Examination of witnesses (Questions 180
WEDNESDAY 23 OCTOBER 2002
180. Mr Scotter, we obviously have this SSA
Review underway at the moment, could you explain in a very short
and concise way for an average constiuent of minenot going
into vast detail, I know you can but I do not need you towhat
the defects are that this Review is seeking to remedy in terms
that my constiuents would understand and who the winners and losers
are in areas in terms that my constituents would understand? (Mr
Scotter) One of the defects which the Review is trying to
address is that your constituents will probably not understand
how the money is allocated, and the aim is make this more understandable
to people who actually have an interest in it and are engaged,
the informed constituent who wants to know about this. Another
issue is the way that SSAs have been used and portrayed in the
past as an estimate of the needs of the local authority, rather
than the way of distributing grants between local authorities.
You will know that the past capping has been based on spending
assessments. A third element is the factthese are all set
out in the White Paper which was published last Decemberthat
this is very much based on looking at past patterns of expenditure.
Of course to some extent that is self-fulfilling. If you look
at what people spent last year and base your estimates of needs
on what they spent last year you may come up with what they spent
181. You are beginning to lose my constituent.
Would you be able to say to my constituent, this is a fairer system
than we had before. (Mr Scotter) What the government
is looking for is something which is simple, more straightforward,
more stable and fairer.
182. The previous system was unfair in what
respect? (Mr Scotter) The point I was obviously not
explaining very well was it tended to perpetuate the pattern of
expenditure that has existed in the past rather than looking independently.
183. From your detailed study it had that aspect
of unfairness that perpetuated these things that it should not
be perpetuating, who was losing out in broad terms in terms of
areas of the country? (Mr Scotter) I think the formula
is very complex and naturally particular features may have an
effect in all areas of the country if you are asking me about
regions. There is a clear issue which has already been raised
about the Area Cost Adjustments, where there are people in some
local authorities who think it is excessive and others in local
authorities who think it is inadequate.
184. Before you lose my constituents entirely,
if my constituents said, Mr Scotter was there a part of the country
that appeared to be losing out under the previous unfair system
rather than it being randomly distributed throughout every local
authority area is the answer there was or there was not? (Mr
Scotter) The answer is (Mr Macpherson) I
think the answer is that the Deputy Prime Minister will be announcing
the new proposals very soon and your constituent should hang on.
185. That is why I did not ask you the question.
Are you telling us that after all this work you have done, and
you already developmed various options, and so forth for this,
that you do not know, you cannot actually say to us there was
any area that was dealt with unfairly? (Mr Scotter)
I think I would have to
186. I would rather have your answer than Mr
Macpherson's, his answers are not helpful to my constituents. (Mr
Scotter) The position is that the government has looked at
a range of options. We are consulting with local government and
other people and we have consulted with local government about
the choice between those optionss. When ministers take those decisions
we will reflect those.
187. I thought you said this was going to be
a simpler system! If only we had more time to follow it up. I
want to deal with another area and I want to put this to Mrs DunnI
think it is her areawe discussed earlier and Mr Macpherson
mentioned how we had a bottom-up system, we arrived regionally
at this system and it came to expenditure per head. It is not
done in a coherent way that tries to get money into regions from
the top. When you look at the distribution we have across the
various regionsand Mr Cousins has drawn your attention
to the situation in the north east, I come from the south westwhen
you look at all of the detailed figures in your area do you believe
that it is a satisfactory distribution we have ended up with as
a consequence of a bottom-up process or do you think that the
kind of concerns you have heard from Jim Cousins are quite legitimate? (Mrs
Dunn) I think it goes back to what you are trying to do. I
think that if we had a situation where we looked at health, we
looked at local authority spending, we look at regional development
spending and so on and if in each of those areascriminal
justice would be anotherwe felt we were able to devise
an allocative formula that we thought was fair for that particular
area of expenditure then I think it would be correct to say that
if you aggregated that up to a regional level and added in things
like social security, and so on, that we would have the right
allocation. It is worth thinking about the way in which we distribute
money to Scotland, Wales and Northern Ireland because in effect
that is what we are doing there, we are saying if you add all
of that up it is then up to devolved administrations to determine
the allocative mechanism.
188. Mr Cousins encouraged you to go to the
north east and if you turned up on the doorstep of one of his
constituents and they said, "It is somebody from the Treasury,
we know we have been short-changed for years, this area is losing
out compared to other areas of the country", would you able
to answer, "no, you are not losing out", to that person
at the moment? (Mr Macpherson) I think
189. I was asking Mrs Dunn. I am keen to get
Mrs Dunn's view, this is her area of expertise. (Mr Macpherson)
I am quite happy to give a collective answer.
190. My question was to Mrs Dunn. I would like
an answer to it. (Mrs Dunn) I may not be able to answer
without losing your constituent in the way Mr Scotter might have.
191. Could you answer to Mr Cousins' constituent,
"no, you are not being short changed". (Mr Macpherson)
I would say
192. I do not understand why you are cutting
across your officials, Mrs Dunn is a very senior official, this
is her area of speciality and frankly I would like an answer from
her. (Mrs Dunn) I would say that I thought that the
systems we had were fair but that does not mean that they cannot
be subject to the sort of review that enables them to be refined.
193. If we move to a situation where the south
west or the north east has a regional assembly and they end up
in situation that looks a bit more like the situation that Scotland
and Wales would it make sense to have a situation where we look
at the whole thing again and the north east or the south west
gets a regional block allocation in the same way as Scotland and
Wales do? (Mrs Dunn) I think that if you look at the
detail of the regional government White Paper it sets out quite
clear proposals for elected regional assemblies and it does not
talk about giving a block grant in the way that you are suggesting.
What it does talk about is looking at the functions that are to
be devolved, allocating expenditure to those regions in the normal
way and then, rather in the way that we have done for the Regional
Development Agency, creating a single pot giving the regional
assembly freedom over distribution. (Mr Scotter) I
do not think I have anything to add to that.
194. Moving towards the end now can I just ask
you one question on a technical point, on this Standard Spending
Assessment there is an area of cost adjustment included but in
your own memorandum you draw attention to the fact that the NHS
resource allocation includes what is called a market forces factor,
which is a premium paid for recruiting staff in different wards
and parts of the country, how do you reconile those two? (Mr
Macpherson) The answer is that I would need to go back and
provide you with a note. These allocation mechanisms evolve for
different purposes in different ways. Clearly within the Treasury
we are keen for them to be broadly consistent, and the health
one reflects the special needs of the Health Service. I am happy
to provide you with a note on how precisely those aspects of the
195. Okay. You said it was early days on the
Regional Venture Capital Funds, have they actually started, they
had trouble getting clearance from Brussels? Have they now kicked
in? (Mrs Dunn) They are starting in England, yes. I
think they have. We will check that.
196. Thank you. You promised us some information
on how the allocations are done amongst RDAs. You also promised
to get back on RSA, on the jobs issue and the total amount. There
are a number of other studies floating round, the ONS study on
regional GDP you are going to comment on when it comes out. (Mr
Parkinson) Regionalisation of accounts. (Mr Macpherson)
The 31st of October.
197. You promised to forward your comments on
that. The Office of the Deputy Prime Minister study on Regional
Output Analysis. (Mr Scotter) That is a joint Treasury/DTI
198. When does that come out? (Mr Macpherson)
Another 18 months or so. (Mr Parkinson) 21 months.
199. We will hear about that in due course,
will we. Fine. Finally, the Department of Health allocation formula,
the basis for that. You are going to let us have a note on that,
are you? (Mr Macpherson) Yes.
Chairman: Good. Thank you very much indeed.