English Devolution and Community Empowerment Bill (Second sitting)
Tuesday 16th September 2025
(1 day, 23 hours ago)
Public Bill CommitteesEnglish Devolution and Community Empowerment Bill 2024-26 View all English Devolution and Community Empowerment Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 September 2025 - (16 Sep 2025)
The Chair
We will now hear oral evidence from Tracy Brabin, chair of UK Mayors and Mayor of West Yorkshire; Lord Houchen, Metro Mayor of the Tees Valley; and Donna Jones, Hampshire police and crime commissioner and mayoral candidate. We have until 2.40 pm for this panel.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
Q
Tracy Brabin: Thank you very much for inviting me to give evidence. It is a real pleasure to be here. I am very excited about the way that mayors can help you as you take the Bill through Parliament. When I was a Member of Parliament, I sat on Bill Committees going through Bills line by line, as you are. It is great that we can have our voices heard.
The opportunities for the Bill are exceptional. It gives us a statutory footing for mayoral strategic authorities and clarity around the framework for devolution. We have seen from the leadership of the Government that devolution by default is the theme. One challenge when we have not had clarity is that some Departments have bought into that memo and some have not. The Bill gives us the statutory framework so that mayors who are new and are coming on to devolution understand the three tiers.
The Bill gives us that great opportunity for clarity, but also elements such as the right to request. You will know that a number of established mayors and mayoral strategic authorities across the country are further along than newer mayoral strategic authorities, have certain powers and are already delivering faster growth than the rest of the country. The Bill gives them the opportunity to request further powers, freedoms and flexibilities. For example, as UK Mayors, we have a consensus on 16-to-19 skills, on careers, and on a visitor levy that would give us the opportunity to have an income stream—£20 million for London and potentially £1 million to £2 million for my own region—that we could reinvest in our regions.
The challenges are always about potentially not being brave enough and pulling back from devolution. We have a country that is so centralised. If we continue to do what we have always done we will get the same results. I think this is a revolution of devolution, and I am really pleased to see the enthusiasm and determination of so many Ministers and Members of Parliament to get it over the line.
We are also here to help you go further. This is only part of the process. As we say among the mayors, this Bill is the floor, not the ceiling; it will be iterative as we go forward over the years. We are here to support your thinking and help with understanding.
Donna Jones: Thank you very much for the question. I have only got positive things to say. This was started by the previous Government and has been continued with gusto by the Labour Government, and I am very grateful for it and welcome it. When the new mayoral combined authority in my area, Hampshire and the Isle of Wight—two counties; 2.2 million people—is created in May next year, it will be one of the largest in the country straightaway.
We should have had a devolution deal 10 years ago. I remember negotiating, when I was the leader of a city council, with Greg Clark, the then Secretary of State. We had the deal on the table from the Treasury and it covered about 50% of the geographical area that I currently represent as police and crime commissioner. We lost out. The Secretary of State was shuffled into another Department and it fell by the wayside. That was a great pity, particularly for the health inequalities that we have across my sub-region of the country, and for the businesses that I believe have lost out on inward investment and opportunity—the opportunity cost really is the biggest thing. When you look at the most recent pot of money that the Government announced, in March this year, the roads infrastructure fund— £15.7 billion—I have calculated that my area probably would have got over £2 billion of that money for roads, and we desperately need that.
We need a seat around the table that Tracy is chairing and at the Council of Nations and Regions meeting as well. We need a mayor to be championing and spearheading my sub-region. The final positive thing for me is the opportunity in Hampshire and the Isle of Wight, two of the largest parts of the south-east of England. Over the last decade, on average, our gross value added has been about £800 per head under that of the rest of the south-east. We have opportunity, but we do need some investment and we need someone to be spearheading.
I do not really want to be negative, but I am going to identify one challenge. I think it will dissipate over time, but to start with, for whoever becomes the mayor of Hampshire and the Solent, it is going to be a bit of a sales job, because the public are saying, “It’s another layer of government.” On the whole, there is a lot of misunderstanding around the opportunity that is coming. However, over time, when you are able to demonstrate the programmes you have delivered, the investment you can secure and the positive things that can come out of working closer with the Government, I think the public will very quickly come around to the fact that they really do desperately need a mayor for Hampshire and the Solent.
Ben Houchen: I will pick out a few points. First, to directly answer the question, I think the planning powers coming through the Bill are going to be hugely helpful. Giving mayors a strategic role in that, including in setting the spatial framework—I appreciate that we used to have spatial frameworks and we are coming full circle back to them—and having democratic oversight invested in a single individual, or what people see as a single individual, anyway, is really important. Obviously, we will have to get the permission of the majority of the councils within the combined authority area, but having that focal point is really important.
The drawback of the planning powers is that they are going to be very slow to arrive. The current indication from the Department is that by the time the legislation has passed and all of statutory instruments have gone through, we will not get the powers until maybe July, potentially September, next year. That is a long time to wait for powers that I think we can all agree are going to help with our growth and progress as a country.
The other thing that is still to be clarified is how we will be able to exercise those powers. There is still some grey around what types of planning permissions we will be able to instigate ourselves, through mayoral development orders, and what we will be able to do to call in. In effect, we are getting similar powers to the Mayor of London, but at what threshold? In my area, Teesside, being able to call in maybe 10, 20 or 30 houses would be significant to drive through development and growth, but we are not sure whether the threshold is going to be set at 20 or 30 houses or at 100, 200 or 300 houses. Some clarity on that is going to be really helpful. The reason we need the clarity is that we are all in the process of having to set up the teams within the organisations, and recruit the planners and the experts. That really needs to start now, and without that clarity it is quite difficult to take that step forward. But planning is substantially the best power within the Bill to date.
I personally think—as a mayor, I would say this; I am sure Tracy would agree with me—that more mayoral powers give us directly elected mayors more democratic oversight and accountability with the public. The other side of that coin is that there is a rebalancing of powers at the combined authority, slightly away from the collective of the councils that we have in our combined authority cabinet, and towards investing direct powers in mayors. I absolutely do come down on that side, not just because I am mayor, but because there is a way in which you can make quicker progress by investing more mayoral powers, whether in the establishment of development corporations, in some of the planning powers or in various other things in the Bill. We saw it a little bit at the end of the previous Government, but we are seeing with this Government an acceleration of those powers. Again, it really depends which side of the fence you sit on whether that is a positive or a negative.
Single pot has been parroted as a huge success. I think it is a good success and a good step forward, but I am mindful that we should not over-celebrate something that is not the success that it is sometimes portrayed to be. There are still a lot of restrictions on how you can move the money around. Sometimes it is communicated as, “We’ll have a pot of money and it will be for us to decide how to move those pots of money around.” Actually, within the rules, there is a percentage of money that can be moved from one pot to another. Even within that, sometimes, there are so-called retained projects; in particular, for example, with transport money, the Department for Transport keeps its claws in by saying, “Okay, it’s your money, but we’re going to keep oversight of this project,” and if it is not happy, in effect it has a veto on taking it to the next stage.
It is a good step, but it feels, throughout the Bill, that we have taken half a step from where we want to be. That is not a criticism—the Government have done really well in getting the Bill to where it is. This goes to the point about the right to request. Nobody wants to have taken the strategic decision about what devolution should be, so the Bill is a bit of a halfway house to move devolution on a bit. I think we need, as a collective, and as a UK Government, to decide on the future destination of devolution. The Government have only been allowed to get to where they are because that question has not been answered and, to be frank, it was not answered for three or four years under the previous Government either.
The Bill is a good step forward, but there are lots of things to be cautious about. I make those points because if we want to go as quickly as the Government have said—and I completely agree with their rhetoric around growth—it could have gone a little bit further, a little bit more quickly.
Tracy Brabin: Not every mayor has the potential for the integrated settlement at the speed at which they feel they are ready. That is a challenge. For Members’ understanding, the organisation is funded from top-slicing of projects, so there is a real desire from mayors to have dedicated funding to run the organisation—for example, your legal or HR departments. Everything is top-sliced from projects. That is not necessarily the most sustainable or strategic way to fund an organisation.
David Simmonds
Q
The Chair
Pithy answers, please.
Tracy Brabin: The mayoral precept is democratically held by the mayor for the public. It would be for transport projects; it would be allocated to something specific. For example, the Mayor of Greater Manchester, Andy Burnham, uses it for young people’s travel. The Bill widens the opportunity to use the precept, but none of the public would be happy if you were paying off debts. It is fundamentally for betterment of and investment in communities, in the way that the police and crime commissioner precept is held to deliver better outcomes, whether that is more police community support officers on the street or initiatives around violence against women and girls. It is democratically held by the mayor. We have not introduced it as yet in West Yorkshire, but others have.
Donna Jones: I will be very brief because I am conscious that there are lots of Members on the Committee. The referendum limit is the prohibitor. Essentially, a mayor, like a police and crime commissioner and a council, can precept to the level that they want, but you have to have a referendum if you are going over that limit. Although the Government are right to want some checks and balances, so that you do not get areas that are really out of kilter with others, a referendum is prohibitive: it becomes very political, and it is very costly to do. Therefore, I think there should be a simpler mechanism if a mayor wants to precept above the Secretary of State’s agreed level. Perhaps that could be with written consent from the Secretary of State, as opposed to a referendum.
Ben Houchen: I am not a fan of mayoral precepts generally. I have not raised one, and have promised ever since I was elected not to raise one. Some transparency could be brought to the legislation. You have mayoral precepts, you have transport levies, and there is lobbying from a number of mayors around tourism taxes and so on. From a constituent point of view, forgetting the rights and wrongs of it, all that could be consolidated into a single precept, rather than having a separate transport levy, which can be quite opaque, particularly where you have new combined authorities. Some of those taxations are merged into combined authorities, and who has actually raised the levy can be quite lost. It ultimately all comes into the combined authority once it is established, but the Committee could take away the question of how that could be consolidated to streamline the precept. From the public’s point of view, the mayor has the ability to raise a mayoral precept; there is no reason to have a transport levy as well. For transparency’s sake, that should be clarified as a single levy, if you are going to have one.
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Miatta Fahnbulleh)
Q
Tracy Brabin: I will be pithy—and congratulations on your role, by the way; I know that we have a champion by our side. What is important is the way that we can collectively come to a consensus on the Mayoral Council and say, “The mayors are agreed that this is the next step,” and then the Government have to explain why we cannot have it. There is also an opportunity for individual mayors to have something of value that relates to them and their region specifically. The key to that, Minister, is surely for it to be as straightforward and efficient as possible, rather than hoops and processes.
As mayors, one of the things that we are discussing at the moment is taxi licensing. Just to give you the numbers, 49% of private hires operating in Greater Manchester are licensed by authorities outside of the 10 local authorities. We know, from Baroness Casey’s work about violence against women and girls, how that is a weakness in the system when it comes to the safety of young women. As mayors, we are looking to the council to help us to understand how we can do that more efficiently, but that may be something that affects only some urban metro mayors and not others. It is about how we can collectively ask, which is a really fast-track process, but then there will be individual conversations.
Donna Jones: I really welcome the right to request. Following on from what Tracy just said about mayors and their unique geographical areas, in my patch, I—or whoever is successful next year—will have the largest island, aside from Ireland itself, of course, that we represent in part of England: the Isle of Wight. That piece of water creates a lot of problems for the Isle of Wight in terms of the supply chain and the skills market; things are a lot more expensive on the Isle of Wight.
One of the things that I am really pleased about is that the Government are looking, through the Bill to establish Great British Railways, which is coming forward, to give mayors greater powers around the planning, performance, improvement and project management of rail networks in their areas. I argue that that should be extended to ferries, particularly for my area. The Isle of Wight has three main transporters: Wightlink and Red Funnel are the two car and foot passenger ferries, and Hovertravel is a hovercraft that runs until 6.30 pm every day. For a lot of people who live on the island, it is cost prohibitive to travel off it and back. If it is not included in Committee or picked up by you, Minister, I will be requesting the right to have a regulator power over the ferry companies that operate across the Solent, because of course they need Crown permission to operate across that piece of water.
Following on from Tracy’s point about the uniqueness of certain geographical areas, I think that there are other good things, such as lane rental approval. I love the idea of that. Utility companies are given permission by the highway authority to dig up the road, and it goes on and on. That has an effect on transport, pollution and people’s travel to work time, and it has a knock-on effect on economic growth in the area, putting people off travelling to or from work or taking up jobs. We have to look at that. Giving mayors the ability to effectively tax or fine companies every day they go over the set period of two weeks, or however long it would be, is absolutely key. I could go on—there are some brilliant things in here—but I welcome what you are trying to achieve.
Ben Houchen: The right to request is an interesting one. There is a bit of an academic argument about the Government wanting to standardise mayoral powers so they are same across the board, but then the right to request, if done correctly, would allow for differentiation. There is an issue about whether we are looking for a standard model or whether we want more of a patchwork. That is for members of the Committee to think about, but it is important: at the nth degree, if you have differentiation through the right to request, you could have areas with hugely different powers. That is going to create political problems, with people feeling like one area has more control than another.
Administration from a central Government point of view is also difficult. Irrespective of devolution, there is always a clawback into central Government. That is probably right, rather than giving us carte blanche over everything, but it goes back to the strategic question about what you want to happen. The ultimate right to request—this is where you are going to have proper devolution that allows for earned autonomy over time—is the relationship between combined authorities, the Department and the Treasury. The key question that needs to be answered is how you get the combined authority to have an accountable officer within the organisation. Where I think combined authorities should get to is being treated as geographical Departments. We should be treated in the same way as a Department, bidding into Budgets and spending reviews, with our full, eclectic mix—from housing to transport and everything in between—and we should be accountabledirectly to the Treasury.
The only thing holding that up is the internal civil service mechanism of having an accountable officer outside Whitehall. That sounds flippant, but it is a difficult thing for the civil service to deal with; once you deal with that, it negates the need for a right to request or anything else, because over the years organisations will mature with that direct relationship with the Treasury.
It also gets into some key niggles that I know other mayors care about: “Why do you therefore need organisations like Homes England?”. If you get into the right to request, you do not need them. At the minute we are already doing half of what Homes England does. The Government have again gone into this halfway house of strategic partnerships, instead of taking the bold leap they should have taken: where you have mayors, you do not need Homes England, so make them the financially accountable body and ensure there are ties back in to central Government for oversight and value for money. Something more strategic could be done, but for me it goes back to the point that the Government did not want to address the strategic question of where devolution is going over the next five or 10 years.
Sam Carling (North West Cambridgeshire) (Lab)
Q
Tracy Brabin: Thank you for that question; I know your mayor has raised that with me. The strategic overview is really helpful, because some councils might have different processes. Uniformity across mayoral strategic authorities can only be helpful. I would say that the majority of mayors feel that that is a solution to some of the problem, where we have seen cowboys from way outside people’s patches, not necessarily with the same expectations on their vehicles or safety and so on, and we do not know who they are. It is important to have that clarity for the safety of the public.
Sam Carling
Q
Tracy Brabin: I suppose the same question could be asked of the police and crime commissioner. The deputy mayor for policing and crime, Alison Lowe, is not directly elected by the public; she is accountable to me. I am the one directly elected, and we hold the chief constable to account. That is democracy. The outcomes from that individual will reflect on the impact that the mayor is having, good or bad, so that is about public scrutiny as well.
It is also helpful, if you are a strategic or combined authority, to have a good mix of partners. In West Yorkshire, we have three opposition members, so we are open to scrutiny and to challenge; that is where you can get the clear water of what is going on.
Donna Jones: On licensing and the taxi point, when I was leader of Portsmouth city council 10 years ago, we were one of the areas where Uber exploded first. We were a growth area for it on the south coast, but I think its registered office and its licensing for drivers was up in Wolverhampton or somewhere, so it was miles away and had no bearing on what I was trying to deliver in Portsmouth, in terms of signage on taxis and the uniformity we were trying to achieve.
On safety, and the point Tracy made about what we have been calling for as police and crime commissioners, I was calling three years ago for CCTV to be mandatory in taxis. What you could do, through Parliament, is to mandate that through separate taxi licensing regulation and law. Strategic authorities could play a part, if the licensing authorities remain, like local planning authorities, at the lowest level with the unitary authorities—as it will be after local government reorganisation. The strategic authorities could then have the right to call in or set some strategic licensing powers that the licensing authorities beneath them have to implement. That could be a way to address it.
Ben Houchen: On the commissioner point, I echo what Tracy says: ultimately, the democratic power of that is vested in the mayor. It is for the mayor to appoint, or not. That goes further than just commissioners, with the changes in the Bill around the establishment of mayoral development corporations, the appointment to the boards of those and the fact they can, if they choose, take planning powers, compulsory purchase order powers and so on. You are in effect appointing a board that the mayor appoints—nobody else appoints it; it does not have to be democratically elected, with the exception that there has to be a councillor from the authority where that development corporation is established. We have had some experience of that over the last couple of years in Teesside, as I am sure you are aware.
Ultimately, if you are not happy with that, or with the strategic direction that the mayor is setting for the board to follow, while individuals are not necessarily directly elected, the mayor is accountable. Therefore, if people are not happy with the commissioner, that can be shown through the ballot box at a mayoral election. Whether it is the night tsar or someone else—I apologise; I forget the one you said was appointed in Peterborough—ultimately, it is for the public to decide whether they are happy with how the mayor conducts matters and uses the powers given to them via the Government and Parliament.
Paul Holmes (Hamble Valley) (Con)
Q
Welcome back, Mayor Brabin; I wanted to ask about some of the evidence we heard earlier from the District Councils’ Network. There was a concern that the legislation could undermine some of the traditional links between the public and their parish and town councils. I will ask for a brief answer, because I am aware that there are other Members who want to ask questions. For the two existing mayors, can you give an example of how you have managed to encapsulate the views of town and parish councils to help to guide you through your mayoral term, and whether there are any lessons that could be learned? Donna, have you started to think about how you will encapsulate that and make sure that people are listened to on a ground level politically?
Tracy Brabin: We have not been subject to much of that larger reorganisation, but we are determined to listen to the voices of others, whether through mayor’s question time, going out to the public, where councillors and individuals can ask any question, or “Message the Mayor” on the BBC, where anybody can ring in and ask any question. That also includes working with our voluntary, community and social enterprise sector, whether that is on the mayor’s cost of living fund, or working with smaller organisations on the impact in their communities, towns and villages. I would hope there would be a consensus in West Yorkshire that people felt heard.
I know for a lot of people there will be a sense that there is potentially a power grab and powers are going in the wrong direction. I absolutely believe that this is localism in its pure sense, because these people are elected by the public—275,000 people voted for a Labour mayor in West Yorkshire. You have that mandate. We have skin in the game. We know our communities, businesses, further education colleges, universities, innovators and entrepreneurs. We can definitely deliver for villages, towns and cities in our patch.
Ben Houchen: The honest answer is that, with the development of combined authorities and regional mayors, and a lot of reorganisation going on at county council level, as well as lots of unitaries—Teesside was one of the first unitary areas, many years ago—there are a lot of people looking over their shoulders at what reorganisation might mean. I say this as a previous town councillor and a former unitary councillor: I am not hugely convinced of town and parish council involvement at a regional level. There is a more fundamental question that should be asked around the modern need for town and parish councils in their current form. That is obviously well above my pay grade, and I am sure you will be considering that at some point in the future. It is not something I personally foresee getting much traction or involvement at a combined authority level.
Paul Holmes
I thought you might say that—thank you.
Donna Jones: I have represented my two counties, with 2.2 million people, for four and a bit years now. It is tough, because I have two large geographical counties; it would take me three and a half hours to travel from north to south of my patch, and I know colleagues have the same issue. If you are doing your job well and you are delivering, the press—the media, radio and TV—is your best friend. The power of being able to work with the press to get out the good news of what you are doing is very impactful. For mayors who have police under them, if the police are delivering and helping, that is another way of getting messaging out there.
On parish and town councils, I think that in my area, the rub will come with local government reorganisation, which thankfully is a year or two behind devolution—or planned to be one year behind it. I am trying to very clearly separate the two: this is about spending and more power to our elbow in Hampshire and the Solent, and that is about how we save money through local government reorganisation.
If I was still a unitary authority leader, facing the prospect of moving from 15 councils in my area to perhaps four or five, I would be consulting on parish and town councils, if we did not have them in the area that I represented. When you have four very large unitary authorities across a county such as Hampshire, which has 1.8 million people, the nucleus of your council becomes much further away from the village or town that you live in. Therefore, from a democratic perspective, getting things at that lower level to give real buy-in will be key.
Vikki Slade (Mid Dorset and North Poole) (LD)
Q
How do you understand those different areas? In my area, Wessex, there will be four counties, with two different police authorities and two different fire authorities, and the authority itself. It will all have to line up eventually. I am really concerned about how you can improve services for your residents, because that is what this is all about. It feels very remote when services such as police and fire might be very different in the New Forest compared with the centre of Portsmouth, the North York Moors or one of the cities.
Tracy Brabin: If I could just make the case for mayors and police and crime commissioners, we have had so many amazing opportunities because of those two responsibilities—the teaming and ladling of responsibilities and moneys, and being able to have a strategic police and crime plan. Crime does not just come from bad people; it comes from poor housing, a lack of skills and opportunity, and a lack of transport to get to jobs and training. The ability to bring together those responsibilities in a Venn diagram gives us really great outcomes.
One example is using money from the apprenticeship levy share scheme that would have gone back to Whitehall. We have kept some of that money in the region, including £1 million from Morrisons, to train up 15 PCSOs to go on my bus network and in bus stations, so that we can target my safety of women and girls plan. That opportunity is a gift. I know that the Mayor of South Yorkshire called an early election in order to get those powers, because he saw the opportunity. I also know that Kim McGuinness, who has been a PCC and is now a mayor, is desperate for PCC responsibilities, because she knows the benefit.
To your point, the challenge is coterminosity. I know that the previous Home Secretary was very focused on trying to identify how to get not just savings, but efficiencies, in coterminosity. Bringing fire into that makes a fair bit of sense. In West Yorkshire, we already have a really decent relationship between fire and police, so I am not sure whether having additional powers would make a substantive difference, but I will say to the Committee that mayors need to be in local resilience forums. Following the horrendous attack in Southport, the public, the Government and the press went to the mayor, but the mayor is not privy to all the information in the first instance. The resilience piece is really important, and I know the Bill is going to address that.
The Chair
Donna Jones, we have five minutes left for this panel.
Donna Jones: I will be very brief. While I was effectively advocating for my own job to go, I support what Tracy is saying, because it is about representing the public as best we can and spending taxpayers’ money wisely.
I will give you an example of why there is support for police and crime powers, as well as fire, going into a mayor’s office. One of the biggest frustrations that I have had as a police and crime commissioner has been the lack of ability to convene. I can convene with good will, so I can ask people and bring them together, but I get all different levels from different councils. Sometimes I get the director of children’s services or the director of adult social care coming to my strategic violence reduction meetings; sometimes I get the community safety manager.
Community safety partnerships are hit and miss in a lot of councils—you will know that from your patch. Some district councils see the benefit in community safety, and they still have their community wardens; in others, the emergency planning manager is doubling up as the CSP manager. PCCs have historically paid money towards the CSP manager and the functions that they are delivering, knowing that really, they are just propping up the council’s emergency planning management team, and there is not really a CSP at all. It comes together when, sadly, a baby has died or there is a need to convene a domestic homicide review. That still sits at the district council level, which is an oddity to me.
A whole load of things are aggravating factors. On the serious violence duty, for example, my requirement is to make sure that everyone who has a duty under that is fulfilling it, but I do not have a direct duty myself. I have to make sure that all the councils are doing what they need to do. Each year, I am given a pot of money from the Home Office to do the strategic needs assessment, and then I co-ordinate that and pass it back to the Home Office, on behalf of prisons, probation, the police and all my councils. Some councils turn up and play a part in that; some do not.
Giving the mayor the public safety commissioner role, so that what the councils are currently doing can be pulled through the mayor, and so that the mayor has the right and ability to convene and make sure that people are working and fulfilling their duty to collaborate, will be a game changer. It will make communities safer. However, police moneys are ringfenced, while fire money is not—that is a matter for you.
In relation to local resilience forums, I completely agree. Baroness Jane Scott, who was Minister in the then Department for Levelling Up, Housing and Communities, did a pilot about having sub-committees sitting under the main LRF executive, which is politically led, to brief MPs and council leaders on the highest risks that the council chief execs are working on with all the statutory agencies. We were not one of the selected areas, but we have decided to go ahead and set one up in my area and, as the police and crime commissioner, I am currently chairing it.
Ben Houchen: There has been a huge Government push, in recent months, to try to get the co-ordination and coterminous boundaries to match, because this Government have definitely doubled down on the idea that mayors should be both police and crime commissioners and in charge of the fire authority.
It probably does not surprise many people in this room that I am one of the exceptions among pretty much all the mayors that are currently elected. Again, for me, it comes back to the strategic point. It is not particularly about the police; it is about the role of the mayor and the role of the combined authority. I personally believe—and I would say this, would I not?—that one of the reasons many of the combined authorities have been so successful is because we have a very narrow remit, which is largely economic regeneration, investment and job creation. That obviously links in to things such as transport and skills, and there is therefore a logical argument to take that further to health, policing and fire and so on.
I would go a different way. If it were me—as I have said, it is not me and it will not be me—I would not give us such broad powers. I would not give me police or fire. What I would give me is more powers over the things I already have a remit for. I would go deeper, rather than broader.
I would therefore try to build into a Bill the need and requirement for better consultation and co-ordination with other democratically elected leaders. The LRF is a perfect example of better co-ordination. The mayor should be on the local resilience forum—that is just a miss, because we are brand new. It does not mean that we have to take over the local resilience forum and be in charge of it all; I think the concept goes beyond that. Obviously, I would say that, as a small-state Conservative, because the more powers you give us, the broader, the more bureaucratic and the less effective we become. Keeping us narrow, but giving us more powers in relation to what we have control over, rather than just broadening it out, will give you better outcomes from us. As I say, I know that I am the exception to the rule in that opinion.
Mike Reader (Northampton South) (Lab)
Q
Tracy Brabin: I am the Mayor of West Yorkshire because there was not a one Yorkshire, so I would say that it is for local people to decide.
Donna Jones: The Government have made a commitment to have all of England in a devolved deal by 2029. If the Government want to deliver on that mandate, which they ran on in the general election, I think that they have no choice but to intervene.
Ben Houchen: I think we are now at a stage where Government need to force it.
The Chair
I am afraid that that brings us to the end of the time allotted. On behalf of the Committee, I thank all our witnesses for coming and answering the questions. We now move on to our next panel.
Examination of Witnesses
Andrew Goodacre and Allen Simpson gave evidence.
The Chair
We will now hear evidence from Andrew Goodacre, chief executive officer of the British Independent Retailers Association, and Allen Simpson, deputy chief executive of UKHospitality. For this panel we have until 3.10 pm.
Kevin McKenna (Sittingbourne and Sheppey) (Lab)
Q
Andrew Goodacre: Looking at it from a wider view, we are largely supportive of devolution and what is in the White Paper. If I put the retail lens on it, though, especially independent retail, which are the businesses that we represent, they will always ask, “What is in it for us?” There is a fear among those businesses that if you look at the national growth strategy, neither retail nor hospitality really feature in there as one of the eight key areas for investment and growth. I have not seen all the local growth plans. I have looked at the north-east and the west midlands one—that is where we are based—and largely those growth plans are aligned to the national growth areas. I understand that: the mayors, the areas and the regions want to create jobs that are skilled and well paid, and that grow the local economy by focusing on industries of growth.
You could argue that retail, and high street retail especially, has seen itself decline over the years as customer behaviour has changed, so I understand where the direction is, but there has to be a fear. If I was a shop owner now looking out, I would be saying, “Okay, I hear where you’re going to spend money. How does that work for me? How does that make a difference for me in my high street in Coleshill in the west midlands, near where I live?”—or in Solihull, or anywhere else in the UK that they might be?
If you look at the north-east plan, I do not see high streets mentioned once—I have only scan read it; someone may be able to point me in the right direction—and in the west midlands plan, I see priority high streets mentioned. Priority high streets are where they are planning to invest and create jobs, so they recognise the need to invest in high streets in the areas where they are creating jobs. I am not sure where that leaves the others. If you look at it purely from a retail point of view, there has to be a fear that the focus on high-tech, highly skilled jobs and on creating in the local economy will create pockets of success, but it will also create pockets of neglect as well, if we are not careful.
Allen Simpson: I agree with that. The element of a local growth plan that I think is really positive is the word “growth”. Quite often, when we ask local communities what they want, we are talking to them about whether they do or do not want housing, but encouraging local communities to think about what sort of growth they want is really valuable.
I think you are right about the tendency that exists. Often, if you ask local political leaders what sort of growth they want, they will start talking about wanting to be a fintech hub. In an old life, when I was at a devolved organisation that used London mayoral money to drive economic development, I quite often used to get asked by people around the country how they could create a fintech hub in Devon, Dorset or wherever. I used to say, “You’re probably not going to. You’re likely not going to succeed, but there are industries that you can develop.” That might have been agritech, agricultural tourism or food supply chains, depending on where they were in the country.
Your point about encouraging local communities to think about the role of hospitality and retail in driving quite visible growth is really powerful. There is something about the distribution of the value of growth that we would encourage local communities to consider. I happen to know your patch quite well—I am from Maidstone, so it is a world I know. If you look at the areas around the Kent coast, for example, which have done well over the last few years, the characteristic of the growth strategy has been to use hospitality, leisure and experience as a way of driving other forms of growth. Take Folkestone, for example, and the work around the Harbour Arm there, or Margate, or 20 years ago, Whitstable. With growth strategies that, first, ask how you make a place liveable and attractive, you find that you crowd in other forms of growth, which may be within the eight industrial sectors.
I am very in favour of local growth plans, because they help to encourage local communities to ask what sort of growth they want and to be pro it. To a hammer, everything looks like a nail, and if you ask people what sort of growth they want, you get an answer about what growth they want. If you ask people what other sorts of development they want, often you get an anti-development answer.
Manuela Perteghella (Stratford-on-Avon) (LD)
Q
Andrew Goodacre: I am really lucky in the role that I do. I get to visit places around the country. I have become involved with initiatives. Recently, there was an initiative from Visa, which sponsored the “Let’s Celebrate Towns” awards. I was judge for one section of the awards, which was about high streets that had been regenerated. Local areas had to put themselves forward, and we considered elements of the regeneration—partly digital, and partly how they have integrated transformation into their world and understood their target market. I have visited three of those places since in the last two months.
In fact, last month, I was in a place called Oakengates in Shropshire, near Telford. I visited Enniskillen in Northern Ireland, and I visited New Malden, a suburb in south London. Those are three different areas—three different socioeconomic places with different background foundations. What they all have in common is local pride, local involvement and local people making decisions. Not all of them are councillors or politicians, or sit on a local authority. New Malden was about a focus group looking at ways they could improve their status, being between Wimbledon and Richmond—often the forgotten part. They have created a fantastic cultural experience, because they have a large Korean population that is integrated very well into it.
If you go to Oakengates, it has a very simple local high street. It has a huge retail park near it, but it works well. The local council and local people work well with the local authority, and they receive funding. It has free car parking as a policy—no wonder there is a 94% occupancy rate on the high street against an average of 86%. Enniskillen has a business improvement district, which is funded by rate payers, although it is slightly different in Northern Ireland. Again, local people are proud of their high street. When I walked up and down, I saw only one empty unit.
It is about local people with pride in their area who really understand what they are trying to achieve. Each one has a different mission. New Malden wants to become a food centre and a tourist attraction in that respect. Enniskillen wants to build on the fact that it is the only island town in Northern Ireland and is worth visiting; it has so many fantastic local features. Oakengates wants to be a local place for local people, and not forgotten about despite the huge retail park next to it.
I see plenty examples of local people, if they are given a chance and the right involvement and engagement, being able to make the right decisions for their areas, because they really understand what they need. Sometimes they need help and guidance, and it is not always perfect. I am sure that if I really thought about it, I could think of some bad examples, but just recently I have had the privilege of seeing three where it works.
Allen Simpson: Great examples. I mentioned Folkestone as an example of somewhere that has regenerated incredibly strongly. That is, to some degree, non-replicable because one thing that has driven Folkestone’s success is a wealthy local man who has ploughed a lot of his personal wealth into regenerating his community—largely, from what I can see, for social purposes. Bootle is an interesting case study of a specific national Government grant being used locally to drive high street regeneration, with the intention of bringing in other sorts of business behind it. That has been quite successful. There is another example up in Aberdeen around the dock area, where a mixture of local businesses and—I think I am right in saying—council grants have reduced the cost of access.
A universal trend seems to be peppercorn renting, to the extent that an ex-industrial, brownfield site will be brought online. This was true in Peckham when the cocktail bar, Frank’s, opened above the Peckhamplex. I was young at the time, so it was 15 or 20 years ago. Low rents have two benefits. First, they allow businesses to take a risk on opening in an area where it is unclear whether there is live spend available to them. Secondly, those opportunities are open to local people. That is an important point, because the wealth generated tends to be returned to the community in quite a powerful way. I come back to the point that if you can get that right—and there are lots of examples of where it has been less successful—you get other sorts of economic activity crowding in. If it goes well, you have to manage questions of gentrification and how you keep the character of the local area, but that is a second-order concern for a lot of areas.
The Chair
Can I just ask you to keep your answers fairly short? We have two very important questioners coming up. I call the Minister.
Miatta Fahnbulleh
Q
The Chair
Before you answer, can I ask you to direct your answers to the speaker or the Chair, rather than to each other?
Andrew Goodacre: Running a high street business, whether it be retail or whatever else, is expensive, and the costs are going up all the time. When you talk to those business owners, they will tell you that the three biggest chunks are labour, business rates and rent. If your rent is only ever going to go up because the lease stipulates it and there is no negotiation around that, irrespective of what the economic climate might be or what has happened in the local area to perhaps take footfall away to a different part of town, your business is left with ever-increasing costs and no power to change it. That just does not seem right.
If there is pain because of a change in the area, the landlord, the property owner, has to feel some of that as well. At the moment it is only ever faced by the commercial tenant who has a difficult decision to make: either they go with the higher rent in the hope that they can compensate for it or they leave the business. They should not be faced with that choice, in fairness. These are hardworking businesses. People have probably been running those businesses for many years. There needs to be a more sensible, mature conversation taking place between landlords and commercial tenants. I think it does happen; I think there are good examples of it. But if we leave it to best practice, if we leave it to the industry and good actors dominating, we will be waiting another 20 years and sat here moaning about upward-only rents, so we do need to remove it.
Allen Simpson: Two quick points on rent reviews. The first thing is that upward-only rent reviews also drive up business rates because of the link between rateable values and rents. So the Government’s intention to reduce business rates expenses for businesses relies on addressing upward-only rent reviews. They do bake in inflation in the way that you say. There is an A/B test here, which is that the pubs code, of course, banned them some years ago. That has increased the amount of time that the average pub tenant stays on site. It has not led, that I can see, to any other negative outcomes, so there is evidence that it does actually increase tenancy rates.
Miatta Fahnbulleh
Q
Andrew Goodacre: We touched on good examples, and we should look to learn from them. On local engagement, you need local leadership, but they need help sometimes. That help could be internally from the next level of authority up, or it could be from an external body. One body that I thought was beneficial to high street regeneration at a local authority level was the high streets taskforce that was set up as part of the Institute of Place Management for Manchester Metropolitan University. It has now ended as a body, although in name it carries on because stakeholders—we were one of those stakeholders—would meet on a quarterly basis to discuss opportunities, challenges, good news and bad news on high streets and high street regeneration. We would share those ideas and share them back with the high streets taskforce, and they would help that local decision making.
Quite often what you find is that people know what they want to do. They just do not quite always know how to do it. A think-tank independently managed and run could help them with that “how” and the implementation of their ideas. If you do not bring it back as it was, something similar would really help that local decision making, because sometimes the pride is there, the passion is there; they just do not always have the nous to make it work in the way they hoped for.
With regard to high streets, I see it from a retail point of view, but I recognise the fact that high streets are increasingly dominated by experiential elements—cultural, leisure, more hospitality driven—and I have no issue with that. It does mean that we need better change of use of some of the retail sites that become empty. I know planning is part of this whole issue, so speeding up the planning process is important.
Ideally, I would like to bring homes back into high streets where the possibility exists. There are some large, empty buildings. I live quite near Stratford-upon-Avon and I still go past a VHS store that closed in 2016. It is still empty. I find it remarkable that a landlord can let a big place like that stay empty for so long. We have not looked at the opportunity of what more we could do with that, or what we could do differently with that. If we can bring homes and people back into high streets as places where people want to live, preferably with affordable properties for younger people, I think you would start to create local economies that would drive some of those high streets as well.
Allen Simpson: The question is what level you devolve at. Clearly, we are all nimbys. Nimby is an irregular verb—you are a nimby; I am concerned about my local environment. There are circumstances in which we need to find ways of treating high streets like strategic infrastructure. There will be asymmetric benefits and costs if you live close to a high street or, as people used to, above shops—that is less common than it was—versus being in the surrounding community. Sometimes local politicians do need help. We have seen an approach to that in London that the Committee will have views on.
I am very much in favour of hospitality zones, which have specific licensing approaches, where there is some form of recognition that you get to a “yes” more quickly. There is a specific question around Andrew’s point about bringing people back into former high street or commercial areas, in the City of London or elsewhere, around agents of change. I am very in favour of placing a burden on developers to fit the development around hospitality, rather than buying a flat next door to a pub and then being annoyed that there is a beer garden, for which I have zero sympathy.
David Simmonds
Q
Andrew Goodacre: That is a good question. What works well at the moment is the business improvement district model. Where it falls down slightly again depends on the people involved. A good BID represents the voice of local businesses, which are paying through business rates, because the levy is on the business rate, as we know. What I saw in Enniskillen at that time was a BID that really listened to its stakeholders, shared ideas with them and took back the feedback. One of the things introduced there was an Enniskillen gift card that could be used in any shop in that area—ideal for the tourist market that it is trying to appeal to.
We should establish BIDs; the problem with them is that they can be very indifferent, in terms of their make-up and the quality of them. Again, the funding often becomes a point of contention because you are adding to business rates, which is already a massive point of contention for most business owners. In a way, I would like to see BIDs funded in different ways, through the devolution White Paper. Their performance would therefore be a bit more targeted. Part of their performance metrics should be the ability for them to show that they have engaged, understood and taken forward what local business people want, in my case, within their high street.
Allen Simpson: An observation: if you are looking to drive growth, by definition you are looking to bring in businesses that are not there or do not exist, so to some extent your problem is how you consult businesses that do not currently exist. To some degree, it is less about having consultation with specific businesses and more about having an approach that is pro the foundation of businesses in a given area. Clearly, there will be examples where licensing rules could be better consulted on so that existing businesses can expand, but I wonder whether it is less about consultation and more about taking a proactive approach to growth.
Maya Ellis (Ribble Valley) (Lab)
Q
Andrew Goodacre: I think it would be a shame if we lost some of those brands that people have worked hard to create. I think the visitor economy is so important. The most successful independent retailers are in those visitor economies, because people often visit looking for something different that you do not see in a chain store of a large retailer. Creating that identity is something that I hear all the time from successful places. They feel as if they are part of an identity—they have something around them that says, “Yes, we can buy into this.” The riviera example is a good one. It would be a shame if that local effort—that local sense—was lost. I think Falmouth is another good example. Falmouth has created its own essence of Cornwall within that place. You should not lose that. They are so important. It seems counterintuitive that a push for devolution to create more power at a local level means that you would lose local identities. That would be counterintuitive, so we need to make sure that does not happen. Actually, those should be reinforced with better funding.
Allen Simpson: I ran Visit London for five years, so I worked on this a lot. My observation is that the money is not there. Unless you are London, Edinburgh or, to a certain degree, Manchester, which has a very high-quality marketing agency of its own, the money just is not there to do it. Visit Kent has just gone bust. The ability to market a region—sometimes, we devolve the responsibility but not the money with it, and I think that is an example. Equally, not everywhere can be branded. I am not going to pick on anywhere in particular or have one of my regular digs at Essex, but where there is a solid local brand, at the moment, we do not have sensible ways of doing that—just mechanisms to do it. Visit Britain works quite hard internationally to disperse people’s awareness of the UK outside of Edinburgh, York, Lincoln and London, but towards a domestic market, which I think is largely what you are talking about, the exam question is, “What is the pot of money handed down to local communities to do it?” because it is incredibly expensive doing marketing.
The Chair
If there are no further questions from Members, on behalf of the Committee, I thank both our witnesses for their evidence. We will now move on to the next panel.
Examination of Witnesses
Gareth Davies and Bill Butler gave evidence.
The Chair
We will now hear evidence from Gareth Davies, Comptroller and Auditor General at the National Audit Office, and Bill Butler, chair of Public Sector Audit Appointments. For this panel, we have until 3.40 pm.
Miatta Fahnbulleh
Q
Gareth Davies: I will start, and then Bill can come in with some facts and figures on the current state of play with the firm’s contracts. First, it is important to say that, before I did this job at the National Audit Office, I was an auditor in local government, so in the past I have had a foot in both camps. Audit in the public sector is a fundamental part of our democracy; in local government, it is a fundamental part of local democracy.
Ensuring effective local accountability through independently audited council accounts, governance and value for money arrangements is a fundamental part of a healthy, functioning, tax-paying society. There is no doubt that we have run into some very serious problems with that in recent years, such as big backlogs of unaudited accounts. When those backlogs start to be cleared, at first we are seeing disclaimed audit opinions, which are essentially the auditors giving no assurance on those accounts. That is an unprecedented and unacceptable position to find ourselves in for a significant amount of public money. People have a right to expect audited accounts as a bare minimum when they pay their council tax and business rates, so this is a big system failure that needs fixing as quickly and robustly as possible. That is my starting point.
The obvious question is: why has this happened? Unusually, we have a natural experiment in the UK on this. No other devolved country has the same problem as England, with a failure of local government accountability and audited accounts. Everybody has had a pandemic and changes in auditing standards and so on, but only one country has dismantled its audit machinery and expected it to function nonetheless. Those changes were not implemented in Wales, Scotland and Northern Ireland, so we do not have to look far for the explanation. That is why I welcome the creation of the Local Audit Office in the Bill. It is the right measure to correct that problem. It is necessary, but it is not sufficient. We will want to explore what else will be necessary.
The reason it is necessary is that it brings back together the essential functions that make for a robust audit regime. That includes letting the contracts with the firms to do the work, specifying that work; holding the firms to account for delivery on time and to the right quality standard; supporting the firms with technical advice and help with tricky issues, many of which we are seeing across local government; and robustly speaking with local government about where problems need to be fixed.
It also includes working as a partner with local government to improve the quality of accounts, and make them less burdensome to local authorities and more useful to taxpayers and businesses. There is a big agenda beyond just the creation of the Local Audit Office—it is a necessary but not sufficient requirement.
Bill Butler: I should also declare an interest, although mine is slightly more historic than Gareth’s. I spent 35 years in local government audit before I escaped. As you can see, Chair, I have been dragged back. I hope I am not going to sound too much like an echo, but I agree with everything that Gareth said. The effective audit of public bodies, which are funded by compulsory taxation and not by voluntary shareholders, is fundamental to proper democracy, governance and the financial credibility of English local government.
The world looks down on the large number of disclaimed audit opinions. We should not underestimate what bankers in New York and the large accountancy firms are thinking. When they look at that, they cannot comprehend how we have ended up in this position. We therefore strongly welcome the commitment to reform, the changes in the Bill and the creation of the Local Audit Office.
We particularly like the fact that it will reestablish a co-ordinated local audit system, and bring together responsibility for audit appointments, the code of practice, audit quality and the performance of auditors, because local government audit is in a very bad position. The only option available that anybody could think of to tackle the increasing backlog of delayed accounts was to disclaim opinions. It is really important that we do not replace a backlog with disclaimed opinions. Currently, there are 273 bodies that have received disclaimed opinions—51% of the bodies in England and Wales that we are responsible for appointing to. That is up to ’23-’24. Of those, 236 are for two or more years, and 53—that is 11%—are for four or more years. In total, that means there are 716 sets of accounts in English local government for which there is no assurance from the auditors. Gareth did not mention this, but it also affects his opinion on the whole of Government accounts, which he has had to disclaim owing to the disclaimers in local government, which affect and knock on to the credibility of Government across the country.
We also think that there is a risk to the broader proposed local government reform because of the bad apple in the barrel. If you are constituting a new authority and you are incorporating an authority with a number of years of disclaimed opinions, sorting that out will get in the way of the effectiveness of those bodies at exactly the time when you want them to be focusing on their new responsibilities and opportunities. I will say the same thing as Gareth, but in a slightly different way: we cannot envisage a solution without the Local Audit Office, but it is not the solution. Bold action is required to cut through the Gordian knot that exists at present. The sector seems unlikely to resolve the underlying issues without, as Gareth has made clear, support both to those bodies preparing accounts and to those auditing the accounts.
Miatta Fahnbulleh
Q
Gareth Davies: The first would be skills and capacity. This sector has suffered from a loss of skilled expertise. Public audit is not interchangeable with company audit; it is a specialist field—you are auditing political institutions and reporting in the public interest. It is a different skillset, with some common areas with the rest of the auditing profession, and it attracts people who are interested in how public bodies become successful and how they achieve value for money, and so on. The pool of experts in that area has reduced sharply, so the system faces the challenge of building up that body of expertise and skills.
It is not just the auditors. In the past, the auditors did a lot of the training, and people then went on to careers in local government, the rest of the public sector and other sectors. It was a breeding ground for the finance function of local authorities. Individual local authorities cannot typically sustain large training programmes of accountants on their own, so having a regime that supports the development of that skillset is vital.
The other essential is getting hold of local government financial reporting and radically simplifying it, streamlining it in a way that can still be incorporated into the whole of Government accounts. That is always the caveat, and the reason for some of the complexity, but I do not believe that it is an impossible task. At the moment, the accounts are too easily dismissed as only of interest to the auditor because they are long, complex and quite difficult to follow in many places. There is no reason why we should put up with that. I know the Chartered Institute of Public Finance and Accountancy and the wider profession have started work on what professionals think would represent a high-quality, meaningful financial statement that would clearly explain to taxpayers how we have used their resources.
There is a danger that everyone focuses only on the council budget and ignores the accounts. That is dangerous, because the balance sheet matters as well as annual expenditure.
Bill Butler: I can save quite a lot of time by saying that I agree with all of that. This may happen on a number of occasions, and we have not shared briefs. If you start with those who prepare the accounts, that needs to be revitalised. It is moribund, and people are looking at the scale of this task and finding it difficult. Some of this can be the support that Members and Ministers can bring to bear in terms of its importance, because—again, echoing Gareth—it is not considered to be interesting and it is too easily put aside, but that is not going to get any better. There is a real risk that it will get worse unless preparers are properly supported, and unless it is clear what revisions are possible to make the accounts simpler and deliverable.
There are issues around how we encourage colleagues who work in the audit firms. That is a broader issue, because they are bound by the technical standards imposed across the firms by their relationship with the Financial Reporting Council. However, at the moment, that seems occasionally to act as a block to overcoming that risk. We need to be honest about the fact that that risk assessment is there and about what we can do around it.
As Gareth said, we have been looking, with CIPFA, at reforming local government accounts for some considerable time. The clock has now ticked down, I think. One of the things I hope for is that the commitment shown to reform so far carries on across these broader areas, not of all of which are susceptible to legislation, but all of which would be, I hope, susceptible to encouragement.
Gareth Davies: I would like to add one other thing, because an important bit of the full picture is governance arrangements in local authorities. I know that the Bill includes provisions on audit committees, but it is important that local authorities have robust audit committee-type arrangements. I am not prescriptive about exactly what form they should take, but meaningful engagement with internal and external audit and a connection to the governance of the authority as a whole through its political leadership are essential to good governance. That means having somewhere where difficult questions can be asked and answers gained.
In quite a few of the disasters we have seen in local government finance in recent years, it is the governance arrangements that are primarily at fault in not picking up on excessive risk-taking and lack of understanding of the nature of the risk being taken on, and so on. It is another example of where a more robust audit system will not, on its own, solve everything—although it will definitely help, because it will bring those questions to the audit committee table—but the audit committee itself needs to be a functioning, robust and effective part of the governance of the authority.
Bill Butler: If I may say so, these are not things that can wait for the Local Audit Office, which has a massive task to perform anyway. If we wait, these problems become intractable, and the organisation’s chances of succeeding, if it has any at all, are very low,. They are issues that need to be addressed now, while we have the opportunity and—I hope everybody agrees—a pressing need.
David Simmonds
Q
In a local authority, there is the collection fund, which essentially covers all the income that it is due to collect, then there are pension schemes, the dedicated schools grant, the housing revenue account and the parking revenue account, where there are slightly variable legal ringfences. All of those pose risks and many of them are impacted by elements of the devolution proposals affecting who will be responsible for decision making and what that revenue might underpin in terms of borrowing or day-to-day expenditure. Will you give us a sense, from your experience, of what the risks are, what the potential opportunities are and where changes are needed to, for example, the ringfences, and your views on the inclusion of the dedicated schools grant in the annual, legal council tax-fixing process, which might help or hinder the proper management of some of those financial risks.
Gareth Davies: Do you want to go first, Bill?
Bill Butler: Yes, then you can agree with me.
The Chair
We heard that!
Bill Butler: I think the nature of those statutory balances is actually one of the significant things in how we handle the disclaimers, because they are a part of the mechanism that is different from a balance sheet outside of local government. Of course, because they are statutory, that does mean that they are amenable to change.
On how they will affect the broader issues, it depends on where you are, because there are still quite a lot of places where there are no problems and where you can deal with it. The problem arises, as I alluded to earlier, when there is a bad apple in the barrel. We have seen in previous reorganisations that bringing on board a set of accounts and an organisation that is not on top of those things—where there is no assurance about where those boundaries have been set—poisons the water across the whole thing.
If you have one district coming into a newly constituted authority or organisation, the whole of the account will cause problems. That problem tends to be long standing in nature; the people who might have been able to help you resolve it have gone, and the attention is focused elsewhere. It is impossible to say, other than on a case-by-case basis, how that would impact things, but my view—our view, I think—would be that if those issues can be addressed and clarified now, that will lead to a better situation. If you have places with four years’ worth of disclaimers, finding a way through the statutory balances is will be fundamental to avoiding problems down the line.
Gareth Davies: All I would add is that, in a way, that is a good example of the accreted layers of complexity that now represent local government accounts. There was a strong argument for each ringfence when it was created, but when you stand back, the total picture is now very messy and complex. This is an opportunity to take stock and say, “Which bits of this actually serve our purpose now? Is there an opportunity here for simplification?”
As Bill says, some of these are statutory balances, which can be determined by Government, and that may be one way of accelerating the restoration of proper audit opinions, for example. Rather than the auditor agonising over questions like, “Where do I get the assurance over this statutory balance? It’s not been signed off for many years,” using the statutory process for determination of the balances might be part of the solution. Of course, there are all sorts of downsides with that kind of thing, but it is important that we are clear about how long it will take to get to a properly constituted set of accounts for a new organisation.
Bill Butler: Striving for something that is good, rather than pursuing excellence and achieving nothing, is fundamentally important.
David Simmonds
Q
Secondly, in respect of specific funds, in debates around devolution, it is often argued that, for example, there should be freedom to spend the proceeds of the parking revenue account beyond the current constraints—that the revenue, for example, should be used to prop up social care, or whatever it may be, in a way that it simply cannot within the current legal framework. Do you have any views about decisions or tweaks that the Bill should make to those arrangements, based on the risk and assurance issues you have outlined?
Bill Butler: Not from where I sit. It is a policy area that I would avoid, although I understand why you would ask the question.
Gareth Davies: Yes, I am required to avoid it. The reason I am here today is to discuss public audits, essentially, rather than policy decisions on those kinds of financial matters. Clearly, there is a point at which the two things meet, which is really where we are talking now, but it is not for me to give a view on what should or should not be in a ringfence.
David Simmonds
Q
Bill Butler: There is a standard basis for it standardisation and simplification so that you can move between sets of accounts. It seems hugely sensible. Interestingly, I can remember having similar discussions in the early 1980s, when I first qualified, with the then Department of the Environment’s technical advisers. We have made some progress. Yes, the inconsistency is odd. As Gareth said, it causes problems for auditors as well, because they move between places. It does not help the underlying problem that we have been discussing.
Vikki Slade
Q
Gareth Davies: I work with the current Public Accounts Committee in Parliament. In that set-up, it is an essential part of the effectiveness of the accountability system. I have seen how the Committee works, and it works extremely well on a non-partisan basis. It has a hugely dedicated membership pursuing accountability across government, so it is a very effective model in the House of Commons. Such a body is normally positive in local government in the context of combined authorities—that is where I have seen it mentioned most. As I said earlier, having an audit committee in every local authority is an essential part of good governance. Questions like, “Are we managing the risks to the organisation effectively? Are the controls that we think we have in place operating as intended?” are the meat and drink of an audit committee agenda.
Where a local public accounts committee might have an effect would be in looking across the public service landscape—say, at a combined authority or sub-regional scale, in Greater Manchester, in the west midlands or wherever. I think there is a gap there at the moment. One of my last roles before I stopped auditing local government was auditing the Greater Manchester combined authority; it was ramping up in scale at the time, and it was getting to be very significant, including some health spending and so on. As we know, it is the most developed of the devolved set-ups at the moment. I can see how, in that arena, a local public accounts committee would add real value by looking beyond the institution, which an individual audit committee cannot do, and by looking at value for money in the sub-region. If that is what we are talking about, it would be a body that we in the National Audit Office could engage with in order to follow the public pound from national policy making, through to sub-regional infrastructure and so on, and through to council delivery. All parts of that are important, including right at the individual local authority level.
Bill Butler: I have nothing to add.
The Chair
Do you agree with Gareth?
Bill Butler: I do. My only plea at the moment is that what we have got does not work, so that may be an aspiration.
Andrew Cooper (Mid Cheshire) (Lab)
Q
Gareth Davies: My view is that they are part of the local government landscape. They should be properly audited as part of the local government landscape, and the strengthening that this Bill brings to local government audit needs to apply to those parts of local government as well. I certainly would not try to lift them out of the local government set-up and make them subject to the National Audit Office. We are absolutely national; it should be the Local Audit Office that has a remit for mayoral corporations. I think this is less about the structural picture than about strengthening the local audit arrangements so that every part of the local set-up is audited effectively, including those.
Andrew Cooper
Q
Gareth Davies: As we have said, it is not going to be quick or easy, but this is the right approach. It is just going to need substantial application of shoulder to the wheel and strong leadership of the new Local Audit Office, when that is created. That will make a big difference because it will have a loud voice in this area of work, and all the levers necessary to acquire the capacity required to perform to a high standard and to restore proper accountability. Even though we know that will not be easy, and we have explained why it is not simple, I think that is the right approach.
Bill Butler: This is getting tedious, but I agree with Gareth. It is a local issue. It is fundamentally important that we recognise that these are local democratic bodies and that the Local Audit Office, and auditors, need to operate independently from them and without unnecessary interference from anywhere else. The job needs to be done properly, and framework in the Bill for reforming local audit is exactly the right direction to go.
As I think we said, we need to address a number of environmental issues now to see that benefit. The risks you described apply to all 716 sets of unassured accounts. In my experience in this area, although audit does not always find a problem, I find it difficult to believe that there are not significant problems lurking where audits have not been completed. I hope there are not many. I would be delighted, but very surprised, if there were none.
Siân Berry (Brighton Pavilion) (Green)
Q
Gareth Davies: It is about the person and their skills and approach more than any office they hold or party they come from. You need the right approach and the right skills to do a good job. I have seen elected politicians fulfil that role brilliantly. The reason I said what I said is that I am a bit suspicious of anything that says, for example, “We must have an independent chair who is not a member of the council.” The audit committee is there to be part of the council’s governance arrangements. If it is too independent of the council, it does not engage with the machinery of running the council or influence the decision makers sufficiently, in my experience. If it is entirely made up of members who, with the best will in the world, do not have the skills required to perform a role that sometimes has technical elements, that model also has weaknesses.
The best models I have seen consist of a cross-party committee of members who are very interested in getting value for money for the taxpayer and ensuring that controls are operating properly across the council, and in ensuring that the council is maintaining public trust; you need people with those kind of motivations, supplemented with some independent membership. The chair does not necessarily have to come from that independent membership, but it must be somebody who is prepared to read all the accounts and ask difficult questions about why a surprising number has appeared out of nowhere.
That is why I would not be prescriptive. You need a mix of skills around the table and the committee must be connected to the leadership of the council, so that difficult messages coming out of the audits are relayed to the decision makers, raised in full council if necessary, and certainly raised with the executive or the mayor. That linkage needs to be clear and fully operational for it to work properly.
Bill Butler: That is not different—
The Chair
We are going to finish.
Bill Butler: I will be brief. I have chaired quite a few audit committees, but not in local government. A good audit committee works. It ensures that the organisation operates effectively by being part of it, while everybody knows that if it has a problem, it will voice it and it will be trusted. That is what you are looking for in any audit committee.
The Chair
Thank you both very much for being the guardians of the public purse. That brings us to the end of the time allotted for this panel. On behalf of the Committee, I thank you again for your time and for all the work you do for us.
Examination of Witness
Mark Stocks gave evidence.
The Chair
We will now hear evidence from Mark Stocks, head of public sector assurance at Grant Thornton UK. For this panel we have until 4 pm, unless we are interrupted by a vote—I am sorry about that, Mr Stocks.
Miatta Fahnbulleh
Q
Mark Stocks: I have done this for a rather long time. I was an auditor with District Audit back in the day, then with the Audit Commission, and I am now with Grant Thornton. I have seen quite a lot of changes. The division of the Audit Commission duties has probably been the most impactful change, because it has created quite a confused landscape in terms of what the priorities are. The National Audit Office maintains responsibility for the code, which sets out the basis of our work, but our primary regulator has been the Financial Reporting Council, whose focus tends to be on the accounts. Public Sector Audit Appointments sets out the fees, and the Institute of Chartered Accountants in England and Wales decides whether we can act as a key account partner. That is quite difficult to cope with.
Throughout my whole history as an local auditor, the accounts have been important, but it has been equally important that I spend my time on value for money. I have to look at the financial sustainability of authorities, as well as their governance and performance. That has changed, to be candid, over the last 10 years. The code changed, so we spent less time on value for money. Then it changed again, so we spent more time on value for money. However, our primary focus in the last five years has been on the accounts, which has led to a confused environment in terms of how local auditors have acted.
In terms of what the Bill does, bringing in the Local Audit Office is crucial. Somebody needs to speak to the Government about the issues that auditors are seeing and what is actually happening out there, because some of the pressures on local government are quite immense. To be candid, I need somewhere to go and someone to speak to when I am concerned about what I am finding—someone who can say, “Let’s do this, or we’ll speak to the Ministry of Housing, Communities and Local Government.” The changes in the Bill are crucial for a functioning local audit in the future.
Miatta Fahnbulleh
Q
Mark Stocks: You only have the private sector. It provides all of local audit now. We are used to working with the PSAA, so I do not see any issue in working with the Local Audit Office. It will make it easier; we will have a single code and a single arbiter of what quality is for a local auditor. I think that will be easier for us, as the private sector auditors, than it is now. I would not want the Committee to go away thinking that there is no commitment to this from the private sector. It was a difficult procurement the last time round, but the PSAA did manage to appoint sufficient auditors and we remain committed—I certainly remain committed—to a successful local audit system.
Miatta Fahnbulleh
Q
Mark Stocks: It is still fragile. I thought Gareth and Bill were accurate in what they said. We need to have more capacity so that we are not reliant on just a few suppliers. For that, there has to be consistency in terms of message. We need to get to grips with local authority accounts. If I went and did a set of NHS accounts, they are perhaps 100 pages long. The average local government accounts are 200 to 250 pages long, so the work involved is immense. That is why it takes longer, so we have to get that right.
We need to start to deal with some of the risks in local government, to be candid. It is quite difficult to deal with the breadth of what local government does. If you add on top of that the financial issues that they face and the issues that are asked of them in terms of policy, that layers on quite a scope for auditors, which means that we have to bring in specialists to do some of the work. I do not think that will get any easier under the current landscape.
David Simmonds
Q
Mark Stocks: Local government accounts are complex. These are highly complex sorts of businesses, if I can use that phrase, that deal with any number of services. What we see now are local finance teams who are stretched, to be candid. There has been a lack of investment in them over the years. Gareth talked about trainees going from the Audit Commission into local government, but that does not happen now. There is a bunch of people who are around 50, who may be disappearing in the short term, so we have to sort out the strength of local government finance teams. As I said, we also need to sort out the complexity of the accounts.
In terms of the standards, all local government accounts are under international financial reporting standards, and that will not change. That is a Treasury requirement. How that is interpreted and what is important in those accounts is open to judgment. The emphasis from the LAO on whether it is more important for us to audit income or to audit property will make a difference to what local auditors do. I would always argue that it is more important to audit income.
It is very difficult to standardise anything that we do, because local government is not standardised. I can take you from a district authority that spends £60 million, most of which is housing benefit, to an authority that spends £4 billion and has significant regeneration schemes and companies. The skillsets that you need and the ability to standardise is very difficult. You have to have the right skills to do the work.
Manuela Perteghella
Q
Mark Stocks: The Local Audit Office cannot look like the Audit Commission. The Audit Commission took a particular tack in terms of what it did and the level of scrutiny that it put on local government. If the Local Audit Office follows suit, which this Bill does not allow it to, I am sure there will be problems. But the way the Local Audit Office is configured in the Bill is to make local audit stronger. As long as the Local Audit Office sticks to that, I do not think there will be too much of a problem.
The Chair
We will continue this session for 10 minutes. We have 10 minutes’ extra time—no penalties.
Mark Stocks: I have one final comment, if I may. The Member was asking whether the Local Audit Office was going to come into contention with local government. Some of the things we do are contentious, such as when we issue statutory recommendations and public interest reports. One of the things I have missed in the last decade or so is the support of a body when we do something as difficult as that, because, as you can imagine, it is me against the authority, even though we have the firm there. I would hope and expect the Local Audit Office to be part of the decision making around public interest reports and statutory recommendations, which I think will lead to some contention with local government, because that is the difficult end of what we do. However, we need to do that, because sometimes things go wrong.
Sam Carling
Q
Mark Stocks: That is a good question. There is a remit for a local public accounts committee, but only one, if we do that. The NAO provides all the information to the national Public Accounts Committee, so it is then about how you co-ordinate that across local auditors to deliver the information for a public accounts committee to hold local government to account. Personally, I think that should be a long-term aim and aspiration. I would worry at the moment about whether there is enough capacity in local audit to support a public accounts committee. At the moment we have just enough of us to do the job that we are doing.
Sam Carling
Q
Mark Stocks: I think it depends on how you view it and how much detail you want to get into. The contentious parts of local government are where things like regeneration schemes go awry, or where there are management decisions that lead to claims against the council in some form or another. Those tend to be national issues. I agree that to delve down into each one for an authority would be enormous, but looking at things in terms of thematics—how councils are coping with children’s social care, adult social care, regeneration or some of the Government policies—would I think be possible at a national level. Again, if you started to push it down into local committees, it is about who provides the information. That is always going to be the difficulty in having those committees.
The Chair
If there are no further questions, on behalf of the Committee, I thank you for coming to give evidence, Mr Stocks.
Examination of Witnesses
Zoë Billingham and Professor John Denham gave evidence.
The Chair
We will now hear evidence from Zoë Billingham, director of IPPR North, and we welcome back Professor John Denham, professorial research fellow in the department of politics and international relations—that is a long title—at the University of Southampton and director of the Centre for English Identity and Politics. We will have until 4.40 pm for this panel.
Miatta Fahnbulleh
Q
Professor Denham: Thank you very much, Minister. It is absolutely crucial that the Bill underpins a really robust legal framework for devolution if it is to last—it cannot be for one Parliament. I will talk today about work that I have developed with Sir David Lidington—so that was a Labour Minister and a Conservative Minister coming together to say, “You need to have a consensus that lasts; otherwise, the Government changes.”
This is where I would say we are at the moment: there are many good things in the Bill, but there are some real areas of weakness that could lead to it being undermined quite quickly. It depends on financial commitments to integrated settlements and long-term funding, which are not even mentioned in the Bill. The Bill creates no forum in which finance can be discussed between strategic authorities and central Government. One of the ways in which that could be mitigated, at least to some extent, is to put the mayoral council on a statutory basis. Mayor Brabin said earlier today, “Well, the mayoral council is where we talk about new powers for mayors.” The mayoral council is not in the Bill. If Ministers decided tomorrow that it was not going to meet any more, it would not. It has no terms of reference and no secretariat. The mayors have no legal right to put items on its agenda.
I would give that as one example of where things could be embedded much more deeply. Parliament would have to come back and say, “We are going to abolish it”, in order to stop that meeting happening. If that sounds very radical in our system, every other European nation with a devolved system of government has a layer between the devolved level and central Government. I would suggest that it will be of benefit to Ministers, too. It is probably possible to manage relationships with a relatively small number of powerful mayors, but when there is one for every part of the country, there will be a cacophony of people demanding special treatment for their areas. The ability to corral that into a proper process would be an advantage.
This has to be embedded. Prior to this, regional arrangements lasted for about 10 years before Government lost interest in them. If you want this to be here in 30 years’ time, doing the Bill, but adding to it, is crucial.
Zoë Billingham: I absolutely agree that it is essential that devolution through this Bill should be put on a statutory footing. I would highlight a few things that I think achieve that entrenchment, in addition to the legal aspect of that. First, the broadening and deepening is absolutely essential, with the right to request in combination with that, so that strategic authorities can decide what further powers they wish to request from Government. I agree with John that the integrated settlement is a really important entrenchment to give places the flexibility they need to demonstrate how different places make different choices about how they spend public money. That will be essential to showing how devolution can deliver differently according to the needs of different places.
The moves towards votes at 16 and returning to a supplementary vote system for our mayors is absolutely essential to broaden the number of people who can take part in in local democracy. I would urge the Committee to consider going further in a few areas in the Bill, to build on that entrenchment from a statutory footing. Fiscal devolution has so far been completely omitted from the Bill. We at IPPR North have been looking at options, including a visitor levy to start with, to start the process of fiscal devolution that we think will really help to mature the model that we have today. Accountability is another key area. I know that you have talked in previous sessions today about LPACs, and we absolutely agree that we need to beef up the accountability of mayoral combined authorities—that is a two-way street, but I am sure we can get on to it later.
Finally, in terms of public support, the flip side, if you will, of further empowering and rolling out devolution to the country is demonstrating to the public what devolution can deliver for them. The evidence shows that in places that have more powers and freedoms, voting turnout and engagement with local democracy go up, so we think it is important not just for the economy, but for democratic reform.
Miatta Fahnbulleh
Q
Secondly, we need to ensure strong scrutiny and accountability for any institution. We heard in the last session about some of the challenges with local government accountability and scrutiny. I am interested in your views on what we need to do to strengthen that and the provisions in the Bill to build on that.
Zoë Billingham: First, to your point on the democratic engagement of mayors, I do think, and I stand by the evidence that suggests this, that the more powers that mayors get, the more they are able to demonstrate to the public how they can tailor and do things differently in their places, according to what the public want. That is essential for the responsiveness of democracy; therefore, I also think that votes at 16 and the return to a supplementary vote are helpful additional aspects to this Bill, in terms of demonstrating that the Government are serious about broadening engagement with mayoral combined authorities.
I would also pick up the proposal in the Bill for neighbour area committees. Something along those lines is essential. We know that, as currently drafted, the Bill is proposing full unitarisation of local authorities to a 500,000 population level, which is far larger than we see in local government in our European counterparts, for example. There is a question about how those unitaries engage with those communities, not on an ad hoc basis, but as an ongoing community conversation. I wonder whether, for instance, the neighbourhood area committees could be predominantly made up of community representatives and young people, so that they do not replicate the district level that the Bill proposes to abolish, but instead create an ongoing, democratic renewal at that local level.
Secondly, to pick up your point on scrutiny, this is essential. If you speak to local leaders, mayors included, they are absolutely game for it. It is not something that central Government are imposing; it is an essential part of both enabling the further devolution of power and resources, and ensuring that the current model is not undermined because there is not enough scrutiny in place for what is already there. I totally support the proposal for a local public accounts committee—we have built on that idea ourselves at IPPR North, looking at mayoral accounts committees, which bring together overview and scrutiny, and local public accounts committees.
We think that those committees need to represent place leadership; this is no longer narrow lines of inquiry about certain budgetary lines or solely about audit. It must be much broader. This is about place-based leadership, not only by the mayor and the mayoral cabinet, but by other public leaders locally who could be brought in front of such committees. We think that is a really important thing to go hand in hand with the future of devolution.
Professor Denham: May I pick up and develop a couple of those points? There is no doubt that the Bill has a danger of an upwards movement of power: things are being moved from local authorities to strategic authorities and mayors have more autonomy. I understand why that is being done, but the Bill needs to build in a healthy counterpoint to that. I, too, would go beyond the neighbourhood governance proposal, which sounds a bit narrow and a bit prescriptive, as though the same model will work everywhere.
Sir David and I proposed what we called community empowerment plans, and we proposed them even when we did not know there was going to be local government reorganisation. The strategic authorities should have a legal duty to set out how they will engage with local people across the whole range of activity—I should have declared an interest, in that I am the honorary president of the Hampshire Association of Local Councils—
Paul Holmes
Hear, hear!
Professor Denham: So I am familiar with town and parish councils, and there are some very good ones, including in Mr Holmes’s constituency. But they are not uniform everywhere within the area, so a single prescriptive approach is unlikely to work.
There has also been, in the last 10 or 15 years, a transformation in our understanding of deliberative, participative engagement with local communities by many local authorities. We need both the strategic authorities and the unitary authorities to set out, in a document that should be challengeable, how they propose to do that. I think that would be useful.
Secondly—I will embarrass her—Zoë has written the best policy paper on local public accounts committees, so I will not say any more about that, except that I agree with Gareth Davies in an earlier panel: the challenge here is not local council audit, but the whole of public spending across a mayoral area. I was delighted to see the new Secretary of State backing the concept of total place, which is something I was involved in as a Minister 15 years ago; but, if that is going to work, you cannot combine that with upwards accountability to departmental accounting officers.
Local authority scrutiny has very good people, but it is not up to the job. You have to create a new local institution, the local public accounts committee and, picking up on what Mayor Houchen said earlier, make the chief executive within the area the local accounting officer. So you have a complete audit model at local level that is not then channelled upwards through departmental accounting officers. I think that is what we need to work towards. Those two things would not only empower local people, but ensure that you have local scrutiny of what is being spent and what is being done with their money.
The Chair
Could that paper be sent to the secretariat and circulated around the Committee?
Zoë Billingham: Certainly.
David Simmonds
Q
And to come to the point that both of you have touched on, the Bill as drafted assumes power upwards to mayors, and it introduces a raft of powers—in chapter after chapter of the Bill—whereby the Secretary of State will direct the mayor and the authority, requiring them to produce various strategies. In a country that is already very centralised anyway, how do we develop and encourage local leaders to come forward in a context where there will be significantly fewer roles for them to fulfil, and where those roles will be significantly more constrained than they have been used to?
Professor Denham: Let me break that down into a number of sections. First, on local government reorganisation and size, I will be straightforward: Sir David and I did not propose local government reorganisation. We proposed creating what would now be called strategic authorities from what we generally call upper-tier authorities—the unitaries and the counties. I am not saying that there would not have been a need down the line to do something about what will be a messy system, but in terms of getting growth plans and those things up and running—I just put that on the record, because I am not going to get too far into the issue. However, if you are where you are at the moment, I would commend the idea of community empowerment plans and a proper legal framework for devolution below those levels.
What I would say, though, is that there is a level of devolved function that needs to operate at the level of strategic authorities. If you are going to have really good local growth strategies, and if they are going to tie into a national industrial strategy, it could not be done, say, at the level of a city such as Southampton, where I was an MP for a long time. You need a bigger body. However you do it at the micro level, that strategic level must operate effectively.
To tie my threads together, if you go to other European countries with a higher level of devolution, they have an intermediate forum between the strategic body and the national, where these issues are thrashed out, best practice is worked out and, in a sense, the Secretary of State does not exercise their direction powers without discussing it with the mayoral council first. You actually say, “How is that going to work then? How is that power going to be used?” So building in that layer means the right sort of compromise between the desire of Governments to get on with things and the need to engage people at local level. That would be one way of dealing with it.
You are inviting me to say we should keep all the district councils, but I am going to pass on that one, because that was not part of our proposals.
Zoë Billingham: Let me just build on that and the question of scale. As John says, the proposed 500,000 scale of the unitaries post-reorganisation is very large compared with European counterparts, and that poses some big questions, not least whether the projected efficiency savings will be realised. However, town and parish councils still exist within the system, and we have previously done work that looks at what we call the hyper-local tier of governance. While they are imperfect bodies, there are improvements that can be built upon at that hyper-local level, in addition to having some sort of formal forum, as John says, to engage with communities.
If the neighbourhood area committee proposal continues as planned, I would really urge that to be—the majority—taken up by community leaders and young people. There are other ways that we can help to counterbalance this through democratic innovations. There was talk, for instance, about remote meetings and remote voting, which are not currently available. Especially when you speak to young people about why they do not engage with local politics, they say that meetings are at the wrong time and too far away, and if you do not have a car, you cannot get to them, especially in rural communities. So I think this could be a real opportunity to see how normal council business is done and improve on it.
Finally, to build on the point about participatory methods, it is about making sure that unitaries are committed to properly engaging with their communities on the big questions they face, and not seeing it as distancing from communities.
Perran Moon (Camborne and Redruth) (Lab)
Q
In order for Cornwall to access the highest level of devolution, as the Bill is drafted, it requires the Government to breach article 16 of the framework convention for the protection of national minorities. The Cornish are the only people in the UK that have national minority status but do not have access to the highest level of devolution. How flexible should the Government be when determining what powers different types of strategic authorities can exercise? Is there a case for exceptions in places such as Cornwall? I ask that you try to avoid the temptation to talk about identity—we can identify with lots of parts of the country and with football teams and pop bands—and talk more about national minority status.
Professor Denham: I confess that I am not an expert on the framework convention, so I am not sure I will address that from a satisfactory legal point of view. In terms of the devolution policy, it was always my view that whether to have a mayor should have been a local choice and not a national prescription. That boat may have sailed, but that was my view. Clearly, there are cases where mayoral leadership is seen by everybody as an advantage, but I think there was a case for having some flexibility over that.
The other thing that I think is worth exploring is that one size fits all is not always going to be the right arrangement. I would imagine that, in the case of Cornwall, there are some functions on which it is in Cornwall’s interest to collaborate very closely with Devon, and maybe the new Wessex strategic authority around strategic transport, and other areas on which you would not want to. There should be a way in the Bill—we have talked about the pooling of regional powers—to enable strategic authorities to build larger bodies with neighbouring strategic authorities when it is in their interest to do so, without requiring the agreement of central Government.
I suppose my in-principle answer to your question, which is very unhelpful to the Minister, is that maybe the choice whether to have a mayor should have been given more local discretion. As we are where we are, certainly I would like to see a system where Cornwall can build the sort of strategic authority it wants but also have the benefits of collaboration across the south-west peninsula, or whatever, on areas of common interest and where everybody might benefit from having a regional rather than a county-based approach.
Zoë Billingham: I speak only from the experience of pan-northern collaboration, which has changed and been flexible, and has taken the form of transport co-ordination. Its latest guise is the Great North, which is a great innovation and a great step forward for northern leadership. I think that is an example of how flexibility should be offered to all parts of the country where they see benefits beyond devolution just in their patch, so to speak.
I think you speak to a larger point about inconsistency in devolution. As many have said, it is very much building the plane while it is flying, and I think we need to be comfortable with that. We are far behind many of our OECD counterparts in terms of decentralising power. We are yet to settle on a model, and we should not settle on a very rigid model at this stage; we should be open to it being flexible in the future. I am sure that the Bill will be a very important first step in this Parliament, but it should by no means be the last word; the question of how devolution is taken forward in this country will need to be revisited on an ongoing basis.
Professor Denham: It might be worth exploring in Committee whether the right to request powers is sufficiently broad. For somewhere like Cornwall, even if you are currently on the lowest tier, you could none the less have the right to request powers specific to Cornwall, for the reasons that you want. There may be scope in the Bill to create something that does not necessarily guarantee you what you want, but gives you a route towards it.
Kevin McKenna
Q
One of the concerns that has been raised locally is that, by replicating the electoral and political structure of Kent and having Tunbridge Wells and Maidstone, which are very different types of towns, predominate the political nature of the mayoralty, we will just replicate the same problem and our needs in terms of economic development, and therefore social support and social economics, will be overridden. Effectively, we can be categorised as a little bit of the red wall in the south-east of England. One of the dangers to me is that we—
Kevin McKenna
Sorry, Ms Vaz—there is. What do you think we can do when setting up mayoral authorities to prevent aberrant areas—I say that in a very positive way—within a broader, more homogenous mayoral district from being neglected?
Zoë Billingham: We have some similar dynamics in the north, where certain combined authorities comprise some areas of low and modest incomes and some areas of great wealth, so some parallels can be drawn. Setting and influencing early mayoral priorities is really key. While in the north-east there are some areas of great wealth, Kim McGuinness’s priority is child poverty, and she has made that very clear. Obviously, that speaks directly to the areas of the north-east that suffer most from high levels of deprivation and child poverty. The initial setting of the mayoral agenda is absolutely essential in that.
Professor Denham: I recognise a lot of what you say, because I live in Hampshire. We have Southampton, Portsmouth and the island, which was mentioned earlier and is completely different.
There are two things that are crucially important. First, the unitarisation approach must be sensitive to those local geographies. Simply forcing people into a 500,000 unit because, mathematically, that is what came out of a PwC report two years ago would be counterproductive if that meant you lost the focus on those areas. That is a part of it: we need sufficient flexibility in the unitarisation approach.
The second thing is to try to build in from the beginning the idea that not every combined authority needs to replicate the structures that evolved initially in Manchester and the west midlands around a centralised authority. There are different ways of structuring a combined authority, its functions and its leadership that recognise the different constituent elements in an area. If I have one concern at the moment, it is that because we are asking people to reorganise their district councils and create a combined authority at the same time, it is very hard to find the headroom for that creative thinking about, “How are the internal dynamics of this going to work in the future?”
That is two things. First, we need flexibility on unitarisation, so that you do not disappear into an area that does not understand your needs. That is replicated in cathedral cities and all sorts of places right across the country. Secondly, we need to look at structuring a combined authority that builds in an understanding of those different geographies from the outset, and does not necessarily create a superior tier of authority.
Zoë Billingham: May I add one more point? It is about interventions at the neighbourhood level. A welcome focus of the Bill is that, as you raised, there can be as much inequality within combined authorities as between combined authorities. Sometimes the intervention needs to be at the neighbourhood level, so that should also be introduced as a focus of the combined authority. The basis on which they intervene and where is also a useful way to address disparities within regions.
Lewis Cocking (Broxbourne) (Con)
Q
On the democratic deficit, we are talking about getting rid of elected authorities. The response from you, Zoë, was, “Well, we can do some more consultation. We can have online meetings and votes at 16,” but how can any of that replicate a free and fair democratic election to a local council?
Professor Denham: I made my position clear: I think you might have needed to reorganise in future; I did not think it was the priority. But we are where we are. Personally, I am sceptical about savings materialising at the scale that has been said, because costs are always higher. If you followed what I suggested about having some flexibility in the size of the new unitaries, that undermines what was in the original proposal, but I think it is necessary for democratic reasons.
I would say, though, that we have never really taken a strategic approach to what happens below unitary and strategic authorities, even in areas that have only unitaries and strategic authorities. Everything I said about community empowerment plans, I would apply to met boroughs and to Greater Manchester and all the rest of it. It probably sounds particularly relevant because we have this process of local government reorganisation, but it should apply equally strongly to the duties that exist on current unitary authorities and strategic authorities. It is a national policy, rather than purely a local one.
Zoë Billingham: I would only add that, as John said, I am not sure there were many external voices calling for the abolition of district councils. It was seen as a quid pro quo, as I understand it, for the mayoral tier. As I stated previously, I am sceptical about the backroom savings that are considered to come with reducing headcount, office space and so on, but I will leave others to speak to that. As John said, unitarisation is not new, so there are examples of places that have tackled it well. We should look to those before thinking it is a foregone conclusion that it is not the right thing to do.
On democratic innovations, although the Bill challenges the current model, I think we should use this moment to consider what they are. Looking at voting levels at the last election, we just about got 50% of the country voting for MPs. At some of the local and regional elections, we mostly have less than the majority of the population coming out to vote. We can improve on the current system, and I hope this is a real opportunity to do that. That is why thinking about how people engage with democracy, why they come out to vote, and who comes out to vote is really important at this stage—especially with such a difficult political atmosphere in this country.
Maya Ellis
Q
Professor Denham: My view is that it would be reasonable for the legislation to enable Ministers to set out the broad parameters of the plans, but not to do that in a way that specifies exactly how it should be done in particular areas. It will vary: if you have strong town councils, you would sensibly build them in, but if you have communities that do not engage at all, you would use deliberative participation. People should be required to set out which tools they are going to use, why they are going to use them, how they would monitor the effect of that, how they will keep an eye on who is taking part in those processes, and so on. It is not just a slogan; it is a proper structured framework for doing it.
Zoë Billingham: I absolutely agree with that, and with allowing local tailoring. You are right; sometimes even community conversations can be captured by usual suspects. That is why using participatory methods on an ongoing basis is really important. We have seen some innovation in this space already through the mayors; they do mayoral question times, or invite young people to come in and ask them questions in a public forum. There are lots of ways it can be done.
The Chair
Order. I am afraid that brings us to the end of the allotted time. On behalf of the Committee, I thank you both very much for your erudite evidence.
Examination of Witnesses
Richard Hebditch and Naomi Luhde-Thompson gave evidence.
The Chair
We will now hear evidence from Richard Hebditch, coalition co-ordinator at the Better Planning Coalition, and Naomi Luhde-Thompson, member of the Better Planning Coalition steering group and director of rights community action at the Better Planning Coalition. We have until 5 pm for this panel.
Siân Berry
Q
Richard Hebditch: I think the Bill could be a very powerful tool from a planning point of view. The ability to co-ordinate across housing, transport and planning is really important. As in the London model, which obviously you know very well, that can be very powerful. One thing that is interesting with the Bill is the comparison with London’s accountability. What has been really important in London is the fact that you have the directly elected Assembly, committee structures with powers, and active civil society and media. There is also the statutory passenger watchdog in London, London TravelWatch, of which I am a board member. There is a developed infrastructure to scrutinise what the strategic authority and the mayor do, and that is important. Particularly given the increased powers there will be for strategic authorities elsewhere to call in planning applications and have mayoral development bodies, it is important to have that level of accountability.
Siân Berry
Naomi, do you have anything to add?
Naomi Luhde-Thompson: I could mention a little bit about public participation, but I do not know if you have a question on that later.
Siân Berry
Q
Richard Hebditch: As I mentioned, these are potentially very powerful bodies, as the Bill collects powers and duties from other legislation, rather than being a stand-alone piece of legislation. The health duty is potentially important. We would like to see duties around climate and nature. Those are long-term issues; they are not the kinds of things where, as a mayor or an authority, you are under short-term pressure—or, necessarily, pressure from central Government—to deliver, but they are really important. In the collection of duties from elsewhere—on local transport plans, for example—there are duties to have regard to national policy, but not in terms of the exercise of your functions, so these strategic authorities will be powerful delivery bodies in their own right, not simply as plan-making and strategy bodies, which makes it important to have those climate and nature duties as well.
Naomi Luhde-Thompson: The Labour Government in Wales introduced a different format in the Well-being of Future Generations (Wales) Act 2015—a public authority duty. It has a series of goals, and each public authority has to carry out those duties in relation to their functions. I should declare that I am a member of the Eryri national park authority, so I have a very close view of how this is actually carried out. It comes to the point about where the public interest is in the proposals in front of us. There is growth and a bit about health, but where is the public interest? It does not seem to me to be properly explained or described in the Bill that this is all about delivering on the public interest—what is the Government’s role in doing that?
There is a bit of confusion between the two Bills. Look at the health duty in this Bill and then look at the Planning and Infrastructure Bill, which is obviously in the Lords at the moment. There is no consultation for health groups in the Planning and Infrastructure Bill, but there is a health duty on the combined county authority. It is just not connected. On the spatial development strategies, it is not particularly mentioned as a group, but there is a duty on the CCA, so it is really important to examine the connection between the two a bit more closely.
Miatta Fahnbulleh
Q
At the community level, we obviously want to build in a way that is sustainable, but we need to make sure that there is public consent. I am interested in how we ensure that strategic planning powers sit alongside community engagement and community consent to make sure that there is a whole place sense of the direction of travel and the development that needs to happen, in a way that builds public support.
Naomi Luhde-Thompson: On public participation, the UK is a signatory of the Aarhus convention. Article 393 of the trade and co-operation agreement is really clear that when you are doing something that has an impact on the environment you must have a proper process of public participation. It must happen at an early enough time to influence the outcomes; otherwise, what is the point of having people involved? You are literally just asking them, “What colour do you want the gates to be?” You are not asking them to be involved in the full decision.
The issue that you have here—I will talk about the products that are produced—is that, if you look at the spatial development strategies, it specifically says in the Planning and Infrastructure Bill, in proposed new section 12I of the Planning and Compulsory Purchase Act 2004:
“No person is to have a right to be heard at an examination.”
That is completely the opposite of what you have on local plans: any person who makes representations must be given the opportunity to be heard in front of the examiner. That is not going to send out a strong signal that you actually want people to participate in the making of these spatial development strategies.
It is not a sell-out event to go to a plan examination, so I do not think that you need to be worried about that. I do, however, think that you need a right to be involved at that stage, and it cannot be at the discretion of someone else. I think that is one of the issues: if you have to wait for somebody else to give you consent or permission to enter that space, you do not have a right to enter it, because it is at somebody else’s discretion. That is why the formulation of such a right of access—a right to participate—is really important.
Your other point was about the duties, and how that is carried out. I would be really interested to see how the local growth plan is supposed to comply with, for example, the environmental principles policy statement. How does it combine with that? How does it combine with the spatial development strategy? What is the interaction there? It is quite complex, if you look at the organogram of the different plans that, if you are a member of the public, might affect and shape the place in which you live, and therefore what the purpose of all these plans are—whether they are there to achieve sustainable development in the public interest—and how you are supposed to get involved in influencing the outcome of the decisions that are made through these plans.
Richard Hebditch: It is probably also worth talking about the resourcing of all this. As people have discussed, we have the local government reorganisation at the same time. The new format for local plans, which are out of date, has new housing targets as well. Then we have the SDSs—spatial development strategies—on top of that. How do we make sure that we have the resourcing to develop all those things, which are happening at the same time? We then have wider planning reform, and we might have another planning Bill in the new year. There is a lot of potential chaos at the same time. I am sure the Government want to address that, and the resourcing for planners to develop the SDSs is very helpful, but there is a risk of not necessarily having a clear road map for how you get to that place. As I was saying, we are very supportive of the idea of spatial development strategies and the strategic layer, but the journey there is going to be quite chaotic. I think it would be good to look at issues around workforce skills and the timing of all the different things that are going on.
Miatta Fahnbulleh
Q
Naomi Luhde-Thompson: I think we need to reflect on what became of the regional spatial strategies, and on whether that was an issue around social licence and public consent. Obviously, an examination was attached to them in their development, and there was accountability in different formats. If it is not clear to people that they are going to be involved, you will just get disempowerment and disenfranchisement, and then people are just going to say, “Well, it’s nothing to do with me. I haven’t been able to be involved, and I haven’t been able to have an influence.” Those routes to influence and to participate properly, which means having an impact on the outcome, need to be very clearly laid out so that people can participate. I agree with you that it is a whole discussion. Planning is the way we organise ourselves in space, in society and in places. That is what it is supposed to be, so we need to make it like that.
Your point about democratic accountability is really important. One of the things that the Better Planning Coalition has been looking at is the national scheme of delegation, which will have a huge impact on whether there is democratic accountability for planning decisions at local level. If people realise what is happening only when the bulldozer turns up at the end of the road, that is obviously a failure of the system. If they feel that a decision has not been made in a way that is accountable, if there is no one for them to go and talk to, and if they do not have public speaking rights at planning committees any more and cannot have their say on that decision, I think that will lead to a democratic deficit.
David Simmonds
Q
The Chair
Bullet points would be great.
Richard Hebditch: This is not a good way to start an answer, but it is a massive challenge, and I very much recognise that. One of the things is around democratic legitimacy. As Naomi was saying, it is not about entirely removing local planning authorities’ say in how they deal with applications. It is important to ensure there is a community voice in the development of local plans as well. There is a challenge, as previously mentioned, if local government reorganisation is going on at the same time.
It is also about having a level of democratic accountability within the strategic layer. I mentioned the lack of structures for these new strategic authorities beyond the indirectly elected constituent authorities. The previous panel was discussing ideas that might improve engagement. There are risks in relying on elections every four years as the entire democratic legitimacy, particularly in a time when you have five parties all quite close together in polling, and you are seeing that in local authority elections at the moment.
There are risks in relying on that to justify your decisions without necessarily having a structure for what happens in the gap between those four years to ensure democratic voice and community engagement. It is not necessarily for the Bill, but maybe there is something around ensuring that there are adequate reviews of how this will operate, drawing on the ideas that the previous panel was discussing. We also now have the national covenant between civil society and national Government, so it is about whether we can look at similar things at a strategic layer and at a local layer.
Naomi Luhde-Thompson: Let me add just one example. I do not know whether anyone knows about the Salt Cross area action plan. It is West Oxfordshire district council: 2,000 homes on a greenfield site, and they want it to be zero carbon. It is going to have business on it and affordable housing. The community is really supportive, because that development is bringing things for them. The only problem is that those developing it want to strip out some of the things about zero carbon, for example, so there is a conflict there. I think that is all about—this is a whole different conversation—land values and land value capture, and how you get the public benefit out of development.
Manuela Perteghella
Q
Richard Hebditch: The Planning and Infrastructure Bill has the requirements on training for councillors when they make decisions. That is something we have welcomed, at that level. I think this goes back to the point on resourcing as well. The funding that has gone in to pay for planners to help develop at the SDS level is welcome. The Planning and Infrastructure Bill changes on being able to retain fee income from planning, and to vary fee income, are also welcome.
There is still an ongoing issue, and there are particular issues that the Royal Town Planning Institute has raised around apprenticeships and being able to have new entrants into planning. Changes in the rules around apprenticeships might threaten that input for planners.
Naomi Luhde-Thompson: We should be applying the subsidiarity principle. We should be making the decision at the closest level at which it is relevant to make that decision.
Mike Reader
Q
Richard Hebditch: Can we just say yes?
Naomi Luhde-Thompson: You need duties, because then it provides a framework. All those parts of the green economy have had no stability over the last few years because they have not known which way the policy has been going. If you provide stability in terms of a framework—“This is the direction of travel: we have to mitigate and we have to adapt”—and it is stable and long-term, then you know in which direction you are going.
The Chair
Thank you. That brings us to the end of our time for this panel. On behalf of the Committee, I thank you both very much for your evidence.
Examination of Witness
Sacha Bedding gave evidence.
The Chair
We will now hear evidence from Sacha Bedding MBE, chief executive of Wharton Trust and a member of Locality. For this panel, we have until 5.20 pm.
Miatta Fahnbulleh
Q
Sacha Bedding: We welcome the community right to buy. It is a good step, a big step, and it is important. Communities often do not feel that they have those rights, because they do not, and when they see a treasured building or space go up for sale, and they have no opportunity to purchase or reclaim it—lots of these things are already ours—they feel disillusioned and hopeless. To have an avenue and pathway to change that will be important and helpful. It will need to be properly resourced; I think we should look again at a community ownership fund or a successor to it. Places that do not have capacity but have a willingness and desire should be supported in creating that. But it is a great opportunity for the people of this country.
Miatta Fahnbulleh
Q
Sacha Bedding: I watched some of the proceedings, and I understand why there is a desire for an expansion of parish councils. It is what we look like, and it is a reflection of this at a local level, but it is not right for everywhere. There are places up and down England where organisations like mine—Locality has hundreds of them as members—have the opportunity to create an active role in making sure that decisions reflect the will, the want and the need of the people who are going to be affected by those decisions.
That will happen only if we do not prescribe a one-size-fits-all solution to what neighbourhood governance looks like. Neighbourhood governance should mean that when the people in that community are asked, “Do you feel you have a stake in this place and the opportunity to shape where you live?” the answer is yes. At the moment, our opinion is no: roughly 80% of people say they do not feel they have that stake in their community. We see that in election turnout: the by-elections in Hartlepool, which I know well, had turnout of under 20% or 15%. That is an issue, and I am afraid that it is not going to be solved by creating another layer of councillor. I live in a parish area, by the way. Where parish councils do tremendous work, perfect—build on it—but where it is not right, let’s not mandate it. Let’s be creative and braver than we have been so far.
Miatta Fahnbulleh
Q
Sacha Bedding: The first thing is that we have to make it accessible. I will always advocate for a community organising approach, because I think that releasing people’s agency, so that they feel that they can take action on the things they care about, is a route to that. However, whether it is asset-based community development, old traditional community development or community organising, that is where we start. We start where people are, not where we would like them to be.
If we can do that and resource that, there are thousands of people willing to roll up their sleeves and get involved where they live. I see it every day; you see it in your constituencies every day. This is not some great big secret—it is just, “Go out and ask them.” On the flipside of that, our sector, like every other sector, has been hammered for a long time, but releasing the skills and talents of local people to take action on the things they care about will answer that question.
Vikki Slade
Q
Sacha Bedding: I do not work in an area of environmental concern. If there are environmental opportunities in places, the broader the scope of what we consider an asset of community value to be, the better, in my opinion. I do not think we should prescribe that it must be bricks and mortar. For us in Hartlepool, things such as long-term plans for neighbourhoods should include the sea. That is our greatest asset, after the people who live there, and every community plan could involve the sea, for example. The environmental opportunities are there; whether we can distinguish whether they are social or environmental does not matter—let us expand the scope.
However, we should also look at the right to shape public services, because too often the people who are receiving services do not have a stake in the design of those services and the right to control investment. That is a big one. I do not mean, for example, Hartlepool getting 10 nuclear modular power stations, although that is great news; I mean at the neighbourhood level, where houses can be built, or not built, as we have just heard. People should have a stake in that decision. If you want more housing built, work alongside people who live in that community now. Do not just internally exile them, flatten the houses and say, “Hard luck, son.” That is not an answer.
The more expansive the assets of community value are, the better. The opportunity to expand the community rights is there, and it makes more sense for everybody. On homelessness strategies, where people are still on the streets and we are spending hundreds of thousands of pounds, or a literacy strategy, where one in three people is illiterate and that works with cohesion, if people can bring those together, they will coalesce around a place, and they can do that far better if those rights are enhanced.
The Chair
Thank you very much, Mr Bedding, for coming down and for your evidence. I will suspend the Committee for 10 minutes, because our Minister has been sitting here and she has to give evidence next. We will resume at 5.20 pm.
The Chair
We will now hear evidence from Miatta Fahnbulleh MP, Parliamentary Under-Secretary of State in the Ministry of Housing, Communities and Local Government. Thank you very much for agreeing to do it today when you were just sitting here listening to all the evidence; it is a tough day for you, Minister. For this panel, we have until 5.40 pm.
Paul Holmes
Q
I would like to angle in on two issues. I think it is fair to say that most witnesses today have said that there has been confusion and doubt about the benefits, and there have been some concerns about the disjointed nature of planning reforms. I do not think I have seen before a Government bring forward two major pieces of legislation that, maybe unintentionally, deliver completely different things.
My first question is: has your Department done any analysis or assessments on how much will be saved in local government from the unitarisation and devolution measures that you are introducing?
Miatta Fahnbulleh: First, no, I do not think I have inherited a disjointed mess from my predecessor. Candidly, we are having to fix 15 years of another Government making a complete mess of the local government landscape. To the extent that these are big reforms and that we are having to drive through some big changes simultaneously, that is a function of where the Conservative party—and the hon. Member and his colleagues—left us.
On the specific question about local government reorganisation, yes, savings are part of this, but it is much bigger than that. Ultimately—I think this came out really clearly in all the evidence sessions—this is about delivering better services and better outcomes for communities. It is about dealing with the fact that the landscape of local government is currently fragmented. It is about dealing with the fact that we do not have sufficient alignment around different types of services that we need to bring together in order to deliver the outcomes for communities. It is about ensuring that we are aggregating our resources and driving through efficiencies. It is about all of that.
Candidly, when you speak to communities, they do not know who in their local area is responsible for what, so we have to strengthen that sense of accountability. The reforms go back to what works in service of communities. That is driving us. We are very clear that where we are is not where we need to be. If you speak to communities, they are clear that the landscape does not serve them in the way that they need it to, and that is what these reforms are trying to drive though. Yes, it is about efficiency savings, but it is a much bigger agenda than that.
Paul Holmes
Q
Can I just drill down again, as you have not answered the question: has your Department done any analysis on estimated savings from the unitarisation of local authorities across England, and the devolution measures that you have put forward to the House today?
Miatta Fahnbulleh: There is a big evidence base that sits behind the proposals, and an impact assessment that sits alongside this piece of legislation. Ultimately, we have taken an approach of asking places to come forward with proposals. That is the right approach because, in the end, it is about places and communities. A locality must make the decision about what works for their communities. It is quite hard to have a full and comprehensive assessment until you have that set of proposals. It is a function of the approach that we have taken, but I do not think a single Committee member would say that we should have just imposed boundaries across the country rather than go to communities and say, “What is the boundary that makes sense for you that will deliver the outcomes that we need for your communities?”
Paul Holmes
Q
Paul Holmes
I have one more question, if I may. We will move on, because it is clear that there was no assessment of the spending.
On 16 December 2024, the hon. Member for Oldham West, Chadderton and Royton (Jim McMahon) sent a letter to local authority leaders setting out a target of 500,000 people per local authority. On 3 June, he said that that was a set principle and that any local authority that wanted to go above or below it would need to set out a clear rationale. On 20 July, he said that he continued to be asked about the 500,000 target, indicating the concern and confusion among local government leaders. Do you think that the Government have behaved in the right way to ensure an efficient and streamlined consultation process for local government leaders in the country?
Miatta Fahnbulleh: Councillor Craig summed it up perfectly: the 500,000 was an indication of the type of scale that we thought makes sense for the outcomes that we are trying to achieve. I go back to the need to deal with fragmentation, the alignment of services and, fundamentally, the impact for communities on the ground. Ultimately, though, there has to be some give within that. It has to be aligned with the existing institutions and with what local communities believe is the right geography to deliver the outcomes they want.
I think that we have been consistent, and I understand that my predecessor was pretty consistent. People ask whether it is 10,000 or 1 million; the 500,000 gives an indication. But part of the devolution process is about empowering places to use their judgment to come up with the right outcomes, and that is what we are trying to do. We have given an indication but, ultimately, we want proposals to come forward from places that say, “We can achieve the scale in the geography that makes sense to deliver the outcomes for our communities.” In the end, that is what this is all about.
The Chair
If we keep our questions and answers short, everyone will get in. I call Perran Moon.
Perran Moon
Q
“Article 16 prohibits restricting the enjoyment of the rights of the Framework Convention in connection with the redrawing of borders.”
The Bill currently excludes Cornwall from accessing the highest level of devolution unless we compromise our national minority status. Is there an appetite in the Government, before we pass a Bill that breaches the framework convention, for making special provision in the Bill for Cornwall so that it can access the highest level of devolution without compromising our national minority status?
Miatta Fahnbulleh: First, let me thank you for being such a consistent, persistent and passionate advocate for Cornwall. The Government absolutely recognise Cornwall’s national minority status. We recognise the uniqueness of Cornwall and are trying to operate within that framework. Ultimately, strategic authorities, at their best, try to drive economic performance and growth, so geography matters.
The conversation that we want to have with Cornwall is: “If you want to drive growth and employment opportunities, and if you want to create jobs in your area, what is the best geography to do that in?” That is not to deny Cornwall’s uniqueness and specialness, which I think every single Committee member recognises and appreciates, but it is to say that if our objective is to make sure we are delivering for your community in Cornwall, what is the best spatial strategy to do that? That might require collaboration beyond the boundaries of Cornwall.
David Simmonds
Q
Clearly, a number of those authority areas are in the process of finalising their bids, and in some areas there is dispute at different levels of local authority as to what the footprint should be. Many of us will have been pleased to hear you say earlier, Minister, that that was flexible, in your view—that it was not intended to be a strong guideline, but was something where you were looking at a much greater level of latitude. So that we can have assurances in relation to the relevant groupings later in the Committee process, will you commit to all those local leaders—in particular any who have submitted a bid on the understanding that it had to be around that 500,000—that there will be the opportunity to revisit that if it was not dictated by their local circumstances and preferences but, in their minds, something required by the Government?
David Simmonds
That is the question.
Miatta Fahnbulleh: I come back to, “What is the purpose of this?” We are not doing reorganisation for the fun of it—it is not fun. We are doing it because we think it will help us to drive certain outcomes. Our assessment is that around 500,000 is the sort of scale that allows us to do certain functions. That has to be consistent and compliant with what makes sense locally. The whole purpose of localism is that you have that interaction between the two. We have therefore given a benchmark for what we think makes sense, but when we look at proposals we will, of course, take into account the specific circumstances. If an authority comes forward with 100,000 or 200,000, we are likely to say that that probably does not cut the mustard, but we want to have that conversation, because fundamentally this has to be aligned and make sense on the ground. Otherwise, none of this will play out in the way that we want it to.
David Simmonds
Q
Miatta Fahnbulleh: I come back to the fact that it is not just about savings and efficiency, but about removing fragmentation and about what makes sense in terms of the types of services that we are asking local authorities to deliver—it is a whole set of things. That is our benchmark, but ultimately the basis of localism is to say to places, “Given these parameters, what do you think makes sense?” We will use that to make decisions.
Vikki Slade
Q
Miatta Fahnbulleh: The push of powers to communities is absolutely critical to us, and the duty on local authorities to think about neighbourhood governance is trying to get to the heart of that. Parish councils may be the structures and institutions that the local authority decides to build on, but it is not consistent across the country, so we have to ensure that we are finding the right governance structures for different places so that communities have a genuine voice. We have to ensure that we have diversity of representation, which we need for this to be enduring and for it to ensure that there is power and voice for communities. The commitment is there, and that is why we have it. We were very clear that this was not just about strategic authorities or local authorities, but was absolutely about the neighbourhood level. How we get that right has to be a conversation—an iterative relationship with places. That is the bit that we are absolutely committed to.
Mrs Blundell
Q
Miatta Fahnbulleh: We are clear that councillors have an absolutely fundamental role to play in the democratic system that we are trying to create. They are not only elected, but champions and conduits for their community.
As we drive through these reforms, there is a question about how we build on the power of councillors and the role that they play, whether within our neighbourhood governance structures or, indeed, in how they interact with the mayor, and the accountability and scrutiny of the mayor.
You can have our assurance that councillors have a fundamental role in the landscape and are part of the infrastructure that we need to build on. There are huge opportunities for that as we take the process forward.
Siân Berry
Q
Miatta Fahnbulleh: We recognise that, if you like, the scrutiny landscape is not as it should be, which is why some of the measures that we are driving through the Bill try to address that. We are moving at pace and creating institutions at pace—we recognise that and do not resile from it. We are doing so because we looked at the inheritance and were not pleased with it, so we thought that we had better make some progress in the time that we have.
However, it is absolutely the case that strong, accountable leaders are only as strong and accountable as the scrutiny institutions that you build around them. I think they have emerged organically in some instances, but we hope to use the Bill to create more structure around that so that alongside—hopefully—powerful mayors and powerful local authorities, we have that scrutiny function in place. Again, we will learn from what is working well and we will look at how we build on what is working well.
Siân Berry
Q
Miatta Fahnbulleh: Resourcing is a challenge across the piece. As we think about the structures that we are creating, we are also thinking about how we build capacity, because if we do not do that, we will create structures that will not be effective, which is not the outcome that we are trying to achieve.
Lewis Cocking
Q
Miatta Fahnbulleh: There are two things that I would say. Even in our urban areas, or what are defined as urban areas—for example, North of Tyne—there are big rural constituencies within them. Actually, many of our metro mayors straddle urban areas—in some instances, there are core cities—and rural areas.
The benefits are the same for both. If your starting position is, “How do we drive economic growth?”—that is one of the big issues—the evidence of the last decade and a half, as well as that from other countries, is that such a strategic level creates a massive opportunity to unlock growth. That is as true for our urban areas as it is for our rural areas.
However, I would also say that, yes, there is a model that we are trying to drive forward, but it has to be specific to particular places. There will be different constellations, if you like, of strategic authorities. That is okay, because what matters is that we create governance structures that can fundamentally drive outcomes that are tailored and specific to those areas.
Lewis Cocking
Q
Miatta Fahnbulleh: Ultimately, the approach that we are taking is to say to places, “What makes sense?”, and there is a journey for places to go on. Some places will choose to be foundational authorities, because that makes sense for them. Actually, we are being overwhelmed. It is not just urban areas that are coming forward to us with an appetite to move to—
Lewis Cocking
Q
Miatta Fahnbulleh: Well, no. We said, “This is the suite—
Lewis Cocking
You have.
Miatta Fahnbulleh: We said, “This is the suite of powers that you can get.” Places have seen the opportunity and are looking to other areas that have gone through this journey. Look at Greater Manchester, with some of the highest productivity growth that we have had. I was there at the start, when we began this journey. People are seeing that there is something here that is working and there is an appetite for that.
The Government have done their bit by saying, “Look, we understand you need the powers; this is the suite of powers. We’re not going to ask you to do lots of deals and jump through hoops,” and places are lining up. I think that every place needs to figure out what makes sense for it. However, the evidence so far is that places see that there is a strategic opportunity, because they care about growth and outcomes for their communities.
Mike Reader
Q
The Chair
That was a request and not a question.
We come to the end of today’s session. Minister, thank you very much; I know that it has been a hard day for you.
Ordered, That further consideration be now adjourned.—(Deirdre Costigan.)