To be published as HC 1668-i

House of COMMONS



Communities and Local Government Committee

Performance of the DCLG in 2010-11

Monday 28 November 2011

Sir Bob Kerslake, Andrew Campbell, Sue Higgins, David Prout and Pat Ritchie

Evidence heard in Public Questions 1 - 92



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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 28 November 2011

Members present:

Mr Clive Betts (Chair)

Simon Danczuk

Bill Esterson

Stephen Gilbert

David Heyes

George Hollingbery

James Morris

Mark Pawsey

Heather Wheeler


Examination of Witnesses

Witnesses: Sir Bob Kerslake, Permanent Secretary, Andrew Campbell, Director of Strategy and Performance, Sue Higgins, DirectorGeneral, Finance and Corporate Services Group, David Prout, DirectorGeneral, Localism, DCLG, and Pat Ritchie, Chief Executive, Homes and Communities Agency, gave evidence.

Q1 Chair : Welcome, Sir Bob, to you and your team, to our annual evidence session on the performance of your Department. Just for the sake of our record, could you just identify yourselves and your positions within the Department? That would be helpful to us.

Sir Bob Kerslake: Bob Kerslake, the Permanent Secretary of the Communities and Local Government Department.

Sue Higgins: I am Sue Higgins; I am DirectorGeneral, Finance and Corporate Services at the Department.

Andrew Campbell: Andrew Campbell, Director of Strategy and Performance and, since 10 November, Acting DG for Neighbourhoods.

David Prout: I am David Prout, DirectorGeneral for Localism. I deal with local government issues and the fire service.

Pat Ritchie: I am Pat Ritchie; I am the Homes and Communities Agency Chief Executive.

Q2 Chair : I suppose the obvious point to begin with, first of all, is to offer congratulations for your appointment as Head of the Civil Service, from the new year. I suppose someone might unkindly say that there are so many staff being shed in DCLG that that will now not become a fulltime job and they had to find you something else to do. How would you comment on that statement and how you think you can marry up the two jobs together?

Sir Bob Kerslake: I think it would be somewhat unkind, Chair. The post was a competitive process among the Permanent Secretary group. I was very pleased and delighted to be given the role. The implicit question you are asking me, though, is how you manage the two roles together. I have given a lot of thought to that, both since I have got it but actually before I went for the job. I would not have done it if I had had any doubt that I could not manage the two. The reason I say that is really as follows.

First of all, in the last year, I have taken on quite a few corporate responsibilities across the civil service anyway, so I am a member already of a number of crossWhitehall groups that manage key civil service issues. The second thing is I have thought through very clearly how I will continue to manage the Department through delegation to the team. What you have here this afternoon is the executive team. I thought that was important for you to see. I will very actively ensure that there is effective delegation across the team, and David in particular will take on a deputising role on my behalf within the Department for day-to-day issues.

The third thing to say is that, whilst we do have some big challenges ahead as a Department-we will no doubt come on to some of those-we have been fortunate at one level that our very, very big piece of legislation, the Localism Act, has now secured its passage through Parliament. There is clearly some impact on the Department in terms of the challenges ahead. That is not to say we do not have some big ones, but we have managed to cover a lot of ground in the last year. Perhaps just a final point I will make, then I am happy to take further questions, Chair, it is that I do not see the role of Head of the Civil Service as one where I take sole responsibility for the change occurring in the civil service. I will very much look to draw Permanent Secretary colleagues into that process, and I would expect and will have strong inhouse support in my new role from a team within the Cabinet Office.

Q3 Chair : There is a clearly designated deputy. That is the case. Certainly, when the Prime Minister came to the Liaison Committee, he laid a great deal of emphasis, perhaps before your specific appointment, on whoever got the appointment having a clear deputy, in whichever Department it was, to give support.

Sir Bob Kerslake: Yes, we are very clear on that.

Q4 Chair : In the past, the Committee has made two particular comments about DCLG. One is that we thought as a Department it did not always punch its weight-that to get things working effectively in local government can mean a lot of Departments working together. Very often, Departments seem to go off on their own. That linked into what we said in our report on localism; that we did not think that all Departments were necessarily going at the same pace or sometimes even in the same direction. I am wondering, therefore, whether your appointment now, as someone with also a local government background, will mean that, within Whitehall as a whole, there is a better recognition of local issues, local government and actually getting the whole Whitehall machine to move in the same direction, at the same pace.

Sir Bob Kerslake: That is a very good question. Bringing that local government experience into Whitehall is enormously helpful. I have been long enough a civil servant now, which is just over a year, to see the strengths and capabilities of the civil service, but also not so long that I cannot also see where things could and, indeed, should change. Part of what I will be able to bring is that local perspective. It is not just me; the whole Department has regeared how it works. We do absolutely see ourselves as a crosscutting influencing Department. To that extent, there is a natural and logical connection between my role as a Permanent Secretary and my role as Head of the Civil Service.

Q5 David Heyes: I just wondered, Bob, have you calculated how much of your time you will be spending on each of your two jobs?

Sir Bob Kerslake: Yes, I have. I would envisage that the Head of Civil Service job will take two days a week. We have worked through who does what between Jeremy and myself but also, more importantly, what we do together. We have agreed that I will retain an office at Eland House and a team in Eland House, but I will have a joint private office with Jeremy Heywood in the Cabinet Office, and we will sit adjacent to each other. We have done a lot of thinking about how the logistics will work in this role and how I sit the two alongside each other. Very simply, I would expect on average, and it will always vary of course, from week to week, that I would spend around two days a week on the Head of Civil Service job.

Q6 David Heyes: That chimes exactly with what Sir Gus O’Donnell predicted when he spoke to the Public Administration Select Committee last week, so you have clearly got your act together on that, but what did your Secretary of State think about it?

Sir Bob Kerslake: He was asked before I went into the job what his view was, and that was true of all those who went for the job, so he had to indicate what his view was in the process, and he was very supportive of it and he has been supportive. He was both supportive when I put the application in and he has been very supportive since I was successful.

Q7 David Heyes: I understand that the decision was that, whichever of the Permanent Secretaries had been offered this job, it would require the sanction of the Secretary of State before it was agreed. Is that correct?

Sir Bob Kerslake: I think what they required is the opinion of the Secretary of State as to whether you could manage the two roles. I should say as well that they sought the opinion of the lead nonexecutive, Sara Weller. For both of them, they indicated that they felt more than comfortable that I could carry out both roles.

Q8 David Heyes: It would not be unfair, then, to say that, if this does not work out, with the benefit of experience and we have to reverse the situation, we should hold the Secretary of State to account for what has happened.

Sir Bob Kerslake: To be direct, I think you should hold me to account; I have taken on the two jobs.

Q9 Bill Esterson: You mentioned the role of nonexecutives. As you were saying, I will take the opportunity to ask you about this. I have taken the view that Members of Parliament have a nonexecutive role. Why do we need separate nonexecutives?

Sir Bob Kerslake: What the nonexecutives bring is a different perspective into the work of the Department. They do not-and this is very clear across all the Departments-seek to play a role in policy-setting, which is clearly a matter for Ministers to do and for Parliament to test. What they do bring, and I think we have all found it genuinely valuable, is that wider breadth of experience outside of central Government into the way in which we manage and run the Department. I would say what they bring is knowledge of what works well-what I call good business disciplines, good habits-and they can quite rightly challenge us when they see that there are areas that we could improve on. What they tend to do is help us on thinking through our approach, whether we have riskassessed and how we are approaching the restructuring of the Department. All of these inputs we find both challenging and very instructive. There is a role and I think it is a distinct role from what Ministers clearly do, where it is unambiguously the case that they are setting the priorities and policies, and the role of Parliament. Their role is very much to help us ensure that we have the capacity and capability, or test our capacity and capability, to deliver the priorities that Ministers set for us. There is a genuine role here, and we have found them, as a team, a constructive and valuable resource to work with.

Q10 Bill Esterson: I could pursue that, but the Chairman would probably like me to carry on with some other questions. You have seen severe staff reductions and reorganisation. The number of public bodies has now gone from 26 to 9. Given those huge changes, how are you placed to meet Ministers’ objectives?

Sir Bob Kerslake: It is something we have spent a lot of time thinking about. I think it is right to say we have undergone big change over the last year. I would say it is more than just the restructuring, although that is very profound. It is actually also in the role of the Department as well. We are a Department that has defined its role by localism and transferring power to people and communities. There has been a shift of role and a shift in resources. It has been a toptobottom restructuring. The top team, for example, were reduced by half. At every level, we saw reductions. Between the start of the process around November of last year, through to the completion of it around October of next year, it is a reduction, excluding new things that have come in like the RDAs, of around 37% in posts. It is very big and I would not want to disguise that from you.

We feel we are well placed to deliver the priorities, because we have delivered this restructuring in a very organised and specific way around the priorities of the Department. Where we have taken out resources, we have been very clear about where we needed to retain resource for priority areas. We have not simply taken lumps out in a very undirected way; we have done it as a crossDepartmental exercise. Every one of the team has been part of the reductions process and the selection process. We have done it in a way that has looked to retain strong capability where we need it in specialist areas, and we have looked at where we deploy those resources in the areas that are most important to us, where we are retaining people that we need. Yes, it has been a big change, but we do feel well placed to deliver the priorities of Ministers. I would not pretend to you that it is not a challenging agenda and there is a big task ahead of us, but we do feel quite confident that we can do this. One of the reasons we feel confident is that, alongside the restructuring we have done in the last year, we have also delivered some very big things as well. We have delivered, for example, on our structural reform plan. Andrew can go into the detail; we have delivered, I think, 76% of the tasks. Andrew, is that right?

Andrew Campbell: Yes, since May 2010.

Sir Bob Kerslake: That is second only to the Cabinet Office in terms of cumulative delivery. So we have a track record already of delivering through a period of change and reduction.

Q11 Bill Esterson: I am tempted to ask why the previous Government needed so many more staff, how you are managing with fewer and why they needed them. The people over there will be delighted that I am asking that, I suspect.

Sir Bob Kerslake: It is not for me to comment on that, I do not think. What I would say is-this is really quite an important point-the Department has changed its role. The Department has been actively in a process of transferring power and reducing our controlling role. We have seen a reduction in specific programmes that we run as the Department, in favour of local government management of that funding. We have reduced ringfencing; we have virtually eliminated it from our own budgets. All of that changes the balance of the work for the Department. Part of how we can manage that reduction is certainly by being more efficient. We have looked at more efficient ways of doing business, and Sue is leading a very strong piece of work around shared services across the group, but also because I think our role has changed. We do now play less of a directing role and much more of an influencing role.

Q12 Bill Esterson: That is in delivering the localism agenda. It is been decentralising.

Sir Bob Kerslake: Absolutely; the two go hand-in-hand for us.

Q13 Bill Esterson: Has the Department estimated what liabilities will fall to it arising from the closure of the arm’s length bodies, in terms of leases or court cases?

Sir Bob Kerslake: I am sure Andrew has a very clear understanding of our exposure, both in terms of staffing and other costs. All of them are coming in, as we sit here now, within the allocations we made-in fact, well within them. Sue, did you want to say a little bit more about the detail of that?

Sue Higgins: We are anticipating we will be saving £200 million from the reform of the arm’s length bodies over the period. I am just trying to find my relevant page to tell you the detail.

Bill Esterson: The question was about the liabilities.

Sue Higgins: The biggest issue and the biggest potential liability is crystallisation of pension costs. Clearly, as we go through the process, we can only make assessments around those, which is what we are doing. We have seen our estate costs go up in the short term because of the need to take on further accommodation, and we are working through and rationalising leases and releasing properties. We have estimated £50 million as the costs associated with the closures. As I say, until we go through and things are actually crystallised and closed, we-

Q14 Bill Esterson: You are estimating £200 million saved so far from closures.

Sue Higgins: Yes, £200 million net, so £250 million gross with £50 million of costs.

Q15 Bill Esterson: Has that improved services, or how would you say services have changed?

Sue Higgins: Some of it is just a product of the localism agenda. The development corporations are going out to local government. Some of these are natural things that flow from the policy around localisation. Of course, it is our Minister’s belief that things will be better managed at the lowest possible level, so it does fit entirely.

Sir Bob Kerslake: What I would say is that, as we have gone through the year, we have progressively got closer understandings of costs. For example, we largely completed, if not entirely, the government office closure process. As we have gone through the year, we are much clearer now about where costs lie, and we are clear and confident that we can manage them within the provisions that we have in our budgets for the spending review.

Q16 Bill Esterson: Can I just ask about the Homes and Communities Agency? Your numbers have gone up where the overall figures have dropped. What is the reason for that?

Pat Ritchie: Our numbers of staff have not gone up. We are on target to reduce the agency by 50%, and that equates to about 40% reduction in staff, reflecting, as Bob talked about, our move towards an investment in an enabling agency with fewer investment programmes and a greater reliance on delivery through partners. Our initial staffing was 1,087, and we are reducing that. In this year, we will go down to 696, so we have reduced staff significantly. We have taken on some additional staff to reflect the RDA programme that came within the year.

Q17 Bill Esterson: We have slightly different figures. We were told that permanent staff have increased from 822 to 915.

Pat Ritchie: They are completely not the right figures. I can assure that we are on track. We took 300 people out this year through a voluntary redundancy process, and we will manage the reduction over the spending review period.

Sir Bob Kerslake: It is just to say we will be happy to check the numbers against ours. It may be an issue of when the timings of those were because, as Pat has said, there has been an increase with the transfer of responsibilities that might be the complicating factor, but we are happy to go back and check the numbers against our understanding.

Q18 James Morris: Just very quickly, focussing on staffing and whatever, Bob, you made some comments about the way that the culture of the Department has been challenged by the localism agenda over the last year. I just wondered whether you could give a couple of examples of where, behaviourally, the Department is changing the way that it relates to local government-a couple of examples where the actual processes and culture of the Department is starting to reflect the Government’s localism agenda.

Sir Bob Kerslake: I will do. I think I will give two examples. One I hesitate to raise, but I will do, which is the successor to FiReControl, which I think is a good example of how the model has changed. FiReControl was clearly a departmentally managed project with the involvement of the key players on the ground, local government, fire services, but very much it was the Department’s project. One might characterise it as topdownmanaged process. In the successor to FiReControl, we have done it very differently. We have allocated a sum of money-I think it was £80-odd million-we have invited proposals for the fire authorities, where we have encouraged them to look to collaborate across fire authorities. We have then considered those proposals, and then the money will be paid over with an expectation that they will deliver, so it is an unringfenced plan. We will programme-manage it, but the way we will programme-manage it will be much more about influence and collaboration on it, rather than, "We are running the project." It is really quite a big shift.

Q19 James Morris: The failure of the FiReControl project, as it were, in your view was as a result of a tendency for topdown management. Was that a characteristic of the Department under the previous Government?

Sir Bob Kerslake: I would not want to comment that it was generally a characteristic of the previous Government. That is not a territory I should go into. I think it is clear-and this was clear in the report from the NAO-that many of those involved in the FiReControl project felt that it was-

Q20 James Morris: Was it as a result of a systemic view about how best to manage the relationship with local authorities and local fire authorities, which has now changed in your view?

Sir Bob Kerslake: What you will find is a mixed position in the Department in the past. Probably, if you tested it, it had more specific grounds for more managed projects from the Department. The systemic view now in the Department is not to presume that we will run and deliver things. The first question we ask is: what is the most effective way of delivering this project, working with local government? That is a good example of a different model of how we deliver the outcomes, and it requires different skills on the part of staff, because they cannot dictate; they have to influence and they have to work collaboratively. That is quite a good example.

Another example of where we have gone for a new model is the Growing Places Fund, which has recently been announced-£500 million. Again, we are working through the Local Enterprise Partnerships. We have broadly allocated money and we are looking for them to come forward with how they will run that fund. Once they have given us an assurance on that, we expect to fund them and for them to run this revolving fund, through a collaborative partnership across local authorities and the private sector. Those are two examples of a model where we have to find different ways of ensuring delivery on the initiatives. I do not know if David wanted to add something on that.

David Prout: The way that we are dealing with Community budgets now shows a change in our policy-making processes. Previously-until quite recently actually-the process of designing a policy on community budget was a process where you had a big table in Whitehall with DirectorsGeneral from around Whitehall sitting at the table. The local authority would come forward with its proposal and give it to us. We would look at it, ask quite a lot of difficult questions and ask them to come back again when they have answered the questions. We are now putting in place a different policymaking process, whereby we are going to second a team to a local area to work with local partners in the area in order to come up with a proposal that is locally based.

Q21 James Morris: Just a very quick one: do you feel as though your relationship with other Departments had changed as a result of your being in the position of, as it were, being the champion and the leader of the localism agenda? Has that changed at all?

Sir Bob Kerslake: I think it has to this extent really: we have sought to play a different kind of role. Rather than simply see ourselves as running our own projects and then commenting on their proposals, for instance, we have tried to be more proactive. For example, I chair a crossWhitehall Permanent Secretary group called the Localism Group, and its deliberate intent is to think through the issues of how we deliver localism effectively and consistently. Your own report challenges us on whether we have entirely got that in the right place yet, and it is clearly work in progress, but I think it does change our relationship. What we do try to do now much more is to say: how can we help you deliver your policy in a localist way? That is always what is in our minds.

Q22 Chair : You mentioned the Growing Places Fund. The criteria you use to distribute that, which would be based on employment levels and wage levels, as I understand it, were quite new, were they not? I have not seen those criteria used in any other distribution of funding from Whitehall before. Where did they come from?

Sir Bob Kerslake: What we were looking for was population and-what we were looking for was a good proxy for economic potential, if you like. One of the challenges with GDP is how well it represents the numbers when you go to lower segments.

Q23 Chair : It gave money to areas that were already successful.

Sir Bob Kerslake: It was partly about where the opportunities were and where infrastructure costs were likely to arise. It was driven by a combination of population and economic potential. We used what we felt was the best measure of that, given that, as I say, when you go below largescale levels, GDP is known to be not a brilliant measure of these things.

Andrew Campbell: Bob is exactly right that we used the methodology we did, all the formulas we did, because of the desire to get projects up and running quickly. The other bit that was implicit in your question was that is in addition to projects like the Regional Growth Fund, which takes a different approach. The rebalancing the economy and the split of grants between Growing Places Fund areas and predominantly the North in the Regional Growth Fund-there is a balance there between one fund getting housing, infrastructure and projects off the ground quickly, and the other with the Regional Growth Fund, which is primarily focused on the North, where funding is being allocated in this year for future years.

Q24 Heather Wheeler: I am quite interested in the situation with the staff morale and the Civil Service People Survey. I appreciate you came into post on 1 November 2010, so you can come to this with clean hands, if you like. When this survey was done at the end of autumn 2010, it is 15th out of 16 of all civil service areas. They are not proud to tell people which Department they work in. Now that a little bit of time has gone by and you have your feet under the table, albeit you are going to be doing three days a week here and two days a week somewhere else, what have you been able to bring forward to show that the Department has put things in place to bring this up to a higher level?

Sir Bob Kerslake: We have done a number of things really. We have sought to more clearly define the purpose of the Department. We have defined it around two things really. One is localism and the transfer of power. The other we describe as "localities", which is creating the conditions in which places can succeed. We then reorganised the Department’s policy functions around those two key areas. David leads on the localism agenda and Andrew, in his acting role, leads on the neighbourhoods and localities agenda. We have redefined the purpose and then reorganised the Department around those two key purposes for the Department.

The second thing we have sought to do is to get a much sharper idea of where our priorities are, working with Ministers. In a world where there are fewer resources, there have to be some decisions made about priorities. The third thing we have sought to do in our change programme is to identify where we think the Department needs to improve the way it does its business to become a topperforming Department. What I would say to you is-we do not have all the details-we will probably dip this year because of the scale of the change we have experienced. My view is that this year has been the year where we have secured the reductions in the Department, and the focus for the year ahead is rebuilding and growing stronger. It is a process of change, and with a 37% reduction in the Department, that is bound to have an impact.

Q25 Heather Wheeler: I thank you for that answer. It is clear that you have given it some thought and you have got a destination you want to get to, which is very helpful, but the latest figures look like it is declining in people’s comfort zones, so I do think it sounds like you have a big job to do. It does slightly concern me that then you are going to be doing it part time.

Sir Bob Kerslake: What I would say is we are in a good place, because we have done a lot of the more structural change that we needed to make. For something that might have dragged out over four years, which was one possibility, we have sought to do the bulk of the heavy lifting in one year. People now know where they stand, so they know whether they are staying in the Department, whether they are going and whether they are going on a deferred exit. We have a lot of clarity about where people are. We have a lot of clarity about our core purpose and our programme. We have a genuinely good year of achievement against our targets, and all of that I think puts us in a strong foundation for the year ahead with staff. I believe that we can, as a team, make some real progress in the year ahead. I will make sure I will do the Department justice on that agenda.

Q26 Heather Wheeler: We look forward to having this discussion in 12 months’ time. Ms Ritchie, I was wondering-you have obviously inherited an interesting task from the HCA. Do you do those sorts of surveys as well in your area or will you be doing so?

Pat Ritchie: We will. In a similar process to the Department, we have taken most of the structural changes this year. We have gone through significant changes within the agency, where people have had to reapply or apply for jobs, and a number of people have left the agency. I have spent the last month going around all of our offices throughout the country to talk about the new role of the agency to be very clear about our purpose, in the way that Bob also described. I think it is fair to say that, having gone through change, the staff in the agency have continued to deliver and are continuing to deliver on programmes, and are very positive about the future and about their future role. Our intention is to reinitiate the staff survey, probably towards the beginning of next year.

Heather Wheeler: I wish you well. Coming from a previous life where I was leader of a district council that was the 51st best place in the country to work-it is all about leadership, guys-I am sure you will do a great job.

Q27 Simon Danczuk: Bob, I just wanted to pick you up on this staff survey. The results for the Department are pretty appalling really-are they not?-compared to other sections of the civil service. I just wanted to be clear about what you were saying. As Heather pointed out, the survey was conducted in the autumn of 2010. I got the impression from what you were saying that you think the next survey results will show even worse results or are they going to get better. Which is it?

Sir Bob Kerslake: I was saying that we have not got all the full details yet and we will get those later. We have been through a very radical change in the last year.

Q28 Simon Danczuk: You think they are going to be worse.

Sir Bob Kerslake: I think in some cases, not all of them.

Q29 Simon Danczuk: That does not bode well in terms of you heading up the civil service, does it? You have managed a Department for 12 months and the results are going to get worse.

Sir Bob Kerslake: What I said earlier was we are partway through a very big change programme, which is not completed yet. We have done the significant reduction in the Department, which has been a big challenge. Everyone, as with the HCA, has had to effectively apply for-

Q30 Simon Danczuk: Sorry to interrupt, Bob, but Departments right across Government are facing cuts of all different kinds, of all different sizes. People are having it tough; there is no doubt about that. Your Department is not that different in that respect, and you say they were already very bad results and they are going to get worse. That is the point.

Sir Bob Kerslake: In some aspects, I think they may well get worse. I am just being very honest with you. What I would say is I think ours has been probably one of the biggest scales of change, as indeed has the HCA. Probably very few parts of Government have seen a reduction by a half, which is what the HCA has done. Very few have seen a reduction of 37%, which is what we have done. We have seen some of the biggest scale of change, as well as closing the government offices as part of our task as well. It has been a very big year of change for the Department. I am not saying other Departments have not experienced change. I think ours is probably on a scale that has not been seen by as many Departments. We have always seen this as a twoyear process of change, where we get the big reductions out of the way and then we build from there to create a stronger Department.

Q31 George Hollingbery: If I could return to the previous conversation just for a moment, with the government offices going, the RDAs going, your eyes and ears in the sticks are going. That is the simple truth of the matter. At the same time, there are plenty of DCLGsponsored programmes going on in local government. It seems to me you have a considerable challenge to face in terms of information management backwards and forwards of how projects are going. Management, governance, accountability-how on earth do you deal with that melange? I did notice that, Mr Prout, you said you have already inserted some local teams down into local projects. You cannot do that everywhere, I would suggest. With the Total Place agenda on top of all of that, so not just DCLG spending but spending across Departments, this is going to be a horrendously complex thing, is it not?

Sir Bob Kerslake: I will make a few points then I will ask colleagues to come in as well, if I can. The first thing to say is that we have reduced the number of programmes that we directly manage. We have put a lot of the money out, as you know, through unringfenced grants to local authorities. Where we retain programmes, those leading on those programmes, like the new successor to FiReControl, hold a responsibility for ensuring and assuring the delivery of that programme. That means that they need to have good local information, so the same would also apply on the delivery of Enterprise Zones and so on. On top of that, we have also thought about how we best connect with local government and local places, as a Department, given that the government offices have gone. What we have created is what we have called a kind of "localities approach" in the Department. We have actually sought to embed local connections into the Department, particularly at senior level. Our senior team all have connections with parts of the country and all form direct relationships with those areas, regardless of their own direct responsibilities.

Q32 George Hollingbery: Are these government offices by another name?

Sir Bob Kerslake: No, they are absolutely not government offices. They do not work to the government office boundaries and they do not purport to be separate local teams. This is the core of the Department making a connection with local places, finding out what the issues are on the ground and making sure that we can feed that back into the Department and help them interpret issues on the ground.

Q33 George Hollingbery: Can I just push it a bit further on that? I understand you have some eyes looking and some ears listening, but how do those people manage it down on the ground, or is that left up to local accountability and local democracy?

Sir Bob Kerslake: We do not try to manage it on the ground actually. We do not seek to manage it on the ground, because we see that as very much for local initiative. What we see our role as doing is to test out, on the ground, what the issues and challenges of delivery are, to what extent Government is helping the delivery and to what extent it is not, and then seek to influence things in the Department on that. Where we see issues of concern, we look to act on them and address what we are doing. Just one last point really: we do have the local capacity of the HCA in relation to housing and regeneration. The HCA has retained teams. Again, they do not follow the old regional boundaries, but they do have local teams that can provide us with insights and information.

Then just one final point: in relation to the ERDF programme, we do have people who are locally placed to secure the delivery of that. What I am trying to say to you is there is still a picture of quite a lot of local connection, local interchange and information, which comes back to the Department, and it is a twoway exchange. We have quite successfully managed to retain that local connection, despite the fact that government offices have gone. I do not know if either Andrew or Pat wanted to say something.

Andrew Campbell: It picks up the point that one of the Committee members was making earlier about culture change. As part of the implication of the locality function, we are a much more outwardlooking Department than we were a year or two ago. For myself, the areas I engage with are Essex, Kent and Inner London, so not at all designed on the old regional boundaries. The sorts of issues I have discussed with them were: in Wandsworth, the riots and the followup to that immediately after they happened; in Kent, Enterprise Zones; in Essex, community budgets-so quite a range of the Department’s business.

Before we went for this approach, I talked to a number of chief execs of local authorities about what they would find most helpful, and it was very much talking to them. Two things really: bringing issues back to Whitehall, to which Bob referred. We had an example from one of my colleagues in Cumbria, who was saying that, "Actually the guidance that you have produced on ERDF does not allow us to gear up for broadband in small and medium enterprises." We brought that back to the Department and changed the guidance. The other is just having a dialogue with central Government, so they understand the policy intention. They can read the words on the page, but what is the policy intention that was driving the guidance to be written in the way it was? We have sought to do that with areas, too.

Q34 George Hollingbery: Can I ask the same question of the HCA as well?

Pat Ritchie: If I could just add to what Bob and Andrew have said, we have retained a network of local offices as part of our restructure. The majority of our staff are based out in those local offices and, indeed, our corporate teams support the local priorities that are identified through the local office network. Our key relationship is with local government through the local investment plans that we have developed. Our focus is delivering and using our land assets and our programmes to support local priorities. We have taken on some of the RDAs’ responsibility and retained that expertise in our local offices, with the transfer of staff responsible for the land and property portfolio of the RDAs, but only that element of the RDA work. As Bob said, there have been other measures taken around European funding and business support in other parts of the RDA portfolio.

Q35 George Hollingbery: Can I just finish this off just by asking: as individuals working in the Department-forget what the Minister thinks about localism and so on-does it feel like this is going to work? Do you have enough control? There are billions and billions of pounds pouring out of your Department, channelled through your Department’s local authorities. Is this going to work better or is it going to work worse, or is it just different?

Sir Bob Kerslake: My personal view, as somebody who comes from a local government background, is that it actually has the potential to work better, because I think what you experience if you are a local authority is often a mass of individual Departments, in the past, all coming to you and saying, "Here is my specific plan; my requirements on monitoring; my rules." What you spent a large part of your time doing was-we used to call ourselves cobblers actually, because what we did was stitch everything together at local level.

George Hollingbery: Sorry, I had a slightly different understanding.

Sir Bob Kerslake: I should be careful about what I say. That is how we used to think of ourselves. Actually that takes up time and energy, and it distorts efforts at local level. I do think that a model that actually allows, particularly when there is less money-in many ways it is crucially important when there is less money-localities and local places to make those judgments about priorities and how things fit together, with more flexibility, is hugely important.

Q36 Stephen Gilbert: Sir Bob, I am just a little bit confused actually, because when George was talking about the eyes and the ears going from the region, you said you have embedded people with local connections in the senior management team. Talking of cobblers, that is pretty good as it goes. Does that mean, from what Andrew was saying, that you have divided the country between you and each of you, as the senior management team, has taken part of the country and has a special responsibility for it?

Sir Bob Kerslake: I apologise if it was not clear. It is not just the senior team here. In our SCS-our senior civil servants-we have sought to have them linked to a part of the country. That is what I meant by "embedded". Instead of having a team of officials over here whose job it is to connect to places, which is what government offices did, we expect our senior team, as part of their job, to connect to places. Each one of our top team-Directors and DGs-has connections to localities. They meet with the local authorities and others in those areas and find out what the issues are, across the Department’s agenda. You could call them the equivalent of relationship managers if you like.

Q37 Stephen Gilbert: Are those relationships then local authoritybased, countybased or regionbased, and are they equal across the country?

Sir Bob Kerslake: We are happy to share with you the map of that.

Stephen Gilbert: That would be helpful.

Heather Wheeler: That would be very helpful.

Sir Bob Kerslake: Actually our starting point has been, for a lot of the thinking, around actually, a, what the HCA does, so that we do not have different arrangements, and, b, what are the natural boundaries for things like the Local Enterprise Partnerships. We have tried to do it through the natural aggregations that happen in a place, rather than our predefined views about it.

Stephen Gilbert: I think it would be helpful, Chair, to see that, so we can see whether all parts of the country have been divided equally.

Q38 George Hollingbery: Just very quickly, I was at a presentation you made with the Minister, Mark Prisk, the other day about what has happened to the majority of property in the HCA, where it has gone and how you are managing. Can you just give us a very brief report, because I know I have taken a bit of time?

Pat Ritchie: Yes. I am sure this might be something that the Committee want to come back to, because these are quite early days in the RDA asset programme. We have taken over responsibility for the RDA property assets. That includes sites, joint venture vehicles, a number of projects and a whole range of initiatives within that portfolio. It is our intention then to develop those through local stewardship arrangements, which have been designed at a local level, often based on Local Enterprise Partnerships, as Bob referred to. They will be responsible for making decisions and advising on decisions around the use of the assets to support the ongoing economic priorities, which they were often bought for, to support the economic strategies at a local level, developed by the RDAs. That will sit within an overall national programme, which will have to balance across the individual stewardship models to ensure that the programme is selffinancing overall.

George Hollingbery: Chairman, when she updates, can she send us a copy of that?

Q39 Simon Danczuk: I am interested in the press release that your Department put out on 17 June. I am quoting from it. It says: "Councils could save £10 billion every year if they improve the way they buy, source and pay for goods and services new research reveals today...with no impact on quality of service." The claim is based on an assertion made by a procurement consultancy firm called Opera Solutions. I am a polite person; I would described the methodology used by that company as flimsy. How would you describe the methodology? Do you regret using that methodology, Bob?

Sir Bob Kerslake: We did not ever claim it was our methodology in that press release. What we quite directly quoted was we wanted to give an example of some work that was going on in local government, in individual places, which identified where there were potential savings. As part of our ambition to get as much as possible information and knowledge out there in local government about what is going on in local government to save money and how efficiencies might be achieved, we sought to communicate this particular initiative. We did not claim it was a piece of methodology we-

Q40 Simon Danczuk: Let’s just be clear on that because the methodology is based on three tiny categories of expenditure-mobile phones, energy, solicitors. I can go through the detail on it. It is based on three local authorities, when there are 433 in England, so it is reviewing £13 million worth of money, and yet those local authorities have a budget of £50 billion. I am just asking you: the press release described the methodology as "new, cutting edge analysis". They are your Department’s press release’s words about the methodology. It would be easier and simpler if you just apologised and said that the methodology is very weak and flimsy. Is that not the case, Bob?

Sir Bob Kerslake: As I said in the previous answer to your question, we did not seek to say this was CLGapproved methodology. What we were saying was that some interesting work had been done by Opera Solutions and in a number of local authorities, and that we felt this was something that other parts of local government might find useful. I cannot really say a lot more than that.

Q41 Simon Danczuk: There are problems with what you were saying, because it is suggesting that it is converting a saving for each household of £452. The Local Government Minister, Robert Neill, quoted it in the House on 5 September, extrapolating on the methodology that you were saying was "new, cutting edge analysis", so it has got into circulation there. There is an important point in this. You seem quite relaxed about the issue, but there are local authority staff being made redundant right across the country. They will read your press release; they will read it being quoted by the Government Minister. They will assume that their local authority could have saved £452 per household. They think their jobs could have perhaps been saved if their local authority had procured better. That is the result of that. Do you not have any regrets about quoting this flimsy methodology?

Sir Bob Kerslake: I do not think Ministers have any regrets about saying that local government should look to secure savings and efficiencies wherever possible.

Q42 Simon Danczuk: It is not about that; it is about this particular methodology. Do you not have any regrets about quoting it? I have just explained to you the inevitability of the impact it has by using that as an example. On ordinary people, council workers, it has an impact.

Sir Bob Kerslake: I think every local authority is perfectly capable of forming its own judgment on this and making its own arguments, at local level, as to whether it believes the analysis is relevant or appropriate to their local authority.

Q43 Simon Danczuk: All that methodology has not been explained to them in your press release. Just finally: costs relating to planning delays, £3 billion, completely fictitious; savings from axing the Audit Commission, never really been given any real proof of what would be saved. This is another example of figures that clearly do not stack up. Why would anybody trust the future claims of DCLG in relation to major issues like that?

Sir Bob Kerslake: On the first two of the ones you have mentioned, we think there is good evidence around the potential savings on planning. It has been subject to others exploring the potential savings. I am happy for Andrew to say a few words about that, but I think there is quite good information. Our figures for the Audit Commission were based on costs that we anticipate to save from the closure of the Audit Commission, so both of those two were figures that we have produced and quoted ourselves, drawn from research and analysis. I do mark that out as different from the case of Opera Solutions, where we quoted a particular analysis, but made it very clear that it was another organisation’s analysis. Andrew, did you just want to come in on the planning issue?

Andrew Campbell: It might be something where perhaps the best thing would be for us to write to the Committee, but I do know that an independent academic produced a figure behind the planning delays, so I am happy to look into that and send a summary of that.

Q44 Chair : This is Mr Ball, is it?

Sir Bob Kerslake: I think you have some information on that already.

Q45 Chair : Could you let us have a detailed workedout figure on the Audit Commission savings?

Sir Bob Kerslake: I am happy to give you some further information on the Audit Commission, yes.

Q46 Chair : This is subsequent to the last visit to the Committee by the Housing Minister, who seemed to say at that stage that he could not.

Sir Bob Kerslake: We can give you how we arrived at the numbers that we produced.

Q47 Chair : At the time of the announcement of the closure?

Sir Bob Kerslake: I do not see why we cannot give you a summary assessment of how we calculated in outline terms.

Q48 Chair : Some uptodate figures of what your expectation is now about what the saving would be.

Sir Bob Kerslake: It would be better if we could give you some indication of how the numbers might look, but clearly we are still in the process of working through them.

Chair : An uptodate figure would be helpful.

Q49 David Heyes: We know from your remuneration report that Stephen Park worked for you as Interim Senior Finance Director, up to the beginning of January this year, for a 10month period. The cost of employing him in that role is £427,920, which was paid to Capita. If you extrapolate that for a full year, it is over £0.5 million for a full year. That is more than three Prime Ministers’ worth of salary, is it not? How can you justify that? How did that come about?

Sir Bob Kerslake: I would not want to suggest anything other than that it has been a high cost. I would not want to suggest that. What I would say is that, at the point at which the Department took on Stephen, it had just lost its then DG responsible for finance and had lost a number of other key people in its structures.

Q50 David Heyes: Lost in what context?

Sir Bob Kerslake: Lost in that they had moved on to other jobs or left the Department. This predates me.

Q51 David Heyes: What, got flushed out as part of redundancies?

Sir Bob Kerslake: No, this predates the redundancy exercise.

Q52 David Heyes: How did that sit with any attempt at succession planning for people?

Sir Bob Kerslake: It is difficult for me to comment on that. This goes back to March 2010, as I understand it. A number of departures occurred, including the then DG of Finance at the time. Clearly, the Department had to ensure that it had effective and adequate resources to cover its financial responsibilities. Clearly, however large that figure is-and I do not suggest that it is not a large figure-the consequences of not running our finances in a sound way would have been far greater than that sum.

If I can just make two last points on this, and you are welcome to come back, the first is to say that the Department did try to recruit, following the departure of the previous DG and the Finance Director in the summer of 2010, but was unsuccessful in recruiting to the job. The second point I would say is that we have moved as quickly as possible to get permanent replacements, and obviously one of the parts of doing that is Sue Higgins on my right, who is now the DG of Finance and Corporate Services. We have strengthened the resource under the Finance Director, David Rossington, as well. We have done quite a lot, I think, to do exactly what you say and create succession and resource strength and depth but, at the time at which the Department lost people, it was in my view right and proper that it secured its position and brought in someone to work on its behalf.

Q53 David Heyes: How long was he employed all together? The figures I have quoted relate to a 10month period of employment.

Sir Bob Kerslake: My understanding is-I am just checking the dates here-it was from 1 March 2010 to 2 July 2011.

Q54 David Heyes: The figure I quoted, which I said would have quoted to £0.5 million a year, was actually for only 10 months of what was about an 18month period.

Sir Bob Kerslake: I understand that the cost in 201011 was £428,000, and the cost in the entire period, including VAT, was £580,000.

Q55 David Heyes: I am struggling to ask a followup question, because I am so gobsmacked by what you say. This continued for a period of 18 months. There was no preparation for the vacancies occurring in the absence of any kind of tenable succession planning system but even in those circumstances where you had to turn to this emergency situation-I think it is right to call it an emergency situation-it took 18 months to resolve that, at a cost of well over £0.5 million altogether. When you put this in the context of the cuts the Department is having to make and the staff you are having to dispense with, it is indefensible, surely. Try to defend it.

Sir Bob Kerslake: The defence, as I said earlier, is that the Department had to ensure that it had adequate financial capacity to deliver its responsibilities. The Department had tried to secure the recruitment of a new person and had been unsuccessful

Q56 David Heyes: Over an 18month period.

Sir Bob Kerslake: There were at least two occasions when efforts were made to fill the post, unsuccessfully. It was not just once. In those circumstances, it made absolute sense for the Department-and I accept it is expensive-to retain qualified senior capacity to ensure that things like the closure of the accounts were done to plan and to timetable. Once that was secure and once we had a full team in place, including Sue, we ended that contract.

Q57 David Heyes: Is it Sue or is there another identifiable member of staff in post now?

Sir Bob Kerslake: Sue is the DG of Finance and Corporate Services.

Sue Higgins: I joined in August 2011.

Sir Bob Kerslake: Behind Sue is David Rossington, who is the Finance Director.

Q58 David Heyes: On the comparable costs, is it possible to say what this would have cost had this job been filled by a mainstream civil servant over that 18month period? Your figures are well over £0.5 million cost here. That would include the cost of a basic salary, the additional cost, and I think that is something we would want to get at.

Sir Bob Kerslake: I am certainly happy to look at that. The slight difficulty I have is that, as I have said earlier, there was more than one potential vacancy at the time in the Department. We will certainly go back and see whether we can help you on that point.

Q59 David Heyes: Can we look at the question of bonus briefly? You have a bonus system in place. In the year we have been looking at, which was the 200910 year, we understand that only 21% of staff on grade 6 or below performed well enough to receive any performance bonus. That compares with the senior civil servant level, where it seems 65% of people there qualified for a quite significantly higher level of bonus. How do you explain that? Are we back to this question of low morale? Is the low morale affecting performance, so that people do not qualify for bonuses anymore, or is there another reason?

Sir Bob Kerslake: In fact, just checking my notes here, the figure for 201011 was 25% of staff-

Q60 David Heyes: Okay, I quoted the 200910 figures, which is the information I have been provided with.

Sir Bob Kerslake: I do not think this has anything to do with morale. In fact, we had a working figure of 25% for bonus payments and that is what we did, really.

Q61 David Heyes: Can you explain the fact that your senior people are operating at a performance level that warrants 65% of them qualifying for performance payments, yet only 20odd percent of your staff on lower grades qualify?

Sir Bob Kerslake: I do not think that is right. For 201011, 25% is the figure we were using for the SCS group as well. These are clear working numbers. It can vary slightly from that number, but 25% is what we have used for the performance bands in the current year. There was a different system in the previous year, but effectively in the last year that has just gone we paid bonuses to the top 25%.

Q62 David Heyes: I think we need to get some clarity on this.

Sir Bob Kerslake: I am happy to write but, in relation to the year where we have just paid out bonuses, 25% has been the going target number, and it is around the number we anticipate exceeding their targets.

David Prout: There was a different system in 200910 from 201011. The 200910 system allowed up to 65% of the SCS to get bonuses, right across the civil service at different levels, but 65% was how many could get bonuses. Last year it was 25%.

Sir Bob Kerslake: What I am saying is, for the year that we have just done bonus awards, it is an absolutely consistent percentage of 25% SCS and other. In previous years, it was different.

Q63 David Heyes: If you would let us have some more information on that it would be helpful.

Sir Bob Kerslake: I would be happy to.

Q64 Mark Pawsey: I wonder if I could turn to the business plan of the Department. A structural reform plan was published in July 2010, setting out a series of actions due by 31 March this year. That is now eight months ago. Is there a new business plan? What are you working to currently?

Sir Bob Kerslake: We are currently working to the agreed business plan that was agreed last year. The renewal of the business plan will come ahead of the next financial year.

Q65 Mark Pawsey: The period from March 2011, when there was a series of actions were set, of which 15 were missed by one month and two missed by three months, that has been updated. Is there a new plan beyond that currently?

Sir Bob Kerslake: No, what I am saying is the next new plan would come for the next financial year. We are working to the current plan agreed back in March.

Q66 Mark Pawsey: Of the 81 actions, you had completed 64 of them, so what is happening in the interim? Are you saying there is a new plan that will come into effect in April of next year?

Sir Bob Kerslake: Obviously, we are continuing to deliver on the current plan. What I am saying is that the next renewal will come before the next financial year, in effect. We have a series of tasks that we are delivering now within the current structural reform plan. What we have indicated is how many of them we have already delivered. As I said earlier, we are well advanced on that. The next refresh will come for the next financial year.

Q67 Mark Pawsey: Your team is currently working on that.

Sir Bob Kerslake: We are working in anticipation of that. Clearly, what happens is we deliver some tasks, but new things come into the plan. When the plan was prepared last year, or the beginning of the financial year, we did not know what tasks would emerge from the housing strategy, for example. They will clearly now, insofar as they go beyond this financial year, be embedded in the next plan.

Q68 Mark Pawsey: It just sounds as though the aims and objectives of the Department are a little loose in this interim period.

Sir Bob Kerslake: No, because we are working to an agreed plan and we are held very much to account for that plan for the delivery. In fact, it is quite the opposite: the idea is to avoid lots of changes to the plan. The plan that we have agreed is the plan that we are working on delivering. What I am saying is that it was refreshed last year from 2010, and it will be refreshed for the following year.

Q69 Mark Pawsey: Next year, in 2012?

Sir Bob Kerslake: Yes, that is right.

Q70 Simon Danczuk: I just wondered about the Citizenship Survey. You have decided to drop that, but you consulted on the Citizenship Survey and gathered information on community cohesion, civic engagement, discrimination, attitudes to extremism and things. Significant Departments support it. The Home Office have said you should keep it; the Cabinet Office said you should keep it; the UK Statistics Authority said you should keep this survey, but you decided no to. What is the point of your consultation? Do you not listen to the responses that you receive?

David Prout: The question with the Citizenship Survey is a question of the cost of collecting the information versus the benefits of having the information. I think a lot of academics made a lot of use of the Citizenship Survey to analyse national trends, but as a policymaking tool, where you are looking at a policy and the effect of a policy, in the link between a policy and the very broad patterns of change illustrated in the Citizenship Survey, it is very difficult to prove any kind of causality. When you are getting down to a very local level, where you might be able to prove some sort of causality from a prevent spend or whatever, the amount of information you have is too imprecise to be able to base your policymaking on that.

Q71 Simon Danczuk: Presumably, the Home Office and the Cabinet Office believed it had some policy value.

David Prout: They did not pay for it, but they liked to use some of it.

Simon Danczuk: We are all in this together, David.

Q72 Chair : This is to Pat Ritchie. We saw the starts for affordable homes in the last six months fall off a cliff. Are you responsible or is somebody else responsible?

Pat Ritchie: In going through the process as the agency of changing from one programme to another, the previous programme was a continuous bidding process whereby housing associations registered programmes throughout the period of the delivery of the programme. The new one involves housing associations bidding to use their resources to deliver housing numbers. The first six months of the year were spent going through the bidding process with a new programme and agreeing the fouryear programmes that will deliver the new starts on sites. We are well on track to deliver the contracts for that new programme, but for the first six months, we cannot count any starts because we did not have the providers into contract. For the next six months, we have signed up 83 housing associations for contracts and we have got £1.3 billion of the £1.8 billion programme committed. I am responsible for the contracting process and for going through the transition to the new programme.

Q73 Chair : As an avid reader of Inside Housing, it seems that there is a bit of a turf war between us and between DCLG, HCA and DWP, who suddenly realises that they are going to be the major funder of affordable housing in the future. They are probably putting a bit of resistance to that. Is this a problem that has been sorted out?

Sir Bob Kerslake: No, there is no a turf war on this. When we worked through the affordable housing programme that came out of the spending review, the benefits and implications of that were clearly part of the discussions that went on at the time.

Q74 Chair : So everyone at DWP is absolutely happy about paying for the programme in future.

Sir Bob Kerslake: There was a clear understanding of where the costs fell and where DWP would cover costs and where the Department would cover costs, as part of the programme.

Q75 Chair : That is not holding anything up now.

Sir Bob Kerslake: No.

Q76 Chair : I know that the Department’s not a great fan of targets, but could you tell us how many extra homes you think will be started in 2012 as part of the Get Britain Building scheme?

Pat Ritchie: In terms of the stalled sites programme in the Get Britain Building scheme, it is anticipated that 16,000 new homes will be started across the spending review period. The Public Land Initiatives, which were outlined in the overall strategy, look to contribute 100,000 house starts within the spending review period. Get Britain Building specifically is up to 16,000.

Q77 Chair : The land, is there a figure for next year?

Pat Ritchie: We do have that phased, but I do not have that detail. I can again provide that.

Q78 Chair : Could you give us that as well? That would be helpful.

Pat Ritchie: Yes.

Q79 George Hollingbery: Very quickly, just on the formula grant mechanism as part of the local resource review, would you agree that the way in which it is calculated-the data on which it is calculated-is very confusing? The objectives about how the formula grant mechanism is calculated just need a complete overhaul.

Sir Bob Kerslake: We have acknowledged it is a very complex formula. We use the most current data we can that is available for the formula, but I would not deny that it is a complex formula. One of the reasons it is complex is that it is trying to deal with a wide range of services and a wide variety of local authorities. What we are proposing though, as you know, is a wholly different model that looks to localise business rates and create a much stronger services-

Q80 George Hollingbery: Do you accept that the current formula grant mechanism is kind of broken?

Sir Bob Kerslake: We would accept that there are some severe challenges to the model certainly. Ministers, I think, have said the same. What we are saying is that actually what is needed perhaps here is a different model of funding for local government and that is the way we are taking this forward.

David Prout: It requires constant maintenance.

Sir Bob Kerslake: And a lot of expertise as well.

Q81 James Morris: Just on a second point, I know that part of Government policy has been to reduce the indicators by which local authorities are judged as part of the localism agenda of reducing central prescription, but are you confident that you have enough of a framework for evaluating the way in which money is being spent and comes out of DCLG, and do you support the idea of fewer indicators?

Sir Bob Kerslake: If you actually look at the indicators that went under the previous changes, quite a lot of them were not hard measures, but they were actually things like perceptions, if you actually look at went from this. We do still collect an awful lot of data for the national indicator set, and, therefore, we do have quite a lot of information about local authorities and where they stand. The shift in emphasis is much more to look for local people to have access to information and to challenge about the services they have.

Q82 James Morris: Are you developing any mechanisms for evaluating the impact on local authorities’ service delivery of reductions in expenditure?

David Prout: There are different methods. The way that local government is set up, the primary responsibility for assuring quality standards on a day-to-day basis is the local authority, and the local authority is democratically elected and accountable to local people. We all know this. In addition to that, there are other mechanisms to ensure that money is properly used and that there is value for money, through independent auditors and through the duties of the section 151 officer in each local authority. In addition to that, there are the inspectorates, which still exist and look at crucial services, particularly sensitive services, child and adult social services, and schools. In addition to that, there is a top slice that goes to the Local Government Association, which aims, through selfhelp mechanisms, to drive performance within local government. If, at the end of that, there are still problems, the Secretary of State still retains powers to intervene, and currently the Secretary of State is intervening in Doncaster, for example.

Q83 George Hollingbery: Very quickly on that previous question about the formula grant, equalisation will mean we need something like that again, will it not? Yes or no will do. You need something like the formula grant, because are going to have Westminster with billions and billions, and we are going to have Doncaster with not so-

Sir Bob Kerslake: You will certainly need mechanisms which allow us to define that money is higher.

Q84 George Hollingbery: Which are going to be complicated and full of formulas.

Sir Bob Kerslake: Less so, we hope, in the new model.

Q85 George Hollingbery: I am interested in the Department’s specific aims on regeneration and particularly on local growth. We have got the Regional Growing Fund. We have got Growing Places. We have got a threepage regeneration strategy, a document, a framework. Can you tell us what you are expecting to come out of that? What is success? What does it look like and how will you measure it?

Sir Bob Kerslake: I think the key thing is to say we think success should be defined locally. It is not for us to prescribe how this should look and be done in individual places. What we have sought to do is to develop a set of tools that local authorities can use to drive their own regeneration ambitions. For us, success is that local authorities have the ability to make progress in their own areas. We have not said we are going to define what looks successful in individual places.

Q86 George Hollingbery: Nevertheless, this is an item of policy. Surely the Minister, and therefore the Department, has some vision of what regeneration success and economic growth in local areas looks like, how it feels, and roughly where we are going to be in three or four years’ time after billions of pounds of spent.

Sir Bob Kerslake: Yes, I think we have a sense of where we would see progress coming, and there is a very strong sense of it being around improving neighbourhoods and improving economic activity in places. What we have not done is to say, "This is how we will define success for place X or place Y," because we think that should be down to individual local leadership.

Q87 Heather Wheeler: Let’s just bring it back down to basics: the bin collections. This £250 million of efficiency savings is meant to be paying for these weekly collections for the support scheme. How do you think you are actually going to do that?

David Prout: The bin scheme is a Challenge Fund. It has three objectives. One is to improve the regularity of bin collection in order to give the public the service that they deserve. The second is to drive value for money. The third is to improve environmental performance.

Chair : You said that with a straight face, well nearly.

David Prout: You caught my eye, Chair. The thesis is this: that there are many local authorities that do all three of those at the moment, and there are many local authorities that aspire to do that as well. In a time when money is very, very tight, it is often extremely difficult to find the additional investment at a particular moment in time to take you from rarer collections and low recycling rates to more frequent collections and better recycling and VFM measures. What we are doing is we are putting in place a Challenge Fund that makes £250 million available over a threeyear period for local authorities that need extra investment now, in order to drive up their performance standards. It is a pretty simple scheme in that respect, and we will be putting out a prospectus in the new year inviting bids to the scheme.

Q88 Heather Wheeler: It is not specifically about bringing back a black bin nonrecyclable collection. It is about driving up recycling performances across the piece.

David Prout: It is about three things. It is about reinstating or retaining a weekly black bag collection. In other words, so that you as a householder get your rubbish collected every week. It is about improving environmental performance, and it is about improving value for money. Often that is not possible without some upfront investment in new kit to do the right kind of recycling or whatever. This scheme makes money available to local authorities on a bidbased basis in order for them to be able to invest to drive up their service standards.

Q89 Chair : Does the scheme have to meet all three criteria?

David Prout: Yes.

Q90 Chair : It does. Is it just for one year, the finance?

David Prout: No, it is 50/100/100 over three years.

Q91 Chair : Finally, was this the third good example of the Department becoming more localist that you were looking for?

Sir Bob Kerslake: If you were saying the Department was not localist here, you might have prescribed that we could have made it a duty and all those sorts of things would have been options. We have not. We have said there is an ambition to promote the three objectives that David spoke about, but we are looking for individual places to come forward with their best proposals to deliver them.

Q92 Chair : You just lauded the idea of having nonringfenced grants and the Department getting less involved in the day-to-day management of local authorities. Is this scheme not breaking both of those rules?

Sir Bob Kerslake: I think it will, but it is keeping a sense of local initiative. We will give local authorities flexibility about how they deliver the ambitions that they sign up to.

Chair : Well defended. I am sure the Secretary of State could not have done better. Thank you very much indeed for coming, all of you, and for answering our questions. Bob, as well as wishing you all the best for the next 12 months in this job, we also give you all our best wishes for your new role as well. Thank you very much indeed.

Prepared 1st December 2011