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


Examination of Witnesses (Questions 40-59)

CLLR SANDY BRUCE-LOCKHART AND MR NEIL KINGHAN

MONDAY 8 JULY 2002

  40. So why refer to it then.
  (Cllr Bruce-Lockhart) We could.

  41. Why advise that this is one way of raising funds if you are not going to press it? What we are looking for is some idea for the way forward on local government funding and to refer to alternatives without pressing them I think is just a red herring.
  (Mr Kinghan) We will have to look at the drafting of the Bill and see whether or not it would be within the scope of the Bill. I suspect that some of the alternative taxes probably would not be within the scope of the Bill. The Government has said that it is willing to review the balance of funding, we are keen to make progress with them to talk about those options.

  42. A lot of funding does depend on distribution. If there is going to be any weighting do you think it should be based on the actual or an assumption?
  (Cllr Bruce-Lockhart) When we talk about the balance of funding, we mean the balance of funding which comes from government and the balance which is raised locally, either through council tax or as it was in the business rate or some of the other forms I have talked about in other countries. The distribution issue is surely a separate issue.

  43. Is it one you have a view on? We are talking about the distribution and you say you want to keep a separate business rate and the SSAs but there are other views which ought to be considered also by the LGA.
  (Cllr Bruce-Lockhart) The balance of funding issue is an issue we have a clear view on, which is the one I stated, we want to see more raised locally. On the distribution issue, the LGA is not having a position because it has to represent, as I say, all types of authorities at all parts of the country.

  44. So you do not believe in it being applied fairly then on actual expenditure and not on assumed expenditure?
  (Mr Kinghan) You are taking us into a question of what the basis of the distribution should be. There are lots of arguments about how the distribution might change.

  45. I am trying to obtain what you consider the right balance would be for the funding between local government and central government, the balance for providing local services?
  (Mr Kinghan) Okay. I think we have said in the past, and I think we would stick to this, that at the moment, as you probably know, council tax accounts for on average about a quarter of all local authority spending, the rest is controlled by the Government through the National Non Domestic Rate and through grant. If that balance was to shift to 50:50 that would seem to us to be a much more sensible balance between central and local government than we have at the moment. It would still mean that Central Government was controlling this element of local authority expenditure and that there was provision for equalisation between different parts of the country, given the different levels of resources and needs in different parts of the country. Fifty per cent would actually be a significantly better share of local authority funding than we have at the moment and would seem to us to be a more reasonable balance.

  46. An increase would be an increase in council tax to meet the 50 per cent?
  (Mr Kinghan) The easiest way to do it would be to return the business rate to local control.

  47. I see. You are not for merging the business rate and the local rate? What impact would that have on the relationship between the Government and local government and the rates programme?
  (Cllr Bruce-Lockhart) If you returned the business rate to where it was in 1989 when local income was over 50 per cent of the finance coming to local government, I think it would make local government more relevant and accountable to local people and to local businesses. I think it would improve the relevance of local government to the private sector which I think is extremely important. On a variety of fronts it would be helpful.

Chairman

  48. The only problem with that is you did have local authorities in that era chasing out of town shopping developments just to get the business rate from them.
  (Cllr Bruce-Lockhart) Yes but you do have an equalisation across the country in the amount of money which is raised through the business rate but the answer is yes.

  49. It did appear to be quite a lot of pressure for people to scoop those sorts of developments within their area even though there was equalisation.
  (Mr Kinghan) Chairman, if you are suggesting that it would give local authorities an incentive to encourage businesses to come into their area in order to increase business rate income then I think a lot of people would say that was one of the virtues of the local business rate rather than a failing of it because actually it would give local authorities a further incentive to encourage businesses to operate in their area, perhaps to grow new businesses.

  50. In an area like Greater Manchester it did not help the shopping strategy for the whole of the area by each of the local authorities competing.
  (Mr Kinghan) There are always ups and downs with all proposals.

Sir Paul Beresford

  51. The Government talks of transparency, do you think merging the NNDR and the RSGs is in that trend?
  (Cllr Bruce-Lockhart) No, we do not support that. It does not add transparency. The LGA is opposed to that for reasons which we have said.

  Sir Paul Beresford: The Minister said it does.

Dr Pugh

  52. Do you think the Comprehensive Performance Assessment Framework is going to improve local government functioning?
  (Cllr Bruce-Lockhart) The LGA has, I think, a variety of concerns about the Comprehensive Performance Assessment. They are less about what is in the Bill and more about the process. The process needs to have, greater transparency than it has at the moment. It needs to be more consistent. It needs to be applied, obviously, in a more consistent manner. There is concern, as I say though, in local government about the whole issue about how you apply the improvement agenda. The LGA was not batting for the four league tables, or five as they may be, of the CPA but they have been announced and that is what we have to deal with. To us, I think, the challenge of the improvement agenda is amongst the middle authorities. At the moment what we are seeing is that in the categorisation of authorities in four or five bands many of the freedoms and flexibilities are applied only to the top band. If you want to improve local government you have got to improve the bands in the middle.

  53. Are they actually needed? There are all sorts of Audit Commission inspections, best value inspections, a whole range of inspections going on giving data to the public about their local authority, what is the point of having a further set of inspections?
  (Cllr Bruce-Lockhart) That is a perfectly good question. As I say, the LGA was not in the first place in favour but this is now here and we are therefore trying to make the best of it. League tables started in schools ten years ago, the public understand them, they have been applied across the board to hospitals, they are now being applied to local authorities. I think it probably would not be helpful for local authorities to say "I refuse to be inspected" when we have got an inspection culture in the country.

  54. But there is a very significant difference, is there not, because local authorities have a Comprehensive Performance Assessment called an election periodically?
  (Cllr Bruce-Lockhart) Absolutely.

  55. And that tends to focus people's minds on improving schools, hospitals.
  (Cllr Bruce-Lockhart) Yes.

  56. Are you saying that you are happy for that to be the method by which local government should be judged or do you wish to be judged by the Audit Commission?
  (Cllr Bruce-Lockhart) No. As I say, the LGA was not in favour but we have got it. The places which cause particular concern are where local priorities, which are the priorities of the electorate, are not necessarily judged as being right because they do not sign up to Government priorities and that causes us a major concern.

Chairman

  57. Can you give us a specific example of that?
  (Cllr Bruce-Lockhart) Yes. Take my own authority: we are a rural county with no large major urban centre but with dispersed towns, we therefore have what the Government might call a possibly pro-car policy rather than more strongly pro-public transport and in the Local Transport Plan that is likely to be scored down because of the Government's national priority. That is just one example.

Dr Pugh

  58. So you can get distortions creeping in. Performance improvements going on but nonetheless you can get distortions induced by having the framework there. If that happens do you think there should be an appeal mechanism? If you get some little Hitler in from the Audit Commission who tells you the authority is going down the wrong road and if the authority is quite obviously satisfying its punters, do you think there should be an appeal mechanism?
  (Cllr Bruce-Lockhart) Undoubtedly, yes. The Pathfinder authorities, some of them are in the process of appealing at the moment and, indeed, in some cases have been offered a reinspection. Undoubtedly an appeal is important.

  59. So your concerns are not going to be entirely addressed by talking about the categories, you need a change in how the process would be conducted?
  (Cllr Bruce-Lockhart) No, I think the LGA started off with the position that it was not in favour in the first place but it now has a number of concerns. One is about the need for local authorities to reflect local priorities and through that implement local democracy. There are a number of other concerns which the LGA has simply about the process altogether. One of them is that at the moment the process is not transparent. We know the blocks which make up the Comprehensive Performance Assessment and they cover the main services, such as education, social services and so on, and they cover a quarterly assessment, they cover performance indicators, satisfaction ratings and so on, but we do not know how those are added together to judge where authorities will eventually come. It is very important for this to have any credibility that the process is fully transparent. You could, of course, devise a methodology of drawing these facts together which would favour one particular type of authority above another and, therefore, absolute transparency about the methodology, which we have not yet been allowed to see, is extremely important.


 
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