Local Government White Paper

HL Deb 11 December 2001 vol 629 cc1256-71

4.15 p.m.

The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton)

My Lords, with permission, I shall repeat a Statement made in another place by my right honourable friend the Secretary of State for Transport, Local Government and the Regions. The Statement is as follows:

"With permission, Mr Speaker, I should like to make a Statement about the local government White Paper, which we are publishing today. This White Paper sets out a new vision for local government at the beginning of the 21st century. It seeks to establish a partnership between central and local government, reflecting the critical importance of local authorities both as a tier of democratic government and with the responsibility to deliver high quality public services to local people.

"Democratically elected councils should be part of the fabric of our communities. The services they provide have a vital part to play in sustaining and enhancing the social and economic prospects and environmental quality of our towns, cities and countryside.

"They can have a profound effect on the opportunities and quality of life of the people who live and work there: educating children, providing care for the vulnerable, making places safer and cleaner to live in, and providing reliable local transport.

"People therefore expect a great deal from their council; and those expectations are rising. To meet them, councils have constantly to seek new and more effective ways to deliver customer-focused services and lead their communities. The proposals in this White Paper will provide a framework in which all can do so, through the application of the Government's four principles of public services reform. These are: establishing a national framework for the delivery of high quality services and effective community leadership—for example, people everywhere want high quality education for their children; within this framework, freeing up local councils to meet their communities' particular needs—these will be different in a London borough from a shire district; making sure that councillors and council staff have the skills and money to do their jobs well, and providing more choice for people in the services they want to use.

"I want to tackle the trend towards excessive central prescription and interference, which dominated central/local relations in the 1980s and 1990s. We are reversing that approach. The White Paper marks a pronounced step away from centralisation.

"It is about increased freedoms, better incentives, and a significant reduction in the number of controls, consent requirements, plans and over-elaborate guidance which have been all too characteristic of the top-down approach to local government. It is truly about local government. It is a significant shift away from local administration, based on a belief that we do not need to control everything, and a recognition that local authorities are often in the best position to respond to local needs and aspirations.

"I hope that this will encourage local political and civic leadership. Today's reports into this summer's disturbances in Oldham, Burnley and Bradford show how important it is to have a leadership with a democratic mandate, who are prepared to take the often sensitive, always difficult, decisions necessary to ensure social cohesion. So this White Paper has at its heart community leadership and the democratic renewal of local government.

"For all councils we want to reduce the bureaucratic burden and give them the freedom to innovate and focus on driving up standards. We therefore intend to cut the number of plans and strategies that councils are required to produce, to scale back the number of area-based initiatives and give greater scope to rationalise partnerships.

"We shall remove many of the present requirements to obtain government consent before acting. Over 50 will be abolished with another 30 under review. We shall also provide councils with wider powers to provide services to others.

"With these new freedoms come responsibilities. For the first time we will produce a clear performance profile for each council. The Audit Commission will compile a scorecard and will identify each council as either high performing, striving, coasting or poor performing. It is our intention that further freedoms over and above those for all councils will be applied to high performing authorities.

"We will also intervene decisively where councils are failing their local people. Where councils are not collecting their council tax or providing high quality services, for example, this will not be acceptable, and we will take action.

"The Government agree with the Local Government Association that there should he joint ownership of the service priorities for local government. It is therefore our intention that—through negotiation and dialogue—we will agree a single list of priorities for local government.

"The White Paper also sets out our specific proposals for the reform of our local government finance system. Last week, I announced that next year will be the final year in which grant to local authorities would be based on the present standard spending assessment formula.

"We will be bringing forward our detailed proposals for a new system of grant distribution next year. But I can inform the House that I have decided to abolish the standard spending assessment mechanism and replace it with a system which is easier to understand, better reflects the real cost of services and the needs of a local area.

"We also intend to give local authorities greater flexibility to undertake capital investment. We shall scrap the system of credit approvals and, instead, authorities will be free to borrow for capital investment without consent provided they can afford to service the debt. So where a council sees the need, for example, for a new library or leisure centre, it will no longer need our permission to raise the necessary funds, provided it acts prudently.

"As a consequence of this approach, we shall abolish the receipts taken into account mechanism—which has acted as a disincentive for local authorities to dispose of surplus assets. I know that there has been concern about the growth of ring-fenced funding and the way in which this limits local discretion. We will therefore restrict ring-fenced funding to areas which are genuine high priorities for the Government and where we cannot achieve our policy objectives by specifying outcome targets.

"The setting of council tax itself is very much a local decision. But we also recognise that the risk of high council tax increases falls on local taxpayers. We have already ended pre-announced universal capping. Our long-term goal is to dispense with the reserve capping powers altogether. But we intend to proceed cautiously.

"We do feel that we should take the first step towards the ending of capping—and so I can announce that the power to cap will not be used in respect of high-performing authorities. A large number of authorities and honourable Members have raised with me the difficulties being created by the council tax benefit subsidy limitation scheme. The principles underlying the scheme are sensible. However, in practice its application has proved to be very complex. Some have proposed that we should simplify the scheme or find other ways of reducing its impact. Having considered all of the options, I have decided to abolish the scheme altogether.

"These proposals form part of the Government's agenda for modernisation and reform. For many, they will be challenging. They are meant to be. We proposed these changes not for their own sake, but because local people will benefit—benefit from the requirement that all services should be delivered to an acceptable standard; benefit from the fact that the changes we all really want to see—better schools and social care, improved local environments, better transport and other vital local services—will get the priority they deserve; and benefit from effective community leadership by councils in touch with local people and working to meet their aspirations.

"These proposals will put the 'local' back into local government—allowing local councillors to really make a difference for their communities. This is vital if we are to re-engage people, and as a result see an increase in turnout at local elections.

"This White Paper outlines a new and lasting basis for effective local government. I want to see central and local government working together in a constructive partnership to deliver the high-quality public services that local people have the right to expect. In a practical way, this White Paper shows how we can do so. I commend this White Paper to the House".

My Lords, that concludes the Statement.

4.24 p.m.

Baroness Hanham

My Lords, I thank the Minister for repeating the Statement. I must make my usual declaration that I am a member of a local authority in London.

I am slightly breathless from having tried to deal with the Statement in a remarkably short time. I have drawn a number of conclusions. Local Government will be delighted that there is to be yet another new vision for it! It may not have quite the profound feeling of relief that the Government believe it should have.

It is impossible to respond in detail to the content of the White Paper. However, one of the things that affects local government most is the system by which it receives its pay and rations from the Government. We have heard a great deal over the past few years about the importance of reforming local government finance. The expectation today will have been for more than merely a statement that the standard spending assessment system is to be abolished. That will be welcomed. But when will new proposals he produced that give an indication of the new mechanisms and formulas that will be used?

Every system disadvantages someone. The present one has been manipulated each year to take from one part of the country and give to another. Local authorities need stability of finance. I hope that this is what they will get for the start of 2003. I also hope that we shall have an opportunity to discuss in this House the methods that will be adopted by the Government for the future of local government finance. The White Paper contains brave words regarding the freeing up of local authorities, but they will only be as free as the money they have available to spend.

I have little doubt that the ability to undertake capital investment will be welcomed. It is long overdue. Councils which can demonstrate that they can afford to pay the debt charges and can manage the major capital schemes that might he involved should be able to do so. That is a welcome step.

All councils will rejoice at the abandonment of the council tax benefit subsidy limitation. I recommend that any noble Lords who want a little amusement should turn to what is euphemistically described as the "simplified" explanation of council tax benefit subsidy limitation which appears in the White Paper. However hard anyone tries, it is almost impossible to rationalise, justify or explain what the council tax benefit subsidy limitation ever was, or ever shall be, and what was its benefit. The explanation is so abstruse that it is no wonder that no one has every readily understood it.

The Government have indicated that they believe that councils—that is, some well-behaved councils—should have more control over their own finances. I have no doubt that that will be welcomed, so long as there really is true freedom.

Since 1997, ring-fencing of grant to specific requirements has risen from 5 per cent to 15 per cent of the total grant. We discussed the matter briefly in relation to the previous White Paper on local government finance. Perhaps the Minister would he kind enough to explain how that ring-fencing will change—now that the Government have admitted that it brings with it an over-heavy-handed approach—a council's ability to deliver services to its own priorities.

The Statement places great emphasis on the fact that the White Paper envisages better incentives and a significant reduction in the number of controls exerted on local government. It will be interesting to see how or whether this works out. For example, councils are being banded into "high-performing", "striving", "coasting" and "poor-performing" on the basis of a "balanced scorecard" to be compiled by the Audit Commission. I must say that the designations are enchanting. Can the Minister give any further facts about what this will involve? Will it include results from "best value" and Audit Commission inspections, and indeed from Oftel and the other inspectorates? Or will it be based on financial prudence and financial outcomes? In other words, what will influence the bandings? And what is the implication for council management?

The Statement indicated that capping will be abolished for high-performing councils. I assume that that means "high-performing" according to the banding. But that will probably lead to the majority of councils being potentially subject to capping.

It is clear from what little of the White Paper I have been able to absorb in the extremely brief time available that the good management of councils remains a totem of the Government. Rightly, they are concerned about democratic legitimacy, but will the Minister say where he believes that will end? We have elected mayors, although there are not many so far and they do not seem to be wildly popular. There is a suggestion in the White Paper that if councils perform poorly, pressure will be exerted by the Government to have those led into an elected mayor/council manager system. That does not seem to me to resemble local democracy. What is the future for local government if central government are to have an influence on that? What about the problems arising from the new current structure of councillors who have little to do and a somewhat inadequate role as scrutineers of policy? What are the expectations arising from the further reforms predicated in the forthcoming White Paper on regional government?

I am sure that there will be much in this White Paper with which we shall be able to agree. but the history of central government's control of local government does not lead one to have any confidence that the brave words about encouraging local democracy will, in truth, have much meaning. Every year the Government has promised more autonomy for local councils, but in fact they have centralised and reduced local discretion. It will take a significant change of attitude, which I hope is in this paper, for that to come about.

There are also indications in the paper that the expectation is that it will encourage greater interest in local councils on the part of the local electorate. We shall see. It is fair to say that none of the other initiatives has had much success in that direction. It is also true to say that the electorate will not be interested until they truly believe that they can affect what happens. If this White Paper and the proposals in it lead to greater autonomy and to a greater interest on the part of the local electorate in what happens in their local area, they will have served a good cause.

Finally, there must remain grave concerns about the promises to give more powers to local councils when it is intended to strip counties of their planning powers and to replace many councils with a new tier of regional local government. There are brave words in the Statement about reducing bureaucracy and freeing local government to innovate and giving more powers to provide services to others. I hope that that will happen in practice, but there will also need to be a great deal more discussion before action is taken on many aspects of the White Paper so that we can see that its proposals are truly reflective of the Government's stated determination to let local government do its own thing.

4.33 p.m.

Baroness Hamwee

My Lords, I, too, thank the Minister for repeating the Statement. I declare an interest as a member of the London Assembly which I believe will he affected by many of the proposed changes. We are told that the White Paper sets out a new vision for local government. That term is in danger of being rather overworked. We have had much reform since 1997 and I think that we are entitled to ask whether this is a new, new vision or the old new vision recycled.

We have had reform in structure, as the noble Baroness has mentioned. Many of us—certainly my noble friends and I—would like to see greater reforms than we have seen so far in the area of powers. The Government have not been prepared to let local government exercise a power of general competence and functions are largely set by central government.

The Paper makes much reference to services and uses the term "customer". However, we have to remember that local government is about far more than delivering services, although I readily admit that services are an important part of its work. I welcome the reference to the community leadership role. I hope that there is much reference to that in the White Paper which, like the noble Baroness, I have not had time to read in the short time available. That is not a complaint as I understand how that situation arose.

We are told that the proposals in the White Paper sit with the Government's principles of public services reform. Certainly, the delivery of public services requires the ability and the local intelligence of local authorities. This is a government Statement, not just a Statement from the Minister's own department. I note that earlier this month the Secretary of State for Education and Skills mentioned putting even more pressure on local authorities to delegate more money to schools, apparently promoting her tight control of local education authorities. I am not sure how those two matters sit together. The Government apparently also want to provide more choice for people. That concept would stand a five hour debate in itself and therefore I shall not try to analyse it now.

A reduction in the bureaucratic burden would, of course, be welcome, as would freedom to innovate arid to focus on driving up standards. We must accept—it is important to make the point in the context of the bureaucratic (if I may say so) reforms which support the measure—that the freedom to innovate must include the freedom to get things wrong. If local authorities are not allowed occasionally to make mistakes, they do not genuinely have the freedom that the Government say that they will give them.

The Statement refers to removing requirements to obtain government consent before acting in 50 cases, with another 30 under review. Can the Minister tell the House after the review how many circumstances will require central government consent before action can be taken? The Statement also refers to wider powers to provide services to others. That is welcome. Can the Minister confirm that that will include the power to charge for those services? Can he confirm that local government will be—I am afraid I shall use a term that I rather deplore—on a level playing field with the private sector?

We are told that the Audit Commission is to compile a scorecard and that the Government will produce a clear performance profile for each council. In a Statement which refers to removing top-down control, I find that a slightly odd notion. What is the difference between a set of scorecards and a league table? We are only a short way into a relatively new regime, that of best value. I believe that local authorities should have the opportunity to get that right working with central government. At present the matter is very centralised. I do not believe that we even know yet when local authorities will be allowed to set their own performance indicators. Perhaps the Minister can comment on that today. Certainly, one hears all around that the only growth in local government is in the form filling required for inspections related to the best value regime. The notion of best value parishes in the White Paper is, frankly, mindboggling.

The noble Baroness referred to the categories of local councils. There was a clear reaction around the House when the Minister set out the terms. I look forward to describing "striving" and "coasting" local councils on the doorstep.

As regards intervention where councils are failing, the Statement says that central government will take action. I believe that we are shortly to have annual elections. Is that not the real test? Do not elections constitute the real action here? The Statement quite rightly started with a reference to democracy and that needs to be borne in mind throughout.

Clearly the alterations to the financial arrangements will require a good deal of consideration. The replacement of the standard spending assessment with a much easier system is a Holy Grail which I sincerely hope the Government can find.

We welcome the greater flexibility for capital investment. The Minister says that that is provided that the council can afford to service the debt and acts prudently. Who will judge whether the local council can service the debt and is acting prudently? Also, as a result of these proposals, will councils now be able to spend the receipts from council house sales?

We welcome the restriction of ring-fencing—I should prefer to see something closer to abolition—although we are entitled to treat it with a little scepticism given last week's government settlement which, as the noble Baroness, Lady Hanham, said, increased ring-fencing by 15 per cent.

The White Paper says that the setting of council tax is a local decision. Indeed it is, but it is based on, among other things, awareness of the gearing effect. Local authorities will not be totally autonomous until they are financially autonomous. When we come to the actual legislation, I am sure that we shall spend a great deal of time on that.

I note that the benefits that the Government want to see include matters such as better personal care and better transport. But we have to acknowledge that demographic change and the increased need for social care are outside our control, and that better transport can be achieved only to a limited extent in a regime where, for instance, buses are deregulated.

From these Benches we prefer to see a regime which praises rather than blames. If the new proposals go in that direction in practice, they will be welcomed. The Deputy Prime Minister, in his foreword to the 1998 White Paper, talked about the "special status" of councils. They do have a special status and we should all recognise that; in other words, each authority should have freedom—and not just when the Government judge that they should have it. If local government is entitled to freedom, why is it required to earn it? Should it not have it by right?

4.43 p.m.

Lord Falconer of Thoroton

My Lords, I congratulate both noble Baronesses, Lady Hanham and Lady Hamwee, on the competent and clear way in which they dealt with the Statement. I shall go through the points they raised.

The noble Baroness, Lady Hanham, said that pay and rations were important. She asked when announcements would be made about the financial regime. My right honourable friend in another place said that we aim to share our thoughts on the new formula in the new year. The new formula will come into effect for next year's settlement; that is, the settlement for the years 2003 and 2004.

The noble Baroness welcomed the capital investment freedom and the abolition of council tax benefit subsidy limitation. She drew attention, quite rightly, to the fact that even trying to explain it proves to be difficult. The noble Baroness welcomed also the greater freedoms and asked for an explanation of what the effect will be in relation to ring-fencing. Perhaps I may deal with that briefly. We shall be looking closely at all ring-fenced grants to ensure that they are restricted to those cases which are genuine priorities for us and where we cannot achieve our policy goal by specifying output or outcome targets. We are committed to restricting ring-fenced funding to those cases.

The noble Baroness asked why we should end capping only for high performers. Local taxpayers bear the risk of ending capping so we are moving cautiously towards that goal. Protecting those who use and pay for local services has always been a central plank of this reform agenda. Reserve capping powers may also be needed to provide safeguards at times of revaluation. That is why we are restricting it to high performers.

As the noble Baroness, Lady Hamwee, said, the description of categories of council produced some reaction in the House. The description seeks to convey the qualities of councils. As the reaction indicated, the words did convey an element of what their performance would be like. The Audit Commission will do the assessments, as has already been said. Its assessment methodology will draw on the widest possible range of local authority performance information from existing audit inspection-based outcomes and performance-indicated data, including user satisfaction. It will reflect performance at both individual service level and corporate level and take into account current performance and proven capacity to improve.

Given the depth and breadth of information which has been brought together for the first time, no significant area of a council's performance will be overlooked. Moreover, high performing councils will have to be high performers in priority services and must not perform poorly in any service. The methodology will be developed and piloted by the Audit Commission in consultation with local government and other relevant parts of the public sector to ensure both its reliability and robustness.

The noble Baroness asked where it will end. That is another way of asking what will happen to poor performers. Where a council is failing with little or no prospect of improvement, we will apply early intervention measures. The measures used will depend on the specific circumstance of the authority and the nature of the failure. They could include transferring functions to other providers and giving stronger councils or other public bodies a role in running failing councils.

All councils will be expected to address the extent to which greater diversity of service provision will improve performance. As the noble Baroness, Lady Hanham, pointed out, stimulating greater interest in local government among local electorates is one of the aims in that regard. We seek to achieve that by ensuring that service delivery improves and that the role of local authorities as community leaders becomes established. It is those two aspects which will contribute to a greater interest being taken by the electorate in who their local authority representatives are. That is something to which we all aspire.

The first question the noble Baroness, Lady Hamwee, asked was whether this was a "new" new vision or an "old" new vision. I am sure we all see local authorities performing a role as community leaders. That is something to which we all aspire. That is our vision for local authorities and I am sure that the noble Baroness, Lady Hamwee, aspires to that as well.

The noble Baroness said that this new regime must be about more than just the delivery of services. That is absolutely right. The title indicates the importance of that: Strong Local Leadership—Quality Public Services. That is what the people want who elect local authorities and who enjoy the services they provide. We want people to have more choice. The noble Baroness neatly side-stepped that issue by saying that that is a debate that could last five hours and, sensibly in my view, did not engage in that argument at that stage. She welcomed the reduction of the bureaucratic burden and the freedom to innovate and drive up standards, which she said must include the freedom to get things wrong—that is right in certain circumstances.

Drawing attention to the fact that 50 cases were reduced and 30 were being considered, the noble Baroness asked how many consents were still required. I do not know how many are left. I shall write to her on that specific issue.

The noble Baroness also asked me to confirm that local authorities have the power to charge for services. We shall make an order to give local authorities the power to charge for all discretionary services. If they have the power to decide whether to provide a service, they will also be able to decide whether to charge for it. That will encourage authorities to provide services that they do not currently provide.

The noble Baroness then asked about a level playing field with the private sector. I invite her to look, at her leisure, at paragraphs 3.76 and 3.82 in part 1 of the White Paper. She also asked about the White Paper's proposals for the Best Value regime. It proposes the publication of the Best Value performance plan in June and its incorporation within the corporate assessment process; the publication of summarised performance information in March for the public, but with local discretion over contents and method; amendments to the Best Value review framework and guidance so that reviews become more effective and strategic; and an increase in the pressure and capacity for greater diversity in service provision and choice for local people.

The noble Baroness raised the question of whether intervention should be only through elections. We think not. If councils are performing poorly and the quality of service to people in the area is poor, local people are entitled to expect steps to be taken to ensure that the services and the leadership improve.

4.52 p.m.

Lord Jones

My Lords, with partnership, autonomy and initiative in mind, will local authorities still be able to attract footloose inward investment to their areas? Will they still be able to enhance, protect and buttress job prospects in their areas? Will there be more or less money under the new scheme that my noble friend adumbrates in the White Paper? Are there any details on that important work of local authorities?

Lord Falconer of Thoroton

My Lords, local authorities do important work on attracting inward investment to their areas. High-performing councils—those that provide good services and good local leadership—will attract inward investment to their areas. The White Paper does not deal with the amounts of money available. That must wait for another occasion.

Lord Maclennan of Rogart

My Lords, the Government's proposed changes for local government will be welcomed in so far as they result in a reduction in excessive central prescription. Much of what the Minister has said about expenditure—particularly on allowing freedom of borrowing without consent, subject to satisfaction that the debt can be serviced—seems to move in that direction.

However, the Government have much less to say on the fiscal side. The Minister has mentioned charging. What consideration, if any, have the Government given to allowing greater autonomy in respect of taxation? In particular, has any thought been given to the possibility of moving towards a more responsive form of taxation, such as local income tax, which has long been considered the best way to hold local government to account?

Has the Minister noticed that, following the report of the Kerley commission, the Scottish Executive have addressed the issue of greater local accountability by agreeing to seek to introduce a new system of election to local government by proportional representation? We look forward to seeing the timetable for that before the end of the year. Have the minds of Ministers south of the Border been similarly moved in that direction?

Lord Falconer of Thoroton

My Lords, the answer to the last question is that the White Paper contains no proposals for a change in electoral system along the lines referred to by the noble Lord. Ministers have also not been persuaded by the arguments for a local income tax and the idea plays no part in the proposals. The noble Lord was talking about making local authorities more accountable. The White Paper makes it clear that the performance of local authorities will become much more transparent and the delivery of services and the quality of local leadership will play a much more important part hereafter in the way in which they perform their duties.

Lord Smith of Leigh

My Lords, I declare my interests as a leader of a local authority and as a member of the board of the Improvement and Development Agency, which is mentioned as part of the proposed system for improving local authorities. I welcome the Statement with much greater enthusiasm than it has received from other parts of the House. Local authorities should be judged on their outcomes, not by regulation from civil servants. The financial changes that my noble and learned friend outlined are welcome to many authorities. Unlike the noble Baroness, Lady Hamwee, I would like greater turbulence rather than stability. Those at the bottom of the heap need significant changes in the system of local government finance.

I agree with the noble Baroness's comments on the need for a change in attitude. If the White Paper is to be a success, a change in attitude is needed from departments, from Ministers—the noble Baroness gave an example of not all Ministers singing from the same hymn sheet, at least before the publication of the White Paper—and from civil servants. This week I received a letter from the Government Office for the North-West about a lighter touch approach to the accreditation of local strategic partnerships. The guidance says that it should not be too time-consuming or paper-based. We were then invited to give a submission on 20 pages of A4 for our local strategic partnership plan. We need to get through to civil servants that we can be judged in other ways than on the volume of paper that we produce.

Lord Falconer of Thoroton

My Lords, I thank my noble Friend for his welcome for the White Paper. I thoroughly endorse his comments about the need for a new culture involving a genuine partnership between local and central government. I also thoroughly endorse his call for a much reduced burden of bureaucracy, not just on identifiable issues such as the consents regime, but in the ongoing, day-to-day relationship between central and local government. We do not want too much paper. We want outcomes that central and local government both aspire to in public services.

Lord Brooke of Sutton Mandeville

My Lords, into which of the interesting new performance categories for local authorities would the Government put their own performance? Secondly, while I appreciate that it would not be a new Labour Statement if it did not claim to represent a new basis for local government, given recent history, on what does the Minister found his confidence that the White Paper will provide a lasting basis? Finally, how does the Minister justify contingent intervention as a move away from centralisation?

Lord Falconer of Thoroton

My Lords, on the noble Lord's first question, it would be wrong for me to say in which category I should place the Government until the Audit Commission has gone through the process that I described earlier.

Secondly, the noble Lord asked about the confidence that we have that the arrangement will deliver a new culture and vision for local authorities. One does not get anywhere without first setting out a new policy framework. The way in which one changes policy and achieves new delivery is by setting out what one thinks the function and structure should be. That is what we have done in the White Paper. There is a real and genuine commitment on the part of central government to deliver that. The feeling that one gets from local government is that it is very much "up for" this relationship with central government. It wants to make that relationship work because people—the electorate—are keen to see delivery, which will occur only with a genuine partnership between central and local government.

Thirdly, the noble Lord asked how one justifies contingent intervention as being not too centralised. That is a slight re-phrasing of his question. The purpose of contingent intervention is that one in effect lays down the outcomes that one wishes. Local authorities then have the discretion to deliver them, having agreed the priorities with central government, and to decide on the way in which they are delivered. If they are not delivered, the people in the district who are covered by the local authority area are entitled to have steps taken to ensure that the services that they get are as high as those that are delivered by better-performing councils.

Baroness Sharp of Guildford

My Lords, I want to press the Minister a little further on that point. If he is genuine about wanting to create a partnership between local authorities and central government and if he is saying that he wants proper local accountability, can he explain why he thinks that it is necessary to have intervention between elections? Such intervention is not available in relation to central government. If there are to be elections annually in any case, why are the electorate not being trusted in such cases?

Lord Falconer of Thoroton

My Lords, because without intervention one has not got the means of ensuring that the basic outcomes, standards or performance targets that one sets will be delivered.

Baroness Sharp of Guildford

My Lords, who sets the outcomes? Why should central government do so when we want the electorate to judge the matter?

Lord Falconer of Thoroton

My Lords, as the local government White Paper makes clear—this was strongly supported by the Local Government Association—those targets and outcomes will be set through consultation between central and local government. At the local level, they will be reflected in local PSAs. Local government has warmly welcomed such an intervention and process and it is in practice keen for that partnership to be set up.

Baroness Bellingham

My Lords, I warmly welcome the White Paper and I stress how important it will be. My involvement in local government goes back some 10 years. I now have a new role—I chair an urban regeneration company—which makes it clear that local government is one of the most important parts of local democracy. In relation to urban regeneration, I cannot stress how important it is to have a partnership with local councils that are confident, capable and vibrant. Since taking up that new role, it has deeply depressed me during the past year to find out how much of that has been lacking. Much has been lost from local government's previous performance.

A spin off from the proposals is that there will be a regeneration of local democracy—getting more people out to vote—and, if we give local councillors more responsibilities, as the White Paper suggests, we will get a better calibre of person. Such people will put themselves forward for a very demanding role. Local councillors receive little thanks but plenty of kicks, and shouts from the doorstep of, "why haven't we seen you since last year?" It is a thankless task. I want local councillors to be given credit where it is due and for the fine job that they do. I hope that the White Paper will enhance their reputation and help them to deliver services where they are most properly delivered; namely, at local level.

Lord Falconer of Thoroton

My Lords, I thank my noble friend for the welcome that she gave to the White Paper. I know that she is the chairman of an urban regeneration company in Corby and I pay tribute to her for the work that she has done over a long period in that regard. I agree enthusiastically with her that when a local authority is engaged with partners such as urban regeneration companies, which bring people together, results are delivered on the ground. I also agree with her that one of the aims of the White Paper—one of its visions for local government—is to encourage more people to become engaged in local government because of the huge importance that it plays in people's lives. Involving people of calibre in local government is vital to the nation's well-being.

Baroness Miller of Chilthorne Domer

My Lords, under the proposals, will rural councils—in particular, sparsely populated councils—finally receive a settlement that ensures that in education, for example, they do not receive hundreds of pounds less in relation to children than urban areas? Secondly, with this rather blunt instrument of a scorecard, how will the Audit Commission measure an organisation that is set up by a council—a development trust, for example—and which functions effectively, but which delivers all of the goods for the people in that area? How will that be judged? The point raised by my noble friend Lady Sharp would be covered in such a case. People would see something happening as a result of the body that was set up by a council and which was no longer directly owned or managed by it but which was nevertheless beneficial.

Lord Falconer of Thoroton

My Lords, the noble Baroness's first point was about whether the financial settlement would ensure that rural areas were treated fairly—those are not quite her words. The answer, as I said in an earlier response, is that we have indicated that the old financial settlement system has gone and that the Secretary of State has indicated that he will share his views on what the new process should be next year—the provisions will come into effect the following year. That issue is for another day, and is riot really dealt with in the local government White Paper.

I turn to the question of how the assessments will he made by the Audit Commission. I gave a long answer earlier in which I set out what its assessment methodology will be. Plainly, it will have to take into account the sorts of issues to which the noble Baroness referred. Its methodology will be piloted and developed in consultation with local government and other relevant parts of the public sector to ensure that it is effective and insightful.

Baroness Maddock

My Lords, could the Minister clarify the situation regarding capital spending? Councils are currently not allowed to borrow money to build housing, for example. Having listened to the Minister's Statement, it is not clear whether there will be a change and whether councils will be able to borrow money for that purpose. Will he clarify the matter?

Lord Falconer of Thoroton

My Lords, the local government White Paper gives local authorities greater freedom to borrow. That borrowing will have to be within prudential limits, which will be set in such a way that only borrowing that they can service can be made.

Lord Greaves

My Lords, the White Paper comes out, perhaps providentially, on the same day as four other reports that had been promised on last summer's race riots—if that is what they were — in Bradford, Oldham and Burnley. The Minister will be well aware that some of the problems in those towns, and in many similar towns in the north of England, are due to the failure and collapse of the housing market, which means that there are very cheap properties that people are not able to modernise or deal with adequately. The White Paper refers briefly to that problem on page 92 in paragraph 5.3. However, a few pages later, on page 98, it suggests that all that the Government are going to do is to have a review of the HIP system and that nothing will change for two years. Can the Minister give any hope that not only Bradford, Burnley and Oldham but many other towns like them and many other local authorities in the same situation will be able to access greater resources during the next two years in order to help them to begin to tackle those urgent problems before the review takes place?

Lord Falconer of Thoroton

My Lords, the urgent problems to which the noble Lord, Lord Greaves, referred were those which he raised with me in a question about 10 days ago. That question related in particular to East Lancashire and went way beyond the towns hit by disturbances in the summer of this year.

This paper does not seek to deal with the level of resources for housing; nor am I in a position to make any comment about what will happen with regard to that level of resources in the next spending review. However, as I made plain in answer to the question raised by the noble Lord about 10 days ago, the Government are well aware of the problems of market failure and the extent to which in some parts of the country those problems have contributed to disturbances and, in every case, to significant deprivation.