‘Unviable’ West Somerset DC can continue to function as long as it makes some “radical” decisions, according to a senior Whitehall official.
Sir Bob Kerslake, permanent secretary of the Department for Communities & Local Government, characterisation of the district authority’s financial future contradicts an LGA report published last year which suggested the authority with the smallest population in England cannot continue as a democratic unit in its current form.
Sir Bob said: “I don’t think they have reached the point where they’re not viable.” However, he added: “They are not viable in the way they run at the moment” and he suggested the authority had to make “radical” changes.
“We are working with them to look at different business models”, he added. West Somerset are currently exploring shared services and shared management with neighbouring Taunton Deane BC, but Sir Bob also suggested they would need to do more commissioning of services.
A number of other changes would help the authority, he said, including new powers allowing low tax authorities to increase council tax above 2% and up to £5 more per house a year without a referendum, as well as business rate income from the planned nuclear power station at Hinckley Point.
These were “three ways that that particular authority can sustain themselves in the future”, he said, although he also admitted they were “an outlier” and he emphasised he was “not saying it is easy”.
Sir Bob made his comments at a hearing of the public accounts select committee on Monday where he answered questions about the National Audit Office’s recent report into the financial sustainability of local government which questioned what mechanisms the Department for Communities & Local Government had in place for monitoring and dealing with financial failure within local government.
Sir Bob pointed to several ways including the modelling ahead of spending reviews, intelligence from individual councils’ audit reports, intelligence from DCLG’s ‘localities team’ set up following the abolition of its regional government offices and information from councils themselves about their position.
“There are quite a few ways of knowing when we have hit that point” of failure, he said. “I don’t think we have hit that point for any authority” and he questioned if we would “ever reach that point”.
Sir Bob also questioned whether failures could be predicted based on a councils size, such as West Somerset, or deprivation levels and instead argued that “those authorities that have got into difficulties have been for particular reasons…it has been local factors” although he did not give any examples.
If a council did get into trouble, he said DCLG could assist authorities through funding decisions, changes to statutory duties and the standards of statutory duties, and by affecting how councils can raise funding from other sources such as business rates, he said.
Sir Bob was separately challenged on whether the number of statutory burdens had been reduced and told MPs they had not been, although they had been “brought into one place”. He also admitted to MPs there was no ‘one in one out’ policy as there is with other government regulations.
The NAO’s report also highlighted gaps in Whitehall departments’ understanding of the impact of spending review cuts on council services as they were preparing plans for the 2010 spending review and select committee MP Fiona Mactaggart (Lab) said there did not seem to be “the understanding of actually what happens on the ground”. This was “a very serious issue” for the committee, she said.
In response, Sir Bob said: “I think we have pretty good knowledge of what is happening on the ground and where local authorities are finding life particularly difficult.”
However, he accepted the NAO report had found the department’s modelling ahead of the last spending review to be good in some areas and not so good in others.
The department had “had as good information as was possible” during the last spending review, something he described as a “challenging exercise done at pace across government”. He added: “We can of course continue to work on it. We will…look to do whatever we can to improve it before the next spending round” which is currently ongoing.
The NAO report had highlighted one particular of the Department for Education which had no quantitive data concerning the impact of cuts on children’s services as a whole.
Committee chairman Margaret Hodge (Lab) was particularly critical of this lack in the light of the department’s later decision to add new requirements on councils in areas such as adoption.
“They cut the finance and they don’t know in its entirety what it means,” she said. “What the hell is it doing putting a new duty on authorities when it is cutting the budget.”
Sir Bob said the ‘new burdens’ doctrine meant councils would receive funding for any new responsibility, however he was unable to tell the committee whether new money was or would be available in relation to the new adoption targets.
DCLG’s permanent secretary was also challenged by select committee MPs who expressed long held concerns that the demise of the Audit Commission and its monitoring of council performance meant he, as the accounting officer to parliament for local government spending, did not have the necessary information to be held accountable.
They were concerned DCLG were not keeping track of which councils were the most productive and sharing that best practice with the councils they had identified as less productive.
Stephen Barclay (Con) said DCLG’s reliance on transparency, audit reports and locality teams appeared to be “very nebulous”, but this was denied by Sir Bob who pointed to the work done by the LGA on creating a system of sector led improvement.
“It isn’t nebulous”, he said. “We think the best way of driving efficiencies is through transparency, bench marking done by the sector, by peer review done by the sector and the natural democratic election process.”