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Department for Communities and Local Government — Central and Local Government

Part of Estimates Day — [1st Allotted Day] — Vote on Account, 2010-11 — Department for Business, Innovation and Skills – in the House of Commons at 4:25 pm on 10th December 2009.

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Photo of Clive Betts Clive Betts Labour, Sheffield, Attercliffe 4:25 pm, 10th December 2009

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.

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