Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 1-19)




  Has anyone got any declarations of interest they want to declare?
  (Mr O'Brien) I am a supporter of SIGOMA.
  (Mrs Ellman): Vice President of the Local Government Association.
  (Mr Cummings) Local Government Association, National Association of Councils.
  (Mr Betts) I was a member of SIGOMA and Vice President of the Local Government Association.


  1. Right. If I can start the session by welcoming everyone to the first session of the Committee's inquiry into the draft Local Government Bill. Can I point out to everybody that all the evidence we have received is now in a published form and will be available on the web page if anyone wants to have a look at it. I am very grateful, obviously, to all the staff in the office who managed to get it done in record time because we have got very limited time for this. Can I welcome the two of you to today's session and ask you to introduce yourselves to the Committee.
  (Cllr Bruce-Lockhart) I am Sandy Bruce-Lockhart. I am the new Vice Chairman of the Local Government Association.
  (Mr Kinghan) I am Neil Kinghan, I am the Director of Economic and Environmental Policy at the Local Government Association.

  2. Do you want to say anything by way of introduction or do you want us to go straight to questions?
  (Cllr Bruce-Lockhart) I would like to say something about the White Paper and the draft Bill in general.

  3. Yes, by all means, not too long though.
  (Cllr Bruce-Lockhart) No. The White Paper set out to do three or four things. Firstly, as it says, to revitalise local government, to improve public services, to strengthen community leadership and indeed to strengthen local democracy. That is what the Bill is about and therefore that is what we should be judging it by. There is in some sense a tension between Central Government and local government. Central Government, on the one hand, wants to control public expenditure, it wants to have consistent standards, local government on the other hand wants to assess local needs, local priorities, have local diversity and through that to empower local democracy. The thrust of the Bill is I think welcome in the fact that it is a step in the right direction but from local government's point of view the challenge is to give the freedoms and the powers and the responsibilities to local government and by doing so to release the energy and innovation amongst those that work in local government. Therefore, we have seen so far, I think, some of the freedoms and flexibilities but probably fewer than we have seen progress on things like the Comprehensive Performance Assessment. We welcome items such as the prudential borrowing which is, particularly important but there are other aspects where we have not seen progress. The LGA feels very strongly about the need to reduce the amount of specific grant, to reduce the 66 plans and reduce the whole burden of regulation which stifles the progress towards improving public services. I will leave it there for a start and pick up the separate points as we go along.

  Chairman: Thank you very much. Louise Ellman.

Mrs Ellman

  4. Taking the Bill overall would you say the relationship between central and local government is changed by the Bill?
  (Cllr Bruce-Lockhart) Would I say it is improving?

  5. Would you say it is improving? I asked if it had changed but perhaps you would answer if it is improving.
  (Cllr Bruce-Lockhart) I think that some of that is covered by what I have said already. I think, as I have said, it is a step in the right direction. There are a number of things where we need more detail, and indeed there are a number of things which local government would wish to see. I think the relationship between central and local government has improved through one or two initiatives which are outside the Bill. For instance, the central and local partnership whereby Central Government Ministers meet the LGA on a regular basis has undoubtedly been an improvement.

  6. Would you say that the Bill shows the Government is putting more trust in local government?
  (Cllr Bruce-Lockhart) That is the key question, is it not? Again, I think we can say it is a step towards that but I think if we compare local government in the UK with most of the rest of the Western democracies, local government in the UK is probably more centrally controlled than anywhere else. We have seen in the last ten years that control increasing. The LGA's view is that we need a radical decentralisation and deregulation and that has not happened yet. It needs to happen but, as I say, this is one step in the right direction.

  7. Would you say that this Bill puts more control in central Government's hands or more in local government's hands?
  (Cllr Bruce-Lockhart) That is a difficult question. I think that what we have seen so far is the controlling side. The big shift I think in the Bill from my perspective is the prudential borrowing. I come from Kent County Council and the big challenges there are probably around massive school building programmes, road building programmes and so on where we need-£3-400 million for school building programmes alone, we are simply not getting that at the moment either through loan sanction or grant and the ability to go for prudential borrowing would undoubtedly be a help. That is helpful. What we are seeing, of course, is a tighter control through inspection through Comprehensive Performance Assessment. We have seen one side but not yet fully the other side.

Sir Paul Beresford

  8. Can I put it to you that in fact a quick look at this Bill it is actually shackling you to the wall. You mentioned capital, that you are free to borrow but subject to revenue, revenue is in the Government's hands almost entirely. With capital receipts you can have these confiscated, even retrospectively. There are huge restrictions on budget control, as outlined to you. Your grant is no more predictable than it ever was, very similar to the 1992 Local Government Act. Your business rates are going to be pulled together so transparency has gone. Your HRA subsidy which is by formula is now going to be subjectively allocated so you cannot predict it. The same goes for your major repair subsidy. Your housing rents, you are not a housing authority but if you were they are set by Government control. Add to the audit industries, the Audit Commission will come in and go through a two week smash and grab raid and go away and decide whether you are or are not good enough for the Bill. You are telling me this is a step forward.
  (Cllr Bruce-Lockhart) No, I did not, I said—

  9. How can it be local government without local government.
  (Cllr Bruce-Lockhart) Can I be clear, I said it was a step in the right direction—

  10. Which one?
  (Cllr Bruce-Lockhart)—towards what is needed which is a radical decentralisation, deregulation and return of powers to local authorities. Also I said I thought the UK was the most centrally controlled. I am starting off by saying that is what we need, a radical shift in freedom.

  11. If it is a good step what is a bad step.
  (Cllr Bruce-Lockhart) In the prudential borrowing you have got one step in the right direction but I have said, also, that we need to see many more freedoms and flexibility.

  Sir Paul Beresford: When you say capital is a step in the right direction, it is a subterfuge, it is a waving of the magic wand. Your revenue is tied up. I would ask you to have another look at Clause 4.

Mrs Dunwoody

  12. Why not all have a second look at Clause 4.
  (Cllr Bruce-Lockhart) One of the most important things the LGA have asked for on the revenue side is to go back somewhere towards where we were which was five years ago, four per cent of our revenue expenditure was on specific grant, and that has risen now to 12 per cent. The LGA is totally opposed to that rise and would like to see that returned. On the capital side, on the prudential borrowing, we do not know the details of that yet. The LGA says that sounds good but we want to see the detail first.

Mr Betts

  13. Just to follow on that point, you have expressed some concerns about Clauses 2 to 4, the issues around the prudential guidelines and how they might be constrained by the Secretary of State. Would you like to highlight the main concerns you have around that problem?
  (Mr Kinghan) Can I just add to what Councillor Bruce-Lockhart said about the capital provisions generally. They do include constraints, and I will come on to those, but they do represent a shift from a system in which local authorities have been very heavily constrained over what they may borrow for many years and the power to borrow beyond the levels which the Government has previously set for individual authorities will be a step forward. That is why we actually welcome this new system. It does not go nearly as far as many in local government would want but we live in a world where we have to move on from where we are rather than go to where we ideally want to go to. The points that we particularly raised about Clauses 2 to 4 are about the rules concerning loan agreements where we think the powers such as Government is taking go wider than may be necessary. In particular, the Government presents the national limit as a reserve power and it is the case that some reserve powers do not get used, the reserve capping powers are not being used at the moment, but on the other hand a lot of things that were introduced as reserve powers by the original capping regime do tend to get used. We would rather that those powers were not taken in that form. If the Government insists on retaining the reserve power then any reassurance it can provide about how rarely it would use it would be most welcome. I think there are other more detailed provisions of Clause 4 which we have addressed but those are the main points that we are concerned about.

  14. In effect, Clause 4 can totally remove the effect of the prudential guidelines if applied by the Secretary of State who comes along and says "you have all got the freedom to borrow locally but collectively this is how much you can borrow" and that is the end of the prudential guidelines.
  (Mr Kinghan) There is that danger, absolutely. That is why we would rather see that power not expressed in that form or us given as hard an assurance as possible that it should not be used in that form. It is interesting that—

  15. How should it be amended specifically?
  (Mr Kinghan) The best way to amend it would be to take it out, to remove the reserve power.

Sir Paul Beresford

  16. You were addressing part of your answer to me specifically. Local authorities are into long-term borrowing and to do that they need to have the revenue aspect of it.
  (Cllr Bruce-Lockhart) Yes.

  17. They need predictability of that and most of the revenue, directly or indirectly, comes from Central Government with no predictability which cripples the freedom to borrow.
  (Mr Kinghan) A large part of it does, that is absolutely true.

  18. So the combination of the two means that you are strapped to the wall by both hands.
  (Mr Kinghan) Obviously it is not for me to defend the Government's position here and no doubt you will want to ask those questions of Government ministers. We start from where we are which is that there are tight controls—Sorry?

  19. It is bad getting worse.
  (Mr Kinghan) I do not think it is getting worse. I think that the power to borrow beyond what the Government takes the view is absolutely necessary is a desirable one. Yes, revenue is controlled and we would far rather, as Sandy said, have significantly more freedom to control our own income, our own revenue, and we hope in due course that will come. At the moment we have a degree of freedom in relation to the council tax, not nearly as much as one would wish. As you say, a lot of the revenue comes from Government. Given the choice between a control which says "here we will say exactly how much you can borrow" and one which says "you can borrow a bit more but you have got to pay for it yourself out of scarce resources", the second of those choices may not be an enormous step forward but it is a step forward.

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