To be published as HC 163-i 15

House of COMMONS



Communities and Local Government Committee

Community budgets

Monday 20 May 2013

Sir Merrick Cockell, Mr Paul Raynes and Ms Laura Wilkes

Evidence heard in Public Questions 1 – 37



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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 20 May 2013

Members present:

Mr Clive Betts (Chair)

Simon Danczuk

Mary Glindon

James Morris

Mark Pawsey

Andy Sawford

John Stevenson

Heather Wheeler


Examination of Witnesses

Witnesses: Sir Merrick Cockell, Chairman, Local Government Association, Mr Paul Raynes, Head of Programmes (Localism and Finance), Local Government Association, and Ms Laura Wilkes, Policy Manager, Local Government Information Unit, gave evidence.

Chair: Good afternoon, everyone, and welcome to our first evidence session for the inquiry into community budgets. We want to do the declaration of interests from the Committee first, before we get on to the evidence. I must declare I am a VicePresident of the LGA.

Andy Sawford: I have just accepted an invitation to be a VicePresident of the LGA. I think that is confirmed at your July event, but I was until my election in November the Chief Executive of the LGiU.

Heather Wheeler: I am a VicePresident of the LGA and I am also a Board Member of the LGiU, and my husband is now a Board Member of the LGiU-as a Councillor, that is.

Q1 Chair: Let us get that on the record. Once again welcome and thank you for coming. Perhaps, for the sake of our records, you would just say who you are and the organisation you represent? That would be appreciated.

Paul Raynes: I am Paul Raynes, and I am Head of Programmes at the Local Government Association.

Sir Merrick Cockell: I am Merrick Cockell, and I am Chairman of the Local Government Association.

Laura Wilkes: Laura Wilkes, Policy Manager for the Local Government Information Unit.

Q2 Chair: Thank you very much for coming this afternoon to be with us. I suppose the whole thing about community budgets is that everyone thinks they are a great idea, but we always seem to be having new initiatives. When are we going to get the real thing?

Sir Merrick Cockell: I think we are moving in that direction. As you know, the four national pilots were not expected to have delivered community budgets at the end of the 10month period; they were supposed to have shown whether there was a future, establish the principles and whether they were likely to work, save money and improve services. I think they have done that. We are now at the next stage, certainly in those four pilot areas, of getting on and making it work. Clearly there is Government support in the next stage, but crucially the next stage should not require permission from Government to just get on with it, nor should it be restricted to being a member of a network, or being a pioneer, or anything like that. It should be possible for any area to decide that they simply want to get on with it, and hopefully Government, where necessary, will break down the barriers to make sure it is possible.

Q3 Chair: So we are moving forward, basically? We are making progress?

Sir Merrick Cockell: We are making progress, but now is the time to move from an acceptance that it is validated, the potential savings are there, how people would get on with it, to delivering. There is no reason now to hold back on that next stage, I would say.

Laura Wilkes: What I would say is that what we have seen so far is that community budgets work. They will not be a magic bullet, they will not solve everything, but we have seen that they can make savings. We already know that they are looking towards improving outcomes in local areas, and we have some evidence around this, but in order to really take it forward from this point on what we really need to see is greater engagement across Whitehall. This cannot continue to be just a DCLGled programme. It needs to go much further than that: collaboration across all central Departments.

Local authorities need greater freedoms and flexibilities to spend locally how they want to, to match funding against particular outcomes that are important locally, and we also need Government to support the programme generally in moving forward, support from central Departments in enabling local authorities to take this forward. I also think there is plenty councils need to do, so they need to have clarity over their visions and what they want to do with their community budgets. They need strong local partnerships if they are to work together to take this forward. Finally, there is some work that needs to be done around evidence gathering and spend mapping, but I do not think that is the beall and endall. It is part of the picture, but not all of it.

Q4 Chair: I suppose that leads on to what you would like to see from Government in the next spending round. What particular things do you think Government could do to encourage and incentivise Departments to get involved, and in particular are there some Departments beyond CLG that are actively supporting, or others that perhaps are not as enthusiastic as they might be? Name names if you want to, though we could probably have a guess.

Laura Wilkes: In terms of moving forward and looking across Departments, greater freedoms and flexibilities are needed, and that is not necessarily about money; that is about ensuring that local authorities and their local partners have the freedoms to match the funding that is available against the outcomes they want to try to achieve. I do not know that it is necessarily about the next spending round. It is much more about freedoms and flexibilities.

Paul Raynes: Although it is worth saying there are some things that could happen in a spending round context, bearing in mind that it is a oneyear spending round and it is not going to set out multiyear budgets. We have put a number of suggestions to the Treasury, one of which could be a certain amount of bringing budgets together across Whitehall Departments, and maybe setting conditions on how those are released, making them conditional on actual integration activity on the ground. The conversation about the whole idea of a placebased budget has reopened a little over the last few months, on the basis of the evidence that has been coming out of the pilots.

There may also, picking up on Laura’s point, be something about the way in which spend is mapped and identified in places, but all of this comes back to the way in which the various players play in locally, and their financial incentives, and the way in which budgets are set in Whitehall Departments to incentivise cooperation locally. It is tremendously important if you think about the way accountability works, so some progress on that in the spending review would be very welcome.

Sir Merrick Cockell: Yes, just to pick up on that, there has clearly been talk about a lock and key system whereby there may be central Government Departmental funding held back and that that would be released or unlocked against clear evidence that the changes necessary were actually happening. That has, I think, an appeal to it, particularly when it applies to central Government Departments, who probably have to move at least as much as local government has to.

You invited us to identify the miscreants, and I do not think I am going to do that, for obvious reasons, but I would point out perhaps where we are working very effectively at the moment in the leadup to the spending review announcements. That is with Health, where there has been an enormous change in the whole relationship, working very closely with the Secretary of State to look at what may be possible, having seen the work that has been done particularly in my own Tri-Borough, but also in Manchester-in fact throughout the four-in that area of care for the elderly, where it interacts with Health and how we integrate the two together.

Just to point out a difficulty that may apply in some Departments, it is quite difficult to operate community budgets when there is a whole multiplicity of funding streams and schemes going on, and skills might be an obvious area. It is very difficult, when there are so many pots that need different triggers to access them, different rules, different hoops you have to jump through, to then take them to an area; the geography of areabased community budgets works against that being possible. We would certainly look towards a simplification, particularly in some Departments’ ways of operating, which would make community budgets more effective. Other parts of the same Department are working very positively on community budgets.

Paul Raynes: There has been a lot of talk about the idea of meshing national and local programmes through the pilots and through the community budgets’ work, and clearly there are opportunities. The spending round might be one of them. The reletting of contracts for some things after 201516 might be another opportunity. If you want things to mesh, design the gears so that they fit together.

Laura Wilkes: Can I pick up on the point about local spending, just briefly? It would also be useful to look at how local authorities and local partners can use savings that have been realised to reinvest back into prevention. At the moment we have a situation where local authorities might put quite a lot of upfront investment into preventative programmes, but ultimately and in financial terms, it is not the local authorities that reap the benefits of that; it is elsewhere within the system. If we could look at how, when those sorts of savings are made elsewhere, we can reinvest those back into the preventative work that local authorities do, it would be a really useful step forward.

Q5 Andy Sawford: The Government have made a great play of the value of the secondees that there have been to the Whole Place pilots. What is your view of how valuable that has been, and how effective that has been, to the development of the Whole Place pilots?

Sir Merrick Cockell: Paul no doubt will be able to speak in a bit more detail of how those relationships work, but my view is that this is the big difference between community budgets with the pilot areas and previous schemes. It is a familiar landscape, is it not, with Total Place; I am sure we can all go back over the years on the various ideas about pooled budgets. The difference has been the commitment from Government to put asset-in the sense of skilled civil servants-into areas to break down those barriers, barriers that are often created centrally. That has made all the difference: those civil servants, seeing that it works with their own eyes. I have heard that personally, and been in meetings where civil servants who have been based in areas, including in my own area, have been able to reinforce the argument we have been making, because they have evidence of it themselves. It is not a hypothetical theory; they have seen it in practice. That is the important thing. The next stage, of course, is that when we talk about Government investment it is really manpower, people being able to break down those barriers and civil servants being able. It is not about large amounts of money to make the system work. It is actually the people with the skills to be able to do it next.

Laura Wilkes: Sorry, can I come back on that?

Q6 Andy Sawford: I was going to come to you, Laura, but just specifically on that, Sir Merrick, are you perhaps the anonymous person quoted in the Local Government Chronicle? £1.5 million has been allocated for the network, but the person quoted in the LGC says, "What we need is for Departments to buy into this, not a network of highly paid civil servants to trot around the country to take learning to the country and toolkits to local government." That sort of reflects what you were saying about buyin.

Sir Merrick Cockell: That does not sound like me. I would never comment on civil servants’ pay.

Q7 Andy Sawford: It is a broadly similar point, however, to the point you just made about buyin as the next stage.

Sir Merrick Cockell: What was the-sorry?

Q8 Andy Sawford: You just said there that specific resource allocation to the development of pilots was not now as important as the wider buyin across Government and so on.

Sir Merrick Cockell: Yes, the buyin both from local government and local authorities, and the buyin from civil servants, where there is expertise that does need to be spread, but it is not spread by basing people in offices in particular councils or anything like that. It is having that asset that is freely available to whoever, whether, as I said earlier, they are one of the next stage as a pioneer or part of a network or not. Community budgets cannot be something that you need approval to be a member of, as if it was some sort of elite grouping. If there is a problem that needs breaking down or a barrier that needs breaking down, then fine, if there are this group of civil servants, let them-but it does not matter where they are located, if you see what I mean. Anybody should have access to that asset.

Paul Raynes: There is also an Elysium between the secondees in the pilot phase and the network. They are different things. The network is a different thing, designed to do a different job, because we all feel we have moved from what was a pilot phase into a doing phase, into a generalising phase. There is recognition that if you have quite a large number of places now just going for it, you could not put in secondees with the intensity that they were put into the pilots.

Q9 Andy Sawford: On that point: Laura, one of the criticisms from some people who have given evidence to us is that there was not the same investment of secondees in the neighbourhood pilots. Do you think that says something about the value of neighbourhood resource mapping? I know this is something you have worked on-it is in your biography, but I knew it anyway, Chair, forgive me. Do you think this says something about the relative value that they placed on the Whole Place pilots rather than the neighbourhood pilots?

Laura Wilkes: There are two things I would come back to on that. The first is that there was engagement from DCLG, there were staff available, and that was incredibly useful. However, the difference about the neighbourhood pilots is that they should be owned locally, so they should be driven bottomup from communities. I suspect that whilst a secondee would be really useful and a great resource in getting things moving, it needs to be owned by the community and they are the ones who need to drive it, because once that secondee goes, that pilot that goes into fruition still needs to work. If a secondee leaves, they still need to be able to own that.

Q10 Andy Sawford: Could you follow up on this, Laura, and perhaps Sir Merrick might comment as well-it is a point you touched on, Sir Merrick. Do you think that areas outside the network that has been established could be discouraged, in a sense, from taking this forward? What support or opportunities are there for them to take this forward?

Laura Wilkes: I would say that this Transformation Network that has been announced will be absolutely essential, because what we do need is to make sure that the lessons that have been learned from these pilots are shared, so people have an understanding of what is possible and what they can do. We do not want to be in a situation where there are isolated bits of practice all over the sector, and no one sharing that, and no one is aware of what is possible. I would say that network will be an essential part of taking this forward now.

Sir Merrick Cockell: I suppose there is a risk that if you are not a part of that network, you put it off- you think, "Well, maybe in a year’s time"-when actually there is no reason to do that. I have been party to discussions where being part of that network might be a distraction in itself: that it might prevent you from just getting on with it. It is also important to recognise that it should not be dependent on the asset of civil servants. The LGA is giving a lot of advice to local authorities and others at the moment about community budgets, but indeed the four pilot areas, Manchester, Essex, these are very large areas with a lot of partners who have been intimately concerned with the daytoday creation of community budgets in a whole variety of areas. There is a lot of expertise already there, and that is available to be shared, obviously sensibly as well, but it is there for the sector. £1.5 million is really not very much at all. We should not think that everything is dependent on that small amount. It is not. It is part of it, but I would encourage any area to look, whether they are part of the network or not, at starting to make something happen. This is a progressive process, but once you are into it, you will carry on, I would suggest.

Q11 James Morris: Do you think the Treasury has really bought into this, or are they just humouring you?

Sir Merrick Cockell: My experience is, happily, that Treasury is firmly part of this. I think the work we commissioned from Ernst & Young validating the figures is and was crucial. Treasury was absolutely party to that work and has-

Q12 James Morris: Sorry, what figures were they validating, Sir Merrick?

Sir Merrick Cockell: The pilot areas, just to validate the savings that were estimated, and that this was applicable not just in those particular localities-not that community budgets has to be applied in a uniform way, but that the figures stacked up. As I say, Treasury had been party to that process, and as I understand it-Paul may be able to reconfirm this-they buy the figures, in simple terms. Treasury is there, but also the Prime Minister is there. The fact that he personally wrote the foreword to the report or practice guide that we produced, and also the letters that he wrote last week, both to the four pilot areas but also to the 42 areas that have expressed an interest, representing I think over 90 local authorities who want to be part of that network, and wrote to them encouraging them to do that last week, is important.

It is important not only for local government, but it is important that the whole of Government, and particularly Whitehall, understands that this is not something happening somewhere else. If they think it is something happening in town halls it is never going to work. It has to be across the whole of Government, and I hope that prime ministerial message is also being heard loud and clear throughout Whitehall as it is being heard throughout the town halls.

Q13 James Morris: Absolutely. I just wanted to explore, though, this idea of the compulsion to contribute, which is a radical idea. Can you just tell me a little more about it? Would that be Treasuryled, part of a spending review? What sort of percentage money would be within this ringfenced fund? It seems to me that we need to be more ambitious in this area, do we not? We have had Heseltine suggesting there is £50 billion of money that could be put in a single pot, which could be used-you mentioned skills. We spend £14 billion a year on mental health services, and a lot of that could lend itself to community budgets. Paul, could you just talk a little bit more about this?

Paul Raynes: Getting into percentages and figures and so on might be getting well ahead of where the game currently is at, but the important point here in terms of how this plays into the wider public spending debate is that very, very large savings need to be made. There are tremendous rigidities in making those savings straight out of Whitehall budgets, because of the number of ringfences and protections, of which the Committee will be well aware. What was gamechanging about what the pilots did was, precisely as the Chairman said, the Ernst & Young work showed that it was replicable and generated significant savings-not significant extra savings; it is a way of coping with savings that are already built in. The National Audit Office has looked at that work and produced a report, which again makes this significant point that the evidence has always been lacking before and is now there, as a result of what the pilots have done and the way Ernst & Young aggregated it for us, and so going into a very difficult spending round, and looking ahead to a further spending review that will have to happen before the election, putting money together posited on the community budgets model is a way of avoiding some of the very significant barriers to actually making savings at the national headline level.

Q14 James Morris: The mechanism you are envisaging is, I am doing a spending review from the Treasury, I go to the Department for Work and Pensions and say, "Here is your money for your core stuff, but we have this amount of money and we are going to hold it back, and we want you to come to us with 10 projects that could be delivered on a community basis, which would deliver x number of savings." Is that what you are envisaging?

Paul Raynes: On a hypothesis. I mean you could either do this-

Q15 James Morris: Is that the mechanism that you would envisage?

Paul Raynes: We have put a number of possible models to the Treasury, but to pick out two, one of them would be that, which is-I think the Chairman used the phrase lock and key, where people have to come along and say, "Here is an initiative." Another way of doing it would be to trade savings between Departments, simply to allocate to a Department, say, a ration of savings that need to be made, but say, "You must make those savings by working with another Department, or demonstrating integrated working at local level," and then the enforcement, rather than being lock and key, would be through a form of audit. There are various ways in which you could come at it, and I do not think we are-

Q16 James Morris: We talked about civil servants earlier. Do you think there is a way of incentivising civil servants to see the career/financial reward for adopting a more communitybased mentality? I am looking at you, Paul.

Paul Raynes: You are looking at me, so I will answer. Let us answer the question negatively. How are civil servants incentivised at the moment? They are incentivised to account, in a narrow silo, to the PAC, and the acme of a Civil Service career is to sit there in front of the PAC saying, "This is my account of what I did with the budget I was given, with this vote heading on it." That is precisely why we are talking about the sort of models we are talking about, because we want people to want to report, "I have been successful in joining things together," not, "Look at how successfully I delivered within one narrow vote heading."

Q17 James Morris: Just one final question. There has been quite a lot of money allocated to local areas on the basis of the new homes bonus and various bits and pieces, but do you think there is an argument that less well-off areas should be prioritised in terms of investment in community budgeting?

Sir Merrick Cockell: That is a very interesting area. You may have seen-we have not quite gone fully public on it, but we have been doing work on the next spending round, the likely reduction of a further 10% that Whitehall Departments have been instructed to save, and the implications of that. We are looking at probably around 86 councils that, if that reduction came, for every £1 they are spending now would have 85p or less at the end of that next saving round. We think that that is a significant reduction. There are some that are still fully funded, at around at least 100%, so we are not at a tipping point, but those at 85p for every £1 at the moment could be at a tipping point where some of their statutory services and responsibilities are potentially at risk.

I certainly think that if there is to be priority given in community budgets, because many of those areas are those that do not receive any new homes bonus, are not getting a sniff of any of the business rate retention because there is no economic growth in their areas, many of them would be familiar areas to you-some you may well represent. There are a few surprises in it. However, they are not the councils who have the easy capacity to take on community budgets without some support, and our view to Government would be, "If you were going to focus support in the areas most in need, then you should be looking probably towards those 86 or whatever areas, because the potential impact of community budgets is going to be greater there than elsewhere."

Laura Wilkes: The other thing to note on that is that whether they are lesswell off areas or not that are coming forward for support, it is really important that, as a basis of allocating some funding or support to them, they come forward with a clear plan for what they want to do, and a vision, and a sense locally that partners are brought into working differently and challenging how they do things, otherwise I do not think it matters how much funding they get; it might stall.

Q18 Mark Pawsey: Can I follow Mr Morris’s question about the new homes bonus by asking you about the broader principle of payment by results? It is not what we have been used to in the local government sector, and if we move to payment by results, what are the implications for local authorities?

Paul Raynes: Payments by results as a principle is a very good principle, because it focuses people on outcomes. However, designing the incentives within a payment by results scheme so they lead to the outcomes you really want is another matter altogether. One of the interesting live case studies-and I suspect the Committee has this in its mind when it asks the question-is where we are on the payment by results mechanism for troubled families. It looks as if that has had a very powerful incentive effect. Councils are really performing in terms of signing families up. We have already seen some results coming through in the first two quarters, and performance numbers from that.

At the same time we need to recognise that the payment by results money coming from the centre firstly has a component that is an attachment fee, not a simple results payment. That alters over time; let us see what that does to behaviour. There is also the point that the cohort of families being recruited are only partly being recruited on indicators that relate to the outcomes that the payment by results money comes with, so there will be many families who have been recruited for another reason. Again, seeing how that plays out will be really quite interesting.

Q19 Mark Pawsey: It is a challenge of measurement, is that what you are saying?

Paul Raynes: It is a challenge of designing, in advance of actually doing, what the right measurement is going to be in order to get to the result you want, which is a tremendous piece of public service thinking that is novel.

Q20 Mark Pawsey: Sir Merrick, if local authorities are going to be paid by results, how will they adapt their ways of working?

Sir Merrick Cockell: They have been doing that through troubled families. The key thing about troubled families was the investment upfront, and councils having to identify and plan the savings and the payback that they would have to make subsequently, so it has led to changes in the way of operating. The thing about the troubled families proposal-and you can follow a lot of community budget principles coming through and being evidenced through troubled families-is that it is a centralised system; it is controlled from Whitehall. The payment by results and those sorts of agreements made at a local level, where you might look at some of the health and adult care savings-if you look at the Tri-Borough west London model for integration within community budgets-these deals or agreements are made at a local level, by everyone throughout Health.

Acute hospitals are there, because they are crucial. That is where a lot of your savings will come, because you are preventing elderly people from ending up in those unexpected, unplanned, endless visits to hospital and staying in hospitals, as well, costing a lot of money. Those are worked out locally, however, because you have your amount of money you have pooled, you know what your savings are, you take your savings at the beginning, so the savings are not dependent down the line for Government to achieve those, and then you know the remaining amount of money, and that is what you are pooling and what you are working on early intervention and everything.

Q21 Mark Pawsey: Laura, how do you deal with the problem where the investment is made by one agency, but the benefits are received in another agency? How do we square that circle? What incentive does that agency have to make that investment if somebody else sees the benefit?

Laura Wilkes: One of the key examples we had in Kingston was that they really wanted to do some work around NEETs, which would involve the council putting upfront cash into preventative services for young people not in education, employment or training. Ultimately, however, the council will benefit, obviously, but in financial terms the benefits will come with JobCentre Plus, because they will-

Q22 Mark Pawsey: Is that an argument for them not doing it?

Laura Wilkes: No, I think it is an argument for saying that they need more freedoms and flexibilities to be able to reinvest that money back into the system. I am not sure what that looks like at this stage, but we need to start having a conversation not just with local partners, but with Whitehall, about how we can make that happen and how there can be incentives in the system to reinvest in that preventative work.

Q23 Mark Pawsey: You are quite keen about having a conversation before a programme starts, in order to determine who will get the benefit at the end, is that right?

Laura Wilkes: It needs to be a bit of "do it as you go along", but I think the point is that-

Q24 Mark Pawsey: Is it not better to have that conversation first, rather than doing it as you go along?

Laura Wilkes: Possibly, if you know exactly what it is you are going to find. Part of what we found in Kingston was that we did not realise that was a problem or that it could be something that could be changed until we got to the point where we thought, "We want to change that, we want to do something about that." I think it is a bit of both really, but the important thing is to have that door open with Whitehall, to have conversations about doing something really radical, if and when local authorities and their partners want to do that.

Paul Raynes: If I may, this was of course one of the things that in the four pilots was specifically addressed through investment agreements where, having modelled what people wanted to do and decided what they wanted to do-and Manchester really led the way in this-they had reached ways of saying, "The tree is growing in your orchard, but the apple will fall in my garden," and finding a way of anticipating that and saying who was going to invest what when, and who was going to take what saving when. By the way, on payment by results, it also takes us back to the point earlier about initiatives meshing together. If you have payment by results, mechanisms coming in one way, that makes it a bit more complicated fitting it all together on the ground.

Q25 Heather Wheeler: I have been very keen on this for a long time, so I am just wondering, perhaps, Sir Merrick, if you could kick off: what do you think the role of local government should be in encouraging local leadership to drive forward community budgets? We can talk about it as anoraks, but what about out there?

Sir Merrick Cockell: I think that even those we have talked about, even though most of the savings, 80% of the savings, potentially, that come through community budgets-the apple falls on the Whitehall side of the garden fence. You could say local government: what is the incentive for you to do that? However, I think it is part of our responsibilities over our Whole Place, not just what the council is currently responsible for, but actually leadership of our area. That is far more our purpose than simply providing or commissioning services. It is the influence that we can have over the Whole Place.

Therefore I think we are the conductor of the orchestra, who can bring all of those people together. That has been proved clearly in the pilots: councils can fulfil that role very effectively. The difficulty, or one of the difficulties, will be that all councils realise, rather like Whitehall, that this is something somebody else is doing, but actually all local government needs to be looking to their plans on how they are going to make community budgets work effectively. There will be very few options in the next spending round and the spending round beyond that.

We know we are in a very difficult situation, and if there are ways of providing public services better and getting better value for every pound spent, and very often improving those services at the same time, that is a persuasive argument for any local authority or any community to be looking at seriously. I do not think any council should be stepping back from that because the alternative is simply to close down services.

Q26 Heather Wheeler: Absolutely. Do you think that some of this will be almost like invest to save, and are Whitehall prepared to do that? Have you seen any signs that a) community budgets do work, and b) there are huge improvements to people’s locality, how people live, their quality of life? There are savings to be made, but it does need that seed corn and the give from Whitehall in the first place.

Sir Merrick Cockell: Maybe Paul can say whether he is actually seeing an appetite for that, but we have been very clear with Government right the way through that, however difficult our financial position, community budgets is not an easy, instant solution. We have seen it with the work that Kensington and Chelsea has been part of in Tri-Borough, which is a sort of forerunner that has a lot of common ground with this. You have to invest upfront, and it will take four or five years before you see the real savings. You will begin to see some savings before that, but you will not see big savings until four or five years beyond that.

You cannot do one without the other, however, and there will be a need to invest upfront, and we know there is value in that, but in the financial position we are in that is really difficult. With troubled families, of course, the Government got that message clearly, and put the money in, the money that Government could pool together from all different sources upfront, knowing that local government did not have it. The principle is established, but it will be very difficult, I appreciate, for that to bed in, but I hope that in the announcements we get in the summer there will be some acceptance that that model is the only way we can make it work.

Laura Wilkes: The specific point on the Neighbourhood budgets: because they operate at a much smaller scale we will have to be much more patient in terms of seeing savings, because they will take much longer to develop communities, to look at how they might be better involved in the design and delivery of services, and because of the scale at which they operate, the savings you realise will be much smaller than the Whole Place counterparts. Patience is required with the Neighbourhood budgets and acceptance that there will be savings to make, that they will not be so big, but what you can get from them is greater community involvement in the design and delivery of services. If we are going to tackle some of the biggest problems we are facing as a society, we know that Government cannot do that alone. We know that citizens will have to be involved in that, and I think the Neighbourhood budgets really provide the opportunity to have that level of engagement and make it sustainable.

Q27 Heather Wheeler: I will just move on a little bit, because I have a couple more questions. The LGA set out a series of asks from Government, with the review coming up. How confident are you that the Government has listened?

Sir Merrick Cockell: I think it is right to say we have not had a clear response to the asks, have we? We have not had a definitive, "Yes, we accept and we will deliver on those." However, I feel that there is traction, in a way that I have not seen before on community budgets and in the discussions we have been having, detailed discussions with some Departments on the next spending round, on the practicalities of how they would operate, which tells me that frankly the Government would not be wasting everyone’s time unless they were taking this very seriously.

Paul Raynes: To go back to the Chairman’s initial question, "What has changed here?", as you know, we have been in this conversation for a while. This year’s was not the first Budget where we hoped to see the phrase "community budgets" feature in the Budget. This was the first Budget where the Government committed itself in a Budget document to community budgets. Localism is an explicit theme of the spending round, and as the Chairman has highlighted, the Prime Minister put a foreword on the guide document, and has written out to the places that are expressing an interest, which does suggest the Government is engaging.

Q28 Heather Wheeler: Very good. Final question, and this is a bit about savings, but also about the success of community budgets: how important is it to colocate staff, so that the different groups really are joined up and they are in the same building and working cheek by jowl?

Laura Wilkes: This is a really important point. Having people together locally, discussing local plans on a daytoday basis, on that quite practical level, is really important. I would also say it has to be backed up by more than just having people sitting in offices together. They need robust plans behind it on how partners are going to engage locally, to what extent they are going to look at pooling and aligning budgets, and how they will look at joint and shared outcomes for the area.

Q29 Simon Danczuk: I just briefly wanted to ask about measuring success in terms of Whole Place and Neighbourhood budgets. Is it about measuring outcomes, or is it about savings achieved? Starting with you, Paul, perhaps, first.

Paul Raynes: I would think it is about both, is it not? The context in which we approached all of this was one in which there is a very significant burning platform of savings to be made, a desire to protect actual delivery of services within that financial context, and also a desire to reengineer-we like to use the word "rewire"-public services. Ms Wheeler has made the point about upfront investment, but to move to prevention, early intervention, the measure of success is, if it is possible to say that it is all the things at once, getting that virtuous circle, shifting resource to a place where it enables you to make savings by reducing demand.

Q30 Simon Danczuk: Do you think we have systems in place to be able to measure all that?

Paul Raynes: The pilots have taken us a very, very long way down the track. Their business cases, their cost-benefit analysis were technically-if you are interested in the technicalities-streets ahead of what has been done in the past. I think people will continue to learn, but now there are business cases, places moving to deliver, and the obvious thing to do is to say, "Have you delivered your business case?"

Laura Wilkes: On that point, though, I do not think we should let the perfect be the enemy of the good. We know that we may not have perfect data, but at the same time we know that we have something; we know that we have seen there have been results from this. In some respects we just need to get on and do it. We could spend for ever looking for evidence and making business cases. We have enough evidence to know that this works, so now is the time to just get on with it.

Q31 Simon Danczuk: Sir Merrick, anything to add?

Sir Merrick Cockell: No, I absolutely agree with that. We have piloted to death, we know what the answers are, nobody has challenged them seriously, and it seems to me we just need to get on with it.

Q32 Simon Danczuk: Staying with you, Sir Merrick, do you think there is consensus across Whitehall and locally as to what constitutes a successful outcome in terms of dealing with troubled families?

Sir Merrick Cockell: I think there is consensus-there is a simple definition for troubled families. We know, and Paul referred to, the three areas that the definitions take into account, which I think were truancy rates, antisocial behaviour, youth crime and getting back to work. Those were the centrally driven triggers for the definition of troubled families, and the fact that that would not take you to 120,000 families. It was the local experience that added to that and has helped to identify the substantial levels that do not fit those three relatively easy classifications, which are far more the daytoday experience in particular areas. I think there is a recognition and a clearer understanding, and then I think it is down to individual areas looking at what works best for particular families in those particular areas, rather than this assumption that there must always be a nationally derived solution to everything; to leave that flexibility with local areas is showing to be effective in troubled families.

Q33 Simon Danczuk: What you are saying is that nationally there are set successful outcomes that Government wants, but do local areas want other outcomes as well, or different successes, or-

Sir Merrick Cockell: Undoubtedly they do, and perhaps it is difficult for a central Government to deal with the nuances of troubled families. Of course you will probably end up with three definitions that you can find data on, that you can look at where they cross over and therefore you have determined that that indicates troubled families. However, we all know that every family, including each of our own, has very different circumstances, and only people on the ground, who are quite likely not to be the council itself but all the partners that we work with, will hopefully be able to identify far more, perhaps, sophisticated definitions in their particular area. I think that is a very positive position to be in, rather than just a mandated, centralised approach to something as complicated as troubled families.

Laura Wilkes: The other point on that, really, is that yes, it is very much about local outcomes, because every area and community is different, but just as much as it is about ensuring outcomes for families, it is about ensuring the right outcomes for communities as well. There is that aspect to look at things, too: looking at minimal disruption for the community at large and thinking about what it is they want from the troubled families agenda, as well.

Q34 Mrs Glindon: Estimates of the potential savings from Whole Place community budgets vary significantly. What level of savings would you expect to see if they were rolled out nationally?

Sir Merrick Cockell: Of course the pilots have looked at a relatively small number of areas. They have looked at the integration of health and social care that we have talked about, families with complex needs, and work and skills, broadly. That is where Ernst & Young have done their work, where they have looked at a base level and what they would call a prudent level. In those areas only, it varies, as you say, between £9.4 billion and £20.6 billion. The range is considerable, and no doubt everyone, particularly the Treasury, would like it to be towards the £20.6 billion. These are the first areas where we have looked in detail across four pilots at community budgets.

My experience in Tri-Borough has been that once you start on a different approach to providing public services locally, benefits you never thought of and that would never have been on your list over time begin to fall out, even if it is just colocating, as we touched on earlier. By colocating teams together so that across an office they can interact and pick up and understand, you begin to draw out savings and improvements in service that you did not think were there when you started.

Potentially, some years down the road, the sums are substantial. They will not be easy and they will not be uniform throughout; I certainly do not believe there is a definition of something where you say, "That is community budgets and that most certainly is not community budgets." Almost, community budgets should be whatever anybody wants them to be, if they mean breaking down those barriers, if they mean rewiring services around people and communities and not the convenience of bureaucracies and silos and all those things that we have happily been part of for rather too long.

Laura Wilkes: There is really a limit to the amount of time we should spend on predicting savings, as I said previously. It is now time to get on, but also to look at the wider benefits of these programmes: improved outcomes for people locally; the potential for reducing demand on particular, really costly services; and also greater engagement from people in making more resilient communities, and in taking responsibility for themselves and looking after themselves more.

Q35 Mrs Glindon: What would you think, if the community budgets are not rolled out, would be the effect on local government over the next five or 10 years?

Sir Merrick Cockell: I am not sure what the alternatives are. What we have seen with this spending round is that there are not many submissions as detailed as the LGA’s on behalf of our sector have been, but not many of them have come up with a partial solution to the next stage or even the current stage of where we are. Beyond that, if we do not take the opportunity that is there, Government and local government, then there will be no alternative but to do what we have seen before, which is simply salami slicing, coping from one year to the next, cutting services, turning off the street lights, looking at all those emotive things, not knowing how to pay for adult care. There is no alternative. Some of this is interesting because you start off driven by the money, but the more you look into it you realise-and professionals are very clear on this-that this is the way to provide services in the future. If you said, "We are cancelling community budgets," they would probably just go ahead and do it, because it is the best way to do things. They have discovered a better way of doing things, and I think we are at that point at the moment. Many authorities have yet to do the work and yet to understand, and have yet to think it is not just something they are doing in four pilot areas. We need to get over that barrier, but then I think increasingly local authorities and Government will realise it is the way we should operate.

Paul Raynes: We set out the counterfactual last summer, did we not, in the future funding work, which effectively shows that unless we do something transformative, things you have to spend money on within a spending constraint squeeze out all the things that communities really, really want. We did that for local government; you can do the same thing for public sector spending as a whole, where the "have to spends" are closing in on room to do the things that communities are most demanding.

Laura Wilkes: Generally in local government we are really good at assessing the risk of doing things, but not very good at assessing the risk of not doing things. It seems to me that community budgets are the only programme at the moment that gives a real opportunity to transform services, to work differently, to commission differently, to work with your local partners differently, to involve the community, look much more holistically across the public sector about how you can pool and align budgets, and how you can achieve better outcomes. This is the game in town right now; it is where local government should be, and now is the time to take it forward.

Q36 John Stevenson: You have probably covered most of the questions I was going to ask, so I was just really looking for a summary. To each of you: what do you see as the advantages and disadvantages of neighbourhood as opposed to Whole Place community budgets?

Laura Wilkes: I can come in on the neighbourhood point. One of the key things about the Neighbourhood budgets is that they take much longer to realise any savings. They involve much closer collaboration with communities, which takes time, which takes resources to build and sustain, so they are different. They will not realise the big savings you will see from the Whole Place programmes.

However, if we are looking to the future and we are looking to wanting to have communities more involved in the design and the delivery of services, and we are wanting to make them more resilient, I would suggest that Neighbourhood budgets are a very good way of doing that. You really focus your work with the communities around what they want to do, what they think they can deliver, where they think they can add capacity. That will be really valuable looking forward.

Q37 John Stevenson: Before the rest of you answer, can I just come back: do you think politicians have the patience for that?

Laura Wilkes: I hope they do. They will have to have the patience for that, because Neighbourhood budgets will not be an overnight thing. They will take time to develop and mature, but I think the benefits of giving them time and being patient will be worth it.

Sir Merrick Cockell: They are complementary, but actually they are essential. You cannot just have the community budgets in areas, pretty disconnected from people and their experience, in many ways. You do need the local level and a similar thing happening at local levels, where councils and others are letting go. We might be saying Government has to let go between our tiers, but we have to let go with our communities. It will be much smaller, of course, and based on people’s daytoday lives and projects at that level, but that is essential. We will not be able to do community budgets without Government overall changing-that whole relationship between national and local government changing. We have talked here before about what I would like to see as a far more mature relationship. You cannot break down these barriers and have far more open, honest partnerships where, when you enter into them, you do not know where it is going to end up, where not everything is tied down on day one, without that having implications for the way we operate between the two parts of Government, both with their own mandates. That is due for a refresh as well, and maybe on the back of the type of things we are talking about with community budgets, that will happen as well. We cannot just carry on in that sort of business as normal within community budgets, because it requires everything to change.

Paul Raynes: I very much agree with Sir Merrick.

Chair: Thank you all very much for coming and starting off our inquiry this afternoon with us. Thank you very much indeed.

Prepared 30th May 2013