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[Relevant Documents: The Sixth Report from the Communities and Local Government Committee, HC 33, Session 2008-09, on The balance of power: central and local government, and the Government response, Cm 7712.]
Motion made, and Question proposed,
That, for the year ending with
(1) resources, not exceeding £17,434,832,000, be authorised, on account, for use as set out in HC 33, and
(2) a sum, not exceeding £17,433,673,000, be granted to Her Majesty out of the Consolidated Fund, on account, to meet the costs as so set out .-(Mr. Watts.)
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Before I call the Chairman of the Select Committee, may I just observe that there is less time available for this debate than there was for the former debate? I will not impose a time limit but, given the numbers of hon. Members who I know wish to take part and in an effort to be as inclusive as possible, a rough tariff of about 15 minutes per person will apply.
Thank you, Mr. Deputy Speaker. I shall try and moderate what I say to make sure that there is ample space for other Members.
I want to begin by setting the scene for the report from the Communities and Local Government Committee on the balance of power between central Government and local government. Over several decades, the pattern in this country seems to have been that of a pendulum swinging backwards and forwards. First it lurches towards centralism, then it swings back in the other direction towards localism before swinging back towards centralism again. The overall trend in the past century has been towards a reduction in the numbers of elected people, if one takes all levels together and excludes MPs, and there has also been a substantial reduction in the powers of local government. However, although that has been the overall trend, the pendulum has undoubtedly swung the other way too. Those of us who were in local government before we came to this place will certainly have experienced times when local government was even more constrained than it is at present.
I think that we need to be aware that the pendulum that I have described exists. At the moment, it seems to me that there is a willingness-or at least an expressed willingness-among all the political parties to lurch towards localism, and away from centralism. The Select Committee's report is therefore extremely timely, in that it looks at what it considers to be appropriate ways to give more power to local government and ensure that we have a much less centralised process.
Those hon. Members who have read the report will be aware that, in coming to our view, we took evidence from a number of witnesses, and that we also visited Denmark and Sweden. We made that visit because local government in those countries has a lot more freedom than is the case here, and also runs a wider range of services. It was interesting to see their system in operation and to discover that it was not quite as localised and free from central control as perhaps one might have thought from looking from the outside.
I also ought to make the point that we have received the Government's response to many of the recommendations in our report, but we agreed with the Government that we did not want their response to all of them, because at that point they were still consulting on some of the changes that they had proposed. We felt it would be inappropriate for the Government to say either that they had not come to a view and would do so at the end of the consultation or that they had come to a view when the public consultation was still going on-that would have looked somewhat odd. We have received only a partial response, but that was by agreement and we hope that the final response, including the Government's response to the public consultation, will be given at the end of this month.
I wish to go through a few of the main points in the report to set the scene. First, I wish to restate that, notwithstanding the swings back and forth in the relationship between local and central Government in England-of course, the report was considering only the arrangements in England-we have one of the most centralised systems in the whole of Europe. We discovered as we were undertaking our investigation that this is not simply a matter of local government and central Government imposing controls; it is about a whole culture in this country of centralism. We feel that that manifests itself in the way in which even though there has been a lightening up of the controls, some councils have been backward about pushing the margins and taking on the freedoms that they have. It is as if they have got into a culture of waiting for direction from the centre, even when they have the freedom to do more.
The culture of centralism certainly affects the public at large. If they were asked whether they would like more decisions to be taken locally, they would generally speak in favour of that, yet they complain if there is any variation between the service delivered by their own council and that delivered by the one next door-this is the so-called 'postcode lottery'. Of course, there cannot be increased freedom and flexibility for local councils without variations in outcome. Therefore, the public are in a bit of a schizophrenic mood about whether they really want their local council to have the freedom to decide on the level and standard of services or whether they would prefer central Government to lay down standards and their local council to be held to them.
This is also about the press and the media. The example that we cited over and over in our report was the baby P case in Haringey. I do not want to get into the details of that but, in essence, as soon as it happened, horrific though the case was, it was being discussed in Parliament, the Opposition were requiring Ministers to respond and Ministers felt that they had to respond. However, in reality, the case involved a failure at the local level on the part of the council, and the police and the local health service-they are the ones who should be held to account. The local councillors and the local council officials are the ones who should have been put on the spot by the media and by the people in the borough concerned; they should not have gone to central Government level to take people to task. Our colleagues in Sweden and Denmark said that that would not have happened in their countries; if there was a comparable case in those countries, the national press would not demand that the Secretary of State stand up to comment.
The hon. Lady makes a powerful point. As a result of that case, the Badman review is taking place. It is trying to get local authorities to implement new inspection regimes on home education-that issue has been a feature of petitions in this House. Such a regime will add costs; indeed there will be a tougher regime on home educators than in respect of those on the at-risk register. We seem, again, to be going full circle, rather than allowing local authorities to sort out their own problems.
I am not going to comment on the detail of that, because I suspect that I take a rather different view from the hon. Gentleman on that review, the proposals and the objections. However, this is an example of where a decision is being taken centrally, although it is a matter of debate among members of the public as to whether that is the appropriate place for such a decision to be taken. On child protection, the public have proved themselves to be resistant to leaving local councils to get on with it and appear to have much more confidence in central Government.
In parenthesis, in another inquiry that the Committee has completed on the Supporting People programme, it was very interesting that many of the people who gave us evidence on services for people with drug addictions, the vulnerable homeless and victims of domestic violence-groups who might be perceived to have a pretty low profile with the local electorate-were very twitchy about removing central controls. They were not confident that local councils would respond to the demands. I am not saying that they are right to be so, but that simply is a fact. The people supporting those groups had more confidence in central Government than they did in local government.
I simply want to make the point that was made to us very forcefully by Dr. Vernon Bogdanor, who is of course a constitutional expert. We asked him whether we needed a constitutional change and he said that we need a cultural change. This is not just a question of changing the rules-it is much more wide ranging than changing the rules and regulations, and who decides them. We need a huge cultural change, which it is probably a bit beyond Parliament to create. Obviously, we should do what we can.
That is the opening point that I wanted to make about the background. On the central and local relationship, it is also interesting that although the Government, in their evidence, could point out a number of steps that they had taken that appeared to reduce the level of control over local government and to start nudging it slightly towards greater localisation, the Government's assessment of how far they had gone down the road towards lightening up was a bit further down the road than the progress perceived by most councils.
The Committee effectively recommended that councils must be given much greater flexibility in the breadth and standard of services that they deliver and much greater power to vary that as well as a much greater ability to raise a bigger proportion of their income, and not to be so reliant on the Government. Let me touch on those aspects of the report, but before I do so, I want to make what might be considered a philosophical point. We were in favour of more devolution not simply because locally determined services were likely to be more responsive to local need and therefore more effective and, probably, more cost-efficient, but because we felt that it would strengthen local democracy to have much more decided locally. That itself would strengthen the democratic fabric of the country. Democracy is seamless and if people had a clear understanding of, and greater involvement in, local democracy, they would be more likely to feel that they had more of a commitment to, and involvement in, the democratic process at a national level and a regional level, if appropriate, too.
The second point about allowing councils to raise a bigger proportion of their income is that we cannot get local accountability unless we have much greater local control of income and spending. Otherwise, there is no obvious link for local voters between what they are paying in council tax and the quality and breadth of the services that they receive. At the moment, some 75 to 80 per cent. of the councils' income comes, in one way or another, from central Government grants. The relationship between the level of council tax and the quality and breadth of services is therefore pretty minimal.
May I proffer another example? Although the devolution to London was extremely welcome, we ended up in a situation where the council tax made up only one twelfth of the revenue of the mayoralty and the Greater London authority. The current Mayor has ended up reverting to the fare-box to secure a significant hold on the finances. Perhaps if the business rates-or some element of them-had been given to the Mayor, that would have shown an even greater endorsement of the Government's ambition to devolve and to have that direct relationship between the voter and the Mayor in the control of the finances.
The hon. Gentleman anticipates one of the specific proposals-albeit not in relation to the London Mayor-that the Committee made when we got down to the detail of our recommendations on local government income. He makes the point that under the existing system, especially when there are several layers of local government, it is extremely difficult for voters to understand exactly what they are paying for and the relationship between local tax-whatever it is-and the quality of services. In my view, the clearest form of accountability comes when someone is able to see a relationship between what they vote for, in relation to paying, and the services that they get.
On giving greater autonomy to local government, we certainly felt that central Government should reduce the number of performance indicators and specifications that they make on the detailed way in which services should be provided. We felt that the subsidiarity principle should be adhered to properly, and that local government should be given a power of general competence, if it was demonstrated that the existing well-being powers were falling short. At the time when we concluded the report, the court case on a mutual company had not concluded, and we would now say that there should definitely be a power of general competence because it is clear that the well-being powers did not deliver quite what they were supposed to.
The Committee felt that there should certainly be statutory rights for local communities to determine the way in which public services are implemented and co-ordinated in their areas. We thought that the power of councils to vary service standards should be limited, in that there should still be reasonable national minimum standards below which councils should not have the freedom to reduce services. This is a difficult issue, but we got the sense that the British public were not quite ready for councils to have complete freedom to reduce such things as the level of education provided or standards of street cleanliness. While there should be national minimum standards, however, councils should have the freedom to vary above them. Obviously, that suggests that the standards should not be so prescriptive that no reasonable council would want to vary from them one way or another. We certainly feel that councils should have oversight over the full range of public services in their area and the way in which they integrate with each other, as I shall point out when I set out our suggestions on policing and health care.
The Government's response shows that they at least partially recognise what we are saying and that they are moving in the right direction. However, I think that we would conclude that they are still not moving far enough and that they need to lighten up considerably more.
Health care and policing, especially neighbourhood policing and public health, are incredibly important local services, and there is already a degree of co-operation between local councils and those services through crime and safety partnerships. Several local authorities have pooled budgets, particularly with the NHS, and some make joint appointments. For example, my council's director of public health is a joint appointment, so there is already some joint working. However, the Committee feels that a local authority, as the only elected local body, should have much more direct control over other public services.
Specifically on health care, we suggest that where there is a coterminous primary care trust and unitary authority, the Government should consider introducing a pilot scheme that effectively gets rid of the PCT board and replaces it with the council. We recognise that that process would be relatively simple in such areas, whereas it would be difficult to introduce throughout the whole country because the boundaries of PCTs and councils are not coterminous in many places and a huge reorganisation would be necessary. However, it would be worth trying that out in some areas. We also suggest that, in the absence of such a development, the Department of Health and the Home Office should at least work much more closely with the Department for Communities and Local Government to establish local authority commissioning models for both health care and local policing.
When members of the Local Government Association representing the three main parties were asked in our evidence session about democratic control over police services, it was extremely impressive that they spoke with absolutely one voice. I understand that the one voice with which they spoke differed from each of the parties' Front-Bench policies. Essentially, that one voice said that we should certainly have local, democratic control over the police, that there is already a local, democratic body-the council-and that it should have such control. The members of the LGA were root-and-branch opposed to directly elected police chiefs and police committees. We were extremely impressed by that, and I think that we largely agreed with them.
Ministers in the Department for Communities and Local Government have at least some understanding of local government and some feeling for devolution to local government, but we were unimpressed by the Ministers from the Department of Health and the Home Office, who did not seem to have much understanding of how local government worked or how it impinged on their Departments. I suspect that we would have gained a similar impression had we asked for a Minister from the Department for Children, Schools and Families or any other Department.
That points to a problem: even if DCLG is signed up to devolution, it has a big job to do to persuade the Ministers and civil servants in other Departments whose responsibilities impinge on local government to take the same relaxed view; to recognise the virtues of devolving power to local councils; and to realise that devolution might lead to departmental policy delivery locally that was more effective and cost-effective than it would be if they continued to try to micro-manage it.
On local government finance, we expressed the view that the Government must consider a variety of options to increase local government's revenue-raising powers. The issue is particularly relevant, given the country's likely economic climate and the need, as we come out of the recession, to rein in public spending. Local councils should be given greater flexibility in terms of revenue-raising powers, because future extreme funding shortages, as constrained by central Government, will mean that, even if councils are given increased powers to take decisions, they will not have any effective ability to vary services; they will simply be given flexibility in terms of what to cut. Indeed, local councillors will once again be held responsible for cuts that they have no power to vary. It is therefore particularly important that we increase local government's revenue-raising powers.
On local government taxation, the Committee concluded that there should be a supplementary local income tax alongside a property tax, and a corresponding reduction in central income tax rates so that the overall tax burden remained the same. Obviously, that could not be introduced tomorrow, but it is a potential long-term solution to the balance-of-funding problem, and one that the Government should seriously consider. Unsurprisingly, they immediately responded by saying that they had no plans to undertake such a project. I shall leave it to the Minister to explain why.
It is difficult to blame one set of people at one point. The fact is that, over the decades, a variety of people have, if I may describe it this way, bottled out. On the other hand, this country's experience of changing local government taxation systems has been an unhappy one, and I can absolutely see why central Government of whatever party, having been rather burnt by the poll tax experience, take the view that minimal and incremental change is the best way forward.
Personally I think that incremental change on council tax reform, for example, could go a lot further than it has; all Governments seem to be extremely timid about the matter. To be fair, I understand that. We all know that when a system is changed, there are winners and losers. The winners take what they have got, keep quiet and carry on and the losers make a lot of fuss. It is extremely difficult. Sooner or later, however, somebody will have to bite the bullet because we cannot carry on nibbling away at the system and changing it incrementally.
We certainly reiterated the view that the Committee had taken before, which was that the business rate should be relocalised. Speaking personally again, I should say that I was on the other side of the argument in the sense that I was in local government when the business rate was taken away. It was alleged that some councils were bleeding businesses dry because the businesses had no vote. However, I recall that there was never any concrete evidence that that was happening on a grand scale. It seemed to me at the time a pretty poor evidential basis for reducing-removing, essentially-any accountability between a local council and its local businesses.
The fact that business rates are not localised means that whether there are active and successful businesses in an area makes no difference to the income of the local council, which will get exactly the same amount of redistributed business rate back. The relocalisation of the business rate is an extremely important issue.
On the issue of the business rate and how councils might misuse it if they got it back, I am sure that my hon. Friend recalls from her days in local government that when domestic and business rates were levied, there was a link between the two; councils could not increase the business rate and hold the domestic rate down. There was always that local accountability and democratic control over overall increases in rates.
Absolutely. Of course, the Government have introduced the supplementary business rate, although that is largely for Crossrail. Schemes have been introduced that allow for business income to be raised locally against specific local projects. That has re-established a relationship between local businesses and local councils and demonstrated how local businesses benefit from local spending. Their acquiescence in contributing towards that spending is also encouraged when they know what it is for.
Unsurprisingly, the Committee reiterated its opposition to capping. When there is capping, democratic accountability between a local electorate and their local council is essentially removed and central Government try to second-guess the decisions of local councils. If local councils believe that they are delivering such a good and improved service to their local electorate that their local electorate will be willing to pay higher tax, the Committee and I felt that that is for them; if the local electorate did not agree, they would know what to do. We reiterated our view that capping should go completely.
We also considered forms of grant allocation and recommended some improvements. We were very constrained about what we could suggest in relation to Government grants. During our visit to Denmark and Sweden, it became apparent to us that the level of equalisation required between different authorities in those countries is small compared with what would be required in this country. The income difference between the poorest and richest councils in those countries is much less than the gap in this country because they are much more equal societies-partly as a result of their histories, but also because of their political systems.
When we look at the difference between our poorest and richest councils and the amount of money that needs to be reallocated through the equalisation process, it becomes difficult to think of ways in which one could reduce the contribution that central Government grant makes to local government income. We therefore contented ourselves with making several recommendations about transparency. We said that the advice and evidence that was given to the Department to inform changes in the grant formula should be made available on the DCLG website so that people could see how the formula was arrived at, the factors that had gone into it, and the advice that had been given; that the Government should do everything they could to increase the transparency of the grant allocation process; and that the maximum amount of detailed material should be published on the website. That would at least go some way towards enabling people to have a more informed debate about the outcome of the grant process instead of their being reduced to complaining, as we all have, about our own areas being funded less adequately than others without relating that to different needs.
We made some recommendations about constitutional change. We felt that it was important to enshrine the position of local government and the commitment to subsidiarity in a constitutional framework so that future Governments could not swing things back towards centralisation. We suggested that the European charter of local self-government, to which we signed up some years ago, should be put on to a statutory basis. We also said that there should be a Joint Committee of the House of Commons and the House of Lords to scrutinise and monitor legislation to ensure that none went through this House or the other House that took power away from local government, but preferably did that the other way round. Essentially, it would be like the connection between the Human Rights Act 1998 and the Joint Committee on Human Rights, but in the sense of protecting local government from further central Government encroachment.
I congratulate the hon. Lady and her Committee on their report. In their discussions on having a Joint Committee, was any consideration given to the constitutional implications of having representatives from local government serving on such a body alongside peers and Members of the House of Commons?
We may have discussed that, but I do not recall doing so. We were thinking that it would be analogous to the Human Rights Committee, in which case it would be much more appropriate to have Members of both Houses.
I am getting the message that I should finish and allow other Members to contribute. The spirit of our report was that we wanted to get debate going; we have certainly done our best to do that within the House, but also more widely. I am grateful to all those in local government, among others, who have taken up the report and used it as a discussion document to get the debate going outside this House as well as within it. I hope that we are going to see real change.
I think that in the light of the earlier point of order I should explain that although I am an ethnic minority immigrant from the Commonwealth, I am also a British national. Safety first! No comments about going back, please.
The Chairman of the Committee has ambled all the way through the report, so I will make my speech somewhat shorter. The inquiry looked into the long-standing sources of conflict between central Government and local government. I found it particularly interesting given my history of being both poacher and gamekeeper-or, as some would say, poacher and poacher.
In many ways, local government acts on behalf of central Government; to some degree, it subcontracts to central Government. The situation is very similar in most western democracies. It is therefore understandable that central Government would wish for some measure of control over local government. Again, that applies in most western democracies. The interest and concern arises in relation to the degree of that control. In England, central Government control is clearly excessive, in my belief, and it has increased markedly since 1997. The minutiae of control was imposed from very early on following the 1997 election. When I served on the Committee that considered the "best value" Bill, which became the Local Government Act 1999, I saw these measures being introduced with a very heavy hand. There was monitoring, audits and reports from local government to Government Departments-not just the Department for Communities and Local Government, as the Chairman of the Committee pointed out, but other Departments. In those days, of course, the DCLG was the Office of the Deputy Prime Minister. The best value legislation is notorious among councils, because it gave the Secretary of State the power to take over local authorities, literally.
Since 1997, councils have been loaded with targets to meet and judgments from the Government on quality, many of which have been based more on process than service quality. The current Secretary of State justified that under questioning by the Committee by saying that he believed the majority of councils in 1997 were of poor quality. He is possibly right; after all, the greatest proportion of councils in 1997 were Labour-controlled.
Hand in hand with councils struggling to manage with those central instructions, inspections and so on have come costs, which are moved on to the council tax payer. There has been a huge rise in council tax since 1997, with little change in the number of services provided. Much of it has been imposed as a result of Government audits and so on. For example, one local authority in my area is a tiny one called Mole Valley district council. A couple of years back, its comparative performance assessment was undertaken. It was a huge event for the council, and its officers, particularly its senior officers, worked on it for weeks beforehand and for the time that the auditors were there. To some degree, the council stalled as a result. It cost it £250,000, but because of gearing it cost the council tax payer £1 million, for little or no gain that I can see.
As I mentioned, one of the biggest bones of contention for local authorities is the myriad targets, and the Government have latterly accepted that there are too many. It has been a source of amusement to see the pride of various Secretaries of State as they have announced with an air of smiling benevolence that the number of targets would be reduced, ignoring the fact that the mountain of targets was put in place by either them or their predecessors in the first place. I suppose one could call it "grand old Duke of York syndrome"-march us up the pile of targets and then march us down again.
The problem, which the Committee Chairman touched on, is that although the DCLG cut the raw number of targets, a number of them were amalgamated so that there was no actual diminution. As she pointed out, other Departments went on loading on new targets. Certain freedoms have been announced recently, often with a flourish, such as in capital borrowing. However, that freedom is not really in place, because although in theory councils can borrow with much greater freedom, there is still a tight rein on grant and council tax, and therefore on the revenue side of capital. Even worse, the Government have taken away many local authorities' capital receipts and redistributed them elsewhere.
At face value, there are now only 198 national indicators. As I said, however, there are sub-indicators within them, so that figure does not give a true picture. The inspection regime has changed, and instead of concentrating on quality of service and value for money it is moving into other areas such as-I could not believe this-inspecting work force management. Councils that like to test the market for service providers are now crippled by legislative changes that make it virtually impossible for them to do that properly. Such action is now essentially a waste of money, particularly for councils with in-house services, because the system set up in law cripples potential private competitors.
For decades, local councils have worked with partners-that is the buzz word and has been for a long time-which may be private sector contractors or other public sector bodies such as the national health service and the police. I remember that before I came into the House, such partnerships were used by most of the local authorities that I knew well without mandatory statutory imposition from the Government. Now the Government are getting in on the act and setting up regulated, mandatory local strategic partnerships. They appear to have rules of engagement and require detailed assessment, with the usual flags of so-called performance all going on to a website that claims to grade councils from "good" to "poor". Once again, valuable senior council officers will spend hours of valuable time rushing around, tailed by Audit Commission officers, ticking boxes that are more about process than the situation on the ground that the public would like. To make matters worse, many of those partnerships are now going to be tied into a system that does not reflect the fact that different partners may have different, conflicting priorities. Those should, but will not, be reflected in the flags that go on the appropriate website.
There is a marked contrast between Ministers' and local governments' view of the balance of power. In fact, the tail end of paragraph 28 of the report puts that in a moderate and generous way:
"There remains a sizeable gap between the newly empowered local government that the Government believes it has established in principle, and the actual impact as witnessed at the local level."
That summarises the essence of the report. It is about time-long overdue-that central Government, whichever party is in control, get off the back and out of the pocket of local government.
As my hon. Friend Dr. Starkey said a few minutes ago, the aim of the report was not only to make recommendations, but to stimulate debate. Hopefully, that will happen not merely in the Chamber, but outside. The Local Government Association, for example, has generally welcomed the thrust of the report. Hopefully, it will help its general push for greater powers and responsibilities for local government.
There is no doubt that Britain is one of the most centralised democracies in the western world. Certainly, the evidence given to the Select Committee was virtually unanimous-if there was a lack of unanimity, it was because the Government do not quite agree with everyone else on the matter. Putting that to one side, we took a lot of evidence that despite some moves toward greater powers, responsibilities and freedoms for local government, there had been a modicum of change rather than a seismic change since '97. Of course, we can welcome the different mood music that now comes out of the Department for Communities and Local Government. Ministers now generally seem to want to trust and work with local government.
I must tell Sir Paul Beresford that it is nice to hear Members become very supportive of local government when they are in opposition. However, I seem to remember spending an awful lot of time, when I was a leader and chair of a committee in local government, dealing with something called compulsory competitive tendering, which I seem to remember him having something to do with when he was a Minister.
I will accept the hon. Gentleman's point, but the Government of the time, as a whole, had a certain approach to local government-they sought either to control it completely or to ignore it altogether. I certainly remember a White Paper on urban regeneration, which Nicholas Ridley, the then Minister, introduced, that did not mention local government at all, as though it was not relevant to local people and the places in which they lived.
The Committee also took evidence in Denmark and Sweden. It is true that inherently, all parliamentary democracies are centralised, in that Parliament is ultimately sovereign-it can choose either to use powers itself or to devolve them to other organisations. The fact is that Denmark and Sweden have chosen to devolve more powers to local and regional government. Obviously, those countries have different histories and cultures, so we cannot simply replicate what happens there in this country, but they offer examples of how parliamentary democracies, with Parliament remaining sovereign, can ensure that more decisions are genuinely taken at local level by local elected representatives.
As I said, there has been some improvement. The attitude in the DCLG has definitely improved. The approach of giving city regions more powers is a welcome step forward, and the reduction in the inspection regime and trusting local government more is helpful. Other positive steps forward include the changes that the Housing Minister is considering with regard to the housing revenue account, but an awful lot remains to be done.
We could look at how devolution in Scotland and Wales has been achieved. I certainly do not argue for, and I have never been supportive of, trying to replicate that sort of devolution in the regions in England, which are generally administrative conveniences and not real areas in the sense of being economic entities. I am much more supportive of giving powers to city regions on such matters. In the end, what matters to local people more than anything is their local council because they can see the things that local councils do-they are immediate to people. Councils are about sweeping the streets, the care of the elderly and local education provision. They are concerned with important local matters that affect people's daily lives.
In a healthy democracy, local councillors have to be allowed to respond to the needs of their local population. If they did not have that power and people felt that they were voting for representatives who were powerless and impotent and only there to do what central Government said, we would have an unhealthy democracy and people would get very frustrated and become very cynical. It is important for the health of our democracy that we get real power and responsibility down to local councillors. If we are to do that, we have to examine the whole issue of powers and how they fit within our constitution. Our constitution is, of course, unwritten, which does not make it easy to amend in the way that countries such as Sweden and Denmark can amend theirs. We also have to consider the issue of finance and the constant urge that Ministers have to interfere.
One reason why we have so many projects, so much central Government direction and so many grants for different items is that every single one is a photo call and a press release for the relevant Minister. Ministers can be seen to be doing things. Instead of saying to local government, "Here's the settlement for the year, and you can raise most of the money for yourself by various means", Ministers like to be seen to be doing things and to be involved. That is why they do not keep their hands off what are essentially local issues, and that affects the whole relationship between central and local government.
Establishing the principle of subsidiarity is important. Both Front-Bench teams are talking about moves towards a new localism and accepting the principle of subsidiarity. I have two examples that demonstrate that, whatever the general principles are to which those on the Front Benches want to sign up, in practice they cannot resist taking a view on what should happen at local level. First, I am slightly worried by the care proposals that the Government are putting forward. If they are moving towards a national care service, does that mean that local councils will no longer have the freedom to deliver particular services in particular ways to people in their community? I do not know the answer, but if that is the case, I am worried that another whole section of local government services will be controlled and determined by a Minister, with local government simply as a delivery agent. That is not helpful for local democracy.
Secondly, we have just passed legislation that allows local transport authorities to decide whether they want to move to quality contracts. Indeed, we have just had a notice from the Secretary of State today that the regulations giving extra powers to do that have been laid. I welcome that legislation because it will give the choice back to local communities through their elected transport authority members about how to run bus services in their local area. I have just put a survey out in my constituency asking people what they think about local bus services and this move, and I have already had more than 2,500 responses. That is a staggering response rate and it shows that people are interested and want to have a say. However, I understand that it is the policy of the Conservatives not to allow that and, if they get into power, to reverse the legislation. That is unfortunate and it goes against the grain of the principles of local democracy that they talk about.
I accept what has been proposed in terms of a power of general competence. It probably is better than the current powers of well-being, but of itself it probably does not go far enough. It fits in with the general thrust of the Lyons report that all that we have to do is to give local authorities a bit more power to prioritise the services in their area and that will be a significant step forward. Yes, it would be a step forward, but it is not sufficient. I would like to go further.
We have had the central local concordat, but it has hardly sparked the imagination of the British people or fostered a real debate about local democracy. Can anyone in the Chamber explain what is in the concordat? It is a secretive piece of work hidden away in some ministerial drawer-and probably in a Local Government Association drawer too. It ought to be pretty important, but instead this piece of paper has been signed, pushed to one side and forgotten about.
The report also mentions the European charter of local self-government, which is supposed to be in the constitution of every country that signs it. Obviously this country does not have a constitution in quite that form, but we do have constitutional law, and there is no reason why the central-local concordat and the European charter should not be put on a statutory basis. Why not go that far? If the Government believe in what they have signed, they should put it in statute. Then we could turn to the Joint Committee of both Houses that my hon. Friend the Member for Milton Keynes, South-West suggested. It would be akin to the Human Rights Committee and could examine every piece of legislation that comes before the House to see whether it fits in with those two measures and the principle of subsidiarity.
Such a Committee would be a very healthy check, not just on the DCLG, which has signed up to the general principle and wants to get moving, but on other Departments that have not got the message. As my hon. Friend said, when we had before us witnesses from other Departments, they did not appear to get the message about local democracy. They seemed almost frightened of local government and of ceding any powers to it. Nominally, under the national health service, the Secretary of State is responsible for everything that happens in every part of the country in the health service. Clearly, that is nonsense, but legally it is where we are at. Let us put those measures into law and use them as a base from which to monitor all legislation from every Department.
As my hon. Friend said, in the report we suggested that powers could be devolved to local authorities. We could run pilot schemes under which, where local authority and primary care trust boundaries are coterminous, local authorities could become PCTs. That was a cross-party suggestion. I chaired another inquiry for the all-party group on local government, and Lord Hanningfield, the leader of the Tory-controlled Essex county council, supported that suggestion and said that Essex would volunteer to be one of the pilot councils.
There is great enthusiasm for joining up the commissioning of local health services-not the running of hospitals-with the local authority care services, not through the central mechanism of a national care service alongside a national health service, but by allowing things to be done locally. Of course, we will need local standards, and my hon. Friend is right about that. However, the public and politicians suffer from an element of schizophrenia in that no one wants a postcode lottery, but everyone wants local freedoms. Yet with local freedoms, different things will be done in different parts of the country. We just have to accept that. Central Government probably has a right to set minimum standards that everyone must follow, but some of the best services and service creation happen when people are free to develop and innovate at a local level and when other areas copy them and move on, rather than when central Government choose to be prescriptive from the beginning. That is the challenge.
We face a further challenge. We might be interested in local democracy, but it is not about creating more and more bodies, all of which appoint members through direct elections-directly elected police and health authorities, for instance-because that does away with the ability of local communities to choose their priorities. Local councils are elected and have a variety of responsibilities. They can make choices, based on their electorates and their manifesto priorities for different services, unlike what can be achieved by a series of directly elected bodies that cannot move resources between themselves.
One current criticism of the arrangements for local and multi-area agreements is that, although other Departments' officials often come to the table to join in the debate, they all do so with terms of reference dictated to them by their Departments. We do not get a real joining-up or ability to switch resources to different priorities, because each Department insists that its resources be spent on its services. That presents some challenges and some interesting ideas.
In the end we return to the issue of finance, which lies at the heart of much that we want to achieve. We can give local authorities the powers of general competence and sign up to as many agreements as we want, but in the end if central Government control 75 per cent. of the funding directly, it is a case of, "He who pays the piper, calls the tune." The Lyons report bottled out on one really important matter, although the Government's response was even weaker: how do we give more fundraising powers back to local councils? It seems obvious that re-localising the business rate is the way forward and would alter the balance between local and central Government to about 50:50.
Of course we need an element of central Government funding to deal with disparities in wealth, income and resources between one area and another. However, the calculations that we had done for the Committee in the past suggested that that element need only be about 30 per cent. of overall local government expenditure. Although Sweden has fewer disparities, as my hon. Friend the Member for Milton Keynes, South-West said, 70 per cent. of local authority expenditure in Sweden is raised locally, so a 30 per cent. target ought to be one that we should try to achieve.
We probably need a local income tax element as a top-up, but I would warn hon. Members about that. We have to be careful about a local income tax for authorities that are not allowed to borrow for revenue purposes. Hon. Members should talk to authorities in the United States and even state governments, which are currently in the most awful financial difficulties-I recently visited the Pennsylvania state government. Of course they rely on a local income tax and local sales tax, but as authorities that cannot borrow, they are making massive cuts in their budgets in this recession, so let us not get to the point where a local income tax is the only tax that local authorities rely on. Local councils in this country would be in a complete mess if we implemented Liberal Democrat policy as I think it stands, although I am not absolutely certain about that. We have to be careful on that one.
I also welcome the fact that central Government are now moving away from ring-fenced grants, so that grants can at least be spent as local authorities wish. That is right. We had an inquiry into the Supporting People programme, and people have concerns when the comforts of ring-fencing are removed, but it is right that such decisions are made locally. I remember having discussions about local government finance in the Committee some years ago when Ministers said, "Of course we want to remove ring fences". However, a few days later-this takes us back to different Departments doing different things-the Education Department, as it then was, decided that all school grants would be paid directly to schools and would not go through the local authority, thereby putting a ring fence around one of the biggest parts of local authority budgets. Again, that is the sort of thing that would be tested if agreements were put into law and a committee set up to monitor them.
Those points are the essence of the Committee's report. My hon. Friend the Member for Milton Keynes, South-West referred to this, but the idea that the tragic death of one child could become a major debate in Parliament simply astounded the people we talked to in Sweden. They could not understand how Secretaries of State could be responsible for the actions of local authority workers in one case, in one part of the country. They just did not get it. We have a completely different culture. My hon. Friend is right that the public in this country have a different perception, but perhaps they have had centralisation for so long that they have become accustomed to it. We now have to debate and raise the possibility of doing things differently and giving to local government genuine freedoms that are embodied in statute and monitored by a committee, and greater financial control to local councils. If we have that debate and move in that direction, we will have a much healthier democracy in this country than we do now.
I have been a Member of Parliament for about 13 years. I have also served for four years as a district councillor and for 12 years on a county council, and it is my perception that local government is good and efficient, and delivers services rather better than we do nationally.
One of the key things about local government is that it is much more effective at controlling money. A perfect example of that is today's estimates day debate. We have a vast tome setting out changes in Departments, with surpluses and deficits, and money being swished and switched about. However, on estimates days we debate sport or sports centres, and so on-that is, anything but money. If we as a Parliament want to re-engage the public on a national level about the importance of MPs in these difficult times, Parliament must do something, involving this House and the other House, about controlling money.
From my experience of local government, the one thing I am sure of is that local councillors are much better at looking after money. When I was in local government, if we ever had an overspend on a budget, an officer had to explain it. I have seen a number of officers hauled over the coals because they made certain judgments or misjudged the bill for a project. Local government is much better in that regard.
We have had a series of reforms, but we always seem to get structural reforms and financial reforms out of kilter. I agree that it is vital that the national business rate be localised again, so that at least 50 per cent. of that revenue can be controlled at local authority level. It would also be rather good if the proceeds of some of the development that we have had to have in our areas stayed with local government in the form of a tariff on development. We have a lot of section 106 agreements, which need time and lawyers, and sometimes the money stays in bank accounts for donkeys' years. I would prefer a much simpler tariff system on development in which the money could be used in a variety of ways by local authorities.
A quarter of all public spending is spent by local authorities, but about 80 per cent. of it is controlled by central Government in one way or another-by specific grants, for example. We need to knock down a lot of the boundaries and put more trust in local people to deliver local services. If we did, we would have a much more efficient, effective local sector.
Dr. Starkey mentioned primary care trusts. It has always amazed me that we have set up a separate structure to deliver primary care, as it involves important local issues. We could still have a national health service while allowing a great deal more involvement by local authorities. This would be a good area in which to give greater powers to local authorities, and I hope that those on my Front Bench are listening.
It has been my experience over a number of years that there has been far too much interference from not only the Department for Communities and Local Government but the Department for Transport. Doing anything relating to transport regulations requires permissions, costings, and so on. It is not so much about putting the lines on the roads as about applying for the necessary permissions to do so. We see the same thing happening in education-in relation to admissions processes for schools, for example. Everything has become too bureaucratic.
If we are serious, as a Parliament, about reviving local government and making it more important, we need to look at the way in which we put too many controls on local authorities and impose additional costs by expecting them to produce endless reports. My officers in Poole spend their money on bidding for endless things that they often do not have much chance of doing. They also spend an awful lot of time looking into whether they can do private finance initiative schemes. In this national Parliament, we ought to be aware that we need to cut down the burdens on local authorities wherever possible.
My experience is that it is better to deliver at local level. People usually feel a degree of identity. In our country, that is sometimes to a county or to a borough, to England and to Great Britain. I agree with what Mr. Betts said about regions in our nation. In England, they are mainly administrative areas, although there might be a slight difference with Yorkshire-or perhaps not. People feel no great affection for a region; they are more likely to identify with their county or their borough.
People also pay attention to what goes on, but if central Government control too much-particularly in relation to money-what incentive is there for local people to turn out in any numbers to elect their local authorities? What incentive is there to get good local people back into local government? The key is to give a greater proportion of the revenue going through local authorities to those authorities and to take the hand of the Government off them.
We need to reach a stage at which national politicians do not panic whenever there is a crisis, and feel that they have to have a plan. The hon. Gentleman asked why we, as a nation, behave in such a way. I suspect that it is because we have national newspapers. Our press is highly centralised in relation to the regional and local press. Anyone following the Chancellor's pre-Budget report, for example, will see a range of papers that have been written predominantly in London. Any kind of crisis will be on the front pages and on the BBC, which still tends to be somewhat centralised in London. Other countries have not only devolved local government but have a much more vibrant regional and local press. That is certainly the case in the United States, which has a large geographical area.
That centralisation is probably one of the factors involved. The immediate question to Ministers is, "What are you going to do?", and it is terribly difficult for them to say, "Nothing, actually. I am going home to have a bath and prepare for dinner." They always have to have a plan, and the plan leads to a Green Paper, a White Paper, legislation and reports. The consequence of all that is that we end up putting burdens on local government. I do not know whether we need a constitutional mechanism to deal with that problem. We almost need a Bill of Rights for local authorities.
In Germany, the Länder are represented in the upper House. If we ever complete the reform of the next Chamber, there would be a logical argument for larger cities or counties to be represented there to temper some of the national enthusiasms that we get in this Chamber and to bring things back to questions of "What does it cost? What does it mean for local people?"
I finish where I began. I am a great believer in local government. There are some tremendously talented people in local government. There are some very good and very conscientious councillors of all parties who put a lot into their communities. As a Parliament, we should trust them more. I agree with the hon. Member for Milton Keynes, South-West on policing and fire services. There has been a tendency to pull powers away from local authorities. Power should be going the other way, but that means that we have to accept failure and differences. If we accept that there will be bad authorities, weak authorities, better authorities and perhaps different services in different areas, we will start to have more independent local government and, in some respects, a more vibrant local government. If we do not allow failure, if we cap or if we interfere, it will level everybody down, which would be the worst solution.
There is a lot to be said for the report, which gives a great deal for us to think about. The relationship between local and national Government is crucial, and if we get it right, we will deliver better services at greater value and will reinvigorate local authorities, with more people turning out to vote and better quality people wanting to get involved.
I am grateful for the opportunity to contribute to the debate. In the new year I shall be taking up a position as a Parliamentary Private Secretary within the Department, so this is my last opportunity to speak. I thank the Chairman for her good offices and all the guidance that she has given to me while I have served on the Committee, and I particularly thank the staff, who have done a tremendous job in drawing up the report and in getting our sometimes rambling discussions into order.
Sir Paul Beresford seemed to be painting a picture of local government pre-1997 that was all sunny uplands. I was a local authority member for more years than I care to remember, certainly during the 1980s and 1990s, and that was not how I remember it. The then Conservative Government saw local authorities as theirs to command, and if they did not do as commanded, the Government abolished them, as they did with the metropolitan counties, or they starved them of funds, as happened year on year in the 1980s and 1990s. In Wigan, we had to make £10 million of cash cuts every year for three years on the trot; that was 1980s pound notes and not 2010's pound coins. We had to make a considerable reduction.
There was almost no notification whatever of those cuts. In February, we were given the figure. By April we were starting a new financial year. It was a fire-fighting exercise in which we rushed around trying to make cuts and balance the books. There is no way in which local authorities can plan properly in those circumstances. We found that programmes were being cut halfway through. Money was being wasted on those programmes and no benefit came out of it. My view of the last Conservative Government's local authority relationships is different from that of the hon. Gentleman.
On top of that, we had micro-management. My hon. Friend Mr. Betts mentioned compulsory competitive tendering. I was chair of the committee that had to implement CCT in Wigan. It reminded me of the French education system, under which every child in every school in every village in France would open their book at the same page at the same time on the same day. The micro-management of CCT meant that every council had to do everything in a certain way, and a week later they had to send out another letter and so on. It was more like a French farce than French education.
The hon. Gentleman mentioned inspection regimes. I seem to remember that inspections were brought about by the Audit Commission set up by the then Conservative Government; I checked that with my hon. Friend, whose memory is better than mine, and he agreed. I do not disagree in principle with inspections; I think it is right for local authorities to be properly inspected, and to be shown, in a proactive and positive way, where improvements can be made. However, I do not like the prescriptive system we had in the past, under which authorities that did not do as they were told got clobbered. That was very difficult.
One problem was that targets were applied everywhere, so there was no relationship with local need or a local authority's resources, but we now have a different system. Under the new regime, targets are agreed by the local authority, which means that they have relevance to the area. More importantly, because local authorities are engaged in strategic partnerships that involve people and sectors across the entire community, such as commerce and voluntary organisations, targets-whether to do with sport, industry or regeneration, for instance-are part of an overall package bringing together all the sub-partnerships. That enables councils to promote their area on the basis of targets and priorities set by the local community, which is a very different way of dealing with things.
We can now also work in strategic partnerships with primary care trusts. The Conservatives deprived local authorities of such influence in the 1980s and 1990s when they took their members off area health authorities, which resulted in a complete split between local health provision and local government provision. We have now addressed that, however. We can meet hospital and other health trusts and the family care trusts, and therefore we can draw together those elements of local government service that are particularly relevant to the broader social services.
I do not know about other areas, but in Wigan we hold regular meetings-at least six a year-with health organisations and those involved in the local economy. The local MPs are also invited and can make a contribution. That works well and enables us to have better co-ordination. My hon. Friend Dr. Starkey said that her authority has a public health officer who is jointly employed by the local authority and the PCT. We have that in Wigan as well, and it serves to cement the ability of those employed in the social and health services to work together better.
There is also much pooling of resources between the two areas, so that people who are moving from social service care into health care do not fall between those two nets. There is not the problem of their being told, on the one hand, "No, you're not yet a health service problem; you're still a social services problem," and, on the other hand, social services saying, "No, her ability to look after herself is much worse, so she has to come under the health service." That happens where each service is protecting its own budget, so by pooling budgets we can prevent people from falling between those nets-or at least we can stop that happening often.
Another idea that the Government are taking forward which I warmly welcome is that of multi-area agreements, for which we have pilot schemes in city regions. In the Greater Manchester area, the Association of Greater Manchester Authorities is generally recognised as being foremost among city regions in the way that it has set up voluntary relationships since the Greater Manchester council was abolished. What was important initially was that all but one of the councils were Labour controlled, but that has changed over time. I pay tribute to the leaders of all those councils, from all parties, because what has not changed is their recognition that this is not a zero-sum game. They see that if Tameside gains a benefit, it is not at the expense of Wigan but to the benefit of the whole of Greater Manchester. Therefore, all the leaders come together to ensure that Greater Manchester is seen as the beneficiary. With multi-area agreements and city regions, it is important to ensure that that approach is built into the psyche of local authority leaders. They should not see the situation as a zero-sum game, but see that something that benefits one authority in a city region will roll out benefits to the others.
We have come a long way. I accept that the Government think that they have gone a lot further than the Committee thinks, but everyone on the Committee accepts that there has been significant movement in shifting the balance of power between central Government and local authorities. There is an awful lot more to do, but I perceive a willingness in the DCLG to ensure that that shift continues. That bodes well not only for local government but for citizens.
Let me make some final points about local government finance, which, as hon. Members have said, is crucial to the relationship between central and local government. One of the best actions that the Government have taken in that regard is to introduce the certainty of a three-year system in the comprehensive spending review. That certainty of funding will allow local authorities to plan much better and to institute programmes knowing that they can carry them through. Let me make a suggestion to the Minister that I hope she will take back to the Secretary of State for discussion in the Cabinet: rather than having three-year blocks, which means that at the end of a block there is certainty only for the next year, there could be a rolling three-year programme. With such a programme, one would have some certainty in the first year regarding the next two years, and in the second year, one would have some indication as to what the fourth year would bring. Such a system could be used in both local and central Government to allow local authorities and Departments to plan more effectively.
If finance is crucial to the relationship between central and local government, it is important to get the figures right, particularly the balance that central Government pay to local government. I think it is a universally acknowledged truth that a council in search of a revision of formula funding is a council in search of money. We must always recognise that there will never be a perfect funding formula, as there is no such thing. The idea of a perfect funding formula is a chimera, or a holy grail that can never be grasped. However, I think that our funding formula is reasonably reflective of the needs and resources of local authorities. If that is the case, it is incumbent on the Government to ensure that the formula is put into action as quickly as possible. It cannot be right that many local authorities are massively overfunded while others are massively underfunded. The needs of Kensington and Chelsea have been assessed at £89 million under the formula, but it is receiving £104 million in Government grant, whereas Wigan's needs have been assessed at £135 million, but it is receiving only £129 million. One local authority is receiving £14 million more than it is entitled to under the formula, while another is receiving £6 million less.
I spoke earlier about the relationships between PCTs and local authorities, and unfortunately the same problem arises with PCT funding. I shall again make a comparison between Kensington and Chelsea and Wigan. Kensington and Chelsea needs £277 million but gets a grant of £337 million, which amounts to overfunding of £60 million. Wigan needs £537 million but gets £512 million in grant, which amounts to underfunding of £25 million.
Adding together £6 million and £25 million makes a total of £31 million. That is the amount that the Wigan authority is not allowed to spend-last year, this year and next year-on the services that it wants to provide. Another way of looking at it is that it is money that is being taken out of people's pockets and, given Wigan's population of 300,000, that is a lot of money per head.
That brings me back to the earlier point about the existence of a postcode lottery. It is clearly very much easier for a place like Kensington and Chelsea, which is getting so much more funding than it is entitled to, to reduce council tax or increase services, or do a bit of both, than it is for a place like Wigan. People ask why Wigan does not have the same services as other authorities, but they have no knowledge of where we stand in relation to the funding formula and the amount of money that we get. It is extremely important that the Government move forward as quickly as possible on funding.
I do not want to return to the huge cuts that we used to get in the 1980s. Because of my experiences then, I am a big supporter of the damping process and the floors and ceilings that have been introduced, but the pace of change in funding for family care trusts and local authorities is far and away to slow. Speeding it up would help local authorities, and ensure that citizens were being treated fairly.
One last point on the financial history is that we surely have to recognise that council tax is inherently unfair. That is what it was designed to be, and one of the few achievements of John Major and his Government was to make sure that it was. It is quite wrong that a person who lives in 25-bedroom mansion should pay only three times as much council tax as a person who lives in a two-up, two-down terraced house. That is not the right way to organise finances. The Lyons review was at least an opportunity to open the debate about that, although my hon. Friend the Member for Sheffield, Attercliffe suggested that it was a lost opportunity. The Government's response was far too timid, and we need to look at ways of ensuring that many more bands are introduced and that there is a much fairer relationship between bands. Finally, it is essential to have constant revaluations of houses in the council tax system, to ensure that the system does not get into the same untenable state that characterised the old rates.
This is an excellent report. I am glad that I was able to contribute to it, and sorry that I will not be able to help my colleagues on the Committee in compiling further reports for the House. I believe that this is an extremely important area, and it is one that I feel very strongly drawn to.
I am delighted to be able to take part in this debate. I apologise for not being here at the start to hear the remarks made by the Committee's Chairman, my hon. Friend Dr. Starkey, but I was taking part in the Westminster Hall debate on pensioner poverty, a subject that is undoubtedly linked to this one. Although I will not spell those links out, I think it fair to say that two very interesting debates have been arranged for this Thursday afternoon.
I shall keep my remarks very brief, but I am delighted to be able to say a few things on this topic. My starting point is the fact that, when it comes to the relationship between central Government and local government, all is not well in the kingdom of Denmark. I want to turn these relationships on their head, because like my hon. Friend Mr. Turner, I have a long history of involvement in local government. I am still a councillor in Stonehouse town council and I have much to say about how I admire what this first level of government does. It is often left out of all our discussions on local government, but I wish to put it on the record that we underestimate what parishes and community government can bring. I shall say something about that in a few minutes' time.
I want to turn this on its head, because although it is easy to blame central Government for all the ills that local government feels have been done to it, local government has much to answer for in its timidity in failing to stand up to central Government. In my 30 years of involvement with local government, it has often been too easy to blame the centre when local government could have done more to reform radically what is happening and to address the loss of power and responsibility.
That situation is potentially linked to the changes in structure and the movement towards a cabinet and scrutiny system. Such a system is not intrinsically wrong; what is wrong is the way in which many councils tend to operate it. They tend to believe that once they have a cabinet system, their councillors have inherent powers that they accrete to themselves and, thus, other councillors can do nothing about that. Other councillors ought to use their scrutiny powers more. However, one of the failings occurs when a dominant political group appoints itself not only to the cabinet, but to the chairs of the scrutiny committees. Such an arrangement is wrong; just as we have a balance of power here, it ought to operate properly in local government. It is simply a scandal that a dominant grouping can use its own people in such a way as to not scrutinise what it is doing.
One thing that is wrong and that needs to be changed is that the professionalisation of local government has excluded, rather than included, a lot of people. There are those who argue that we should never allow people's means to enter into the question of whether they can stand for election as a councillor, but we have gone to the other extreme whereby their income is entirely dependent on whether they keep their seat. That should not be the way of it; people should go into local government because they believe in public service and want to serve their communities, not because it is a paid form of employment. It is sad that the question of money is entirely bound up with that of whether people stand for election and try to keep their seat.
The hon. Gentleman is absolutely right. I do not wish to cast aspersions or try in any way to wish even more problems on Stroud district council, even though it is run by those with a different political persuasion from mine, but I should say that the groupings on that council have that problem. The Conservative group is split according to who has got a position and who has not. This is a worrying development and we need to see it as a whole, because it causes great disillusion among the local populous when they see that people apparently get elected because of the associated money. I regret that we have seen that happen. Local government could revisit the issue and do something about it. It does not have to have this system imposed on it, and it might feel that it wants anything but that.
The point about the public service ethos is referred to in the Library debate paper, and from memory, I think it is in the very good report from the Communities and Local Government Committee. It concerns the payment not only of councillors but of staff. We are now completely out of kilter with what some chief executives and senior council officials are paid, and that needs to be revisited quickly. If we must navel gaze at our own situations, it is only right and proper, in the light of the bonus culture, that others should re-examine what they can expect, morally as well as financially. Some of the salaries that are now being paid have achieved the opposite of what I would have liked-they have destroyed the public service ethos, rather than supporting it.
My hon. Friend Lyn Brown would be staggered if I did not take this opportunity to mention the Sustainable Communities Act 2007. Some of us feel that it is a move in the right direction, because it is about re-introducing localism. I caught the end of what my hon. Friend the Member for Milton Keynes, South-West said, and we need to recognise that we cannot isolate local government from other aspects of the statutory and voluntary sectors. It is only right that the Sustainable Communities Act should be linked in with what the Government are doing with Total Place, which I find very exciting, to try to find an overall approach to the way in which we govern local areas. That must make its way through the morass of difficulties, which we all know about. If we can get it right, we will get a much clearer system for the accountability of local decision making, which can be made properly accountable, rather than being seen as local administration.
I welcome the efforts that are being made. I know that the Secretary of State makes many speeches nowadays about our planning and consideration of local spending reports. We can argue about how that is being done and whether it is being done quickly enough, but if the work of Tim Berners-Lee and Professor Nigel Shadbolt can be applied so that we can track funding appropriately and begin to share it in a different way, money can be saved. I am not interested in saving-I am interested in much more effective and efficient use of service provision. If we can do that, that will be very exciting. I think Alistair Burt has chosen the "sustainable communities Act mark 2" as his private Member's Bill. I shall be a sponsor of it, as I think he has stolen the Bill that I promoted. I am only too happy to lend it to him.
I want to make two more points, and then I shall not detain the House any longer. It is about time that we took a grown-up approach to moving forward the structure of local government. I ask those who think that it is quaint to have three-tier local authorities and who have moved to unitary authorities in their own area to please revisit the issue. We should have a structure that is fit for purpose for the 21st century.
We need some form of regional government in this country. It can either be unaccountable-as it was under the last Conservative Government-or it can be made more accountable. I have enjoyed being on the South West Regional Select Committee. It is a lonely existence, particularly because if I go out of the room, the whole Committee is disallowed because it becomes inquorate. We need to recognise that some form of regional accountability and scrutiny is necessary, and those Select Committees have, in their short existence, already done some invaluable work.
We need to move forward. We need clarity about proper strategic local government delivery, which I hope can be done through unitary authorities. If Cornwall can do it, please can Gloucestershire follow suit one day? We are so far out of the loop now and so far behind the times that it is just embarrassing. That would give greater powers to parish and town councils, which can be the delivery arm in many respects, and that would differ from the situation at the moment in which we are squabbling over who repairs the pavements. If hon. Members can explain who has responsibility to any member of the public, they are a better person than me, because all three layers of government squabble over a number of responsibilities, and that is not a happy situation.
During the summer recess and beyond, I conducted a survey on some of the reforms proposed by the Wright Committee-I was glad to have been elected to serve as one of its members. One of the questions in "Up for Debate", as we called the survey, asked whether the general public wanted local government to get more power and funding. That question produced one of the most disappointing responses, because there was strong opposition to giving more power and funding to local government, but that shows how far we have to go to rebuild local populaces' trust in their local government. We received 7,000 replies to the survey, so we heard from a fairly good cross-section of the Stroud constituency, but the results show that local government is unpopular and not trusted. Although it is easy, as I suggested at the start of my speech, to blame the centre for that, local government must do a lot more in its own right to rebuild trust. I hope that the Committee's report and what happens on the back of our debate will go some way towards achieving that.
It is a shame that more hon. Members have not had the opportunity to participate in this important debate, but pressing business is taking place elsewhere. However, those of us who have been able to discuss the report and hear colleagues' contributions will feel that we are getting to the heart of what government ought to be about: dispersing power and involving people in the decisions that affect them.
The report presented by Dr. Starkey on behalf of her Committee makes several key recommendations. It is clear that the Committee's work on several areas all relates back to the fundamental points of how local government works, its relationship with central Government, and its ability to deliver on local people's agendas.
Sir Paul Beresford gave us a history lesson although, as we heard from other hon. Members, it seemed to begin in 1997 and there is a tale to tell from before that. However, I accept some of the hon. Gentleman's points, especially about the burden that targets and the inspection regime have placed on local authorities. He had less to say about capping, the centralising of business rates and other measures that were introduced on his party's watch during its time in government, but we move on, and I hope that the Labour and Conservative Front Benchers will be able to reassure us that they are looking at those things anew.
The speeches made by Labour Members with a long experience of local government showed that there was no recent golden age because problems have been faced over some time. However, as the hon. Member for Milton Keynes, South-West said, there has been a centralising tendency, so we urgently need to rebalance that and to bring back a sense of freedom to those who are engaged in local government. Mr. Drew said that people, sadly, sometimes have low regard for local authorities. That is a function of the way in which local authorities are unable to deliver on aspirations as they would like, because they do not have the necessary powers, and also arises because there is a lack of transparency and no link between funding and accountability, which has been a key aspect of our debate.
I am delighted to say that a lot of what is in the report has been my party's policy for a long time. I point that out not to say, "I told you so," but because if a group of distinguished Members considers the evidence and comes back with a set of policies that concur with the ones I promote week in, week out, that is a nice place to be. I accept that the Committee does not agree with us on every matter, because there were a few problems with local health boards and elected responsibility for police oversight. I accept what the hon. Lady said, and, as she heard from Liberal Democrat councillors, I recognise that democratic accountability is still the subject of debate in our party, even though our policy is moving in that direction at the moment. The issue stems from the need to get around, at least initially, the problem with the public's perception of local authorities. However, if we introduce democratic accountability, first, to the local health service, longer term there may be opportunities to bring in other measures.
I certainly support a power of general competence, and I was very pleased to hear the hon. Lady say that in light of recent events, the Committee's position would have been stronger had it issued the report today. That is welcome, because such a power would clearly demonstrate that local government was able to innovate, consider local factors and come up with solutions. Currently, without that power or the freedom to be more innovative on finances, whatever the priorities that are identified locally, there are real limits on how much can be done to meet them.
Finance issues were raised, and I was pleased to hear that the Committee wanted to re-localise business rates, because, again, the Liberal Democrats have argued for that for a long time. We need to consider the issues associated with equalisation, because some local authorities will do very well out of it. However, that measure would restore the connection between what is going on in the local economic sphere and what the local authority is doing. It would be a huge step in the right direction.
I was also interested in the fact that the Committee favoured a form of local income tax, if only on a supplementary basis to council tax. Although my party has favoured a local income tax for some time, we have been up front in saying that it could not be done overnight. It would take a long time to introduce and enact in a way that did not cause huge upset to the delivery of public services locally. However, we are sticking to that aspiration, and we want to introduce it.
The hon. Gentleman tempts me, and I thank him for giving way. It is interesting that local income tax is now an "aspiration"-I heard the word-but how long is a long time? Does he accept, moreover, that if local authorities had to rely on a local income tax for their major source of funding in the current economic circumstances, many would be in deep financial difficulties?
When I say a long time, I am not talking about decades but, ideally, within the period of a Parliament. It might take longer than that, as the experience of Scotland is showing-whatever the aspiration might be to introduce a local income tax there. Nevertheless, I would certainly want to look at local pilots as a way of bringing forward the proposal. I accept that with all taxation systems there are winners, losers and issues to address, but we must tackle the fundamentals of equity and inequity, which Mr. Turner mentioned, and the problems of the current council tax system. In my party's view, the council tax system is not delivering and is not fit for purpose.
I was also pleased to hear the hon. Member for Wigan mention revaluation. My party would rather this country did not stick with the council tax system, but if we do, revaluation is the logical way to keep it relevant. That presents a problem for parties that want to stick with council tax but either put off revaluation or argue that it is unnecessary.
When the hon. Gentleman answered-half-answered-the question in my previous intervention by saying that a long time is not decades, he did not address the buoyancy of a local income tax during an economic recession. If people's incomes fall and people lose their jobs, there will be a real problem for an organisation that relies for its main source of funding on a local income tax, particularly when compared with council tax, which is fairly stable despite the current economic difficulties. Is that not a fair point? How does he answer it?
That is a fair point. Obviously, there need to be equalisation measures. As the hon. Gentleman has said, if unemployment was rife in particular parts of the country, they would be worse affected by a falling off of incomes. Such things would need to be reflected in the formula. However, I do not consider that an argument for discounting local income tax altogether, and I am pleased that the Committee was prepared to consider it as a supplementary local taxation system.
In her introductory remarks, the hon. Member for Milton Keynes, South-West was giving marks out of 10 to other Government Departments in respect of how they engage with the issues in the report. That is crucial, too; we have to have a commitment right across the Government to agree that local government plays a vital role in delivering services-sometimes on a sort of agency basis, as other hon. Members have said, but, I hope, increasingly in their own right and as part of a constitutional set-up. Unlike most democracies, we do not have a written constitution, but I hope we will make the move to having one; during my political life, that has been at the heart of what I want to see as part of constitutional reform. That could allow the position to be set in a more concrete way.
I noted that the recent publication "Putting the frontline first: smarter government" took the opportunity to discuss the proliferation of quangos and the amount of public money that they spend. At the moment, it seems that the solution is to merge and amalgamate quangos. We will wait to see how that agenda develops, but that would not get us around our need to bring some of the funding to local authorities, which are well equipped to spend the money and be accountable for it. The Local Government Association has been giving traffic-light markings to quangos, which shows that it is keen to discuss how it could do more to influence how quangos deliver spending locally.
I appreciate that I am moving slightly off the subject of the Committee report, but it is important to see how things are perceived right across the Government. There are a few gems in "Putting the frontline first"; for example, I love this:
"We will align the different sector-specific performance management frameworks"- that sentence, of course, is a fantastic way of engaging people and increasing understanding. On the issue of quangos, the document states:
"We will, as a first step, rationalise the ALB landscape".
If we want to encourage people to engage and feel confident that they can have a role, we need to make sure that things are as accessible as possible.
We have to hear from the other Front Benchers. In conclusion, the report makes a great contribution to our debate. It is a shame that in their response, the Government do not pick up on as many of those issues as we would have liked. The clock is ticking, of course, on their ability to respond-at least in this Parliament; we will see what happens in the next one. I am pleased that the members of the Committee have undertaken this work and presented it to Parliament and Government in this way. It takes us a little further forward.
Like Dan Rogerson, I think this has been a useful, interesting and thoughtful debate. I congratulate Dr. Starkey and her Committee on their report. It is interesting and raises a number of important and serious issues. It is a shame that more Members have not come to participate in the debate. I am sure, however, that what has been said will be circulated and come to the notice of people beyond those who are in the Chamber this afternoon. It deserves that.
Virtually all of us in the Chamber today might be termed "local government usual suspects", because we all have a background and track record in it. Most of us would probably say that we were unashamed local government enthusiasts. Part of the task for those of us who willingly wear that hat is to persuade to our point of view many other hon. Members and people outside the House who may not have our direct experience of the value of local government and the efficient and effective way in which it delivers many crucial public services.
The report and the debate are worth while on several levels. All hon. Members who have spoken have followed the tone of the report. They have a wealth of experience, and they made some very constructive points. Although I might not agree with them all in detail, it is striking that there were several themes on which Members on both sides of the House could find a degree of commonality-an awful word that sounds rather as though it has come from a DCLG report.
I do not think that we will ever reconcile entirely the views of my hon. Friend Sir Paul Beresford and Mr. Turner as regards the historical background. I was in local government at much the same time as both of them. However, we can all see that there has been a kind of ratchet effect of centralisation that goes even further back, almost to the post-war period. If Professor George Jones and others came along to give evidence, we would probably get some alternative starting points. There is a cumulative effect that often occurs when individual initiatives seem to make sense at a particular time in a particular set of circumstances. That has created what is generally accepted as being the most centralised of all the advanced western democracies. The fact that there is pretty much common ground on that view among informed opinion is an important step forward in our seeking to move forward and address it.
Let me go through some of the issues raised by hon. Members, starting with the point made by the hon. Member for Milton Keynes, South-West-and by the hon. Members for Sheffield, Attercliffe (Mr. Betts) and for North Cornwall, among others-about the power of general competence, which I firmly support. The Government had taken the view that the power of well-being was adequate, but events demonstrated that whatever the intentions behind it, it was inadequate. In particular, the judgment in the London Authorities Mutual Ltd case, which was not available at the time, has shown very clearly that the power of well-being is not enough to give local authorities the degree of legal competence that they need. At the time when the Bill that became the Local Democracy, Economic Development and Construction Act 2009 was going through the Commons, the Government did not support Opposition proposals to amend it to create a power of general competence. I have had the opportunity to listen to the Minister talk about this in the past, but I urge the Government to reconsider it in the light of the developments in the LAML case. I think that if they did, they would have the support of all major parties in the House.
The power of competence is a key issue, but there is a general lack of power in other respects, with a needless degree of micro-management of local authorities. Mr. Drew talked about local authority internal governance structures. I do not entirely agree that the unitary option is necessarily always the answer, but I do not have a problem with the patchwork quilt approach, to some extent. However, I share his concern about the straitjacketing of local authorities into certain limits in relation to their own internal governance arrangements. Not everybody would want to return to the committee system that most of us grew up with when we were in local government, but that option should be available.
I have never been fully convinced by the argument that the fairly rigid form of cabinet governance for all but the very smallest local authorities is absolutely necessary and has to be imposed centrally. When I was a fairly senior member of my London borough council and when my hon. Friend the Member for Mole Valley was leader at Wandsworth, I suspect that most big authorities-including Wigan, no doubt-had, in effect, a cabinet system. Our cabinet system comprised the leader and the committee chairman; we got together and drove the policy agenda and gave the officers direction. The slight difference was that we had to get matters through our committees and take at least our own group with us, but we could achieve political direction without having to go through the rigidity of imposing a cabinet structure. If we are serious about giving local authorities back power in their own house, one modest but pretty obvious thing to do is say that it is up to local authorities to determine their internal arrangements. Similarly, where are there are third-tier councils-parish and town councils-it ought to be open to the local authority to determine the delegation and consultation arrangements. A measure of internal freedom is consistent with my party's position and the Select Committee's report. I hope that the Government will take that on board earnestly.
There is concern about intrusive inspection arrangements, which have grown significantly. The Local Government Association has published a couple of important documents recently on the cost of the inspection regime. Each regime succeeds another. At one time we had compulsory competitive tendering, which the hon. Member for Wigan mentioned, and we now have comprehensive area assessments. Each regime brings its own burdens, and depending on where on the spectrum one comes from, one may like or dislike a particular regime, but the costs are real. The LGA has calculated the costs to local authorities of reporting upwards at something like £2 billion, which is a significant burden. The emphasis should be on reporting downwards to their electors.
That is entirely right, and compared with the total costs of reporting that is modest and achievable. I hope that the Government will take the opportunity of this debate to welcome and take on board that report, which is consistent with their own "Smarter Government" document and could be seized upon and worked with. My hon. Friend makes an important point, because the LGA is a cross-party organisation and its report comes from local government practitioners. I hope that it will be taken on board.
Linked with that is a matter on which I agree with both Labour Members and my hon. Friends, which is the fact that we should not regard a postcode lottery as always indicating a problem. It is undesirable if it is the result of arbitrary allocations, but where a difference in out-turns is the result of an informed, democratically driven decision, it is something not to condemn but to praise and encourage as it reflects the working of local democracy. An important cultural shift needs to be taken on board, and I am glad that it was addressed in the Committee's report.
Another real concern is the growth of the quango culture, which, again, has happened under Governments of both persuasions and over a period of years. The number of unaccountable agencies, and more to the point the degree of public spending that they take up, has grown exponentially. That is now a real obstacle between the elector-the informed and interested resident-and the governance systems, central or local, intended to represent them. I have seen one estimate that there are 1,152 quangos, including the small regional ones. There are a massive number, and they administer something like £43 billion.
I saw an interesting figure, I believe again from an LGA source, that of every £7,000 of expenditure, only about £350 is spent by democratically accountable bodies. That indicates the degree to which we have slipped into a form of centralisation and unaccountability. Many of the functions of quangos could readily be carried out by local authorities, and I hope that we can look forward to finding consensus between the parties as a means of achieving a transfer of many of those functions back to democratically accountable bodies. Examples have been given by Members of all parties, and many of us who have worked in the field know that greater alignment of the working of primary care trusts and local authorities could produce significant benefits. There is no doubt that good local authorities could take on valuable roles in commissioning, particularly in the local public health services. The question of acute hospitals is different, but a natural synergy could be achieved with good will and collaboration. That might not only save money, but get better results for the resident and the patient. That is significant.
Linked to that, we could simplify the number of funding streams and agencies that local authorities have to deal with. I have looked at some of the detail. It is striking that in Durham, there are 47 funding streams for social housing. How is anyone going to navigate their way through that? In Luton and Central Bedfordshire-one established and one new unitary authority next door to each other-there are 49 different public sector agencies. Such proliferation gets in the way of making government either joined up or comprehensible to the citizen. The alternative is to concentrate those agencies wherever possible-the obvious place to do that is in the democratically accountable forum of the local authority. If the Minister indicates that the Government are prepared to move in that direction, she would certainly find support elsewhere in the House.
I want to give the Minister ample time to respond to this very useful and constructive debate. I am very impressed by much of what has been said. There are some areas where more work needs to be done, but I hope we will have the opportunity to continue to raise local government issues. Sometimes we do that in rather technical terms, in relation to finance settlements and so on, as we did earlier in the week, but in a sense, they are but the mechanisms by which we try to drive the broader agenda of making services responsive to the needs of local communities. That is why the topics we have debated today are particularly important.
I thank all the members of the Select Committee on Communities and Local Government for this timely and relevant report on the balance of power between central and local government in England. Since the Committee first raised the issue, at least three Ministers in the Department for Communities and Local Government have had the chance to comment on it-I am happy to be the fourth.
First of all, despite the somewhat discouraging comments made by Sir Paul Beresford, I believe that very significant progress has been made over the past 12 years in the move away from centralisation. Such centralisation has happened for more than a century, as other hon. Members pointed out, and in many levels of government-it applies not only to the relationship between local and central Government. My hon. Friend Dr. Starkey, the Chairman of the Committee, alluded to centralisation in her speech and made some telling points on the need to balance it with the variable delivery on the ground that could happen without it. That is at the heart of the problem that we are addressing today. Centralisation was at least in part driven in an attempt to reduce variation in delivery and increase accountability in the public services, which make such a huge difference to the lives of everyone in this country. The public services that local government delivers are the ones that make us angry or happy-they are the ones that touch our lives most personally.
I pay tribute to the way in which local government has risen to the recent downturn. Specifically in the region for which I have ministerial responsibility, the East of England, but also across the country, I have seen the magnificent response by local authorities as they rally round to help individuals and businesses at this very difficult time.
I did not mention it, but several Labour Members did, pointing out that if there is a certain minimum level, variations could and should be the choice of the local population and the local authority. I think that the Minister is wrong on that point.
I agree with the hon. Gentleman that variations up to a certain point can and should be the choice of the local authority, but it is the extent of those variations and people's varying expectations that were alluded to in the debate.
Over the past 12 years, after an initial period that hon. Members have rightly categorised as intensive and centrally directed targeting-designed to get services that in many cases were of varying quality to come together and for agreement to be reached on what quality was-central Government are changing gear and reducing the number of strategic performance measures and re-emphasising the importance of local leadership and local decision making. As a result, councils have been given greater powers and freedoms and, thanks to the first ever three-year settlement, greater financial stability.
I am glad that my hon. Friend Mr. Turner, whom I look forward to welcoming to the Department in the new year, recognises the benefits of this settlement and I am sure that he, like me, will discuss the benefits of rolling settlements with the Secretary of State in the new year.
We have also reduced ring-fencing and devolved powers, which, as I am sure my hon. Friend Mr. Drew-once a member of my local authority, Stevenage borough council-will agree, has allowed the proliferation of parish councils. That can only be a good thing. In my own constituency and region, they have really grown and begun to flex their muscles locally. These increased powers have also led to councils making and enforcing some byelaws and getting increased choices in the democratic processes, both electorally and on leadership matters.
As Robert Neill will be glad to hear and as he knows from previous interactions with me, discussions on the general power of competence are ongoing within Government. Although they are at a very early stage, this space is definitely worth watching. We are also looking at ways in which councils can raise money for specific local economic projects, and a great deal of work is being done-as yesterday's pre-Budget report alluded to-on ways in which councils can raise money with things such as tax increment financing, renewable heat and light incentives and feed-in tariff revenue streams.
Most recently, the Government introduced the Business Rate Supplements Act 2009, which only received Royal Assent last month, so that county and unitary authorities and the Greater London authority could retain the proceeds of a supplement levied on their business rates to invest in additional projects aimed at promoting economic development-I emphasise the words "economic development"-in their area. As some hon. Members mentioned, we have also introduced the business improvement districts.
We have given local councils an enhanced role in leading their communities, shaping their area and bringing their public services closer together. Indeed, since 2007, we have given this co-operation a statutory underpinning in the shape of local area agreements. Despite the remarks of the hon. Member for Mole Valley-in future we should call him the grand old duke of Mole Valley-we have reduced the performance management burden on local authorities, working alone or in partnership, by reducing the national indicator set to a suite of 188 measures and setting a cap of 35 on the designated improvement targets set by local area agreements. In 2011, we hope to review and consult on the indicators set and to reduce their number even further, and under sustainable communities legislation, citizens can put forward proposals for change in their areas through their local councils.
Alongside those improvements, we have introduced extended scrutiny arrangements to give local councils and their electorate a powerful tool with which to influence the decisions that affect their daily lives. Measures in the Local Democracy, Economic Development and Construction Act 2009 will further extend those, and we will use the Act to change the law to allow local authorities, and other "best value" organisations, to enter into much-needed mutual insurance schemes. In those and many other areas, the Government have demonstrated regularly how seriously they take their relationship with local government. Our ratification of the European charter of local self-government in our first 12 months in office is a good illustration of that commitment. The central-local partnership and the joint signature of the central-local concordat in December 2007 are further clear indications of the value that the Government place on their special relationship with local government.
The debate about the balance between central and local government is not, however, just an academic exercise; as I said earlier, it is about getting the highest quality services for local people. That is where the Total Place approach, as outlined in this week's White Paper, entitled "Putting the frontline first: smarter government", will help to make a real difference on the ground by giving local areas more control over what they spend their money on and by reducing burdens, especially where the cost of national performance monitoring, assessments and data collection outweighs the benefits to local areas.
Once again, and despite allegations, we have made a very serious attempt to reduce burdens, and I hope that in putting the front line first, we will go even further through the commitments to reduce burdens. Our measures to put the front line first will go hand in hand with a new drive to make more comparative performance data public and to allow the Government and the people to hold service providers to account for the safety, quality and cost of the services they provide. The new comprehensive area assessment, also announced this week, has a part in that openness and transparency. Unlike its predecessor-the comprehensive performance assessment-the CAA focuses on outcomes delivered by councils in partnership with other local service providers, rather than just on the performance of individual councils.
Despite councils in some areas performing very well, internally and externally, some areas have been flagged up-for example, my county council of Hertfordshire and the provision of social housing-as causing concern. Those areas have been given a red flag. Making data available to the public empowers the public. Total Place is a revolution and will revolutionise how we deliver public services locally, regionally and nationally. We are looking at a huge change, some of which I have seen beginning on the ground. And it works!
Places such as Margate are delivering a comprehensive range of services through the portal of the local library. People can go and talk about refuse or their housing benefit, or attend a sexual health clinic while simultaneously taking their children to the local library. I am glad to say that the number of children attending that library has trebled over the past few months. We are making a huge assessment of assets in areas such as Kent. It is this kind of drive-
Debate interrupted, and Question deferred (
The Deputy Speaker put the deferred Questions (