Local Government Finance (England) Special Grant Report (No. 97) (HC 721), on Local Government On-Line Funding to Local Authorities

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Mr. Allan: The hon. Gentleman mentioned telephone services. A criticism that has been made of the strategy to put everything online is that call centre services are included under the category of

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electronically delivered. That leaves people feeling sceptical about the targets.

Mr. Moss: The hon. Gentleman makes a good point. Most people's experience of call centres is not especially favourable, and the waiting time must add hugely to people's telephone bills.

A former senior civil servant who spent the last 10 years at the telecommunications agency remarked last week that the Government's policy is

    ''rhetoric rather than reality. I think the government has focused on an objective which isn't in line with what citizens want . . . If you are looking to find out how much your council tax will cost you, it will still take an IT-literate person 10 to 15 minutes to get there.''

That brings us on to the lack of broadband. BT has informed me that some telephone exchanges are being upgraded to broadband—not before time, one might say. The regulation of the telecommunications industry has failed to achieve the roll-out of broadband internet access that we all want. This country has now fallen behind Asia, the USA and most of Europe in broadband penetration. Only 11 per cent. of the population connect with the Government online, but without the high-speed connections on the internet there will not be the widespread take-up of e-government services that the Government anticipate.

In annexe A of the document, under the heading ''E-Voting Pilots'', we are told that the money for establishing e-voting pathfinders is for the period from February to July. I do not know why that period goes beyond 2 May, but perhaps the deadline of the local election does not mean anything.

As for the grant, which totals £4,135,011, there is a staggering variation between the measly £5,000 for Broxbourne borough council and the sum of more than £1 million for St Albans district council, for example. Will the Minister tell us why there is such a huge range in the sums allocated? If the Government deem that it is meaningful to give sums as large as £1 million to get anything out of the pilot project, what is the point of spending only £5,000 or £48,000?

Paragraph ii deals with the money given to local authorities for implementing electronic government. I want to probe further the Minister's response to an intervention from the hon. Member for Sheffield, Hallam. The second paragraph states:

    ''This grant . . . will only be payable to authorities that have submitted a satisfactory IEG Statement (by a date to be specified by the Secretary of State).''

The Minister told us that only one council has not provided a satisfactory IEG statement, so the wording has surely been overtaken by events. We should like that reference to be removed from annexe A.

Under paragraphs ii and iii, which extends the grant to the next year, it is not clear how much money is involved in total. It was difficult to name a total until the IEGs were submitted and passed by the Government, but perhaps the Minister could now tell us what the total will be for all those that made successful bids.

Paragraph iv deals with the extension of e-government pathfinders and the roll-out of existing

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moneys. The maximum grant will be the same as that allocated for the previous year. It would be interesting to know what proportion of the councils involved in the project were overrunning, and what the reasons for that were. Is a common factor involved, or are there difficulties in implementing the grant requirements? The original deadline or target date of 31 March seems to have been superseded by several councils—or so it would appear, because the list of councils does not show that the total grant has been taken up and used by those that successfully met the deadline date.

In all, we welcome the grants to help e-government commerce as we welcome any schemes to boost voter participation and turnout in elections, but we shall watch the pilot schemes carefully to ensure that the Government receive value for money.

11.7 am

Mr. Allan: I welcome the report and the money going to the local authorities, but I have some specific questions and general points.

I start with the specific questions to allow the Minister time to gather his responses together. I was warmed by the Minister's positive response to being mugged by a pair of Allans—I do not know how that would be spelt in Hansard, whether with an ''e'' or an ''a''.

On the e-voting pilots, the critical issue is how they are evaluated. It is right that the Government should go ahead with pilots. I attended a meeting the other day at which the e-envoy grimaced when someone asked what would happen if things went wrong. I replied that that was presumably why the Government were running the pilots. At the end of the day, they can re-run a local election without causing a major catastrophe, whereas re-running a general election would be a little more difficult. They are going ahead in the hope that things will run smoothly but are aware that things may go wrong. The Electoral Reform Society published a good report, in which the Minister for Local Government may have participated in some way. That body did much detailed work on what might go wrong with e-voting.

There is obviously a need for serious evaluation, and I assume that some of the grant for the pilots will go towards evaluation, and that the reason why the money extends to 31 July is to allow that evaluation work to take place through the local authorities. Will the Minister clarify what element will be evaluated and who will be responsible for it? Will it be the local authorities, his Department or the Electoral Commission? My clear preference is for the Electoral Commission to have central responsibility for evaluating the pilots. This is an issue of confidence in the voting process, and the commission is the appropriate independent body to deal with it.

I hope that the Minister can clarify how the pilots will be evaluated and what the time scale will be. It is important that there is a quick response, that we are not left hanging on and that the report does not come out a long time after the election. I also hope that the commission will be properly resourced if it is to be responsible for evaluation.

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There are concerns about voters' perceptions of these issues. Electronic voting is potentially far more secure than the existing system. At present, I could walk into the polling station, say that I was Mr. Smith of 23, the High street, get a ballot paper, and vote. That system is insecure, but we still have confidence in it because if the real Mr. Smith comes along later and is told that he has already voted, he can prove his identity. It is therefore clear that the other person is the imposter, and people will not lose confidence in the system.

The potential biggest difficulty in the electronic voting pilots will be when Mr. Smith arrives at the polling station and is told that he has already voted electronically. The assumption might then be that someone in his household has stolen his voting card, pin number and user ID. In the same way, banks assume that someone who queries a transaction has had their card and pin number stolen and is at fault for not keeping them secure.

Such problems will challenge voter perceptions, and they raise important questions, particularly given our curious confidence in a system that is the most insecure that we could possibly create and does not even require us to produce ID when we arrive at the polling station. Those questions will be dealt with only by a clear independent report, and I suggest that the Electoral Commission should have that major responsibility.

Sections ii and iii deal with the grants to support IEGs, and I have some questions about the evaluation. The report says that the total amount of grant that will be paid to the authorities will be £200,000 and that the Secretary of State will perform the evaluation, but I am curious to know how it will be published. Section iii states that authorities will be paid the second tranche if the Secretary of State judges

    ''that they have made good progress . . . and that they have used, and will be using, the first £200,000 . . . to good effect.''

That is wonderfully vague, and it would help those of us who seek to hold the Government to account if there was some clarity about how the Secretary of State will judge whether authorities have used their money to good effect. If one of our local authorities was told that it had not done so, we would come in for some significant lobbying. It is therefore important that we have an open statement of the criteria that the Secretary of State uses and that we understand how decisions on whether to award the second £200,000 are made.

I was pleased to see that the Government are extending the spending envelope and that they are being more flexible. They are not insisting that the money be spent in one financial year, but allowing it to spill over into a second year. It is entirely sensible that they do that on IT projects and that they do not take the rigid approach of constraining funding to a single year.

The other question in that regard is the extent to which local authorities will be able to work together and pool money. Ten authorities with an extra £200,000 each to spend can work together to come up with a good £2 million project to change one of

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their major transactional systems. If those authorities are spending only their own £200,000, however, they may go for easier projects, such as putting a web interface on their information services, and the evidence suggests that that is happening. A Society of Information Technology Management review of local government has shown that authorities have done the easy bit, but that the tough stuff is still to come. They have the informational services, and people can go to a website to see what their council has done for them, but they cannot engage in transactions.

Anyone who works in IT knows that transactional services are the expensive ones and are difficult to get right. I am therefore interested to know to what extent the Government are encouraging local authorities to work as purchasing consortiums and not simply to do their own thing. To what extent do the rules cause problems? Some authorities in Derbyshire are trying to take a consortium-purchasing approach, but they are having difficulty with the legal requirements on them. I understand that the grants have to go to local authorities and that the authorities are responsible for spending them, but I would be worried if barriers were preventing authorities from getting together to obtain best value.

I am very keen that local authorities, the purchasers, should have the stronger arm, and the providers of the IT services should be the weaker partner and thus have to offer a good deal. I suspect that in the past it has often been the other way around, and that because local authorities have had to meet tough targets on such things as council tax and the benefits systems, they were in the weaker position when negotiating with a limited range of suppliers. Group working is essential if they are to have that strong purchasing position.

Sections iv and v of annexe A deal with pathfinders and dissemination. How will the dissemination place? The sum of £50,000 is allocated to each authority. Is it intended that the £1.25 million should be treated as a single spend—that the authorities will each be given £50,000 but that they should pool the money? Which agencies will be involved? Will they include SOCITM or IDEA? How is good practice expected to spread? Can it be done effectively if the £1.25 million is pooled, or are we expecting each local authority to spend its £50,000 on producing a glossy brochure about what it has done and sending that out? I know that local authorities are keen, and I praise the work done by many on the list. However, it will be tough if the rules do not allow them to pool the funding.

What sort of model are we expecting local authorities to use? Concern has been expressed by local authorities that the model for the spread of good practice could end up too expensive. The Minister said that good practice systems had been developed and that they should be freely available to other local authorities. I hope that that will be the case. If a model has been developed for the local authority family, the thinking should effectively be free to other local authorities. They should have to pay only for the software to be written. They should not have to pay again for the design of the business practices model.

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Someone from a local authority told me that the authority was concerned that it may be offered products for which the thinking was supposedly free but that it may come with a hard slice of consultancy. It would concern me if local authorities were tied to paying an agency large sums to get hold of something that had already been paid for with public money.

I want to know more about how the services are being developed. I am particularly interested to know to what the extent the Government intend their electronic services to replace existing services. I sympathise with what has been said about that. The banks provide an interesting model. They have developed exciting new electronic banking products, but they quickly realised the need to keep their branch network going because customers want different things and one-size-fits-all provisions are not enough. Some people want the do-it-yourself model: they want to do everything themselves, including electronic banking and council tax payments. Others will never want to do that and will always want to use the physical model.

Mistakes have been made in the past. Some projects have been built on a business case, based on the assumption that the physical is replaced with the electronic rather than treating the electronic as a supplement to the physical. Analysis shows that some services will work electronically but one can see that others will not because people will not want them to be delivered in that way. For instance, the Inland Revenue has made self-assessment available online 24 hours a day, 365 days a year. However, the take-up has been low: the idea of coming home from the pub on a Friday night and logging on to fill in one's tax return does not appeal to most people. They would rather visit other sites—ones that contain rather less technical information.

Other sites that would be useful are not obvious. I understand that research has been done in Camden showing that checking council house rent arrears would be a popular online service. Paying council house rent would not necessarily be popular, because people would want to know that the money had been handed over, but people might prefer to check on screen how much they owe. I hope that the strategy will not be to put everything online by 2005, but—

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