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

Examination of Witnesses (Questions 549 - 559)




  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.

Christine Russell

  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 departments?
  (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.

Mr Betts

  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 encountered—not 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 alone—there 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 services—a series of freedoms that were not offered by the government of which you were a member.

Chris Grayling

  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 regime—

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