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

Examination of Witnesses (Questions 300-319)



Sir Paul Beresford

  300. If you were a commercial businessman in Stockport and you were growing bedding plants, you would be paying the business rate, you would be probably paying council tax on your property, etc, you would have overheads which a local authority has not, you would be paying business taxation and yet you would be competing with an in-house firm which was not required to produce any of those and was not actually required to produce a profit, how would you feel?
  (Professor Stoker) How would I feel? I would find it very difficult to put my feet into such a place.

  301. That is what effectively this would do to the businesses in the same field.
  (Professor Stoker) If you have a general feeling to encourage trading, I think that in addition to the constraint that we have talked about already, which is the constraint that in a way should have a demonstrated capacity in terms of delivery in the area, I think that a second constraint might be is there in effect such a dynamic market in that area that it is not appropriate for an authority to be a player in that market. I think there are many areas where local authorities could potentially trade where in effect there is not a market and they are going to be creating a market by their capacity to do something which will be of benefit not only to their own citizens but also to other citizens because they have access to a service which is done far better.

  302. Should that restriction be put into the Bill or not?
  (Professor Stoker) Again, I understand, certainly from the general rubric around the White Paper, that considerations about market conditions are part of the regulations that are likely to be put around the general power of trading.

  303. Should they be?
  (Professor Stoker) Yes, they should.


  304. Did you want to add anything?
  (Mr Travers) Merely to make the point, I think, Chairman, that in a sense there are two quite discrete things caught up here. One is the question of whether or not local authorities should trade, and clearly to answer Sir Paul's point it seems to me that we have experience in England, and indeed in Britain, of ensuring as far as possible that local authorities where they do trade with the private sector do so on fair and equal terms. A lot of the experience under compulsory competitive tendering will have ensured that is possible. Without trying to tease out motivation that is not explicit, the motivation for this particular reform has more to do with the Government wanting to offer prizes for authorities that perform well and finding a way of motivating and incentivising different behaviour at least as much for that reason as it does to encourage trading. I think there are a number of authorities that would like more freedom to trade but a lot of the pressure on Government here is to find something to reward local authorities.

  305. Sort of gold stars?
  (Mr Travers) There are a lot of stars around but this is another possibility, yes.

Mrs Ellman

  306. What about Comprehensive Performance Assessments, are they going to be a good way of getting freedom and responsibilities for councils? You can both answer.
  (Mr Travers) While we are on tzars and stars. The Comprehensive Performance Assessments, like what we have just been discussing, are clearly yet another way for the Government to feel confident about letting go of a bit of power. As with a lot of the Government's proposals in the last two or three years there is clearly a sense that the Government gives the impression that it would love to give more power to local government but in the end does not quite trust local government enough to give it much power. Things such as the Comprehensive Performance Assessments are a way of the Government getting the Audit Commission in this case to determine which authorities are most trustworthy, most competent, and then giving them a little extra power and seeing what happens. It is a very gentle release mechanism to try to let local government have a little greater freedom than they have had in the recent past without any great risk. I think that Comprehensive Performance Assessments have to be seen against that background. They will be extremely complex constructs in that they bring together many performance indicators and judgments of auditors and inspectors into a single distilled thing and they will only be as good as they are good, if you see what I mean, as plausible as they can be made by those making them plausible.

  307. Do you think they will be understandable?
  (Mr Travers) They will be understandable in the sense that they will, in effect, mark local authorities 1, 2, 3, 4, 5 or 5, 4, 3, 2, 1 and in that sense they will be comprehensible. I think the question is will they be credible or plausible, particularly for the local authorities themselves. If authorities feel they are being fairly treated I think it will be okay. I think the real difficulty will be if there are significant rewards particularly for those in the top rank or penalties for those in the bottom then being on the margin and just in or just out, that will be very, very important. The question of how that is calibrated, if it is not done properly, will lead to legal challenges, there is no question.

  308. Are the freedoms offered going to be very meaningful?
  (Mr Travers) I think that would be a question, as they say, better put to the Ministers who you will doubtless have before you.


  309. We will put it to the Ministers but have you got a view?

  (Mr Travers) Again, the experience of the local Public Service Agreements, which went down this road first, is not hugely and not entirely encouraging I think it would be fair to say. I think there is a risk since all the incentive mechanisms are there that just at the point that freedoms are due to be given there could be a kind of loss of nerve, there is always that risk.

Mrs Ellman

  310. Are the freedoms likely to be real then?
  (Mr Travers) Again, to be fair to the Government, in this legislation there is the potential on the capital side for a significant increase in local autonomy but we will not know until we get there whether it operates like that. You are asking me to guess whether I believe what Ministers say. Of course I believe what Ministers say, and I am sure they do, but—

  311. That is the question, will it happen?
  (Mr Travers) The issue is will they actually get there when that day arrives.

Sir Paul Beresford

  312. All these inspections are horrendously expensive. Would it be a sensible incentive for a reduction in the inspections so as to select and rank and then use the expertise of the Audit Commission and so on to actually concentrate on those local authorities at the bottom that specialise in incompetence?
  (Mr Travers) I suppose, to be fair to the Government, in a sense the system will be—Are you effectively saying not to discuss the top—

  313. Get off the backs of the top 80 per cent and concentrate on helping rather than penalising the ones at the bottom.
  (Mr Travers) Certainly that would be another way of doing it. It would be more straightforward. It would involve the Government in less aggravation, although I think the Government shows every sign that it is cautious about becoming involved in failing authorities. It would put even greater pressure on the Government to get the involvement right because that is what everybody would then be concentrating on whereas at the moment they are concentrating also on the high performers, or they will be, as well. It is clearly the poor performers that cause the most difficulty for the people whose services are being damaged, no question. As I say, I think part of the reason for doing this is the Government is trying inch by inch to find a way of letting go of control.

  314. Get off their backs with all the regulations and inspections and so on.
  (Mr Travers) That would be the simple way of doing it but, as I said a moment ago, to be fair, this is not unique to this Government and this Government does not feel that it can in one leap—


  315. We could not quite get on the record the movement of your eyes at that particular point. We noticed that you were looking at Sir Paul.
  (Mr Travers) Thank you for recording it for me, Chairman.

Sir Paul Beresford

  316. However, I do remember doing a certain amount of releasing particularly on CCT but that is an argument for another day.
  (Mr Travers) Indeed.


  317. Professor Stoker, do you want to add anything to this or do you agree?
  (Professor Stoker) I agree largely with Tony. I would just add three things. One is that the crucial thing is that the assessment system is seen as legitimate by local government. Secondly, that it is seen as simple and straight forward. Personally I would like to see it as something that became the focus of local public discussion and debate so it is not a strict score but something which then gives you an opportunity to have a local discussion about whether or not the authority could be performing better. The third thing is that the freedoms have got to be real and substantial otherwise it is not worth going through this amount of hassle in order to create the league tables. I think the crucial freedom then is freedom from inspection and demand for plans and regulation and so on, precisely because it will free up opportunity. I do not think it is a question of Central Government support but maybe it will free up opportunity for local authority peer support to those authorities that still clearly do need help.

  318. If I was a local authority that had just been relegated to the Third Division South would I not have some justification in claiming that it was lack of resources that I received as a council that meant I had provided poor services? Until you can convince the public that each local authority is getting a fair crack at the money, is there any point in having these league tables or performance assessments?
  (Professor Stoker) I think it is very difficult to imagine that we will ever get to the state that you have just described where everyone believes that they have got a fair crack at the money. I would say that it opens up an opportunity for a new debate because if you do get relegated both your friends and your foes in your local community may point out that there are other authorities that seem to have remarkably similar levels of resources that are not in the same league as you, in fact are in a better league than you, and you have got to explain why that is the case. It seems to me we all know there is substantial differential performance within local authorities, I do not think that the local authority community itself really denies that. My immediate feeling, certainly from talking to people in local government, is that many of them were going to use this as a fantastic wake-up call to try and persuade those forces of conservatism within their own organisations that they actually do need to change and think about operating in a different way.

  319. Does anyone believe that these grading systems are fair? Have you ever come across an academic who thinks that the assessment of academic departments is a totally fair process?
  (Professor Stoker) Oddly, yes, but that is because I have always been in a five department, so it has always been easy to convince myself of that. The reality is that people have increasingly convinced themselves in the academic community that the grading systems are fair. The reasons why we have been able to do that is because in many ways the ownership of the grading has been taken by the academic community. I think one of the good things about the way the Audit Commission is trying to develop its proposals is it is trying to buy a lot of ownership within the local government community from the way in which the formula and process is constructed to the way in which the activity is undertaken. I agree that it may well take a while but, yes, I could imagine circumstances where people would regard it as a fair judgment and then the crucial question would be in two or three years' time when they felt they had moved forward if the judgment then indicated that, no, they had not.
  (Mr Travers) I think the real problem, and Gerry just hinted at this, comes not with the very good authorities and not with the very bad ones where a glance at existing performance data, the CIPFA figures and so on, will give you a very clear proxy for whether an authority is good or bad, whether it is collecting its council tax or not, what the public thinks of it, these indicators work surprisingly well, I think the difficulty will be at the borderlines between various categories, that is where the agony will come and where there is a risk of legal challenge if authorities feel they are being badly or unfairly done by. Sporting analogies have been used and in a sense the Comprehensive Performance Assessment system will be a little bit like trying to determine the Premiership without playing a game. It will be trying to weigh up the cost of the team, the quality of management and so on and trying to work out who is best and who is worst that way rather than playing the games with all the attendant difficulties.

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