Examination of Witness (Questions 320
TUESDAY 4 DECEMBER 2001
320. I hate to be seen as a supporter of the
CCT regime but the CCT regimeand I have had experience
of bothhad certain advantages over Best Value. One was
the de minimis rule, so a very, very small part was not subjected
to this enormously cumbersome bureaucratic Best Value assessment
and the second major thing is that local authorities could concentrate
within CCT on the departments that they themselves deemed to be
performing less efficiently. Best Value does not allow them to
do that. Best Value assumes that everything right across the board
is examined in immense depth and in an amazingly bureaucratic
way and therefore there are appreciable costs of conducting Best
Value whereas the costs of introducing CCT were possibly less.
(Mr Raynsford) I do not accept your description of
Best Value. I have said that we want to achieve a streamlined
system and we are working to do that, but the purpose of Best
Value is to raise the standard of service and, if you are a local
council taxpayer, you want to be confident that all the services
the local council deliver to you are run efficiently and well
and therefore it is right that there should be measures to consider
the performance of the local authority in all its responsibilities.
Clearly it is for the authority itself, with guidance from the
Audit Commission, possibly with help from the IDA and other support
bodies in local government, to consider how it can take the most
effective action to deal with those services which are least efficient
and also to ensure it is giving high priority to those services
which its local customers say they value most. Those are legitimate
and proper democratic decisions, but I do not think it is right
to say that one should have a framework where it is perfectly
possible for an authority not to deliver decent standards of service
across the board.
Dr Pugh: Nobody is saying that.
321. May I ask when the Best Value review you
have mentioned is going to be published and also if you can outline
what the main issues are to emerge. You mentioned one of them
and while I say that what you said about the two per cent efficiency
cut is entirely proper and reasonable and I agree with what the
Government is doing wholeheartedly, could you say if there are
going to be any potential changes in legislation which might help
reduce any unfairness in terms of conditions for staff when they
(Mr Raynsford) The Best Value review is looking specifically
at the current framework in relation to a number of issues including
the one that you have highlighted about the impact on staff who
transfer to another provider. We have said that we will consider
evidence on the emergence of a two-tier workforce and if there
is evidence that is conclusive and that has an adverse impact,
then we will consider appropriate remedial measures. It just so
happens that this week the meeting of our review group is due
to deal with that particular issue so I am not able to say more
about it. In the previous meetings, we have had three very productive
meetings; these have been held jointly involving representatives
from the trade unions, from local government, from the Audit Commission,
from the private sector and from the voluntary sector and, in
the course of those discussions, we have covered a number of important
issues about establishing a level playing field, ensuring that
the focus is on quality rather than simply cost and ensuring that
it does work effectively as a means of raising standards because
that is our overriding objective. So, the meetings have been very
positive indeed to date. We have some hard work still to do before
I submit the report to the Secretary of State by the end of the
year which is the timetable he has set me.
322. Have you taken any evidence from the transport
unions who have very precise evidence of what happens when you
do the transfer of workers from one nationalised industry to private
industry, which immediately not only wrecks their terms of employment
but also, by the simple device of breaking that contract and re-employing
them for a different unit, manages to change their levels of pay,
their conditions of work and their pension entitlements?
(Mr Raynsford) The review is solely concerned with
Best Value in relation to local government.
323. However, you did say you wanted evidence.
(Mr Raynsford) But the Transport & General Workers'
Union is represented on the review, and parties have brought their
wider experience to the review. I have to say, we have seen quite
interesting evidence of circumstances where it has been found
possible to do particular jobs in a better manner, to deliver
a more efficient outcome, some of which have involved an entirely
public sector solution, some of which have involved a partnership
with the private sector or voluntary sector. Our approach is very
much that there should be a level playing field without a predisposition
to one particular type or model of service delivery.
324. Can I pick up on the level playing field?
There is quite an important issue around which often gets raised.
One area where there clearly is not a level playing field is in
the ability of the public sector to raise capital. A lot of that
is necessary to put in an appropriate bid for a service, whether
it be in investment, in plant and equipment, or vehicles, or computer
systems. The whole benefit system in Sheffield was privatised.
One of the reasons was that the local authority had a choice between
investment in its computer systems or using the limited capital
it had to spend on other things. The Secretary of State at the
Labour Party Conference gave an inkling that there might be a
freeing up of local authorities' ability to raise capital to invest.
Is that one of the issues that has been addressed as part of this
Best Value process?
(Mr Raynsford) It is, and it is one of the issues
on which we expect to say more in our Local Government White Paper.
We did consult on the possibility of replacing the current borrowing
approvals regime with a prudential regime, in our consultation
paper on local government finance published more than a year ago.
We will be setting out how we intend to take that forward in our
Local Government White Paper. The position, I should clarify it,
would involve local government being freed from a requirement
to seek borrowing approval, but instead there would be a prudential
regime to avoid authorities undertaking a level of debt that they
would not be able to service. So it would not provide a completely
open door for widespread borrowing.
325. But they were raising money actually to
invest in things, to make improvements, actually to make savings
in some cases.
(Mr Raynsford) It certainly would allow that particular
option, and that would, in our view, be widely welcomed by local
Sir Paul Beresford
326. On a related issue to that, you are reported,
I understand, if I remember correctly, in some of the local government
journals as going for removal of municipal trading restrictions
on local authorities, is that correct?
(Mr Raynsford) Yes. We also believe it is right that
as part of both the creation of the level playing field but also
part of the general framework of freeing local government from
unreasonable restrictions, that there should be greater opportunities
for local authorities to trade, and that that should also be governed
by similar rules relating to efficiency in performance. So there
will be greater freedoms for those authorities that have demonstrated
particular abilities in that field.
327. So if we continue the level playing field,
presumably they will be divided into units, they will have corporation
tax applied, they will have to pay business tax and so on and
so forth, or would that be a little unfair?
(Mr Raynsford) There will inevitably be different
standards of performance that will apply in the public as against
the private sector. The aim will be, within those patterns, to
ensure that were a local authority is trading, it is doing so
in an efficient way. That is measured against the performance
of other service deliverers.
328. That was not quite the question. The question
was really to bring in the level playing field. Here we are with
municipal trading, with the prospect of a local council supported
by business rates, supported by simple taxation, competing with
the people who are actually paying for it and not contributing
to that themselves.
(Mr Raynsford) I think you have to say that that exists
already in the voluntary sector which provides a number of very
important services, but where it is not subject to the same taxation
regime as the private sector. These are differences that exist
and they reflect the nature of different organisations. What we
are seeking to do is to try to create a level playing field without
the kind of biases that currently prevent sensible activity that
is to the benefit of the community.
329. Local government expenditure is something
like 25, 26, 27 per cent of government expenditure. It rather
puts charities into a shadow. I do not think the comparison is
(Mr Raynsford) The comparison is entirely valid, because
there is a large number of voluntary organisations that do sterling
work in many fields. You will be aware of the housing field where
housing associations now represent a very, very large proportion
indeed of the total housing stock and they are voluntary organisations.
Chairman: Can I just remind the Committee that
we have a fairly lengthy set of questions, and I hope we can reduce
the number of supplementaries that we are getting. Christine Russell.
330. Minister, can we move on to the cost on
inspection. Do you actually know how much is being spent on inspections
not only by the Audit Commission but by all the other inspection
bodies too, and including local authorities who obviously spend
a great deal preparing for those external inspections?
(Mr Raynsford) I can supply you with the full cost,
but I cannot off the top of my head give you the figures for the
total cost of all the inspections including Ofsted and the Social
Services Inspectorate for which I am not responsible. What I can
say is that it is our objective to try to achieve a more coherent
and more integrated framework, so that the various inspectorates
are working to broadly comparable standards and to reduce the
unnecessary burden and bureaucracy of inspection, which is very
much part of what I was talking about earlier about how we could
simplify and streamline the Best Value review, with less inspections,
again relating to the performance of a local authority, so a light-touch
regime applying to those authorities that have demonstrated a
high level of performance. We expect to say more about that in
our forthcoming White Paper.
331. An academic study suggested £600 million
per annum. Would that figure surprise you?
(Mr Raynsford) That would not surprise me at all.
332. Do you think it is reasonable to spend
that much, then, on inspection?
(Mr Raynsford) I think it is reasonable to ensure
high standards of performance, and that the effect of inspection
in a range of different areasI just mentioned education
as onehas undoubtedly played a crucial part in helping
to improve performance standards. What we have to do is to get
value for money and to ensure that the people of our country are
getting high standards of service from local government.
333. So you are satisfied that in general all
the inspection is improving standards?
(Mr Raynsford) Yes, I am. I would not pretend for
a moment that every inspection is successful. Inevitably there
are some that do not do as well as others, but I do believe the
process as a whole is a very competent one and it is helping to
334. Can I focus in particular on the Audit
Commission and whether that is providing good value for money.
Is there any real evidence that following an Audit Commission
inspection there is any real evidence of a failing local authority
(Mr Raynsford) There is a lot of evidence, and the
Audit Commission is increasingly publishing evidence showing the
way in which local authority services are responding. What we
are keen to do is to sharpen that process, to ensure that there
is more focus on outcomes and less on the process itself, to get
away from a slight tendency towards a tick-box approach towards
inspection and more of a focus on outcomes that really will benefit
local people who will get improved services. That is very much
Sir Paul Beresford
335. How much has the staffing level of the
Audit Commission gone up?
(Mr Raynsford) I cannot give you precise figures off
the top of my head, but I can certainly write to you with those.
336. You would not be surprised if it were more
(Mr Raynsford) The Audit Commission has taken on a
very substantial additional range of responsibilities to include
Best Value and Best Value inspections as well as its traditional
337. This Committee in the past recommended
that really more emphasis should be placed on peer review and
that inspections themselves should be better co-ordinated. Are
we ever going to see this happening?
(Mr Raynsford) Yes, we believe there is an important
role for peer review. I have discussed this regularly with local
government and with the IDA which is doing very good work in this
field already. Most people in local government I speak to feel
that both are necessary, that there is a need for more external
inspection which can so often be more rigorous than a peer review
and that there is the need for the supportive approach which those
who are currently working in other local authorities are often
best placed to give to help organisations that are having difficulties
in improving their service.
338. Could I move on to those councils that
the Audit Commission describe as "underperforming".
I think that is 15 per cent of local authorities. Have you actually
been provided with any analysis of what are the characteristics
of those 15 per cent councils?
(Mr Raynsford) I have been deluged with information
which measures local government performance in a whole variety
of different indicators. What the Audit Commission is seeking
to do, quite rightly, is to draw together the key ones that give
above all a sense of the corporate health of a department, because
while you can get detailed figures about the performance of individual
services, very often a failing service is the result of a corporate
failure by the authority as a whole, and it is that area of the
corporate health of the local authority which is going to be one
of the key focuses for proposals in our Local Government White
Paper, building on the existing Best Value regime and the existing
inspection regime which inevitably measure the performance of
specific services. So those three elements we want to bring together
to ensure that we get a picture of the performance of local authorities.
Can I add that the White Paper will spell out the categories of
performance that we expect to use in the future, and this will
define the difference between the levels of performance achieved
by local authorities, but it would not be right to say that 15
per cent of authorities are treated as failing.
339. Can I try to draw you out on whether there
are any characteristics that are appearing here. I would particularly
like you to comment on whether size matters or not, because some
of the reports I have read certainly seem to indicate that some
of the authorities that are really struggling to perform well
are those very small district authorities.
(Mr Raynsford) I think size does have an impact. One
of the interesting conclusions that we have drawn is that among
district councils there is probably the widest range of performance,
with some doing very well indeed, others having difficulty. We
certainly think that it is going to be important for local authorities
to look at ways in which they can work with others, and that will
include links between neighbouring districts or links between
districts and counties, to ensure more efficient service delivery.
If I can move into the area of introducing electronic government,
which I think is hugely important, that is an area where it is
quite clear that the small authorities simply cannot go it alone,
they must work with others, and we are encouraging that.