Communities and Local Government Committee - Codification of the relationship between local government and central government - Minutes of EvidenceHC 1518-i

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House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Communities and Local Government Committee

Codification of the relationship between local government and central government

Monday 16 April 2012

Graham Allen MP AND Cllr Sir Merrick Cockell

Evidence heard in Public Questions 1 - 25

Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 16 April 2012

Members present:

Mr Clive Betts (Chair)

Heidi Alexander

Bob Blackman

Bill Esterson

Stephen Gilbert

David Heyes

George Hollingbery

James Morris

Mark Pawsey

Heather Wheeler

________________

Examination of Witnesses

Witnesses: Graham Allen MP, Chair, Political and Constitutional Reform Select Committee, and Cllr Sir Merrick Cockell, Chair, Local Government Association, gave evidence.

Q1 Chair: Good afternoon to both of you, Graham and Merrick. Thank you very much for coming. At least one of you has been a fairly regular visitor to our proceedings, but Graham, you are welcome as well. For the sake of our records, could you just say who you are and your position? That would be helpful.

Sir Merrick Cockell: I am Merrick Cockell. I am Chair of the Local Government Association and Leader of Kensington and Chelsea Council.

Mr Allen: Graham Allen MP, Member of Parliament for Nottingham North and Chair of the Political and Constitutional Reform Select Committee.

Q2 Chair: We are talking about the code this afternoon. I suppose the word "code" itself might not be a term to get the hearts racing of our various constituents, who might be looking for something dramatic to come out of these deliberations. What in practice do you think the code will do to make things better for members of the public who just want their services delivering to a high quality when they need them?

Mr Allen: This is very much an allparty duo you have got in front of you here.

Q3 Chair: You do not have to say if you agree with each other, by the way.

Mr Allen: Thankfully we do on virtually everything around this. I think the UK is pretty unique in that most Western democracies have a defined settlement for local government and central Government. Whether in North America or Europe, virtually every other Western democracy makes it very clear what the rights and responsibilities of the centre and the localities are. That in itself, I think, would clarify things for a lot of people. People often tend to dismiss everything as government and they are never quite sure where responsibility lies, certainly if you have got two local authorities in an area. One of the key things here, particularly when you look at the financial proposals in the code, is it is less to do with changing the way things are than making the lines of account clearer. If people in the localities understand the lines of account and are aware that effectively threefifths of the income tax they pay goes back to the localities, they will want to take a greater interest in local government. That will mean, in my opinion, better decision-making. It will also mean that more people of all political persuasions will want to be involved in local government. It will be more meaningful for them and people will be less alienated from the governmental structures that are around them. So I think people would see a difference and you would above all see a difference in culture: people wanting to get involved and seeing that local authorities really did matter.

The second point I would like to make is that local authorities themselves would benefit immensely. We are doing something of a regional road show, so looking at my own authority but also talking to lots of people around the country at member- and officer-level, there is immense talent and creativity in local government, which I think is often repressed by the way in which they need to respond to a unitary state-a Government that tells them what to do from Whitehall. We are pretty much fighting with one hand tied behind our backs at the moment and I think the brilliance and talent that is available in the localities at officer- and member-level could be freed to very great effect, again to make sure that local people got the best possible services out there.

Sir Merrick Cockell: I think, Chair, that Graham has represented very fairly the inspiration for his and his committee’s impetus in looking at this area. It will not surprise you that the LGA does not have an established view at this stage, even though one of my purposes has been to try to get established views early on, but this is one area where it is right that we hear from our members. Indeed, perhaps one of the unique elements of this is that the LGA and Graham’s committee are working to stimulate that debate not just in Portcullis House and Smith Square, but also out around the country. We are, led by Graham, actively trying to generate some wider interest, not just amongst think-tanks and in town, county and other such halls, but in our communities, to get their views. That will culminate with our Local Government Association conference in Birmingham at the end of June. Hopefully at that point we will have an established view, having had some widespread debate. That is happening round the country at the moment.

To add to Graham’s outline of the benefits, within the LGA and local government we believe in localism, yet we know the limitations of it in its current form. We know how difficult it is for citizens to know who is accountable, to understand their way through and indeed perhaps the confusion between the role of Members of Parliament and local democratic organisations as well. Coincidentally, this morning Graham chaired a roundtable as part of it and we heard from professors of government in Belgium and Switzerland. It was stark that the evidence from Switzerland was that 85% of local resources are collected not by the cantons but by local councils. That is almost exactly the opposite of the position here. Of course in the Swiss system there is a lot of direct electoral participation, but it is still a stark contrast to what I would say is our overcentralised state.

Q4 Chair: I suppose one response that you might get is, "The Government has given the general power of competence so local authorities can get on and do what they want. Why do we need anything else?"

Sir Merrick Cockell: Indeed, and we welcome that. I think the Localism Bill also gave the Secretary of State another 100 direct powers. I am sure he will not need to use those, but still they are there. The general power of competence just puts us in the same position as a citizen. Graham will no doubt comment on this. Perhaps the great stumbling block of his initiative is how it will be viewed, particularly by the Treasury. The missing bit about the general power of competence is that we cannot decide locally what taxation we may wish to apply or not apply beyond the current powers and indeed whether we would wish to charge for some of the services that we provide. We are prevented from doing that and under Graham’s proposals we would not be.

Mr Allen: One thing is clear from political history: things do not remain the same. Localism is either going to move on and forward-I hope to something in the general direction of independence for local government-or slide back; it will not stay in exactly the same place. We have already seen a number of examples. I saw an article over the weekend about the powers over the high street and betting shops, etc. I am staggered that we have to wait for a pronouncement from Whitehall before our people in the localities can get on and sort out their own high streets in the way that they feel is most effective for them. So I think localism needs to be taken further.

On the general power of competence, currently what the Government giveth, the Government can taketh away just as well. That is why the code is not a concordat; it is not a European aspiration. It is a statutory code that defines the rights and roles and separation of local government as an equal partner. Further, the proposal in the consultation document is that it is entrenched, so that in future years it will not be possible to suddenly change direction at the whim of central Government and do away with the rights of local government because it was not convenient for central Government. I do not necessarily want to bore Members with the details unless they would like them, but there would be an entrenchment provision to hide the rights and responsibilities of local government behind the 1911 Parliament Act so that there could be a possibility of Parliament saying "no" if Government ever were tempted, as they inevitably will be, to chip away at the independence of local government should we be able to achieve it.

The last point is powers, general competence or not, are hollow without finance. They become impositions. As we have seen recently, local government being told to deliver certain things but without the resources often leaves a skewing of local decision-making. You must do that which is statutory and that eliminates all the marginal capabilities that local government has to spend a relatively small amount of money on the things that they think are appropriate for their locality, regardless of party and politics. Diminishing the ability to do that of local government of any complexion is bad for our democracy and very bad for local provision of services.

Q5 Bill Esterson: Having served as a councillor under both Conservative and Labour governments, I completely agree with both of you about the need for some kind of change, as is suggested. I just wonder whether the public care about this, in the context of whether it will enable them to understand the difference and who is responsible and accountable. As far as the public are concerned, would this make a difference? How do you envisage that happening?

Mr Allen: Again, I think this is a cultural question. Once you give people the right to run their own affairs, I think you will have to fight them to get it back off them. Sometimes we as representatives-and also councillors as representatives, if I may say so-need to do what is right rather than wait for socalled public demand. I do not think public demand is expressed in a convoluted way about codes, entrenchment and division of powers; I think it is expressed in a general jaundiced view about the inability of all of us in politics to deliver for people. One of the key concepts-the most beautiful concept but the ugliest word in the English language-is subsidiarity. I am not suggesting, nor is Merrick, that every local authority should have its own nuclear deterrent. What we are suggesting is we should be allowed to deal with problems on the high street with the bins, with services, with social services and with education as appropriate at the appropriate level.

Again, I have to say this is not revolutionary. I do not think there is anything wrong with the DNA of people who happen to be resident in this country that makes them less capable of running their own affairs locally than the Italians, the Germans, the Americans, the Canadians-I could go on and on and on; it is virtually every Western democracy. I think we are capable and I think we are restraining a lot of the talent that should be liberated. That is why I am delighted that we are able to work with the Chair in particular, but hopefully with Members of this Committee too, in opening up this debate and asking people what they think.

Q6 Bill Esterson: So you see this as a way of increasing local participation in democracy?

Mr Allen: Absolutely. Again, Merrick, we had this debate this morning. We were looking at how the code might work. We are not looking at a transfer of state power from central Government to local government; we are looking at local government having certain rights. Among those rights will be to innovate, to be able to bring in whatever they feel is appropriate at a lower level-whether it is neighbourhoods or parishes, their electoral system or the way they want to raise additional funding-to liberate people locally. That can only be done not by prescription but by giving people the authority and the finance to get on with that. That works in most other countries; it could certainly work, one would argue, in the last country in the empire: the UK.

Sir Merrick Cockell: For local government, this is not just simply about people coming out and voting once every four years or annually under the thirds; it is far more active ongoing participation. Whether that is through referenda is not really the point; it is that people see a reason to be involved and be interested in their council and community at whatever level. Part of the discussion has been about what the definition of councils in this is. Is it just the large or obvious ones-counties, districts, boroughs, mets and unitaries-or does this apply to town and parish councils? What is the appropriate level? Graham has still got to answer that in the drafting. But we want citizens to engage and to think there is an outcome that they can achieve from participating. At the moment we know that it takes long enough to do anything whichever part of government is doing it, but at least there is greater immediacy at a local level. This might not interest people at the moment and, as was said, Chair, at the very beginning, a code or a concordat or anything like that is bound to turn people off, but hopefully the realities of it might just excite more people to be involved.

Q7 Heidi Alexander: Sir Merrick, you said earlier that the LGA does not have an established view at the moment on the need to codify the relationship between local government and central Government. Back in December 2010, when the LGA submitted evidence to Mr Allen’s committee, you said that "further work to codify the relationship is unnecessary". Can you tell us what has changed between then and now?

Sir Merrick Cockell: You mean apart from me becoming chairman of the LGA? I think you were asking me in a more general capacity then. Truthfully, the LGA is open to it. A settlement between national and local, codified or otherwise, does seem sensible. As Graham said, we are in an evolutionary process. Across the parties there is a broad acceptance that an overcentralised state does not and has not worked, so if that is being changed, where could it end up? Having a sensible debate now about what might be achievable quite soon or longerterm is a sensible thing to do.

I am not sure where we were in the drafting of it when I gave evidence before. Seeing the drafting in action today with some experts, one of the impressive things about the work of Graham’s committee is that it is such a short document. In fact, the move today was to make it tighter and even shorter. That is very important. There may be other volumes in support of it were it to become accepted, but still, it is something that anybody can understand. Anybody, whether they are in local government or not, can see what it is talking about. If codification means something written down in a couple of pages, then I think that is far more likely to gain acceptance than something running to reams of documents that nobody can penetrate.

Mr Allen: Could I just add that this is a very early point in the process? I am talking to the Chair at length. We are holding a joint meeting for all Members of Parliament of all parties next Monday, with the Municipal Journal very kindly providing refreshments. There will be a continuing process. We are already engaging people through email. We have sent something to every Member of Parliament, which you may have got in the last couple of days. The Municipal Journal very kindly printed the code and allparty views on that.

Our view is a constitutional and democratic one. Hopefully, if we can get something into shape on the code and if the LGA were to be supportive of that at their annual conference in June, the process will start to engage ever deeper within Parliament and the more detailed expertise that you have in this Committee. I think that is going to be helpful. Ultimately, there is, we hope, going to be a refresh of the coalition Government. Apparently the two coalition parties will come together to see where they are in midterm and I make no secret of it that I would like them to consider whatever emerges from this process-a Parliamentary process and a longrunning process. So it is not that it is going to happen next week, unfortunately; it is going to take some time and evolve. I think we have all got a role to play in how that moves forward.

Q8 Heidi Alexander: Can I ask whether you sense that there is much appetite out there? Bill talked about the public, but what about rankandfile councillors? I know a lot of councillors, and I do not think one of them has ever said to me, "I think, Heidi, what we need to do is codify the relationship between local government and central Government". It is a genuine question. How much appetite do you think there is out there amongst councillors?

Mr Allen: I have never met a councillor who has ever said, "The relationship we have with central Government is great. We love them telling us what to do. We like 1,300 acts tying us down". As someone who has been a councillor, a senior officer in local government and the Chair of a local strategic partnership, what central Government imposes upon people has driven me crazy. It grinds people down. When they feel they’ve got no power of initiative, very often people will complain to you, to me and to others and say, "There has got to be a better way of doing it than this. Why are we being instructed, often on things that can be dealt with much more easily and expeditiously at a local level?" I think there is demand out there.

Is there demand being made evident through the consultation? We hope so. When people are held in a position for many, many years, they sometimes get a little bit fatalistic and they argue about the crumbs, so we are trying to change the terms of the debate, ask people by email and through the Municipal Journal, and get Members of Parliament involved, to brew that debate and say, "Look. Things are happening in Scotland. Things are happening on the localism debate. Things may be happening on the second chamber. What is going to happen in the future to local government? Shouldn’t we all have a view rather than wait for the people at the highest echelons of Government and the media to tell us what’s what and then we get an Act of Parliament or a Bill at some point to rubber stamp?" I think we can have a very clear view about how we would like to see local government develop in this country and I would argue very strongly along similar lines of democratic codification as occurs in most other Western countries, where they therefore make a very strong contribution.

Q9 Heidi Alexander: Would you agree with that?

Sir Merrick Cockell: Yes, I would, broadly. I think there is more of an appetite there, not for the writing down of it, but, using Graham’s example, if you asked, "Should the clustering of betting shops or strip clubs be something that you should be able to decide in your area?" most people involved in local government will say, "Absolutely". We have been saying that at the local level for ever, really. That is what those we represent want and we should be free to be able to do that, making a good explanation of why we might be taking action against particular clustering of services, as you might call them.

But the change that has come in the last year, with the difficult financial times and the substantial savings we have had to make, perhaps surprisingly to many, is the appetite that has reignited in local government. I talk to leaders of all parties across the country who are driven by economic development and what they can do about it now in real terms-whether it is looking at the options that are referred to in the draft code on raising finance through the bond markets or using pension funds more effectively. There is a real appetite for something that makes it easier for local communities to have a direct involvement in that, rather than relying entirely on the Treasury to give us permission to borrow and invest in our communities. I think the timing of Graham’s committee is absolutely right.

Q10 Bob Blackman: Graham, you suggested that one way of doing this would be to amend the Parliament Act. That is a bit risky, in the sense that if you get it wrong, it is quite difficult to change afterwards. Are you thinking of a twostage process-i.e. an amendment to the Parliament Act backed up by some secondary legislation that could be revised with agreement? Is that how this will work?

Mr Allen: We are trying to free people to make their own way, so it is a little bit difficult to then tell them exactly what they have got to do in order to get there. Hopefully this campaign will take on its own life and momentum. Certainly every time we sit down with the code, as we did this morning with some of the most eminent people in the local government field and excellent examples of foreign practice that Merrick referred to, we come up with new ways forward, chipping the edges off a very rough draft. I hope that when we have finished our work, you will pick that up, add your stamp to it and move it on another stage with your expertise in concrete terms in local government. The proposal we floated was that you could have some sort of joint committee arrangement between the two Houses; you could hide it behind the 1911 Act so that the second chamber would have the role of protecting the rights of local government, as it does in ensuring that Government cannot extend the life of a Parliament beyond five years. There are all sorts of possibilities, but at the end of the day this is about power and it is about local government in this country wanting to do that.

That is where I will pick up Ms Alexander’s and Mr Esterson’s points. It is not that we need to wait for the public to lead us; we must attempt at some points to lead the public. But without that bubble and activity in the localities and among councils, you are giving freedom to people who have not expressed a desire for it. That is why the debate is very important. That is why, I think probably unprecedentedly, the consultation does not close until October. That is because we would like groups within local authorities, local authorities themselves and even management teams of senior officers within local authorities to have the time to think about this, to have proper debates and then come forward with their answers. I suspect it will not be our draft answers; it will be answers that can achieve a consensus in rooms like this and in local authorities across the land.

Q11 Bob Blackman: What is your current thinking on who gets the benefit of the code and how it would be enforced? There is no point in having a code unless someone makes sure it is adhered to and there is a right of challenge. That could be quite bureaucratic and an opportunity for lawyers to make rather large sums of money.

Mr Allen: The lawyers are not doing too badly at the moment, because there are invariably discussions between local authorities and the centre about their powers and their vires. If it is clearer, written down in a code for everybody to see, then not only can we and senior people in councils understand what local government is about; the average elector can too. If you link that to the finance side, if on your wage slip, for example, you see that threefifths of your income is spent on local services, all of a sudden you take a very smart interest in what is happening locally; you will participate more. I think you will see a blossoming of the very strong spirit of public service that there is in this country expressing itself through local political parties of all colours and persuasions and bringing many local authorities back to life in terms of the part they play in our democracy, which, let’s be honest, sometimes leaves a little bit to be desired. I think a lot of that is because local authorities are agents and the amount of discretion that councillors and officers have in making things work in their locality in the way they know is best has been severely limited. Let’s free that entrepreneurialism, that creativity and that talent and I think we will all be the better for it.

Q12 Bob Blackman: Merrick, is the current view from the LGA that this would be an agreement between the LGA and DCLG, or would it be open to every authority to sign up to this? How do you see this going forward, given that there is obviously a debate going on in the LGA at the moment?

Sir Merrick Cockell: Yes, whether it is the LGA or whether it is local government and Government. If it was an agreement with one Department of Government, all we would be doing is reinforcing the things we have discussed before about silo mentality. It would have to be between local public services and national public services-local government and national Government. If the code was applied, some of it would need quite clear legislative change, wouldn’t it, Graham?

Mr Allen: Absolutely, yes.

Sir Merrick Cockell: So it could not simply be like that concordat that was signed some years ago and that I have certainly never looked at since, to my knowledge. That had a lot of expectations and some drive behind it at the time it was signed, but as we know, it required the signatories to be personally leading it. Once that personal belief in it had gone, it just became another document that most people had never heard of or looked at. There is no point in doing that again. None of us have any inclination to simply produce another document that means nothing. It has got to be followed right the way through the whole of Government and local government.

Q13 James Morris: We may be in a situation in a few months’ time where we have directly elected mayors in quite a few of England’s major cities. There has already been talk of a mayoral cabinet who would maybe be meeting with the Prime Minister and so on. One of the implications of this idea of codification is it fundamentally changes the relationship in our system between prime ministerial power and the power of the House of Commons. How would you envisage the relationship between central Government and local government in terms of participating and holding it to account?

Mr Allen: I do not think Government’s role is to hold anybody to account. It is Parliament’s role to hold Government to account. Whether we do that very effectively or not is another debate that could take some time. What is floated in this code is independence for local government-a separation so that local government is just as valid as central Government. That will mean that central Government will not be able to tell local government what to do.

Q14 James Morris: That is what I am trying to get to. In the world where this code had been signed between whatever representative of central Government and local government-

Mr Allen: It would have been an Act of Parliament.

James Morris: Yes. How would the Executive, as it were, relate to local government in that new world? Would the Prime Minister meet with leaders of local authorities to make sure that whatever legislation was coming through the House of Commons and the House of Lords did not ride roughshod over this code? How would that work?

Mr Allen: I think you would start from the premise that the localities would decide and the localities would be independent of the centre. For example, on the mayoralty, it would not be possible for central Government to impose a referendum, allow a referendum or impose a mayor on anybody. However, the localities would have the choice themselves as to what form of governance they had locally. If they wished to have a different electoral system, or if they wished to raise their money through additional monies on top of that base load that could be met by threefifths of income tax-through a hotel tax or whatever-they would need to interact with their local populations and win them over. If there was a bond issue-let’s say an early intervention bond in Nottingham; something I have been working on-it would be a matter for local people to vote whether they wished to incur that additional expenditure. Local government would be able to borrow on the markets. It would be able to do what local authorities used to 30 years ago, which is buy and sell their own debt.

The provision in the code is about having a balanced budget each year, but other than that, local authorities would live or die on their own credit rating and their own prudence. I have to say most local authorities that I know and have worked in in one capacity or another have arguably had a better record of prudence and financial management than the very people in the centre who often sought to lecture us over many, many years. In terms of what the Prime Minister could or could not do, that would be no different to what it is now. Much of what Government does is exhortation. But there would clearly be a limit to what a partner-central Government-could do by way of dictating to the other partner-local government-about what happens in their area, which is what happens now. This would be much more of a partnership and the culture would need to change quite fundamentally.

Q15 James Morris: As a practical example, one of the things we have seen is that certain Departments of Government have less appetite for localism than others. Could you envisage a situation where this code had been enacted and that would imply, for example, that the way in which we manage our pensions and benefits system would have to fundamentally change to reflect what was going on in the code? In your world, could a local authority decide that it wanted to manage the benefits system in its particular locality and the Department for Work and Pensions, irrespective of what national policy was, would not have any influence over that?

Mr Allen: No. I think there are certain things that are definitely and clearly local authority matters. Many of those are dictated by central Government at the moment.

Q16 James Morris: Does that get defined in the code? In terms of the delivery of a particular public service, does the code envisage a detailed blueprint for who has got accountability for particular aspects of public service delivery?

Mr Allen: It could do that. You have mentioned social security. If central Government wanted the localities to deliver that, then they would need to contract as equal partners. Instead of saying, as they do now, "There is a scandal about Baby P. You must do the following", and issue no money to follow the mandate, there would be a discussion between two equal parties: "We would like you to deliver social security benefits for us". Local government would have a contractual relationship and could possibly do that in certain circumstances. That is a matter for the two parties to decide openly and freely, rather than what we have now, which is mandates with no money, which therefore eliminates what little discretion there is in local government spending in so many other areas.

Q17 Mark Pawsey: I have a question about finance, but I first want to ask you about the flexibility within your proposals. In your wildest dreams, you get responses to the consultation later on this year and this goes into code in 2013. How long does it last for? 50 years? 100 years? What flexibility is built into changing the code? We are currently able to change the code each time there is a change of government. Historically, we have had one government that has centralised rather more and one that is in the process of centralising rather less. Are you going to be that rigid and never change it? If you are going to change it, why is it going to be better than what we are able to do currently?

Sir Merrick Cockell: My immediate response is yes, it could be changed, but that would have to be a matter for negotiation between an incoming government and local government collectively, instead of, as happens, Governments coming in and having a range of policies that are done to local government. That relationship will have changed so that if Government did want to change things, it would have to be talking and working with local government within the code and the legislation backing up the code.

Q18 Mark Pawsey: How appropriate would a code that we agree on next year be in 20, 30, 40 or 50 years’ time?

Sir Merrick Cockell: If the relationship is between relatively equal parties, then of course things evolve and change from both sides. Whatever the structure of local government might be some time in the future, local government will want changes and may have ambitions to do things that they are precluded from doing initially, or vice versa. That would surely be a sensible part of a different form of power and legislation that is done very effectively, we were hearing only today, in lots of other parts of Europe with wellrun administrations, but with a far more equal balance of where power is held.

Mr Allen: The relationship currently between central Government and local government is one of domination and subordination, so it is just a matter of how the new Government expresses its domination. Although I will gladly put on record my support for localism and the concept of localism, which has been around for a long time, it is merely rhetorical if local government is still told what it must do and not allowed to keep the money that it currently contributes to the Treasury. Changing around the edges a relationship of domination and subordination is not what this is about. This is about re-establishing a sound footing for many, many years on the principles of partnership, independence and separation. If you were talking as two equals, I think you would figure out, "We have got a problem here. How do we resolve this?" and people would sit around the table and deal with it. I think that would be a much healthier relationship and one that would optimise and maximise the contribution of local government of all political colours to the national effort, whether it is on the economy, environmental issues or transport issues, where we are going to listen to everyone and bring all the voices to the table rather than one superbrain in Whitehall telling the rest of us how to do stuff.

Q19 Mark Pawsey: Getting to this more equal relationship involves, in your words, "HMRC sending half the national income tax take back to local councils". Graham, you have been a Member of Parliament for many years. Given your knowledge of the workings and the institutions of government, just how realistic is it at any point to expect that the Treasury are going to give up half of their income to local government?

Mr Allen: Given all my experience, I know that is something that you need to want, that you need to campaign for and that you need to have a coherent programme to ensure happens. That has defeated many Governments of all political colours in my time in the House. That is why it is important that everyone understands what is at stake here. We are not in a position of great luxury, where we can say, "Let’s bumble along like we have been doing for a while. Let’s see local government continue to be diminished. Let’s see the activity of local parties shrinking. Let’s waste the immense talent that there is in the localities". We need to do something about this. I have to underline this, Mr Pawsey: what we are doing is not revolutionary. This is what most people in the world do. The odd man out at the party here is the UK, keeping half of our Government capacity bound hand and foot, waiting for crumbs to be dropped from on high. That is very wasteful and it flies in the face of the philosophies of all the political parties around the table. Let’s free that capability. Let’s free the individuals and the collectives that operate in and around local government so they can really help us out.

Q20 Mark Pawsey: And you are confident that the Sir Humphreys will buy into that argument?

Mr Allen: I think the political level is an easier level to talk to and win over on this, because this does so much for personal freedom, local authority freedom and helping towards the national project. I think it will be difficult to win over Whitehall, but has anything worth fighting for ever been won through Whitehall easily? No, it has not. That is why I think there is a leadership role for people like us, in our respective committees, to put these things on the agenda of the Conservative and Liberal Democrat parties when they come to meet at their refresh. When they do that, I hope they will also be supported by the Opposition party.

Sir Merrick Cockell: I did not have a chance to comment on Mr Morris’s question. This might fit together, because I think the last time I gave evidence I referred to the 19th century constitution where financial reporting was done through the Sir Humphreys and suggested that a more direct relationship between areas and Parliament would be much healthier so that places were accountable for the spending of public money at a local level rather than the departmental signoff by Permanent Secretaries. I think that fits very nicely with Graham’s vision.

Q21 George Hollingbery: Which is very interesting, because the construct in the code is exactly not that. I agree with almost everything that has been said, but the one place where I always stumble is the finance. The solution that is offered in your proposals, in articles 7.3 and 7.4, is to utilise the buoyancy of national tax revenues and have an independent committee distribute those to effect rebalancing and equalisation across the country.1 That begs the questions: who selects those people? How often are they selected? Will it be like the Supreme Court in the United States and become politicised? Sir Merrick’s suggestion just now was actually the other alternative. You can call it regionalisation if you like; we will call it whatever you want to call it. You have bodies of electors and areas that are large enough to have buoyant enough revenues not to require a central committee and can aggregate enough tax revenue locally reliably enough not to have to have a committee to equalise. Why did you choose this option? I think it is a bit of a fudge, to be quite honest with you. What does international experience tell us about how this works best?

Mr Allen: No option has been chosen. This is one possibility. I hope very much that colleagues around the table can come up with other stuff, but I think we know local government finance has been a thorny issue and has been used as a way of stopping local authorities taking more of their own independence and freedom and working for people locally. To explain that particular option, the equalisation body would be exactly the same as it is now. The civil servants who currently do this would be the same people.

Q22 George Hollingbery: Therefore, Mr Allen, you are immediately allowing somebody else to control revenue flow. By changing the metrics and having those Sir Humphreys directed to change the metrics in a certain way, you can make the money flow differently?

Mr Allen: Someone controls this process at the moment. It is either Mr Pickles or Mr Prescott and you can take your choice as to which one you think does that job best. I personally would prefer a number of people, perhaps from this Select Committee, with a number of people like Sir Merrick and others, who would be some sort of overarching body. But there is no anticipation at all that those calculations change. You will always need some form of equalisation.

Frankly, I think equalisation has not worked in the past because of the very things that you have mentioned. People have come in and for partisan reasons have helped one lot rather than the other. For example, look at the maturity with which the LGA works, where it is allparty. If you had a number of people from both central Government and local government meeting publicly and talking together openly so the process was transparent-rather than, "Let’s help my pals because they need a bit of a leg up and let’s do the other lot down", which is truthfully what has often happened in the past-I would trust that group of people to do that job at least as well as has happened in the past. However, it is not a be all and end all. If there are other people with other ideas about this, they should contribute to the consultation.

Sir Merrick Cockell: It may be an area that we will not agree on. I think equalisation has always been a problem and even if you trust people like me, Graham, a lot of local government will not. What I am interested in is something that I am only just hearing a bit about at the moment under the business rate retention. They do not have to be pairs and the geography does not have to be close, but could you not have wealthier areas working directly with less wealthy areas? In fact, this morning we heard the Swiss example talking about rich cantons-Zurich and Geneva, where the bankers are-working with the poorer cantons. That equalisation seemed to be half done by national Government to the poorer cantons and half done by a direct relationship between the richer cantons and the poorer cantons. I think that could be a very interesting model that might move us away from equalisation being done to us yet again at a local level.

Q23 George Hollingbery: As a necessary implication of all of this, you are going to have to have one size tier of council, are you not? To try to deal with districts, unitaries and counties of different sizes-

Sir Merrick Cockell: I’m not answering that.

George Hollingbery: He does not even want to begin to go there.

Mr Allen: While Sir Merrick ponders on that question-he has an important appointment to make-part of the way that this draft code is drafted is to reduce the amount of dislocation. In other words, keep the equalisation as it is; keep income tax at the levels it is without local authorities being able to change that; keep things pretty much as they are, but make sure the line of account is much clearer and more transparent. That is one of the key things. Therefore, I would certainly propose that if this is to be a practical proposition, which I hope it can be if we all work together and improve it, I would not suggest that we throw in a big reorganisation of local government at the same time. Once local government has its own independence, I think you will find an evolution takes place. There will be discussions; there will be partnerships; there will be almost treatymaking between independent local government levels. I think that will develop a much more mature level of activity in local government and, who knows, possibly even a more mature level of activity in national Government too.

Q24 Chair: Finally, Sir Merrick.

Sir Merrick Cockell: Yes, just to comment on whether it has to lead to uniformity. It was interesting that the Belgian professor this morning said that while it is complicated with Flanders and all that, you do need that conformity; and the Swiss said the Swiss constitution was designed to enforce the total difference that makes up Switzerland and indeed what we all know of the Swiss. So there were two absolute opposites saying that you needed conformity or you needed to safeguard within law those differences. That is my fudge of an answer.

Q25 Chair: Thank you both very much indeed. This idea of twinning is rather interesting. Can I put a bid in for Sheffield to be linked with Kensington and Chelsea in this proposal?

Sir Merrick Cockell: We are happy to see whether our tripleA rating could be-

Chair: Thank you both very much indeed. As you say, this is an ongoing process and I am sure many of us will want to contribute individually and collectively to it.

Sir Merrick Cockell: Thank you very much, Chair.


[1] http://www.parliament.uk/documents/commons-committees/political-and-constitutional-reforms/revisedcodeandnotes / forwebsite2012amended22feb.pdf

Prepared 5th July 2012