four hours to buy something more cheaply, but driving down the road for a quarter of an hour probably is. So, hotel charges: maybe that should be a local discretion. We felt that the three elements, council tax, business rate, income tax, were probably the main basis for greater freedom.

Q270 Stephen Williams: Did your Committee take any view on whether the setting of an existing tax or the introduction of a new tax should be a decision for the elected Members alone or whether there should be a referendum, for instance, of the citizens of Sheffield?

Mr Betts: I don’t think we specifically commented on that, but I think our general view-and I think it accords with some of the evidence that you’ve taken from people like John Stewart and George Jones on this-is that we effectively live in this country as a representative democracy. I certainly do feel there is a case for referendums in certain circumstances, but we shouldn’t be fast and loose with that. I think we should try to reserve those for general constitutional matters and, therefore, I certainly have a personal problem with the referendum requirements in the Localism Bill. I think, actually, those tax matters are for elected representatives to deal with.

Q271 Stephen Williams: Yes. As an aside, Bristol about 10 years ago had a referendum on the level of council tax and, lo and behold, the population voted on a majority for there to be lower taxes, but there were significant variations in different parts of the city as to how people voted.

What about capping? Did your Committee take a view on whether there should be any national constraint on a local authority in terms of the level of taxes it could impose on its locality?

Mr Betts: We came out very strongly against capping.

Q272 Stephen Williams: There should be none at all?

Mr Betts: That was the Committee’s view. We certainly didn’t find favour with it in any particular circumstances and we looked specifically at council tax capping and were against it. I also have a personal view, although I accept I’m here as Chair of a Select Committee: I have refused to vote for capping arrangements in the last Parliament and the one before when proposed by my own Government. I just don’t feel that as an elected Member for Sheffield I’ve got a right to comment on the detailed financial arrangements of some local authority whose circumstances and particulars I have no knowledge of. I’m not saying I have no interest in it, but certainly not as much interest as the local council that is elected in that area.

Q273 Chair: Clive, we’re looking at the broader democratic framework; that’s the role of this Committee. So we’re not necessarily into all the nitty-gritty and detail. But "framework": the very word implies clarity of relationship between local and central Government. Some Members feel to various degrees that that doesn’t exist currently, which leads us to an ongoing discussion about codification: actually writing down what are the responsibilities of local government or central Government. What happens where there are clear overlaps, including overlaps of interest? You referred to this obliquely in previous thoughts from your Select Committee before you were Chair. What is your general view on that overall challenge?

Mr Betts: If I could just divide the question into two parts. First of all, I think there is a need for some sort of long-term settlement as to the responsibilities and relationships between central and local government, particularly in what is still and will remain a parliamentary democracy. What are the rights of local government within that parliamentary democracy where Parliament is sovereign? When we looked at it as a Select Committee, we identified two possible bases for such a code or agreement. One was the Concordat that was signed between the Secretary of State and the Chair of the Local Government Association in the last Parliament. I think that, actually, on reflection is not a great starting point, and I think Simon Milton and Margaret Eaton when they came indicated that it was a product of its time, rather than something for the long term.

If you look at the European Charter of Local SelfGovernment, you’ll find something with a greater degree of permanency. It talks about more general principles. We signed up to it as a country, but I think if you put that into a legislative format so it was something we had to have regard to, and it was something there and something that both Houses of Parliament had agreed, that would be a basis for a long-term good relationship where local government would have a greater standing. It is never going to be equal in parliamentary democracy but, certainly, it would have a long-term status we could look back on.

I know you’ve looked at the idea, which I think is interesting, about having some sort of lock where both Houses of Parliament would have to agree a change-a bit like the Parliament Act 1911. I think that’s an interesting concept to look at. What as a Committee we proposed as well, which I think you’ve had further discussion about, is the possibility that once you have adopted the European Charter, you require Government, whenever it produces legislation, to do an assessment as to the impact of the legislation with regard to that particular charter, which is now part of our legislative framework. Then you set up a Joint Committee of both Houses to evaluate that response to see if we are chipping away at the rights and responsibilities of local government, often in an unforeseen way. I think that would then mirror what happens with the Joint Committee on Human Rights, and we could do that in a similar way. So I think you can create a framework that certainly doesn’t bypass Parliament; it actually makes Parliament more relevant to the process. I think as parliamentarians we should actually welcome that.

I think there’s a separate issue about the specific responsibilities of central and local government. I think it’s very difficult for a Committee to write down. It’s something that will probably evolve as well. The Charter has a degree of permanency that creates the basis upon which we operate, but I think you can then begin to look at how relationships might be agreed and how they may change over time. You look at the models in other countries where there is, I think, a more equal basis between central and local government as a matter of principle, you then do find more responsibilities at local level and they aren’t chipped away. The Swedish system isn’t perfect. It’s not that they’ve never had any contentions between central and local government, but it does seem that there’s a more stable relationship.

The Spanish system is an interesting one, in that they have an asymmetrical democracy-we probably should not demur from that, because we have the Scottish and Wales situation, which makes our democracy asymmetrical. You have a list of powers for the regions in Spain-I know it’s not quite the same as local government but it’s an interesting example-and the regions negotiate with central Government the powers that they are competent to perform. There’s approval by Parliament on the one hand-so it isn’t just Government agreeing, it’s Parliament-and then there’s a referendum in the region that locks that agreement in place. It can’t simply be undone by a simple legislative change in Parliament in the future. I think that’s an interesting development that began in Catalonia and the Basque Country, but it has moved to other regions of Spain who have embarked on a similar process. That lock of a referendum-it’s something that Simon Parker from the New Local Government Network mentioned when he came to see you-is an appropriate and proper use of a referendum, which might actually give permanency to a particular constitutional relationship between a local authority and Parliament on a specific list of issues and matters of competencies.

Q274 Chair: One last thing from me. We’ve talked in Committee-certainly I’ve talked in Committee-about the fact that I welcome many of the things that the incoming Government have done on freeing local government on, for example, community-based budgeting; and in creating, certainly in a field I’m concerned about, the early intervention grant, although it is not ring-fenced; and in a number of other efforts to push responsibility and discretion to local areas, which I’m quite happy to go on record as welcoming.

In one sense, an incoming Government tends to be quite fresh and radical for the first year, 18 months or two years historically, then starts to become much more incorporated into the Whitehall machinery and a little less daring, perhaps, in its policy prescriptions. Being greedy, I’m wondering whether we can take this high-water mark where I think we are at the moment and ensure that that moment is captured in the relationship between local government and central Government, rather than perhaps one that could have been taken at any point in the last 25 years where there was an atrophy of the strength of local government and a reinvigoration and strengthening of central Government. This would be from a localist point of view-I speak as a localist-a great time to snapshot that relationship rather than perhaps the one that existed some time ago. I don’t know what you feel about that.

Mr Betts: I’m probably a little bit more sceptical of the localist agenda, although I don’t want to be too prescriptive about what the Select Committee eventually may come up with in its localist inquiry because we still have to conclude our deliberations. I think you are right that there is a general support for localism as a concept-people often mean slightly different things by it-or as a way to reinvigorate our democratic processes. There is a mood that should be tapped into, and I think one of the things that came out of your previous hearings was that we didn’t just need a constitutional change-we need a culture change as well, and I think the two go hand in hand.

But I think we also have to be careful because George Jones made the point-what he called the problem of sublocalism-about local government in this context being bypassed by central Government. I think Jessica Crowe made the point about chaotic accountability, where you end up on the ground with things like free schools, police commissioners, and GP commissioning, and there’s no obvious way in which all this hangs together in the sense of a coherent form of local self-government for areas. The mood music might be right, but we don’t necessarily have it completely thought out. So I wouldn’t want a snapshot. I’d want to take a snapshot in terms of the mood and the general support for it, but probably not all the details.

If you look at the Localism Bill-I don’t know if anyone has ever actually sat down and read the whole thing; I think I’ve read most of it-and at the degree of detail about how local councils should go about their scrutiny functions, their specific management functions and how they should initiate neighbourhood planning in their areas, it is incredibly prescriptive. Now, there will always be a need-and this is the case in Sweden when we looked at it and I think the point has been made by other people-for central Government to require local government to do certain things, but the degree of detail that it prescribes those things to be done in, I think, is one of the real problems we have in this country. Can’t we just say to local government, "This is what we need you to do. You get on and do it in the most appropriate way for your areas"?

Q275 Andrew Griffiths: We can have an academic debate about the role and the relationship between central Government and local government, but we are all practical politicians, and what I think we want to see, and what our voters and our residents want is better services that are more reactive to their needs and their concerns. We saw the general power of competence given to local authorities by the previous Government, which wasn’t taken up widely; it wasn’t well used at all. We now have the general power of wellbeing handed to local authorities. Do you think that’s going to deliver the kind of empowerment to local authorities that the Secretary of State suggests, and do you think councils are ready to try and grasp it and take it forward?

Mr Betts: The power of wellbeing was actually given by the last Government and there’s been a problem about it. I think that it was well intentioned, and I think when the Secretary of State, Hazel Blears, at the time, came to our previous inquiry, she said that she was prepared to look at the power of general competence or the general power of competence-I’m not quite sure whether there is a difference between them-but she didn’t feel there was a material difference between that and the power of wellbeing. The problem is the lawyers got hold of the power of wellbeing and the councils got cold feet about using it. I think that is accepted as to what happened. It wasn’t a problem with the initial idea, but how lawyers interpreted it.

Yes, I’m very much in support of the general power of competence. It should remove in some cases the problem of vires when councils don’t know whether they’ve got the power to do something or not, because generally now, unless they’re restricted from doing something, they should be able to get on with it. The problem about it being seen as a panacea for the need to rebalance our relationships between central and local government arises from the premise that councils can do anything that isn’t prevented by current legislation, and they also have to do things that are required by current legislation.

If you begin with current legislation, which is heavily centralised, that is the setting in which the general power of competence is put into place. I think it’s fine, but in a different era where we have actually rebalanced the relationship between central and local government, that power would be much more effective. So I think it has to be seen as a creature of its time. It’s a welcome move, but it is not a panacea. A second slight problem is the catch-all clause in the Bill that says the Secretary of State at any time can override the power of general competence and stop a local authority doing something he doesn’t want it to do, and I think that’s not terribly helpful.

Q276 Andrew Griffiths: But you will always find that’s a fundamental problem-the local authority and central Government and Secretary of State butting up against each other in the worst of cases when, for example, we have a Baby P case, or we have a local authority that decides to give a chief executive £300,000 a year, or those sort of worst cases when there is a clamour by the general public and the media to say to the Secretary of State or to the Minister, "This is outrageous. What are you going to do about it?" Isn’t it the case that there will always be a need for the Secretary of State to have that kind of overarching, overriding power?

Mr Betts: I’m not sure. I think probably not, because I’m probably an ultra-localist and I want to see the cultural change I referred to, as well as the constitutional change. You are absolutely right. When we went to Sweden on our visit, people were just amazed, because it was the time of the Baby P case and they could not get their head around the idea that the Secretary of State was standing up in Parliament dealing with the tragic death of one young boy in one local authority, where the responsibility for dealing with it was with the local authority, its elected representatives and appointed officials. They could not see how the Secretary of State could possibly be responsible. How could he know about it? How could he have hands-on expertise? How could anyone have come to him before the baby died and said, "There’s a problem here. How do we deal with it?" Well, of course he couldn’t, and there is a misnomer.

When my good friend Ann Keen came to the Committee to give evidence as Parliamentary Undersecretary of State for Health, we had an interesting little discussion, as there was just no concept of anything other than absolute responsibility for the Secretary of State and the Chief Executive of NHS in the system. That’s where all responsibility lay at the end of the day, and I think we’ve just got to get away from that. And let me say it isn’t just Ministers. I rather like Eric Pickles’s comments about ending ring-fencing, because it’s just a way of politicians getting publicity. He’s right. Specific grants have been wonderful opportunities for Ministers to get photoshoots and issue press releases. Because if you can give one grant a year but then you go on and give 10 grants a year, you get 10 times as much publicity. That’s the thought behind it. There is a culture of ministerial involvement in things they’re not directly responsible for.

I’m not just criticising Ministers here. Opposition spokespeople are just as bad. If the Minister doesn’t take responsibility, there will be someone from the Opposition Front Bench saying, "Why aren’t you doing something about it?" And if neither of them do it, then the press will say, "Why have Ministers abdicated their responsibility?" Of course, you’re right: the public expect the Government to do something. The bins don’t get emptied, so you expect the Minister to say something, even though the Minister has no power to do anything about it at all. So I think there’s a need for cultural change, and I do not necessarily accept that we have to have these catch-all clauses for Ministers to even be given powers to interfere in things where they are not competent and for which they don’t have direct responsibility.

Q277 Andrew Griffiths: That sort of leads on to accountability in local government because I think, historically, there is a great deal of scrutiny nationally by the press, by think-tanks, by study groups who look at Government policy and how it’s operating. There is a great deal of scrutiny and accountability. That is often less apparent in the way in which the Government operates, principally because people don’t have the opportunity, the wherewithal or the time to delve into the workings of local government and the effectiveness of it. The scrutiny system is part of the Localism Bill, but what do you think needs to be done to increase that level of accountability? If local government wants to take on more power and responsibility, how do we then ensure that there is a proper level of scrutiny that the council taxpayer can use to hold a council to account in a much more effective way?

Mr Betts: I’m not sure you can prescribe that from the centre. I think that if you go and look at local authorities, what you’ll find is good examples of scrutiny practice in some authorities, but others don’t do it as well. But I think that’s one of the strengths, not the weaknesses, of the local government system. Those examples of good practice will eventually be looked at and learned from by other councils. It’s a bit like looking at a thousand flowers bloom and thinking, "We’ll get some failings".

You can’t have a system of devolved local government in this country and not have some failings. Of course, people will always point to those. What you also get are great successes and innovation happening by having more power down at local level, and if what you get as an alternative is a prescription-and there’s an awful lot of prescription about scrutiny in the Localism Bill. Most parliamentarians won’t have read the Bill-let’s be honest about it-so why do they have to prescribe in that sort of detail how local authorities go about their scrutiny functions? I think that’s just a practical thing.

In terms of the climate in which the system operates, I think that it was Tony Travers who talked about the Stockholm syndrome, which you have also talked about. In the end, if councils feel they can blame somebody else-and it’s all down to them telling us how do it; "We wouldn’t really do it this way if we had a choice"-that’s what they’ll do and there’s always a fall-back. There’s always a cover. There’s always someone to blame.

Wherever you have the sort of system where there is so much prescription from the centre, you won’t get the sort of responsiveness and the more active participation by councils in some of the decisions that we ought to see. I think that that climate there has grown over the years. It is not that that councillors are not adequate, intelligent, well-meaning or hard-working, but they’ve been put in a situation where they’re not expected to take responsibility for these things because it’s somebody else’s fault.

Q278 Andrew Griffiths: I agree with you to a degree. I remember sitting in a countrywide meeting of local councillors where the then Shadow Secretary of State was outlining a plan to scrap housing targets and the central listing position of housing numbers. A well-meaning councillor stood up and said, "But if you scrap the targets we won’t build any houses". She couldn’t quite get into her mind that if the Government didn’t demand that they build houses in her ward or her borough, houses could still be built. The question is: are there some areas where there needs to be that level of demand from central Government?

You said there is best practice out there and it will eventually filter down. But isn’t the problem that the least-performing councils don’t want that level of scrutiny? If you’re not performing, the last thing you’re going to want to do is to shine a light into the darkest recesses that highlight just how badly you’re performing. So your suggestion is that, unless it’s driven centrally and there’s a central driver behind it, isn’t the danger that the worst performing councils will try and hide what they’re doing and will get less accountability, not more?

Mr Betts: You’re always going to have ranges of performance. I don’t think you’re ever going to get away from that. I think it’s important that there is some mechanism of trying to compare performance between authorities. It’s very difficult, as you need some sort of comparable data. It’s fine to put every bit of expenditure above £500 on a website, but it doesn’t really give a feel for whether one authority is spending its money better than another in delivering certain services.

There are concerns about the Audit Commission being abolished. I accept that the body has gone, but how do we deal with that value-for-money function? I think that’s a function for local government. I think the Local Government Association is much more proactive in these fields and I genuinely believe that there is a role for them in trying to assist and help with authorities that are not performing to the level that other authorities in similar circumstances are. When Merrick Cockell gave evidence on behalf of London Councils, he talked about councils being lifted up by assistance from other councils in the London area. I think there is a lot of that now we can look to, for local government to come forward and help itself.

The other point you make is an interesting one. Even in my brave new world of European charters being enshrined in legislation and this extra scrutiny on what central Government does in relation to taking powers away or adding responsibilities to local government, there will still be tensions-of course there will. In Sweden, central Government lays down the general requirements for social services and local government delivers it on the ground. There’s always rumour and tensions, for example over mental illness responsibilities in Sweden recently.

Housing is a case in point. If we have a national need to house our people, how do we do that if the sum total of all the housing approvals from local planning decisions don’t add up to the total of houses you need? Of course there are going to be tensions. I think one of the issues that you discussed previously was the issue of Gypsy sites, which is a very contentious one. There is a need nationally for us to have sufficient sites for Gypsies and Travellers to go on so that they don’t illegally camp and cause all the problems we know that illegal encampments cause. There are going to be tensions in those areas, but there ought to be a better way of resolving them. I don’t think that means shoving everything down and pretending there’s no national need, but neither is it about being so prescriptive at the centre that you upset everyone locally.

Q279 Andrew Griffiths: Yes, but the reality is that you open the papers today and you see the Prime Minister being criticised by a mum because of the lack of respite care provision for her mentally handicapped child, which is a provision that the local authority, the county council, is responsible for. That’s not a Government provision. So Ministers will always ultimately be held accountable.

Mr Betts: But that leads on to the other point, that until we have some system of local finance that allows more money to be raised locally, and more accountability for how it’s spent locally, we’re always going to get that. But I think one of the other phrases was, "The Prime Minister is in danger of becoming the mayor of England"-not this Prime Minister but prime ministers in general-and people just hold them to account for everything.

Q280 Chair: If I might just follow on from Andrew. Where there is a settlement, for example in Wales or Northern Ireland or whatever, certainly within Parliament, the Speaker will say, "That is not a matter for the Secretary of State". In a sense, it’s a two-way street. If people take the responsibility they will be held to account for it; if they can stand up and say, "Sorry, that’s not something that is in my jurisdiction; I can oversee the whole policy but not the minutiae", you’ll still get political knock-about-we know that-but if there’s a framework it makes it much easier to manage at parliamentary level.

Mr Betts: I think Andrew was right when he said that central Government was always going to have its priorities, but for heaven’s sake, let local government be responsible for implementing, with the best local solutions, at local level.

Chair: I’m keen that we don’t offend our guest by wandering too much into the detail that is his Committee’s responsibility rather than what our responsibility is about. Should the relationship be codified? If so, what would be appropriate? How would we entrench that? Those things are very clearly in our terms of reference, so we’ll focus on that.

Q281 Mr Chope: That brings me on to the question I was going to ask. I don’t know whether you’ve ever been a member of the Congress of Local and Regional Authorities in your long and distinguished career.

Mr Betts: Not that I recollect, just offhand. I’ve been so many places that it’s difficult to answer.

Mr Chope: But my understanding is that members of the Congress of Local and Regional Authorities are charged by the Council of Europe with the responsibility of promoting the values of the Council of Europe in relation to democracy, human rights and the rule of law at local and regional level, and it was under the auspices of the Congress that the European Charter of Local Self-Government was established.

My further understanding is that we send lots of councillors from this country to become members of this Congress, which meets twice a year in Strasburg and is funded, to the extent of at least £6 million, by the Council of Europe itself. We send these members to the Congress, as do 47 other European countries, and they then have the ability under their constitution to, in a sense, police what they have in their Charter.

Isn’t that a better way forward-to effectively give these people the opportunity to pass comment on what they think is happening in the United Kingdom; to visit us to see what’s happening on the ground, then if they come up with critical reports, we can debate them in Parliament, your Committee can look at them and so on-rather than try and entrench what is effectively an advisory document, the European Charter of Local Self-Government, within our own domestic law? Won’t your proposal lead to exactly the same conflicts that we have as a result of entrenching the European Convention on Human Rights in our law in the form of the Human Right Act 1998?

Mr Betts: Well, I’m not sure, on the second point, that that has caused us problems. I think it’s more the fact that they’re now with UK judges rather than with European Court of Human Rights judges, in that you don’t have to bypass the UK legal system. On the other point, quite frankly, I don’t think I want to give a blind bit of notice to a few councillors coming over from other countries and policing our system and issuing a report.

Sometimes I’m critical, and I know you’ve asked questions of local representatives at your inquiry about why they haven’t stood up and shouted more. I think they’re almost at the point of thinking it isn’t worthwhile in the current arrangements that exist in this country; they are a subservient form of government and they get given what central Government gives to them, and I think that’s how they feel. They ought to be a bit more proactive in coming forward and saying, "Look, Government, you’ve agreed to this charter, but what you’re doing is inconsistent with it". However, I’m not sure that that would make a great deal of difference. I think we have to take a leap forward, a step forward, to change the relationship.

Q282 Mr Chope: That’s very interesting, because at the moment I’m charged by a Committee in the Council of Europe with looking at the value for money we get from the Congress of Local and Regional Authorities. Your response indicates that we’re not getting very good value, and one of our ideas is that we might get better value and there’d be more direct accountability if, for example, the UK contribution was funded by the Local Government Association directly and that the LGA paid. Then they would expect that the people who went off to this Congress would take a more active part in it and so on.

That’s by the bye. Your idea is essentially an advisory one, isn’t it? This charter talks about proportionality, acting on the importance of interests-all that sort of stuff. If we incorporate that into our law we’d create even more work, wouldn’t we, for the High Court in judicial review and legal challenges?

Mr Betts: Of course that’s always possible. You get challenges now about responsibilities between central and local government. The Secretary of State for Communities and Local Government has been in the courts with regard to the regional special strategy, so you’ll never get the courts out of this. You mentioned a framework within which relationships operate. There are a series of principles here. I accept they are open to interpretation, and any set of principles are.

I was trying to draw the distinction between something that isn’t set in stone, like the European Charter of Self-Government-it doesn’t set in stone the absolute responsibilities for particular services in a way I think the concordat did and was, therefore, more frozen in time. It lays down a basic set of principles on which you can judge the actions of central Government in relation to local government. Then you have a more dynamic situation where you have an agreement on what powers are devolved to local government, which can change over time and can be done by parliamentary agreement and local referendums to back them up, so the two go together. So I don’t think this is going to achieve a permanent status quo. I think it sets a basis on which those relationships will be judged in the future.

Mr Chope: Uniform business rates: I can’t let that go unchallenged, because I was the Minister responsible when we brought in uniform business rates, and we did so, because the power of some councils that had a disproportionately large number of businesses and substantial revenue from business rates. They were pushing up the business rates in their areas, thereby causing a problem for the national economy. The consequence of very high business rates in places like Liverpool-I’m not talking about Sheffield necessarily-was that businesses were being driven out of those areas. They certainly weren’t being attracted in.

Ultimately Government was having to take responsibility for picking up the tab for the wastelands, so Government decided that we would remove from local authorities their discretion to penalise businesses, raise more income locally, and introduce the uniform business rate. The consequence of that uniform business rate is that all the money comes into the centre and is then distributed from the centre back to local authorities. Your idea of saying, "We’ll abolish the uniform business rate and let individual councils recover all the money from their own local businesses", might work very well in London or in Sheffield or in the centre of Liverpool, but it wouldn’t work very well in those parts of the country where there isn’t much in terms of business rate revenue and where there isn’t much business value.

Even then, if you did abolish the uniform business rate, you would have to have a more complicated grant system whereby you redistributed or took away from the richer councils, in terms of business revenue, a proportion of that revenue, brought it back to the centre and then had to redistribute it to the councils who do not have so much business property in their area. So you’d still have the same problem of, as you would see it, interference from the centre but it would be a whole lot more complicated than it is at the moment.

Mr Betts: I’m not sure you could get anything much more complicated than the current system of local government finance, but my understanding, going back to when I was on the council in Sheffield in the 1980s, is that the change in the centralisation of the business rate came at the same time as the introduction of the poll tax. The two went together because the rating system as a whole was abolished. Previously, we had rates for domestic and business properties, which were linked together.

There was a domestic rate deduction in relation to tax. Essentially, the rate in the pound was fixed and you could only increase one at the same percentage you increase the other. So that’s the system, as it was, and I think you could link council tax back to business rates so you could only increase one at the same rate as the other. If you do something like that, that wouldn’t be a great problem. But the difficulty is: if you don’t put some responsibility for raising business rates back to local government, where else do you create the base for raising local taxation in a way that frees local government up?

The other thing I would say is that even when we had business rates in that way-and recognising some authorities have a greater capacity to raise business rates than others-the equalisation process on needs and resources was done in those days. As long as you keep it to about one-third of total Government revenue and allow them to raise two thirds themselves and have central Government grant for one third, which then can operate that redistribution system, you can make it work, and we did it before the poll tax came in. We had a system that worked and it was certainly no more complicated, in my experience, than the current system.

Q283 Mrs Laing: I think we’ve just about covered everything. Can I just clarify something? In considering what codification would achieve, would it be right to say that if, as at present, you don’t know where the buck stops, and if you don’t know where the responsibility lies either with local government or with central Government or with another tier of local government, effectively responsibility lies nowhere?

Mr Betts: Very often, that is the case, but generally speaking it tends to lie with central Government in most cases, I think, or central Government thinks it does and that’s where some of the tensions come in. We just discussed Ministers taking responsibility for things they aren’t really responsible for.

Q284 Mrs Laing: Certainly. I think your description about the outside view of the Baby P situation sums it up brilliantly. I like the logic of your description of why there should be no capping-and it is a perfectly logical situation. If the voters in the local authority were to elect an extreme party to run that local authority, and that extreme party was to put up local taxes enormously and follow through other policies of which none of us might approve but which would be their policies, in that case, should central Government stand back and do nothing because there is autonomy and would the voters who chose that party just have to live with it?

Mr Betts: Yes, to some extent. I think there’s a difference between a party whose views you don’t agree with, who come in and raise taxes beyond that which most people in Parliament or Government might think is appropriate, and a party that came in and was corrupt in some form. I think there has to be a fall-back point, and I talked about some cases where there is just incompetence where the Local Government Association may be able to help. There maybe has to be a fall-back power where an authority is absolutely corrupt. And authorities also have to have regard for central Government policies in a variety of ways.

That’s true in every country in the world. I take the Swedish model where social services have devolved responsibility, but there are requirements about certain standards that central Government lays down. Now, in the end, central Government can intervene to enforce those standards or the courts can intervene. That’s the other possibility and you can just take a council to court for not fulfilling the requirements that are laid upon it. So it’s not a complete separation. You’re not creating a series of independent republics through this process, but I think it’s about rebalancing the relationship.

Q285 Mrs Laing: On the other side of the coin-the amount of work that is given to local authorities to act as agents of central Government-do you or your Committee have a view on how codification might solve that problem? I get complaints from my own district council, very reasonably, that the Government-I am, of course, referring to the last Government-required so much of them. It was always sending out tasks that had to be done-and we all know what they are because we passed the laws that let them happen-of one kind or another, which cost an enormous amount of money to the local authority, but no funding came from central Government to enable the tasks to be done. Is there a view on that?

Mr Betts: Yes. All governments do it.

Mrs Laing: Yes, they do.

Mr Betts: There’s 140 order-making powers in the Localism Bill; Lord Heseltine’s bonfire of the quangos. There were so many more orders within a few months of that measure being announced. Of course they do it-they can’t resist it. It highlights the issue. They have to go through a process. The European Charter is the basic set of principles, but if you have to go through a process of analysing each Bill against it, it will focus minds on what is happening and where those extra responsibilities lie. It might be right that central Government does it-it might be agreed at the end of the day-but at least it will be highlighted, then if you go on and have more formal agreements between Parliament and local councils about where responsibilities lie in cases and what powers can be devolved, that adds a further bulwark against this sort of thing happening.

Q286 Chair: I think we’ve seen from our witnesses that codification or a framework need not necessarily be on the European basis or on the European model. A number of witnesses came up with certain things that they felt should be in a code. What we’ve done as a Committee is ask one of our witnesses to talk to all the other witnesses and see if there’s some common ground there. Would your Committee be amenable to interacting with us as that development takes place, and trying to draft something sensible that then perhaps both Committees could discuss, or you could help advise this Committee on a way forward?

Mr Betts: I would hope so, Graham. I obviously haven’t talked to the Committee about it, but that’s a logical approach to joint working, which gives us something that is appropriate for our needs and circumstances in this country. I’ve quoted the European Charter, because it’s the best thing I’ve seen. I’m not saying it can’t be improved and indeed the requirement, if you adopt the European Charter, is that you only have to take up so many of the articles. You don’t automatically have to take all of them up. So there is a selective process there.

I think it’s a good basis to start from, but I’m perfectly amenable about going back to the Committee and saying, "We have an offer here to try and work something up that deals with our particular UK requirements", and that seems to be a very good way forward.

Chair: Great. Well, I think we should all keep talking on this. The Committee has certainly not made its mind up one way or the other on a code-or not a code-and on whether to progress that or not. We’re still in the throes of thinking about these issues but, nonetheless, I think if we continue to talk between the two Committees that can only be beneficial to all of us. If there are no more questions, Clive-Chair-thank you very much for attending this morning.

Mr Betts: Thank you very much, Chair.

Chair: Thank you very much for your extremely helpful and pertinent comments.