Session 2010-12
Publications on the internet

CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 592-v

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

POLITICAL AND CONSTITUTIONAL REFORM COMMITTEE

PROSPECTS FOR CODIFYING THE RELATIONSHIP BETWEEN CENTRAL AND LOCAL GOVERNMENT

THURSDAY 16 DECEMBER 2010

BILL MOYES, JESSICA CROWE, SIMON PARKER and SIR SIMON MILTON

Evidence heard in Public

Questions 210 - 266

USE OF THE TRANSCRIPT

1.    

This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2.

The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Political and Constitutional Reform Committee

on Thursday 16 December 2010

Members present:

Mr Graham Allen (Chair)

Sheila Gilmore

Andrew Griffiths

Simon Hart

Mr Andrew Turner

Examination of Witnesses

Witnesses: Bill Moyes, Institute for Government, and Jessica Crowe, Centre for Public Scrutiny, gave evidence.

Q210 Chair: Thank you very much for coming. Unfortunately, we are very light on the ground today for various unavoidable reasons. Nonetheless, this is a serious evidence session for us. We are feeling our way towards what a constitutional settlement might be between local government and central Government. We know that many people have been round this field before, but I want you to treat us as novices. What is probably boring and familiar to you is actually unusual and novel for us because we are a brand new Select Committee. We have been set up to look at political and constitutional reform, and I think you might agree that this is a really good moment to be doing so.

Our colleagues on the Communities and Local Government Committee are looking more specifically at localism, so we shall not stray into their territory. Ours is a little more stratospheric. Nonetheless, it will be very practical, because we are at something of a high water mark with the Government seeking to push powers to local authorities. What the Lord giveth, the Lord may taketh away unless we solidify or embed that settlement in some way. We want to pick your brains particularly on the accountabilities of such matters.

Would you like to open up by speaking for a couple of minutes about your general views on these issues?

Bill Moyes: My name is Bill Moyes, and I am speaking on behalf of the Institute for Government. Thank you very much for inviting me to talk to the Committee, Chair. I am an associate at the institute, working on a project relating to how ministerial accountability works in practice, and how it might have to change in an era of greater devolution of responsibility for organising and managing public services. I am interested in that from the perspective of my previous role, which was the regulator of NHS foundation trusts. We had a legislative framework in which the powers and duties of foundation trusts were not subject to the directional control or influence in any way-theoretically, at least-of the Secretary of State.

In practice, my experience was that at times of great stress when there was a real service failure, irrespective of the statutory framework, Ministers felt obliged to get involved. I am referring to the Mid Staffordshire hospital problem where there were really serious service failures. My starting point would be to say that the institute probably would support the concept of codification and, if codification were to happen, we would advocate enshrining it in legislation in some form.

Based on our experience and on the work that we have done so far at the institute, there is a prior stage of building a political consensus of what codification should contain, what it should be about and what it should be for. That was one of the great difficulties we faced with foundation trusts. There simply was not the political consensus that said, "Yes, hospitals can be autonomous, and much of what they do need not be political in nature. It need not be subject to political control." Even though the legislative framework for foundation trusts was quite robust and good, and perfectly capable of being operated, it didn’t stand the real stress that happens in a crisis because it was not underpinned by a political consensus, so we would advocate that starting point. A good deal of work needs to be done to develop broad political support for the concept of codification and to define its purpose and how it would be used. On the basis of that, assuming agreement can be reached, you can then build a structure that works.

Our perspective-this is my final comment-would be that the real value in codification is not so much the definition of rights and responsibilities in the Concordat, which is interesting but only takes one so far, but might be to help the citizen to understand who is accountable when things go wrong and to whom they go when they have ideas about how things could get better. That’s a very practical approach to codification, but it seems to us to be one that the Committee might want to think a lot about. I can say more about that later, if that helps.

Q211 Chair: There’s only so much that a Select Committee could do in terms of building consensus. What I would like to do is take that to its optimal level. We talked very briefly about this before you came in, and I would like the Committee itself to agree something sensible internally, and then interact with Government-perhaps even informally-to see whether there is something where all parties can agree. As for whether it needs to go wider than that, I suspect it does, but in terms of what we can do, I think that would be the maximum position for us. We’d be very keen to act in a way in which Select Committees have perhaps not traditionally acted in order to facilitate that consensus. I hope that that meets part of what you were saying.

Jessica Crowe: At the Centre for Public Scrutiny, we certainly see this, as you said at the start, as a very timely enquiry. There are lots of opportunities at the moment to progress the debate about localism and balance. I would echo what Bill Moyes just said about the need for some prior work before we can codify. It shouldn’t be codification on the status quo. There needs to be some clarity-particularly from the perspective of local government-to clarify the purpose and role of local government, as distinct from local administration, so that it’s very clear what the purpose of an organisation at the local level is. It has a democratic mandate, as do national Government, and its purpose needs to be determined. We need to get that clear before there can be codification. One of the weaknesses in the debates about this to date is that there hasn’t tended to be consensus across Government, which Bill Moyes talked about, about the extent and nature of any devolution and localisation of powers. I don’t think you can do that until it’s very clear what the purpose and role of those local bodies is, so we would say that there needs to be discussion about that role and purpose first.

Also, from our perspective as an organisation that promotes the importance and value of non-executives-whether it’s Select Committees at national level, overview and scrutiny committees in local government, non-executive directors of health trusts, charitable trustees or others-whose role is to challenge and question the executive, it’s important that there are very clear accountabilities. If power is devolved and there is clarity about the role of local organisations in taking decisions, it must also be clear how they will be held to account for those decisions. I know we are going to explore the issues of accountability later, but we think that that has to be a really important part of the discussion about the role and purpose of people with power at local level. We need to be clear about how they are held to account.

Building on work that we did earlier this year entitled Accountability Works!, which was part of our submission, there are three principles that could usefully be explored and somehow set out in a code: accountability, transparency and involvement. Those are three core principles; there may well be others and that would be part of the debate, but for us, those are three really important principles that need to be clarified in any codification.

Q212 Chair: I would just put it to both of you that a number of witnesses have been very clear on the question of timing and the fact that this is a particular moment. There is a new Government and a view about new politics. Certainly in terms of political drive and rhetoric, the Government talk about devolving power, so this seems like a good moment. What is your view on that? We could obviously take five years to get this absolutely right, but I think that the time will have gone by that point.

Jessica Crowe: There is an obvious moment now with the Localism Bill that has just been published. It is a huge Bill, and it will need to be quite focused. There are some points within it where the sorts of things that we are interested in at the Centre could be enhanced. One of those things concerns local government constitutions, and there is a section in the schedules about local governance arrangements. What is striking from first reading-it is a very long Bill, and I have not digested it all yet-is that if councils come up with some completely new form of local governance arrangements, they are required to set out to the Secretary of State how they can prove that it will be effective, efficient, open and transparent. We think that should be the case whatever the governance arrangements, and not just to the Government but outwards to local people. That would pick up on the point that the Government have made since taking office about moving from bureaucratic accountability to democratic accountability. If that is the case, it is slightly odd that less is said in the Localism Bill about the role of local councillors as democratically elected people in helping to achieve that aim. We think that there could be ways of strengthening and enhancing that point.

The Bill also provides an opportunity to pick up on the need to get that cross-Government consensus. In the area in which we are most technically interested, concerning the role and future of overview and scrutiny functions, the Bill has pulled together all the different bits of legislation from the past 10 years that have been connected to an expansion of scrutiny powers for local councillors. However, it does not really do anything to tidy that legislation up and make it consistent.

We also have the recent response to the Government health paper produced by the Department of Health. It recognises the role of health scrutiny and the important contribution that that can make to democratic accountability, and indeed it expands those powers. That is not reflected consistently across other areas. I think that the Localism Bill is a real opportunity to try and get that consistency and set out some core principles

Bill Moyes: I agree. I think that this is a good time to start working in this area. The new Government have, very helpfully, raised a lot of questions about the extent to which the state is centralised and the extent to which it is possible for people at local level to take charge of their own services, run them properly and have things tailored to their requirements, rather than to the requirements of Whitehall and Westminster. However, I think there is countervailing pressure, which is the Government’s clear determination to maintain financial control and keep very heavy pressure on public expenditure, for obvious reasons. Therefore, one will have to consider carefully how those two forces will balance out. Once you start trying to codify responsibilities and roles, you quickly get into control mechanisms and questions about funding, such as who is responsible for raising funds, who controls funding and spending, and so on. This might not be the best time to be exploring devolution in those areas, but the time is certainly right to start opening up the concept of codification.

Q213 Simon Hart: Thank you. I am slightly lacking a voice at the moment, you may be relieved to hear. May I just go back to one point you made, Jessica? You drew a distinction between local government and local administration. Before I ask my main question, can you explain precisely what you meant by that?

Jessica Crowe: I think that it’s entirely right that national Governments have set out things they want to do-that they have a mandate to do-and that they have a national prerogative. Foreign policy and defence is the obvious one, but even in domestic policy there will be certain priorities that a national Government will have set out that they want to achieve.

It is important to recognise that local government has also been elected with local mandates to do things. One of the things that could be explored, through a discussion around the idea of codifying that relationship, would be clarifying the boundaries between the what and the how. Even where national Government have set out what they wish to achieve, it is really important to recognise that local government, with its understanding of the needs of its local communities and its mandate through being elected as well, should be able to determine how those priorities are delivered, and not be driven totally down a very tightly controlled route. It is about recognising mandate and local knowledge.

Q214 Simon Hart: That is helpful, because it leads nicely on to the next question, which the Chair has been very patient in allowing me to ask in previous evidence sessions, because it is quite a parochial one in that it applies in Wales. Wales has this curious situation of having a Lib Dem-Conservative Administration here; a Plaid Cymru and Labour Administration in Cardiff; an independent council in the particular area in which I live; and then, to further the pleasure, a national park authority, which has a certain amount of democratic credibility and quite a big say, one might argue, in the local governance of the area.

You mentioned the word "consensus", Bill. I wonder whether, in these circumstances, consensus is possible via codification when you have that strange cocktail of political interest. I wonder whether devolution in that context is seen to achieve either the previous or the current Government’s aims. I would be interested to hear what you thought.

Chair: I am going to call Bill a little bit more, because I know he has to leave us at 10.30.

Bill Moyes: I will be very brief.

Chair: No, please take your time.

Bill Moyes: When I talk about political consensus, it is less about party politics than about a consensus between those who operate politically at the local level and those who operate politically at the national level.

In some areas there are the bones of that consensus. People regard local authorities as essentially responsible for ensuring that the bins get emptied, and so on, and they regard national Government as having a broad responsibility for protecting the environment. So there are two functions there that are at opposite ends of the poles-and people sort of recognise that.

When it comes to things like education, I don’t think there is yet that strong consensus that we all understand the role of Whitehall and the role of the local authority. This has not been the subject of a great deal of debate recently. I

I don’t think the highlighted sentence is what I said. I don’t have a note of exactly the words I used. I think it was something l i ke

" This has not been the subject of a great deal of debate recently.

was talking about building that kind of consensus, rather than just a consensus across party political boundaries.

Jessica Crowe: I would agree with that. That was the point I was trying to make about needing this cross-Government consensus. Different Whitehall Departments need to have a clear understanding of what they mean by devolution and localism, because there are very different definitions-possibly even within Departments. That is the important thing.

It is given particularly sharp focus by the situation that you describe with the additional layer of Welsh devolution and it is similar in Scotland. At local level, it has long been the case that there may be a different local political control from a national.

Q215 Simon Hart: May I follow that question with one more? Although there is probably evidence that suggests that the wider public are not particularly happy with the status quo, do you think there is evidence out there that suggests that what is proposed-either by way of the Localism Bill or through codification-would suddenly excite the public as far as this topic is concerned? I sometimes wonder whether we are slightly overplaying the theory that local people want to be involved in all of this decision making, as most of the local people I know are only too delighted for someone else to take the difficult decisions so that they can be blamed when things go wrong-or that we can be blamed, as a general rule.

The concept of devolution is one that I would personally endorse. Obviously, it depends on you interpret it, but I just wonder sometimes if we overplay the theory that everyone at ground level is determined to get involved with the minutiae of decision making on some quite tedious topics. Have we got that right, do you think?

Bill Moyes: There is one piece of evidence that I would offer in relation to foundation trusts. Foundation trusts have members who are drawn from the public, the staff and the patients they serve. Today, there are 1.7 million members of foundation trusts. The members elect governors, who then appoint the board. There are something like 4,500 governors and when by-elections occur the turnout rate varies from very low to about 55%. Although they do not have a lot of powers in relation to hospitals, they have some quite focused powers, such as appointments, removals and so on. An awful lot of people are very keen to play a part in overseeing the running of the local hospital.

Q216 Simon Hart: I will shut up, I promise. That is an interesting point. It raises questions about whether public interest varies, depending on what aspect of local provision we are talking about. I can well understand that, in terms of health, there may be a higher degree of public involvement than in perhaps some other issues.

Jessica Crowe: I think that’s right. You have hit on it. It is about the topic and also the timing. The evidence from local scrutiny inquiries is that public involvement and interest vary widely from people being quite happy to leave the technical examination and cross-examining of finance officers over performance and financial information. They might be less interested in that, although some will be and possibly more as more information gets published in raw data form, but pick the right topic that is exercising public concern and you can have hundreds of people.

Anybody who has tried to implement parking controls will know that people are very interested in who gets to park on their street. It really depends on the topic, but also the way in which people can get involved. It is about setting out a clear expectation that those with power will make their decisions public, will set out how they intend to be influenced and how much they are willing to be influenced, and then make it as easy as possible for people to get involved, if they want to.

It might be a slightly old-fashioned view, but I think that there is an aspect of class to this. Often we expect people to get involved in things like the regeneration and improvement of their housing estate. That is really about giving them a decent place to live, and they have to go to tenants’ meetings to achieve it, whereas people who live in the very nice street next door have that as a matter of right due to their income and position in life. We should not expect people to have to get involved in order to get a certain level of decent living, but we must make sure that when it is important their voices are heard and they can interact with the elected representatives who have a responsibility to make the decisions. That can be quite difficult, and the representatives must be clear about how they can be influenced by the public, when the public wish to.

Chair: I am going to call Andrew next and then Sheila, but will my colleagues direct their questions particularly at Bill? Thankfully, Jessica will be with us a little longer.

Q217 Mr Turner: The two matters that have really struck people in my constituency have been the possible closure of a hospital, which drew 60,000 people to sign a petition, and of being one consistency rather than one and a bit, which has drawn 17,000 signatures. Which of those is local, and which of those is national? Which have people no right to be involved in? More to the point, are any of them local at the moment because, as far as I know, both those things are subject to decisions at the centre?

Bill Moyes: The questions that I would pose in response and the criteria I would adopt in looking at that kind of question is to say where do we think that the Secretary of State should be the decision taker and should be accountable? Where do we think the decisions can be taken at a more local level legitimately and accountability can operate at a more local level?

I would probably say that on the closure of a hospital-depending on how big a hospital it is-it is much more for those who commission and deliver health care to work out what is safe for patients; what is cost effective; what kind of organisation can they deliver best clinical care in; and what kind of organisation is too small and too restricted for them to operate properly. A lot of those questions are much more technical than political in nature. There is that criterion that one has to adopt as to when does the Secretary of State say, "I’m just not the right person to take this decision and therefore I’m not going to be accountable for it"? At that point, my view would be that you start to work out how local can that decision become. Can it become very local or does it have to be taken at some kind of regional level? That is how I think I would approach the answer to your questions.

Q218 Mr Turner: So we’ve got two levels at least once we get away from national?

Bill Moyes: In some services like health care, yes. There are some kinds of health care where you have to look at populations of 1 million or 5 million, rather than 250,000.

Q219 Mr Turner: Or 110,000.

Bill Moyes: Whatever. Yes.

Chair: Is that true?

Q220 Mr Turner: The problem is that if you are getting to the point now where we might have to start talking about changes, the opportunity will have gone. It’s got to be done within six weeks, eight weeks or 12 weeks. It really seems to be me to be urgent because Governments change their views. Do you agree with that?

Bill Moyes: I am not sure I do because I think the issues are more complex than can be solved with that kind of rapidity. As I said earlier, I come at the question of codification from the perspective of managing accountability. The last time that Parliament looked at this was 1997 when it concluded that Ministers should be responsible for anything and everything that was done or not done by their Department and its agencies. So the parliamentary position-the formal position-remains that Ministers can be called to account for anything and everything. My experience is that if you ask a Department, "What is your Minister accountable for?", they do not know and they assume that it is for anything and everything.

That concept of accountability then drives, in my experience, a desire on the part of Ministers to be informed and to be involved and to have elements of control of information and so on. Those are very deep-seated attitudes in Whitehall and Westminster which, depending on how codification might happen, are simply not consistent with detailed codification of the respective responsibilities of central and local government. The process of negotiating the devolution settlements in Scotland and Wales didn’t happen quickly. Those were very long, prolonged, complex exercises but they have produced a lasting settlement. So my encouragement to the Committee would be that if you are embarking on the examination of codification it will not produce a conclusion quickly.

Q221 Mr Turner: Just as a last question, are Scotland, Wales and Northern Ireland national or local?

Bill Moyes: It depends on the issue.

Q222 Mr Turner: The trouble is we are not getting anywhere, are we? I am not criticising you, but we just aren’t getting anywhere.

Bill Moyes: But it reflects the fact that services are not homogeneous and uniform. Different services have different characteristics.

Q223 Mr Turner: But people aren’t going to wait. We really have two possibilities. We have the national, by which I mean UK, or the local-at some level. There is more opportunity in England, I suspect, than there is in Scotland or Wales, because they are less inclined to hand power over to the really local people. I’m afraid we are not getting anywhere.

Jessica Crowe: May I try to help? I think Bill is right. It probably will not move everywhere for everything very rapidly, but there are some opportunities with codification to set out some principles. One of the things that you’re considering is the European Charter of Local Self-Government, and article 4 of that says, "Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen." If that was adopted, accepted and had some legislative force-I don’t think it is broadly accepted at the moment for the reasons that Bill outlined-it would require authorities and those exercising power at some sort of higher level to set out why they intended not to exercise it at a level closer to the citizen than they were. It doesn’t take away the potential for different decisions to be taken differentially at higher levels, but it would require people to justify it. If you started from that presumption, and you had that with some force, then if decisions were going to be made on different issues at different times in different ways by other agencies higher up, whether at UK national level, or Welsh or Scottish or some other level, they would have to justify it. That would also apply to local authorities. Local authorities would have to justify why they should do it and not some more neighbourhood or community-based thing.

Chair: Unfortunately, we are going to have to move on. Sheila, do you have some questions for Bill specifically, please? Just five minutes.

Q224 Sheila Gilmore: In terms of accountability, do you think that the diffusion, as is perhaps being suggested to some extent, and profusion of providers and so on creates particular challenges for accountability?

Bill Moyes: Yes it does. If you take the position of the Secretary of State being accountable for everything, it’s very easy, because, at some point, if an issue is big enough and serious enough, it will end up being raised in Parliament and Ministers will need information, and from that will flow control mechanisms, change or whatever. It is much more complicated, I think, in a diffused system to be absolutely clear about who is accountable and who is responsible for what, about how that accountability works and about how the dissatisfied user of a service calls someone to account and ensures that change happens and so on.

For different services, different mechanisms are needed. The Government are now concluding, in the case of foundation trust hospitals, for example, that the governors will be the mechanism that will call the board of the hospital to account. That raises a set of questions about how those governors-members of the public, patients and staff-get some kind of legitimacy in calling to the board to account. How do they ensure that they are actually acting on behalf of the population served by the hospital? There are a lot of interesting questions, which I don’t think at the moment there are lots of pat answers to, but they are worth debating, because I do not believe that having the Secretary of State responsible for everything in Westminster and Whitehall is any longer a satisfactory model.

Q225 Sheila Gilmore: You mentioned Scotland and Wales. While the devolution settlement does seem to have resolved most of the accountability issues, the interesting thing is that it hasn’t changed, in any way, the relationship between the new national Governments-the devolved Governments-and local government. If anything, we might be seeing greater centralisation in Scotland, which was perhaps illustrated last week with the resignation of the Transport Minister for not managing to clear all the snow all over the country. There has been no trickle-down effect. I don’t know if you have a view on that.

Bill Moyes: I must admit that that would be my observation. As someone who used to work in the Scotland Scottish Office and who lived, for a large part of my life, in Edinburgh, my observation would be that the devolution settlement has certainly led to a transfer of responsibility and accountability from London to Edinburgh and, although I observe it only from afar-not necessarily from Edinburgh to Stornoway or Inverness or anywhere else-. it That has still to be worked at out and debated. I think, to come back to the Chair’s introduction, we are probably at a time when there is an appetite to debate these things. I’m not feeling that there’s a settled view in the country about how accountability should operate, but I don’t think any longer that there’s satisfaction with the idea that it all has to come to a pinnacle in this building.

Q226 Chair: Bill, you have to leave us, I believe.

Bill Moyes: I’m afraid that I do.

Q227 Chair: I’m so sorry about that. We would have loved to have carried on talking to you. Perhaps what we can do is send you some of the things that are outstanding, because we didn’t manage to cover everything. We wish you well in your work and hope that we can see that at the appropriate time.

Bill Moyes: Thank you very much for inviting me. If I can help further, do please ask.

Chair: That would be wonderful. Thank you, Bill.

Examination of Witnesses

Witnesses: Simon Parker, New Local Government Network, Jessica Crowe, Centre for Public Scrutiny, and Sir Simon Milton, Greater London Authority, gave evidence.

Q228 Chair: Just to kick us off, Simon-I will refer to you as Simon, and Sir Simon Milton as "Sir Simon", just to make it simple for Members, as we’re only Members of Parliament, you know-will you make a few opening remarks and give us your view in general on some of things before the Committee?

Simon Parker: Of course. I will try not to go over too much of the ground that you have already heard about, although I agree with much of what has been said.

One of the things that we talk about a lot at the New Local Government Network, which is the think-tank that I run, is the idea of what it would take to make localism sustainable. Clearly, as the Committee has suggested, we have a spurt of localist energy right now. How do we make sure that that becomes embedded in the way in which England in particular does business? We have heard some of the conditions that would lead to a sustainable localist settlement. One of those is clearly some degree of political consensus. Let’s not kid ourselves that that currently exists-we don’t have the full range of political parties signed up to a more local way of doing business. To some extent, we would need that.

Where I would go slightly further than Bill and Jess is that I would like to bring the public into this as well. I think that we need the public on board. The public-again, the Committee has hinted at this-are not yet convinced localists. I think they are convincible, but if we look at a lot of the polling data, we see that they have very mixed views about the quality and responsiveness of some local services. I think we need to have that debate.

As part of that sustainable settlement, there is also a debate to be had about finance. We have touched on that as well. I think it is very important to talk about making local government much more financially self-sufficient. I can see that there is a real attraction in the idea that once you have had a discussion about how you put that sustainability in place, you would try to codify that. The question that I would want to throw into the debate, which seems a very important one, is: do we think a constitutional codification is a way of driving change or of recognising change that is already in the process of occurring? It seems to me that constitutional change is probably more effective as the latter-as a way of amplifying change that is already occurring. In that sense, I want to raise two issues that will be interesting for me to discuss-and, I hope, for you.

First, where is that public debate? How do we get the public involved in this debate? How do we convince the public that being more involved and engaged is a precondition of a better way of doing government in this country? As I say, I think they are convincible. I wonder whether we think that the goal is to see localism and devolution not merely as an elite exercise in shifting power and accountability structures, but as a genuine popular shift. Should a codification be subject to a referendum? I think that is an interesting question; it would certainly guarantee that we have popular buy-in.

The other issue-I think that Bill alluded to this earlier-is that it seems strange to try to codify a relationship between the locality and the centre, and a role for the locality, in a week in which we have just seen what is perhaps the biggest shake-up of those relationships in, I would argue, local government history-certainly in a generation. Anyone who comes before this Committee and says they can tell you what local government will look like and describe the role it will play in five years’ time is a shyster. No one knows that. It is about to change very dramatically and we need to bear that in mind.

If we are to codify a relationship, we have to know what that relationship is. I would want that relationship to be decisively more localised, and I would want the balance of power to be shifted decisively and sustainably in favour of the locality. I think there is some more campaigning and discussion to be done around that, and I would see the constitutional codification as a result of that process. That doesn’t mean that we have to be inactive now-we could even set a date for a referendum on it-but I think it is a debate that we need to have as a nation about how we want to structure ourselves and what the rules of the game should be.

One of the things that strikes me about the Swedish constitution-I am sure you will have heard about this before-is that one of the starting points for the Swedes is that power proceeds upwards from individual and communities to Government. I am an enthusiastic believer in that principle, and I don’t think that’s how Governments in this country have behaved. We need to shift the power and then recognise that the power has shifted.

Q229 Chair: That is helpful. Sir Simon, do you want to say a few words to help kick us off?

Sir Simon Milton: Thank you. I am currently Deputy Mayor of London, so I work in regional government. I hasten to add that I am an appointee rather than an elected politician-I gave that up after 20 years in local government. Before I took on my current job, I was chairman of the Local Government Association and I signed the notorious Concordat between local and central Government for the then Secretary of State, Hazel Blears. That is sort of an interesting bit of background that you might want to go into later.

The interesting point for today’s debate is that the Greater London Authority, which is unique-it is the only regional tier of government that is going to exist and it has a directly elected component, so it is democratically accountable-is probably the closest we have to a codified level of government in this country, because we are governed by the GLA Act, which was passed in 1999. That was, at the time-and I think still is-the longest piece of legislation passed by Parliament since 1935. It sets out very clearly what the roles, responsibilities, duties, functions and powers of that tier of government are. Two of its key sections are sections 30 and 31. Section 31 explicitly spells out the things that we are not empowered to deal with because they are the responsibility of other parts of government, principally local government. So that might be an interesting example of the fact that it can be done, but it was the longest piece of legislation, which suggests that if you’re trying to do that on a wider level, it would be an incredibly complex job.

Q230 Sheila Gilmore: I would like to pursue further what I have said previously. There are a number of different agendas going on here, which may or may not be contradictory. One agenda is the marketisation of services, in the sense that individual choice is seen as a form of accountability. In the 1980s, I was involved when the first school boards were set up in Scotland, with parental choice of schools. There was a theory of accountability there but, in practice, having a choice of schools didn’t necessarily give you involvement in the curriculum. You could perhaps say, "I like that school better than that school," but there was no ability to say, "I would like my local school to be doing this." All these different kinds of layers become quite individualised, and I am not sure how that delivers accountability.

I was also thinking about the notion that by publishing everything that a local council is spending over a certain figure, individuals will somehow be able to make that local authority accountable. I am not quite sure how that is meant to work from an individual perspective. Doesn’t accountability, as some accept, have to be collective?

Simon Parker: Gosh. I am happy to kick off on that. I think it’s a really important question. Clearly, for the coalition Government, devolution is not simply devolution to local authorities, but devolution in lots of different ways to individuals. I think in some ways we might want to question whether "localism" is the right word for what is happening at the moment. It might partly be localism, but a lot more of it is about decentralisation.

It seems that, in the impact of what it is doing, the coalition is a disciple of Joseph Schumpeter. This is creative destruction. The idea is that if we create lots of different accountability mechanisms-schools are accountable in one way and hospitals in another-we empower communities much more to take on responsibility for running things themselves, and that if we shake all that up, poorly performing services will die off and new ones will grow up. One of the things that is difficult for those of us who worked on local government policy under the last Administration is that they had nothing but vision-there were tons of visions for the way that localities should work. I don’t think the current Government have a clear vision for what local government should look like in the future. I think the philosophy is essentially that if you shake up everything around local government, local government itself will change or become irrelevant over time.

I would agree with you that individual accountability and market-based forms of accountability are probably very good ways to ensure responsiveness of services to the individual. That is to be applauded. Rights of exit for people are also to be applauded. You shouldn’t be stuck with a rubbish service just because it’s the one that the local authority happens to want to provide you with.

But equally, I worry about incoherence, community rights and strategic co-ordination, and I think that if you don’t have a strong local authority and strong local democracy, you don’t have a way of managing some of the difficult trade-offs. With setting up free schools, I came across an example the other day in a county council where someone wants to save a local school and turn it into a free school, which means that probably there won’t be enough kids to keep the two neighbouring schools open. It’s hard to work out how the market balances that out, so local democracy presumably becomes a very important part of the brokering role in that.

If your point is that strong local democracy is irreplaceable in all this, I agree, and I don’t know whether the current set of reforms guarantees that, but part of the challenge for local government over the next few years is to reinvigorate and reinvent what it means to provide local democratic leadership.

Sir Simon Milton: I think that there’s a difference between how you can get redress as a citizen if you’re dissatisfied with the quality of a service you might receive, and deciding on the structure and quantum of service that might be needed. Going back to Mr Turner’s example of the hospital closure, it’s one thing who should decide whether you should have a hospital in that particular location, and another whether you are satisfied with the waiting times to get into that hospital. You can see how, as a citizen, you might find it easier, and it might be more appropriate, to have more power to get redress for things you’re not happy about, but the question about the location of the hospital has to be taken within the wider context of the strategic delivery of services.

This is something that we experience quite a lot in London-in what I’m doing now-where you have a two-tier planning system. The Mayor of London has the ability to get involved in certain types of planning decision-strategic planning applications-and in effect he gets involved or gets the chance to be involved in something like 0.3% of all planning applications in London. It is a small number, but they will obviously be the most significant ones. We’ve developed this idea of things that are local to London-in other words things that are so significant that they affect, or have the ability to affect, the success or the competitiveness of London as a whole. We feel, therefore, that it’s appropriate for the Mayor to have the ability to influence, and indeed in some cases simply to take the decision himself, rather than it being done at a local level. There are always going to be examples like that when, for strategic reasons, the nearest place in the chain where a decision can be taken is not the local one but higher up.

Jessica Crowe: The point you make is absolutely right. There are many different forms of accountability, and that is what our Accountability Works! research says. But what we’ve seen, perhaps in the recent past, is more of a hierarchy, with some forms of accountability being more important than others because they have perhaps more clout. We saw a very centralised regulatory and inspection system around performance management and targets, and meeting those central targets was more important, arguably, than doing things that local people wanted, because there was a kind of penalty. But we would say that there needs to be more of a web in which these different forms of accountability interact with each other. The relationships are clear but there isn’t necessarily always a hierarchy between them.

But what you need alongside clear mechanisms of accountability is the transparency and the involvement as well. Those three things are all part of our democracy, and some bits of it might be about more representatives and elected representatives making strategic decision, in the way that Sir Simon outlines. Some of it might be about making sure that members of the public can influence those decisions and get involved to the degree that they want to, but you have these three very clear principles that underpin that system of representative democracy.

Q231 Sheila Gilmore: One thing that I’ve asked people in some of our previous sessions is whether the fundamental issue of power still lies with the purse strings? To talk about codification is one thing, and that might strengthen the position of local authorities in relation to all sorts of other vague accountability, but what tends to happen in practice, especially when a difficult situation arises, is what we have seen in Scotland. We had a Concordat as well-a great fanfare in 2007 with the new Scottish Government, with all sorts of warm words about giving greater power and un-ring-fencing funding and all sorts of things. This year in particular, though there has always been a sense of it, it became very clear, with the Scottish Government saying, "Well, here you are, you can have this proportion of cuts if you do this, this and this, and a much higher proportion of cuts if you don’t".

Sir Simon Milton: You are absolutely right. All the talk about localism and decentralisation will be for naught unless local levels of government have greater financial autonomy. The new Government seem to be stumbling their way towards recognising that, because there is discussion now about possibly localising the business rates. That would give local authorities a buoyant source of revenue, but we will wait and see whether that actually transpires. Previous Governments, the last one in particular, weren’t interested in going that far. They set up the Lyons inquiry, which made various recommendations, but all its recommendations on finance were completely discarded.

Going back to my discussions with Hazel Blears at the time on the local government Concordat in England, that came about because when Gordon Brown became Prime Minister he published a White Paper on the "Governance of Britain", which had various ideas-fixed-term Parliaments and all sorts of things. One idea was that there should be this Concordat between central and local. Nobody knew what it was about, but the Secretary of State realised that it fell to her to deliver it, so we were going to have a Concordat. We had discussions and I said at the time that, unless there was financial devolution and autonomy, it really wasn’t going to make any difference. If I’d been a braver politician, I would have refused to sign. But the pressures at the time were that this was something that had to be delivered and it was. The truth is that it was a Concordat around the state of local-central relations at a point in time. It was a snapshot, which is now completely obsolete. It was all about local area agreements and how those were going to work. Of course, that has all been junked now, so it is a completely worthless document, which nevertheless was also more honoured in the breach than not. So I am not sure where it got us.

Simon Parker: I quite agree on the Concordat. It is much less a kind of constitutional codification of the relationship than a statement of the relationship that a particular Government at a particular moment in time wanted to have. That is reflected in the language around LAAs and the like. But more broadly, trying to codify relationships seems somewhat troublesome to me. For instance, I think the Concordat says that central Government will consult local government appropriately. Well, how would we decide whether that had been done enough? What would happen if it was decided that not enough consultation had taken place? That seems quite difficult to me.

However, one point that would be very useful to consider for a codification would be something around local government finance. My long-term aspiration would be that local authorities are able to have a genuine and mature dialogue with their citizens about what kind of services should be delivered at what cost in their area. That is very difficult now, because local government doesn’t raise very much of its money locally, and the money it does raise is through the council tax, which is an extraordinarily badly designed tax. It’s not terribly progressive. It’s not buoyant. So that is certainly something that should be a candidate for consideration in any codification. It is quite hard to work out exactly how you do that.

I was again looking at the Swedish constitution. I think they set a target of 70%. Now, what strikes me about targets like that is that one way in which we can very easily get local government in this country to raise more than half its own money is simply to cut central government grants some more. In fact, by the end of this Parliament local government will probably raise well over 40% of its own money simply because we have seen such big reductions in central grants. But it strikes me as completely realistic that we could say something like, "We think local government should always be able to raise a majority of its funding from local sources, ideally from diversified and buoyant sources, not just from the council tax, and ideally not just from a mix of the council tax and the business rate".

If we were being more ambitious, we might start to look at questions of whether we are able to identify a particular sphere of competence, which we think is local government’s preserve, and say that local governments should raise and have control over the money in that sphere. That is a more challenging goal, particularly because we have such flexible definitions of what services local government really runs. An interesting question, as we move increasingly towards personalised budgets in social care, is whether we can say that social care remains in local government’s sphere of competence, or whether it is a service that is broadly commissioned by local government, but which is really bought and managed by individuals. It is troublesome and problematic, but it would be an interesting discussion.

Q232 Sheila Gilmore: May I quickly ask a question, which Eleanor might have asked if she had been here, and which she has asked previously, about how do we get out of the mindset-the media have it in particular, and people respond to it-of the postcode lottery? I am not familiar with the English arrangement, but the arrangement for business rates in Scotland is that they are all gathered in and distributed according to need. For a city like Edinburgh, we feel disadvantaged, but other places are clearly benefiting. It is about both how you distribute the finances and how you change the mindset that if it is different, it is somehow bad.

Jessica Crowe: One of the things that you need, to get away from the idea of a postcode lottery, is clear accountability and legitimacy for those decisions. It is only a lottery if there is no rational means for making that decision. You most often hear it in relation to the availability of certain drugs and treatments, and I think that one of the reasons for that is that nobody really knows how primary care trusts make decisions on commissioning priorities. As Bill Moyes would probably say if he had been here, there is always a balance between the professional technical determination of what is important and what need is from a medical point of view. You can have legitimacy through people who have been elected with a mandate to make particular decisions. You can then strengthen that connection between the public and the decision makers. Arguably, it is therefore not so much of a lottery, because there is a reason for that decision to have been made.

Sir Simon Milton: When I was chairman of the Local Government Association I used to talk about postcode choice, rather than postcode lottery.

Jessica Crowe: I would say that you need something more than choice, because there needs to be accountability for those choices. Choice implies that all choices are equal and that everyone has the same power to make the choice.

Sir Simon Milton: The choice being the choice made by those who are democratically elected in that locality.

Jessica Crowe: Yes, in that case I would agree with that.

Simon Parker: What the polling research on this suggests is that it is possible to convince people that accountabilities have shifted to the local level, but it is quite hard. One of the things that you have to do is unambiguously push that power down and make it clear that that person in the locality is responsible and that you are not responsible for it at the centre. One of the few examples that the research found where that had been done successfully was transport in London, where that was associated with the Mayor and seen as his responsibility, and where it was not Whitehall and Westminster’s job any more. That is an interesting example of where that shift away from the postcode lottery mentality has been achieved. It requires quite a broad cultural shift, because we are so used to it, the media pick up on it and politicians frequently indulge in it.

We need some of the linguistic redefinition that Sir Simon has hinted at. A postcode lottery is bad if it means that everyone is paying the same and they are getting unwarranted variations in service from one area to another. That is a bad thing, let’s make no bones about that. On the other hand, if people are paying different amounts, or have asked for different things, that reflects local preferences and drives innovation and that seems a thoroughly good thing. We need to make the case publicly-and politicians very much need to make the case publicly-for democratic choice, while still wanting to crack down on variation that has happened just because one hospital is awful and another one is good.

Sir Simon Milton: Ministers have to get used to saying that that is a locally devolved matter, as they do for Scotland and Wales, when asked questions in the House to justify or criticise whatever happens to be the decision locally.

Chair: Andrew, did you want to come in on this particular one?

Mr Turner: Well, this and another.

Chair: Let me take Simon then.

Q233 Simon Hart: To me, this shines a bright light on the exasperation that a lot of citizens feel about the process. Most people are interested in outcomes, rather than the means by which those outcomes are reached. Listening to your comments simply confirms to me that we are a long way off the position you suggest where the public can be convinced. If our experiences are anything to go by, most people simply want a decent service and they don’t particularly care whether it is the local authority, the Welsh Assembly or national Government. Are we not getting into a position where we are building up false expectations? From what I have just heard, and from what Sheila Gilmore said, in the end, people aren’t going to have the power that we’re telling them they will have, because they will not control as much as we are indicating they will control, even under the Localism Bill.

It is difficult to escape from the party political trap-again, I go back to the question I asked earlier and I would be interested to hear your view. Take two examples: first, free prescriptions in Wales, for which no equivalent is available in England; and secondly, the recent announcement by the Welsh Assembly about tuition fees, which is fundamentally different from the scheme being imposed in England. It seems to me that if I was just a punter-a voter-the combination of party politics being played out here and in the Welsh Assembly would prevent the proper devolution of power in the context of this conversation. As a consequence of that, unless we’re really careful, we will end up with more frustrated and exasperated citizens than we’ve got now. You have almost persuaded me that we’re going the other way. Have I got that wrong?

Simon Parker: Oh dear.

Q234 Simon Hart: I know you may not have meant that; it is not a criticism, but that’s how I now feel. My heart has been sinking. I know that’s not what you intended, but it is the effect that you had.

Simon Parker: In that case, let me tell you why I am rather more optimistic than I’ve made you feel. First, let's give credit where it’s due. A former boss of mine, David Halpern, made a fascinating graph once-he does a lot of graphs. It showed that if you look at us in comparison with other European countries, the British public are unusually disillusioned with both the state and the market. That is really interesting, and perhaps no surprise after the recession and the crisis we have just come out of. People appear to be fed up with what some of them see as a big nanny-ish state that intrudes on their lives. Equally, they feel that they have been failed by the banks and the marketplace. That raises a question: if we don’t trust either of those things, what do we trust?

I don’t know whether the big society is quite the right description or line, but I’m enthusiastic, and I think lots of people in local government are enthusiastic about it if it is explained to them in the right way. They are enthusiastic about the idea that we increasingly need to create new forms of social power, and new ways for citizens to engage, do things for themselves and each other, and build up social capital in local areas. The obvious question about that is whether disillusion with two forms of power translates into enthusiasm for a third form of social activism. The answer is, yes, at least a bit. The polling data do not show that there are millions upon millions of people waiting for the rules to be removed so that they can get out of their houses and do more stuff, but there are still quite a lot of people who would like to do more and feel that they are blocked from that. That is something to build on.

It’s important to remember that we’ve spent a long time in this country with a lot of power at the centre. We haven’t been enthusiastically putting assets into people’s hands or encouraging social activism and local engagement. If you start from where we are now after a very long period of centralisation and say, "People don’t want localism", that seems slightly odd. They don’t want it because we have not yet had that discussion. We are embarking on that discussion and there is some evidence that the public can be convinced. In a sense, your point-correct me if I am wrong-is that the public do not really care where power is exercised, they just want it to work. I think that it works better at a local level, and people will see that.

Q235 Simon Hart: It is a bit more than that. To clarify, my concern is that we are giving people the indication that they will have power, but I am not convinced that they will. They may come out of this process slightly disappointed. I agree with you on the localism point, but from what I’ve heard, I’m not sure that we’re going to make it as easy as we suggest.

Jessica Crowe: That’s always the kind of thing that new Governments do. They over-promise and then under-deliver as things roll out. We have seen that before, so I think there is a danger of that and I think you’re right to be concerned about it. There is, however, potentially an opportunity to strengthen the Localism Bill, which is where a lot of this rhetoric will be enshrined-that is the intention. It needs to be strengthened in quite a major way to tackle that. If you have seen the very helpful essential guide, which has a set of six actions that Government need to take, the things that are in the Bill to deliver those are quite small. Arguably, lots and lots of small actions add up to one big impact, but I’m not sure that it does.

For me the missing link, as I said at the start, is the link back to democratically elected representatives. There needs to be more in the Bill about their role and their powers to hold all sorts of agencies to account. What is very interesting is that the Department of Health response on the White Paper consultation, as I mentioned, originally said that health scrutiny would go, but it now says that health scrutiny must remain; that it’s the role of democratically elected representatives to challenge health care providers; and that it is a really important safeguard for accountability and greater involvement of patients and the public. It extends those powers over all publicly funded providers of health and social care. On the one hand, you have really quite a strong statement from a not-very-localist Department about the importance of democratically elected representatives challenging all providers on behalf of communities, but on the other that is not reflected in all the provisions of the Localism Bill.

If we had that sort of principle enshrined across the board-it would need that cross-Government consensus, which I think we have agreed is not yet there, to deliver that-it would be a really important step to give that safeguard and to begin to build up more confidence. We ought to remember also that although public trust in Government is not high, people have more trust in their local councillors than-I’m sorry to say-in national MPs.

Q236 Chair: Sir Simon, do you want to comment?

Sir Simon Milton: I would agree with what Jessica has just said. To my mind, one of the greatest levers for improving people’s lives is greater democratic accountability. Some really interesting experiments are about to happen. One that hasn’t been raised yet, which is potentially quite far-reaching, is the Government’s policing reforms. For the first time, chief constables will need to look not up to the Home Secretary and Home Office officials for their rewards and brickbats, but to local people through local democratically elected representatives. I think that could lead to quite profound changes in policing in this country.

Q237 Chair: Can I just take you back to something you alluded to earlier, Sir Simon? Would London want unfettered tax-raising powers? Would that be a help to you?

Sir Simon Milton: I don’t think Londoners would want London government to have unfettered tax-raising powers, but there is no doubt that-

Q238 Chair: Well, fettered by the ballot box.

Sir Simon Milton: Yes. I think London is funded even more by central Government than any other local authority; it’s just the way the funding system has been set up. So it really constrains the ability of a Mayor of London to do innovative things. That is going to change if we get things such as retention of business rates, and tax increment finance where you are able to raise money for capital infrastructure that would be funded from a revenue stream of future local taxation being kept in the area. Those things would make a significant difference.

Q239 Chair: It strikes me, Sir Simon-I have said this to a number of witnesses-how timid local authorities are in demanding their freedom. If you look at every other western democracy, they would laugh out loud that that is the best we can ask for ourselves in terms of local government. People who are used to running all their own affairs and raising virtually all their own tax revenue have a history and tradition of being equals with central Government. In the situation we are looking at, if we are really lucky we might get the business rate back. Isn’t there a bigger vision out there somewhere in local government?

Sir Simon Milton: We are all creatures of our history, culture and tradition, if I may say so. Yes, if I compare London to our nearest competitor city, which would be New York, the Mayor of New York is financially autonomous. That has risks as well as potential, because, obviously, in the current recession New York has lost a massive amount of its tax base, as businesses have moved out, and it is in a worse situation fiscally than London. Nevertheless, the Mayor of New York is able to act in a way that the Mayor of London can’t, in terms of incentivising business to come to locate in the city and doing all sorts of things through leveraging the tax system. I think it would be to London’s and the UK’s benefit if we could do that, because it would give us a much stronger competitive position. On the other side, there are things that the Mayor of New York can’t do that the Mayor of London can. Their biggest complaint in New York is that the Mayor has no responsibility for public transport.

Simon Parker: I am struck by the fact that we are obviously creatures and, to some extent, captives of our history. I’ve recently been reading about the history of Birmingham. I’m struck, as anyone must be reading about Joseph Chamberlain in the 19th century, by the amount of autonomy that he had to run his city. It wasn’t very easy to get Birmingham to the peak of its civic glory-a lot of people didn’t want to pay high rates, and there was a huge movement against paying rates in Birmingham. One way that Birmingham got round that was to municipalise gas and water, and use the profits to pay for the redevelopment of the city centre.

What’s the modern equivalent of gas and water municipalism? That is an interesting question and I don’t have the answer yet. What things would enable local government to develop its own sources of revenue for itself? One interesting area might be something like renewables, where the feed-in tariff allows local authorities to be quite entrepreneurial. Swindon has done some quite interesting work on providing broadband spectrum across the town centre. Eric Pickles, of course, is an enthusiastic proponent of local authorities providing MOTs. That might be part of an answer.

I suspect that probably we are just starting out on a journey of immense change in how we do governance in this country. I hope that we are, and it is something that my organisation will promote. One reason why I want to stick up a little for local government is that, given the sheer scale of the challenge that it faces over the next two years, I suspect local authorities are coming before this Committee and saying, "Look, give us the powers to cope with that" and "Give us the room to cope with that, and let’s worry about the constitutional settlement in the long term." Of course it is not an either/or choice: you can have both, and I think we should try to have both. If there is a lack of ambition, which you detect, it may simply be because local government’s time scales at the moment are very short, because in many areas they are working out how to take 9% out of their budgets next year.

Jessica Crowe: It is also a feature of the fact that in lots of areas the direction of travel seems to have all been in the other direction, and has done over the past 15 or 20 years or longer. That is the case from the previous Government’s constant attempts to set up new funding streams going to other agencies, not local government, and, for example, creating a New Deal for Communities boards-often duplicating the activities and priorities of local government-with their own funding stream from central Government. It goes right up to now, when, as one local treasurer told me, the settlement has assumed that 10% of every authority’s schools will become academies, and has, therefore, taken 10% out of the LEA element of the funding. That is central Government determining local policy and practice even before it has happened. There are those pressures all going in the opposite direction from that we might want to see.

Q240 Chair: One hears, "It is awful and central Government should give us more money." One does not hear, "We could run our own affairs much better if we were allowed to". That’s what surprises me when I compare things with our near neighbours in the other western democracies.

Sir Simon Milton: I think that is an unfair statement. That is what local government has been saying. Unfortunately, we don’t necessarily win the argument. There is a very regrettable example at the moment of how things are going in the wrong direction, which is that the new Government are centralising issues to do with skills rather than let them be procured or commissioned and supported at a local level, where people have a much finer understanding of why you have very high levels of worklessness on a particular estate or wherever it might happen to be. What in my view should be happening is that those local authorities should be commissioning from the private or voluntary sector the services to tackle those particular problems instead of having nationally led contracts by the DWP, which I am afraid ultimately won’t work. Local government does say, "Let us do it, we can do it better", but is not always believed.

Q241 Mr Turner: I am going to say something that is thoroughly offensive to our guests-they are too London dominated.

Sir Simon Milton: You’re right.

Q242 Mr Turner: I know. I’m not blaming them. We aren’t consulting people in, say, Burton-upon-Trent, Oswestry or almost anywhere that isn’t in central London or occasionally Edinburgh. That worries me, because I don’t think we’re getting to real people. The second thing is that in my constituency, the Isle of Wight, there are some very good things and some very bad things. There are some things to do with locality, and the problem is I can’t work out which of these things are problems because of localism and which are problems because we don’t really want to have anything to do with it. The trouble is that the Government have been and still are, I suspect, pulling the things that are happening so that we have to do them.

Let me give you an example-bus fares. I find examples are always much better than generalities. Forgive me if I break the rules. On the island, I have been talking a great deal to people who haven’t had bus services recently. I’m not saying this is a majority, because I haven’t consulted the majority, but I take the view from quite a large minority. They feel it would be better if elderly people paid half bus fares, but they are not allowed to. The rules absolutely forbid it. The Government aren’t going to do it, because it was in our manifesto, so how do we get buses on the Isle of Wight? We’ve got some buses, but we’ve got worse services than we had last year. So what do I do? I suspect the answer is pretty clear-the bus companies should be able to set the bus fares, not the people nationally.

Sir Simon Milton: Or your local authority should be allowed to set up the same bus service and charge what it likes.

Mr Turner: God help us, but yes, I understand that it would be there.

Q243 Chair: Can I ask for a reply?

Mr Turner: I suppose it is a good idea to ask for a reply. What do you think?

Jessica Crowe: You’re right. You’ve chosen to invite three people who come from London. I was a London local authority councillor. I think we said in our submission that one of the things that would benefit a greater and more constructive relationship between the centre and the local is if there was more connection between central and local scrutineers. There could be great value. I would invite the Committee to come and meet an Overview and Scrutiny Committee that had investigated the issues that you’re concerned about, and you could see how councillors are going about investigating these issues. We’d be very happy to facilitate that kind of dialogue, and they could undoubtedly learn more from you. Indeed, we do facilitate that through some seminars that we organise with your Clerks. So there could be more learning between central and local elected representatives. That aspect could enrich your enquiries. I think Sir Simon’s absolutely right, and more freedom for local authorities to tackle those sorts of issues would undoubtedly be a better thing.

Sir Simon Milton: I am aware that in other local authorities-I am pretty sure it was Kent-they believed that there was market failure in the local bus services, so they actually went out and intervened in the market and bought buses to make sure that there was a bus service that could be run. I don’t know enough of the detail, but it might be worth looking at. The wider point is that your council or local bus companies should be allowed to do what is right for the local economy. There need to be locally elected people who can take that decision.

London is different from the rest of the country, I’m afraid, because we do have a devolved settlement and, in all sorts of areas, the Mayor of London departs quite happily from what is required in the rest of the country. Of two very recent examples, one is the settlement just announced for policing. Every part of the country has a ring-fenced grant for PCSOs, but in London that grant is not ring-fenced, so the Mayor can decide that, rather than have PCSOs, he could switch to warranted police officers. That is a local decision because we are a devolved part of government.

The other example is that the Government, nationally, are about to abolish, through the Homes and Communities Agency, standards for house building-or size standards. In London, we are being allowed to keep our own size standards which we have come up with.

So, it can be done, but perhaps this goes back to where we started and is where codification needs to happen. It needs to be set out that it is right that local areas have that power to do things differently.

Jessica Crowe: You can see that the centre would be rightly nervous about just letting everything go out without any clear understanding of how it was going to be exercised or of what the limits and demarcations were. If you felt that, that would be a benefit of codifying some principles, and if you have those expectations of how the devolved powers would be held to account for how they were exercised, I think that comes back to what could be done in the Bill.

For example, if local authorities want to put up a completely different sort of governance, then they have to say how they want it to be open and transparent-how they expect it to be more open, transparent and accountable than what they have got. They don’t have to do that if they are following one of the two prescribed options. If you were going to be local, as you say, then each local authority should be required to say how it intended to be held to account locally. It has to go further than elections every four years-it should be what happens in-between times, how the decision making will be open, how it will be made clear how people can influence those decisions and how organisations will be accountable locally. If you could do that and set out those expectations, that might give some comfort to the centre, enabling it to let more go.

Simon Parker: I am far from insulted-although I am a proud Londoner-but by one of those happy coincidences I was actually in Burton-upon-Trent about three weeks ago, talking to the leader and the chief executive, which was very interesting.

The only point that I would add, because I think we have heard a very good response, would be to go back to the point that I made at the beginning, which is that I completely agree with you. The idea that we are going to codify in a semi-constitutional way a new relationship around government, and that it is going to be done by MPs and people like us in London, is not the way to do it. It needs to emerge from a national debate and a discussion that leads us to a sustainably localist change in our governance.

Q244 Chair: Who would lead this debate? You are assuming that it sort of pops out of thin air. We have got a very highly centralised society. Who on earth would initiate such a debate, particularly when political power is at stake? You are, therefore, asking people that run the centre to give power away and to institute a national debate. It seems rather hopeful.

Simon Parker: We have a Government in place now who have staked their political fortunes on the localism stuff actually working. It doesn’t seem beyond credibility to ask them to take the debate out to the public. I hope that it actually turns into something that looks a bit more like a movement. It seems like something that local authorities themselves should want to lead.

We have a Government who have explicitly said, "We want power out there." We might not believe them and might be sceptical, but they have said it. They have shown in some of their early legislation and some of the early things they have done, that they are prepared, to some extent at least, to put their money where their mouth is. Let’s challenge them to go further.

Jessica Crowe: If something was enshrined and if there was some backsliding and people did not want to do it, they would be forced to justify that. That would be one of the benefits of putting on a statutory basis some of the principles in the European charter, for example. Probably, like Sir Simon’s Concordat, that is more honoured in the breach than in the actuality.

Q245 Mr Turner: A good thing for my constituency-I suspect this is where there is a difference between Simon and me-is that we are happy to take decisions locally. We very much hate the idea of decisions coming over the water. I am a bit surprised that Simon found that people don’t care. What is happening is that people cannot get the things done that they want to have done, because there are so many things in a list of what they are required to do. It is going to be a challenge to get people in London-and Southampton come to that-to lay aside their ideas of what we ought to be doing and let us get on with the things that we want to get on with. Are you happy about allowing people in the Isle of Wight to make those decisions-all of them? If not, the problem is what to do, because you are immediately denying us the chance.

Sir Simon Milton: I think the principle must be yes. Of course, I would support the right of people in the Isle of Wight to make their own decisions. The constraint is that you don’t control the money-you have money that comes through the Government grant. While that continues to be the case, the person who holds the purse strings will inevitably be able to exercise a great deal of influence.

Jessica Crowe: What there should be, even if that situation continued and local government did not have the same diversified sources of its own income, is an acceptance that although central Government might control the funding and therefore have some expectation of the sorts of things that they feel ought to be achieved, the ability to say how those things are achieved should be with those who know the area best. Sir Simon’s example about skills and worklessness is a good one, in that such matters should not be commissioned at national level. Local institutions that are accountable democratically should have the ability to do that. They have said how they are going to be transparent about how they make those decisions and about how people can influence them locally, so they can justify that. They should be able to say how they want to achieve the broader national outcomes that it might be legitimate for central Government to expect, given that the funding is coming from the centre.

Sir Simon Milton: I seem to recall-I will probably get this wrong-that one of the big political rows on the island in recent years was around the restructuring of schools. Should it simply be a matter for the Isle of Wight to decide whether it wants middle schools or not, or is it right that a national Government should say, "We are not happy with the quality of what’s being produced in this particular area, and we believe that it would be better if there was a restructuring of schools"? I think that the national Government have a legitimate say, not least because they are also providing the money.

Chair: Currently.

Simon Parker: The point that Sir Simon and Jess have both made is that to some extent we need to rethink the line between central and local responsibilities. I don’t think anyone is saying, "Let’s turn into a federation in which the Isle of Wight is its own state and has absolute autonomy." That would not be a good thing for the Isle of Wight, because there are things that central Government quite usefully do. In lots of European countries, which we look to as examples of localist states, it is frequently the case that there are reorganisations and national initiatives on local government, but they are just handled quite differently. So, I don’t think I know the answer about where you draw that line. Clearly, what we are all proposing-and I think what you have been proposing-is that we must shift that line in favour of the local decisively, and that we should then seek to lock in some protections to stop the kind of backsliding that Jess has identified as a potential problem. If we can get the Government to commit now-in the first flush of their localism-to a referendum and some principles, later in the Parliament, as they come under more pressure to centralise things, it becomes harder for them to do that. They then at least have to think twice before they do it, and that would be a thoroughly good thing.

Jessica Crowe: It would also make them be transparent about it, which the Government have said is a key thing that they want to promote more of. If there were a set of commitments and principles that were expected to be in play for how central and local decisions are made, the Government would have to be transparent about where they wished to derogate from those. They would have to justify that and they would be held to account for saying, "No, we think this is something where the national prerogative is stronger." They would have to justify it, it would be open and transparent, and people could question it.

Simon Parker: The default should be that you don’t, rather than you do, and if you do, you have to explain why.

Q246 Chair: I will move on to Sir Simon, in respect of the experience you had around the Concordat, which I think was a great effort to do something serious in this area. Perhaps it hasn’t quite turned out the way that many of us wanted, but are there things that we can learn from that? What are the main things? For example, it was a voluntary, non-statutory code, so is one of the lessons that there should be some statutory force behind that? If so, do you feel that there has to be something that embeds a code beyond the disposal of the next incoming Government, who may just decide to abolish it by merely changing an Act of Parliament?

Sir Simon Milton: The real lesson to be learned from that was that if you have a code or concordat without any form of policing mechanism or form of redress, it will fall into neglect very quickly, so you would need to have some mechanism for righting a wrong, or for dealing with a grievance under the code.

Q247 Chair: So that really means statutory.

Sir Simon Milton: It would, yes.

Q248 Chair: On the question of there being a settled answer on the principles that should apply in respect of local government and central Government, is there a way of putting that beyond the reach of easy repeal? Did people think about that at that time?

Sir Simon Milton: Is there a way of putting it-

Q249 Chair: Just beyond repeal following a change in Government, so that it is more lasting and actually a deal people can work with for 20 or 30 years.

Sir Simon Milton: In the absence of a written constitution as a context, that is quite hard in this country. It’s not like the United States, which fought a civil war over states’ rights and is very clear, or like Germany, which has a very strong federal system. We don’t have that in this country; we don’t have a written constitution of that kind. So it’s quite hard to say, "Here is one area of governance that supersedes other issues that are subject to changing opinion." You can have a party fighting a general election on a platform of restructuring local government. Are you going to say that if it is elected on that platform, it shouldn’t allowed to implement it? I think that is quite hard.

Q250 Chair: There is, of course, one area where we do say that you can’t just simply repeal without the second Chamber consenting, and that is in the extension of the life of a Parliament-in the Parliament Act 1911. Some witnesses have said we could have a section (b) there that says that if there is an agreed division of rights and responsibilities between the locality and the centre, that shall not be passed without the consent of the second Chamber. So, effectively, were the rights of local government or even national Government to be done away with, you would have this fall-back position of the second Chamber being able to say, "I’m sorry, but on this occasion, we can say no." I’m not saying that they’d do it whenever there was an organic change in the relationship, but if there was something fundamental.

Sir Simon Milton: But they’re all going to be different. Excuse my ignorance on this, but how would that be different from any other piece of legislation on which you need the consent of the second Chamber?

Q251 Chair: It is true that it remains an Act of Parliament, but it has some sanctity for being the 1911 Act, because so many other things were done at that moment. So, in effect, it has a certain resonance beyond a normal statute.

Jessica Crowe: That sounds like it could be a good parliamentary mechanism for achieving such goals, but I think it is really important to ensure that any agreed code is not tied to things that are going to be ephemeral. Simon’s point about the LAA targets and linking the Concordat to something of that nature almost condemned it to becoming out of date very swiftly. So it would have to be based more on some very clear principles and commitments than on any specific delivery mechanisms, or anything of that nature. It would have to be general, but not so general that it is meaningless. That is the challenge.

Q252 Chair: The right of local government to raise its own revenue has been an example put to us.

Jessica Crowe: Yes, and some of the other principles that are in the European charter. One of them states that decisions should be made at the level closest to the citizen.

Q253 Mr Turner: Taking your example of buses, in London, are buses local or regional?

Sir Simon Milton: Regional.

Q254 Mr Turner: Why?

Sir Simon Milton: Because London is a functioning economic unit, and it would be completely impractical to have buses run at a local level. It is one of the best examples of a service that has to be delivered strategically.

Q255 Mr Turner: I hear the answer, but it hasn’t persuaded me of anything.

Sir Simon Milton: The reason being that there are 33 boroughs in London, so you could ask, "Why aren’t there 33 local bus services?"

Q256 Mr Turner: No, I wouldn’t. I would ask why there isn’t a private bus service.

Sir Simon Milton: All the bus services are private.

Q257 Mr Turner: No, all the bus services outside London are private. Yours are all controlled.

Sir Simon Milton: We have bus regulation. You are absolutely right that that is a difference, and it is another example of why London is different. When bus deregulation happened, London was excluded. As a result, London is able to have a single controlling mind, if I can put that way. That is Transport for London, which can arrange bus services to allow people who live in Croydon to commute to Canary Wharf.

Q258 Mr Turner: Let me take a different example. Southampton buses aren’t controlled by Southampton.

Sir Simon Milton: I think they should be. Personally, I think that was a mistake by the Conservative Government.

Q259 Mr Turner: But people outside Southampton control Southampton buses.

Sir Simon Milton: I see the point you are making. There is actually a very live example in London, because we unsuccessfully sought to persuade the Government that the Mayor of London should have more control over rail commuter services serving London, because there are so many people living in Kent, Surrey, Sussex and Essex who need to get to London to work. We think that they get a pretty shoddy service, and we think we could improve it if we had more say over it.

Q260 Mr Turner: The problem here is that you’re just sectioning. You are not having the lowest local definition, but going up the chain. That is what I thought you were saying should be different.

Jessica Crowe: The definition of the principle of subsidiarity is the most local level appropriate.

Q261 Mr Turner: But who is to say that Sir Simon is right and I am wrong?

Chair: If I can help, Andrew. I think that the Government are effectively saying that this is the settlement.

Mr Turner: They do this every day of the week, and they change their mind.

Chair: I may be putting words in the mouths of the witnesses. The witnesses can speak for themselves, but I think they are saying that there are some things which the Government should not be able to change their mind about every week, because it is not an appropriate power at their level.

Mr Turner: But whose is? Who makes the decision? If the Government do not make the decision, who is to make it and why should it be what Sir Simon suggests, what Simon Parker suggests or what we suggest?

Chair: I think they are suggesting, if I may again put words in their mouths, that there is a better way of doing it than the Government deciding. That better way, to answer your question, is that there is a reallocation of responsibilities and rights so that things which should appropriately be done locally are done by the locality, and that in future, if I may paraphrase, it will be their right and responsibility to decide that, not the Government. But there will, none the less, be an interaction on things. There will be things that are not absolutely clear.

Mr Turner: But the problem is, I’ve got a hospital on the Isle of Wight and I want it to remain there but people elsewhere in the system say it would be better to have it in Southampton. The decision has fortunately been made and it remains for the moment, but how do you allocate? This is the thing that really worries me. Nobody is allocating these things. Or rather, if they are, they might be changed.

Chair: I don’t think a constitutional settlement, which is a broad-brush reallocation of responsibilities can deal with a very specific matter. We can’t write a constitution or a code to deal with one hospital. However, the underlying principle would be that decisions should be taken closer to the place where they are most affected. I can only guess. In this case if you have a human rights framework, which we have in this country, people are entitled to decent health care and people in that locality could have a greater say than they do at the moment when these decisions may be made in Whitehall. I think I’d better move on, if I may, Andrew, to Simon.

Q262 Simon Hart: I have a very quick and sort of related question. It just requires rewinding a little bit, funnily enough to the disagreement that Andrew Turner and I had earlier on. There is a reason for this. Oddly enough, while I said that people didn’t care, actually I think that people would care deeply about it if they felt that they could exercise any real power. That is the real problem. There is a great sense of frustration; if they thought their input would translate into some positive changes then, of course, they would care very deeply. I think they don’t care because it is more out of frustration than apathy. I just wanted to clarify that.

The question I wanted to ask was this: is the democratic structure-the current organogram of local and national Government, whether it is in the UK as a whole or Scotland or Wales-sufficiently sophisticated, contemporary and robust to be able to deliver the things that we have talked about today? I might have missed this. Will we need to change the democratic structure at local and national level to overcome some of the frustrations we have talked about?

Simon Parker: I am always struck by a quote that Geoff Mulgan used to use a lot. He said that local government isn’t local and doesn’t govern. What he meant specifically was that local government often isn’t small enough to engage democratically with local people and neither is it big and strategic enough to be able to manage big services. If we were starting with a blank sheet of paper, I don’t think that we would design the structures and boundaries that we have now. But, none the less, we have those and they are rather difficult to shift. One of the things that is interesting about the cuts is that over the next few years or so you will see a sort of organic restructuring of local government. What I mean by that is that there will be district councils, but also small metropolitan councils-some of them already say this-that will not be financially viable by the end of the spending review period as standalone organisations and so they will merge their services in one way or another. They will share things. So we will see an organic restructuring, and once we have done that, we may ask questions such as whether we need quite so many councillors in area X or area Y. I think the point you’re trying to get at more particularly is about the quality of local democracy.

Q263 Simon Hart: Yes, and I should have added, to make it easier, that I’m also interested in the relationship between the executive and the non-executive, which varies hugely from region to region, and will, as a consequence of what we’re talking about, change even further. If you could put that in the mix as well, I would be grateful.

Simon Parker: Jess will talk more about this but, for me, one of the problems with the way we’ve done local government over the past decade is that targets, audit and inspection have pushed councillors into the role of elected service managers and left most councillors sitting there scrutinising them. Particularly as local government moves increasingly into more of a commissioning role and less of a direct service delivery role, it doesn’t feel as though that kind of "elected service manager plus scrutiny" role is enough, so we need to think very carefully about how to find new roles.

Obviously, one of the issues, as you’ve said, is that local people are often frustrated that they can’t get things done. Increasingly, we need to see back-bench councillors taking on a role almost as stewards of the-you’ll all groan if I say "big society" again, but you know what I mean. Isn’t there a role for those ward councillors in leading, organising, growing social capital and pointing it in useful directions? It becomes much less about seeing local democracy as being about the workings of the town hall, and more about, particularly for back-bench councillors, being involved in local communities, catalysing them, helping them and then bringing that knowledge back into local government. In a way, what we’re seeing at the moment is the end of the idea that-I’m exaggerating a little for effect-councils will no longer shape places in quite the way they used to. The idea is that people will shape councils a lot more. I think back benchers have a huge role in that. They don’t play that role in lots of areas now, but they need to.

Q264 Simon Hart: So would it be fair to say-this is my final question-that there are circumstances in which the executive may not be accountable but is competent? Does what you say interrupt that in any way? As we know, there are some very competent executives and some very competent cabinet-led local authorities, yet they are arguably, and frequently, accused of being pretty invisible-the opposite of transparent-and unaccountable.

Jessica Crowe: That question is really important. If there is to be a shift of power to the local level, there needs to be a shift of accountability as well, so we need to strengthen the local accountability arrangements. As Simon says, centring it around the locally elected councillor is really important. I think that what needs to come much more to the forefront of the Localism Bill is what the role of the local councillor is in keeping an eye on all this stuff. It’s not about being quasi-regulators and inspectors and having all the power and control, because what is envisaged is a much more messy, diffuse system of service delivery by a range of agencies-public, private and voluntary-but the local councillor should have the crucial role of being able to challenge and question all those bodies and hold them to account in public-on behalf of the public and taking evidence from the public-and the public should see the councillor and the scrutiny committee as the public forum to which they go to raise their concerns and get them fed back in.

One of my concerns about some of the proposals about transparency is about what happens as a result of publishing every item of expenditure over £500. If a member of the public-an eagle-eyed armchair auditor-is concerned about something they have spotted, what do they do with that information other than send it to the local paper and make a big hoo-hah? There needs to be a mechanism to feed that back into the formal decision-making processes. I’m talking about empowering local councillors to play that role and ask questions, no matter who is providing the service that people might be concerned about, and those providers and commissioners having to come and give evidence. At the moment, they don’t. They can be invited, and lots of them do come, because they see it as a public relations thing. I’m talking about making sure that they are expected to come and give evidence and to say what their response is to the recommendations. It should all be out in the open, with local councillors driving that.

Sir Simon Milton: On the issue of quality, when you have a system that for so long has taken decision making away from the local level, you get good people not putting themselves forward, or not enough good people. The biggest difference between today and when I started as a councillor 22 years ago is that now very few business people stand to become councillors, because they just don’t see that as being worth their time. If the Government’s agenda does one thing, hopefully it will encourage a wider range of people to come forward so that the great Victorian growth in local government, which was actually business-led, might be something that happens again.

One thing that councils can do now that would be very helpful, which I did when I was a council leader, is to give back-bench councillors their own meaningful budgets. We gave £100,000 per ward so that they could actually make the decisions and use it more or less unfettered, subject to legalities, for the betterment of their local community. Most of the time, it was done through voluntary organisations running lunch clubs for elderly people or whatever.

Q265 Andrew Griffiths: I apologise for my late arrival. I was held up on constituency business and by public transport.

I have two quick points. First, we hear a lot about the general power of competence. The general power of well-being did not work in the ultra vires problem. A lot of people are putting a lot of store on giving local authorities greater power through the general power of competence. Is it going to work? Where are the problems? Are councils going to use it?

Secondly, I have a quick question for Simon about elected mayors. You are the pilot for elected mayors. You have seen how it works. What lessons do we need to learn from that in relation to going forward with rolling out elected mayors across the country? Is there a need to address it specifically if we codify the relationship between local and central Government?

Sir Simon Milton: I support the Government’s proposals for more elected mayors, but not if that means simply calling a council leader an elected mayor. They have to have wider powers and responsibilities. For example, it is intended that the elected mayor in Birmingham, Manchester or wherever will be the elected police commissioner for that area. They should have wider powers for skills, for place making and for things that will actually change those areas. Do not just call a council leader an elected mayor and think that the job is done. It needs something much wider than that.

The biggest thing that an elected mayor gives is a voice for the area, and greater accountability. That is a tribute not just to the Mayor whom I work for, but his predecessor. One of the reasons why London has become such a dominant economic force in the last decade is that it had single accountable leadership, which meant that we could bid for things like the Olympic games. We would not have got the Olympic games for London if there had not been an elected voice in London. We would not have the transport settlement that we have if we did not have somebody who could argue-if not on equal then nearer equal terms-with the Government of the day. Those are the really powerful reasons why we should have elected mayors, but they need to have a broader remit than current council leaders do.

Simon Parker: I was sort of dreading the question about the general power of competence, because the Bill has just come out and we are still trying to work it out. There are people in my organisation who are more expert on this than me, and they are currently trying to work it out themselves. It is extremely complex and a very long bit of legislation.

It is a very important philosophical shift. The old power of well-being was giving local government a new power to do some stuff. This is doing the reverse in a sense. It is saying that we are going to change round the environment so that, if there is not something that bans you from doing it, you can go ahead and do it. That is a very welcome move. The practical question is how much does it really allow you to do that which you could not do under the well being power?

The LAML case has been brought up. It is about a local authority insurance mutual. I cannot remember exactly, but I think that Brent was told that it could not enter into it. Opinion is still divided in the legal community about whether that case really should have stood and whether the council should have made its case more powerfully. There are lawyers I have heard who would say that, probably, you could have covered some of that with the old well-being power.

The interesting question will be, in practice: can local authorities use this new power to do anything new? Is it practically going to make much of a difference? Philosophically, it is absolutely an important statement of intent; practically, we will have to wait and see, and some of that depends on what kinds of strings and reserve powers might be attached.

Sir Simon Milton: I think it is going to take time. The psyche of local government has been so suppressed for so long that it will be a while before people start to use the power of competence to its fullest extent. I think you will find that in different parts of the country you will have different people pioneering things, and then others will say, "Oh, look what they’ve done-we could probably do something like that." So it will take time for the culture to shift.

Jessica Crowe: I think that is right, because if it involves local authorities seeking to take powers over something that other people have been used to exercising, it will be challenged. It probably needs to go along with some of the other things that we have talked about this morning, such as a principle of subsidiarity. If it is a power to do anything that you are not proscribed from doing in law, there could be lots of laws that proscribe you none the less, so the reality of the competence would be quite narrow. So it needs to go along with some other principles.

Q266 Andrew Griffiths: Do you think there is a concern that officers, in particular, being risk-averse, will act as a drag to councils using it?

Sir Simon Milton: That could be the case. But, again, I think this will be a matter of a cultural shift. Where you have strong elected leadership-maybe mayors will be in the vanguard of that-it will push those officers to do things that they might feel reticent about to start with.

Chair: I am delighted that Andrew made it, because I know he is a keen attender and not normally late. Great to see you, Andrew. Thank you all, colleagues, this morning.

Can I particularly thank our witnesses, including Bill, who had to leave early? It has been a stimulating session and we have a lot more questions in our minds. I don’t know whether that is a good thing-we are looking for some answers-but we have certainly had a good exchange this morning. I thank you all for taking your valuable time to come and see us today.