Examination of Witnesses (Questions 549
THURSDAY 11 JULY 2002
MP, MS PAM
549. Can I welcome you to the Committee for
our final session on the draft Local Government Bill. Can I say
we very much welcome the opportunity to have scrutinised the draft
Local Government Bill but we rather regret we have had to do it
in quite as short a timescale as we have. Can I ask you to introduce
yourself and your team for the record, please?
(Mr Raynsford) I am Minister for Local
Government and the Regions. I am accompanied by two officials
from my Department, Pam Williams and Stephen Briody, and between
us we will try and answer any questions that you have. As an introduction
can I briefly say that this is a very important part of our overall
agenda for the reform of local government: we want to extend freedoms
and flexbilities, to reduce the extent to which local government
is restricted unreasonably by government controls, but that has
to be within a framework which encourages high standards of performance
and rewards achievement. We see this, therefore, as very much
part of the overall package set out in the White Paper that we
published last December. We are very grateful to you for arranging
this inquiry and we apologise it has been at short notice but
we felt it was better to at least get a draft bill out to allow
this opportunity rather than to produce a Bill itself without
having the benefit of preliminary scrutiny, and we appreciate
very much the effort you have made to allow this inquiry to take
place in the very limited timescale.
550. Good afternoon, Minister. Can I begin by
asking you about your own Department's bureaucracy? You are obviously
aware, I am sure, of recent press reports, Public Finance
magazine to name but one, who have said, "The breaking up
of the Department for Transport Local Government and the Regions
threatens to plunge the civil service into months of administrative
chaos according to Whitehall sources . . .", so I think the
Committee would like to know if there is a timetable for the completion
of the re-organisation?
(Mr Raynsford) Perhaps I can say straight away that
in my experience, having been firstly a Minister in the Department
of Environment Transport and the Regions, then more recently a
Minister in the Department of Transport Local Government and the
Regions, and now a Minister in the Office of the Deputy Prime
Minister, the only Minister to have gone through all three of
those, it certainly does not feel to me in any way like that description.
There are inevitably some rough edges in any change of responsibilities
but I have to say the Department is working very positively indeed
and there is certainly no question of disruption or attention
being diverted from our main priorities as a result of the formation
of the office of the Deputy Prime Minister. On the contrary, I
believe we have a new and very positive spirit in our Department.
551. What about the people themselves? Have
they all literally moved desks? Has all that been sorted?
(Mr Raynsford) No. A number of people are still working
in the same desks they were working in before because we have
the new Secretary of State for Transport in the Department whereas
the Office of the Deputy Prime Minister himself is in Whitehall.
552. So is there a date when everyone will be
in post, in the right grade, in the right position, in the two
(Mr Raynsford) The actual physical location of officials
and indeed ministers, because ministers are going to be moving
in due course as well, will happen over the next few months but
it is not something that will disrupt the work of the organisation.
The grades and the role of officials are decided and the work
is going on, as I said earlier, in a very positive spirit.
553. When the White Paper was produced a few
months ago, we had words like "new relationship", "new
beginning", "trust", "milestone"people
got a bit excited about what was going to happen. The evidence
we have taken so far seems to be a great sense of disappointment
about whether the realities in the Bill in any way live up to
the aspirations in the White Paper.
(Mr Raynsford) My reading of the view in local government
is that this is seen as a step in the right direction.
554. A small step?
(Mr Raynsford) Clearly some people want to see us
moving at a faster rate than we are but there are very few people
in local government who have said to me that this Bill is not
an improvement on the previous framework. Some would like to see
us going further and faster. We believe we have moved rather rapidly
because, as you know, the White Paper was only published last
December; we are currently moving on a number of different fronts
simultaneously, introducing this new draft Bill, introducing the
new grant distribution formula and introducing the comprehensive
performance assessment framework, all three of which are major
operations and all three of which are going ahead in parallel.
We believe this is part of the new relationship: it is not going
to be welcomed enthusiastically by everyone because people have
higher aspirations but I do not think there is a strong body of
opinion in local government that is opposed to this Bill.
555. I think that may be right in the terms
you have just used. I think what most people have said to us is
it is a small step forward, maybe two forward, one backwards in
some regard, but not the complete change in relationship which
you were proposing in the White Paper. While people have not come
to us generally with evidence and said they have opposed the Bill,
I have not heard one bit of evidence which has enthusiastically
welcomed it. Is that not a bit of a disappointment compared to
the aspirations in the White Paper?
(Mr Raynsford) If I may say so, it is the very nature
of people giving evidence in front of a Select Committee not to
over-enthusiastically welcome something that they want to see
go even further. This is the very nature of political presentation.
On the serious point about relationships, however, I think there
is a new and better relationship but it is one where trust has
to build up gradually step by step, and I think this Bill will
help to reinforce a relationship of trust. Certainly at the Local
Government Association conference in Bournemouth last week I felt
a much more positive relationship with not just councillors from
all political parties but also senior officers in local government
than I felt a year before at the Harrogate equivalent. That does
not mean to say there is not a lot further to go but I think we
are moving in the right direction.
556. Another thing that has been said to us
is that the government says it wants to trust local government
and perhaps, instinctively, it does but then it looks at certain
freedoms it might give to local authorities and again generally
means it, but when it gets to the giving of the detail it suddenly
starts to decide it can only give it with lots of regulations
and guidance and extra controls, so the things that have to be
given in theory do not amount to a great deal in practice. They
are certainly restrained. Do you not think that is a fair description?
(Mr Raynsford) I would not accept that because the
freedoms set out in this Bill were the freedoms as described in
the White Paper. We have not reneged on any of the commitments
in the White Paper: we are proceeding with them: and inevitably
there are some safeguards that go with greater freedoms. Some
concerns have been voiced about some of the issues relating to
levels of balances and reserves that local authorities maintain.
That is an inevitable consequence of giving greater freedom to
local authorities to determining their borrowing, because if there
was not a safeguard in place then the kind of problems we have
encounterednot very often I have to say but in individual
authorities and I will mention both Hackney and Walsall, authorities
that have got into serious difficulties, we do not want to see
that problem repeated. There has to be a safeguard. So that safeguard
is there but the freedom is going to be enjoyed by hundreds of
local authorities: the safeguard is only to guard against possible
failing by a very small number. That seems to me to be a framework
that is responsible and in line about what we say in the White
Paper, and it brings real benefits to local government.
Mr Betts: We have had evidence on how the 2000
Act is working, and they have got obsessed with processing, local
councils have got bogged down in looking at management systems
and how they work rather than at local communities, and we have
evidence that on the various regimes for inspecting and assessing
local authorities chief executives are taking virtually half the
working week on those issues alonethere are so many rules
and procedures and prescriptions from the centre from legislation
from within this government's lifetime as well as beforehand
Sir Paul Beresford
557. Before you answer that, can I add more?
If we look at the capital you say it is free but Clause 4 gives
the opportunity to take it right back. The reality is that local
authorities are going to be looking at the revenue side of their
capital and you have the strengths that you pull on the revenue
side; there is deep concern over capital receipts because you
are going to be able to take them away, even retrospectively;
the budget controls in part 2, local authorities see as very tight;
the predictability of grant you have said is going to be better
but in part 3 it is the same as the Local Government Act 1992;
business rates being poolled with the government grant is seen
by many as the removal of transparency, yet you say you want more
transparency; the formula based HRA subsidy, the major repairs
subsidy, was at least predictable but you are taking that away
with subjective grants, and on top of that you are setting council
house rents by a central formula?
(Mr Raynsford) I have to say your experience as a
Minister in the previous government will have undoubtedly equipped
you to understand the level of controls that government exercised
over local government, and I do not recognise the description,
frankly, you are giving to me now of what we are doing. These
measures are deregulatory. Borrowing approvals were introduced
by your government. These measures allow local authorities to
borrow against a prudential framework which allows the authority
itself to determine whether or not it can prudently borrow without
incurring debts that it would find difficulty in repaying. I said
in response to an earlier question that there have to be fallbacks,
and one is against a situation where the national economic position
requires a government to take steps to limit overall public indebtedness.
No responsible government will give up that ability to control
the overall level of debt in its country and that is why the safeguard
that you have referred to is in place, but that will only be used
in an extreme situation where there is a major overriding national
interest. In the vast majority of circumstances, the overwhelming
majority, that provision will never be used but local authorities
will benefit from the freedom to borrow which they did not enjoy
under the government you were a member of.
558. Is the freedom tied to the revenue then?
(Mr Raynsford) On the revenue side authorities will
be able themselves to determine what revenue resources they have
and, if you look at other parts of this legislation, you will
see greater freedom, freedom to trade for high performing authorities,
freedom to make charges for discretionary servicesa series
of freedoms that were not offered by the government of which you
were a member.
559. Why is it necessary, and it seems to be
a running theme in the legislation the government is introducing,
to say that few can have freedom and the rest cannot? Why can
you not give freedom and remove it when there is underperformance,
rather than insist the freedom can only come with excellent performance?
(Mr Raynsford) I have to say we are, as I answered
earlier, giving freedom to local authorities. The borrowing approval