Public Accounts Committee
Oral evidence: Devolving power in England, HC 612
Monday 7 September 2026
Ordered by the House of Commons to be published on 7 September 2026.
Members present: Sir Geoffrey Clifton-Brown (Chair); Mr Clive Betts; Anna Dixon; Sarah Hall; Chris Kane; Rupert Lowe; Sarah Olney; Tristan Osborne; Matt Turmaine.
Gareth Davies, the Comptroller and Auditor General, Head of the National Audit Office, Vicky Davis, Director for MHCLG and Local Government VFM Audit, and David Fairbrother, Treasury Officer of Accounts, were in attendance.
Questions 1-120
Witnesses
I: Steve Rotheram, Metro Mayor, Liverpool City Region; Katherine Fairclough, Chief Executive, Liverpool City Region Combined Authority; Paul Bristow, Mayor, Cambridgeshire and Peterborough; Rob Bridge, Chief Executive, Cambridgeshire and Peterborough Combined Authority.
II: Cat Little CB, Permanent Secretary, Cabinet Office; James Bowler CB, Permanent Secretary, HM Treasury; Will Burgon, Director for Public Services, HM Treasury; Will Garton, Interim Permanent Secretary, and Director General for Local Government, Growth and Communities, Ministry of Housing, Communities & Local Government (MHCLG); Melissa Brown, Deputy Director, English Devolution Strategy and Institutions, MHCLG.
Report by the Comptroller and Auditor General
Devolution in England: funding and accountability (HC 263)
Examination of witnesses
Witnesses: Steve Rotheram, Katherine Fairclough, Paul Bristow and Rob Bridge.
Q1 Chair: Welcome to the Public Accounts Committee on Monday 7 September 2026. The Government’s “Rewiring the State” policy paper published in July this year sets out their aim for every area in England to be covered by a strategic authority by the end of 2028. Strategic authorities allow combined authorities to be classified as foundation strategic authorities or mayoral strategic authorities—MSAs. Eligible MSAs can receive central Government funding through a single integrated settlement, bringing together funding from multiple Government Departments and providing greater local flexibility over spending. Greater Manchester and West Midlands were the first MSAs to receive an integrated settlement—last year—and in April this year, a further five MSAs began to receive multi-year integrated settlements, which will total £14.8 billion.
Many questions, however, remain about how the Government’s ambitious plans for devolution will turn into reality. Today, we are very grateful to be joined by local authority leaders, who we hope can share their thoughts on the insights of working in this area, ahead of questioning Government officials later this afternoon. If you have not already heard, it is strongly rumoured that the Government are going to delay local government reorganisation. That may or may not have a knock-on effect on strategic authorities, particularly new ones being formed. Anyway, you are all very welcome. Steve, would you start by introducing yourself, please?
Steve Rotheram: My name is Steve Rotheram. I am the Metro Mayor of the Liverpool city region. I am formerly of this parish. I was an MP down here for seven years, from 2010 to 2017. Myself and somebody who now is familiar to most people, called Andy Burnham, decided to leave Parliament and see if we could pull Liverpool city region and Greater Manchester together and get the agglomeration effect and benefits of that. I have been elected three times to that post.
Chair: Well done. Your chief executive is sitting next to you. Katherine, would you like to introduce yourself?
Katherine Fairclough: Good afternoon, everybody. I am Katherine Fairclough, chief executive of the Liverpool city region combined authority. I have been there for five years. Prior to that, I was a local government chief executive at Cumbria, and I have spent the whole of my career in local government across the north-west. It has been a great time to shape the future of the combined authority alongside the metro mayor.
Chair: Paul, would you like to introduce yourself, please?
Paul Bristow: I am Paul Bristow. I am the Mayor of Cambridgeshire and Peterborough. Like Steve, I am formerly of this parish, but it was not a voluntary withdrawal on my part; I lost the election in 2024, but became the Metro Mayor of Cambridgeshire and Peterborough in May 2025.
Chair: Well done. We are very pleased to see both of you. Your chief executive is also here. Rob, would you introduce yourself, please?
Rob Bridge: Hello, everyone. I am Rob Bridge, and I am the chief executive of Cambridge and Peterborough combined authority, where I have been for three years. Before that, I, like Katherine, worked as a chief exec in local authorities. I also worked for Her Majesty’s Prison Service for a while.
Chair: Good. We are very pleased to see all of you. We will start with my deputy, Clive Betts, who has a lot of experience in the field of local government.
Mr Betts: I begin by putting on record what I think is an interest: I am a friend of Steve’s; we played together on the parliamentary football team for many years.
Steve Rotheram: I did use to carry you, yes.
Chair: Who got the best transfer?
Q2 Mr Betts: I retired earlier than Steve—I think he is still going!
Steve and Katherine, one thing that has been touted as a real step forward for strategic authorities is the integrated settlement. What difference does having that actually make to the way that you operate? What more can you do that you could not have done without it?
Steve Rotheram: For me, when we first started, we called it devolution, but it was never devolution—it was decentralisation. The Government decided on a pot of fund for us for each of those different funding streams and told us that we had to spend it in a certain way.
With the new process, we get flexibilities around a single pot, which, obviously, is an amalgamation of all the different streams we formerly had. There is some ability to vire between those different funding streams. It also provides us with certainty: there is one integrated settlement, so we know what we will have to spend year on year. That has given us a fresh belief in proper devolution. We are doing things differently now compared with at the beginning of this experiment.
Katherine Fairclough: That has allowed us to unlock growth and look at the area in the round, rather than through individual funding streams. In our role in driving productivity and growth, the fact that we can look at, for example, housing, transport and skills alongside each other has really helped us to plan better for place, even in these early stages. As the Mayor outlined, that gives us the confidence that this flexibility will deliver for people on the ground.
Q3 Mr Betts: Jumping ahead a bit to a topic we will discuss later, Steve mentioned the issue of devolution or decentralisation, but there are a lot of constraints. You have this big settlement. Nominally, you can do what you want with it, but you can’t really, can you?
Steve Rotheram: It is not quite federalism, but I don’t think it was ever meant to be. There are flexibilities in the funding now, and the certainty over three years means that we can start to plan for the longer term. Those are some of the benefits. At first, we had no ability to spend it in a way other than what the Government told us we had to spend it on.
Q4 Mr Betts: Is there anything more that could be done?
Paul Bristow: From our perspective, as an authority that is now established but only as of very recently, some of the things I have experienced since becoming Mayor have been as Mayor Rotheram said. For certain budgets, we are told exactly how to spend, when to spend by and what to spend on.
For example, in terms of skills, Cambridgeshire and Peterborough is a very diverse area. We have some of the most skilled—certainly, those who have the opportunity to be the most skilled—young people in the entire country in Cambridge and South Cambridgeshire, whereas in the Fens, the reverse is true. We really are the most unequal region when it comes to skills and opportunities, but we are told exactly how and on what efforts we are supposed to spend the money. That means that we are not able to adapt to the unique challenges we have around skills in places like Wisbech or the Fens. We try our best, but we are told exactly what we have to spend, how we should spend it and what on, and when we have to spend it by.
Q5 Mr Betts: Even given Steve’s newfound freedoms to do what he wants—not quite, but nearly—what more freedoms would you like to have? What constraints could be taken off you so that you can deliver more, and what benefits would that bring?
Steve Rotheram: We could come to Government, provide an evidence base and say, “We think that we can get some growth in our area by recalibrating where we currently are.” In other words, the skills issue is really important to that, but so is public transport and the whole ecosystem with our universities around how you do it.
At this moment in time, we have the ability to draw down additional pots of money over and above what everybody bids in for—I am talking about for targeted growth. With some of the flexibilities, because we know the certainty of the quantum of funding we are getting, we could borrow ahead if we needed to, knowing that there would be a return on that investment that would cover any of the costs and inflationary pressures. We would also get the jobs and the growth, and UK plc would get the benefit.
Q6 Mr Betts: Okay. That is what you can do. Katherine, what more could you do?
Katherine Fairclough: Not everything is in the settlement. It focuses on things like transport, skills and housing; there is very little in the basket of public service reform as things stand. It is about an open-mindedness to other funding streams coming into the integrated settlement. Alongside that, the same flexibility would allow us to join up more connectedly with services for people in the place, as well as the infrastructure for the place.
It is also about how we simplify some of the funding arrangements that sit outside of the settlement. We recognise that they might not all come in immediately, but it is about how we start to harmonise and build a common outcomes framework with Government to deliver those services.
Q7 Mr Betts: If you talk about skills, further education particularly comes into view. Talking about some of the other issues, health is also important, but they are excluded currently. You really cannot do anything with those that you are not told that you can do.
Katherine Fairclough: There is an intention for them to come our way.
Q8 Mr Betts: You have been very cautious in this answer. Now is the opportunity to say, “This is what we want and what we could do.” Go on—give it to us.
Steve Rotheram: I think that Paul has hit the nail on the head about skills. Every area had to develop something called the skills improvement plan. We have the evidence about the demand for the skills we are developing and our ability to respond to capacity issues—skills shortages and gaps—for the employment we are developing. Government do not have all that information; we are the only ones with all of that.
If we wanted to develop some skills for the future under a company that we are trying to attract to invest in the Liverpool city region, we do not have the ability to train those people because we have limited resources. We fund the stuff that FE has the capacity to deliver for us. We might not want those skills in the future, so it is about the flexibilities around developing supply and demand, and we do not have all those abilities.
Q9 Chair: Paul, Clive has been pressing Steve and Katherine on Liverpool. You do not yet have an integrated budget. Have you an ambition to move toward an integrated budget, and what is the mechanism to do that?
Paul Bristow: To get an integrated settlement, you have to gain established status, which we have recently done along with York, North Yorkshire and West of England. I anticipate that, from ’27-28, we will have an integrated settlement, and we will be able to spend it in a different way and do lots of the things that Mayor Rotheram has talked about.
For example, we would be able to divert 10% of the money we receive in capital to revenue. You might think, “Why would you do that? Is that not a good thing?” The biggest challenge we face as an organisation is often capacity. We have to go from an authority where, in the past, the default has been to passport money through to constituent councils to one that is focused on delivery. For delivery, we need capacity: we need to increase the number of people who work for our organisation, which is only 165—
Rob Bridge: It is 140.
Paul Bristow: Only 140. The 165 includes the Greater South East net zero hub. We have to increase capacity in our organisation to deliver some of the strategic things the Government would expect an established status authority to do.
Q10 Anna Dixon: This was sort of covered, but what difference does established status make for those new opportunities? Paul or Rob, could you be more specific about the new opportunities you will be driving to deliver for the people of Cambridgeshire and Peterborough? I will declare that I am a West Yorkshire MP, so I have seen what a good mayor and strategic combined authority can deliver as it matures. Thinking ahead, what new opportunities might you bring forward?
Rob Bridge: I will start, and I am sure Mayor Bristow will come in if I miss anything. From our perspective, obviously there is the integrated settlement, as Paul has outlined. There are other things as well. For established authorities, there has been the local innovation partnerships fund. Like the rest of the country, we had to bid for Cambridgeshire and Peterborough, an area that has a lot of exciting innovation, but we were not successful. Established areas had funds—£30 million, £50 million—allocated to the combined authority, to then work in their area to drive growth. That is one really positive element.
Equally, we are now part of the right to request process, so we can think much more locally and work with all the mayors on what things would be better if they were more devolved. We can start to work through that with partners, stakeholders and businesses in our area.
I also think, when you look at what has happened to strategic authorities across the country, that there is a reputational piece about being established. We talked earlier about West Midlands and Manchester, and how they set the trailblazer route many years ago. From our perspective, we are now in conversations that we were not in with arm’s length bodies, such as our strategic place partnership with Homes England. Pretty much straightaway after we got established status, they wanted to start working more, with their teams embedded in the organisation, to help with capacity and deliver housing.
There are a number of things. In the framework of differences between established and mayoral combined authorities, there is a list of things such as more influence on Jobcentre Plus and on the affordable homes programme—a number of different things that we could not but now can do. That is what we are working towards with the points around capacity.
To come back to the integrated settlement, the challenge is always that the integrated settlement is only the quantum of money that you have in your area. The challenge around some aspects of our funding is that it is different from all the other strategic authorities—they are all different because they all started at different places. We need to work out with Government what the funding envelope in an integrated settlement needs to look like, alongside the fiscal devolution conversations that are now actively starting.
Q11 Anna Dixon: Mr Bristow, as the mayor, do you wish to add anything about what new opportunities you hope the population will see? In West Yorkshire, for example, our mass transit, which was a big priority, will hopefully be very visible. As you say, part of devolution is doing the things that make sense for that place. Again, the industrial priorities of West Yorkshire would be very different in terms of manufacturing and creative industries. What are the new opportunities that you hope to deliver through devolution?
Paul Bristow: A lot of the job of mayor is using the convening powers to try to bring together pots of money and opportunities and drive them forward. You talked about mass rapid transit in Leeds. That is exactly what we hope to achieve in Cambridge. We have a new development corporation in Cambridge. It is a centrally led development corporation, which is a little perverse because we are looking towards more mayoral devolution, but let us see what happens with that.
The point of my story is that we are working together on a mass rapid transit system for Cambridge. We have just introduced a strategic outline business case for it. Some of the direction of travel around making decisions locally, whether an authority is established or not, can only help with the delivery of projects such as this. Look at the timeframe for something like this; it can take 11 years, which is just extraordinary—frankly, it is beyond anyone’s willingness to think further than about four years. If we get more powers over TWAOs and so on, we should be able to speed this up.
On delivery mechanisms for mayors, it is much easier to go out and sell yourself to private capital, to the National Wealth Fund, to pension funds and to other things that might be able to fund big infrastructure projects like this, rather than waiting for central Government, who have a million and one other things to think about. That is why I think devolution in this way, on a regional level, is the right way forward.
Q12 Mr Betts: To come to a further look at the future, the Government made their “Rewiring the State” announcement, but we still do not know the detail of it. Given that the Government may still be thinking about those details, where do you expect it will make the biggest difference when it is eventually implemented? Do you have ambitions there as well?
Steve Rotheram: That is a leading question.
Mr Betts: Yes, that’s right.
Steve Rotheram: Myself and Andy wrote a book about rewiring the country. The idea was to take some of the lessons that we had learned through devolution and to apply the demonstrably successful bits and ensure that they were embedded. It was also about other things that we had seen, which were frustrations really, from the outside of this place. I know you are all in it, but, honestly, this thing about the Westminster bubble—when you go outside, nobody sees things through the same eyes as you do in here, so there is some truth to that. That gave us the opportunity to look at how you can circumvent the things within the machinery that slow us down sometimes. It is a way of speeding things up; I think it is about acceleration.
To give you one example, beforehand, two and a bit years ago, under the previous Government, we all had to bid in for the same pot of money. We knew that there would be a very limited number of winners because the quantum was small, but, while we might have believed that we were unlikely to be successful, you had to be seen by your electorate to bid in, because if you didn’t, somebody would say to you, “Why haven’t you bid for this money that the Government are giving away?” That really did spread us thinly at times.
I think there were eight combined authorities at the time, all trying to bid. Every single time money came out, we bid in for it. Now, with integrated settlements, we do not have to do that, so it releases capacity within all our authorities to do the things that we want to get on and do. That is just one instance where it is the rewiring that is the issue, not necessarily the individuals.
Paul Bristow: From my perspective, it allows us to do the job that we were elected to do. What are mayors there for? Mayors are there to try to promote economic growth and be ambassadors for their regions. You cannot effectively do that if you have your hands tied behind your back and are only able to do certain things that the Government tell you to do, when they want you to do them.
Something such as fiscal devolution, be it a share of locally raised income tax or a share of business rates, even if it is just the growth, does two things. First, it gives us an incentive to really go for growth and make decisions that are going to create economic growth, rather than looking over our shoulders with short-term politics. Secondly—this is really important—if you get a long-term revenue stream such as that, you can borrow off the back of it and then invest locally in what you perceive to be best for your area in terms of transport or infrastructure, rather than waiting for some spending round where, if you are lucky, with a tailwind and if you know the right people, you might get your particular scheme into the Green Book or whatever it is.
There are certain things, such as the Ely area capacity enhancement, which I am not going to bore the Committee with today. For 23 years, that has been either the third or fourth most important rail intervention in the entire country because it is all based on freight. The GVA is at 4.8 and it is a really good case, but it is about freight and is not particularly sexy. The idea of connecting Peterborough and Cambridge up, rather than having a train that takes longer than 55 minutes, is so important to our area and could just transform it.
Rather than waiting for the Government just to give that to us, we could look to try to fund it ourselves, because we could borrow off the back of our own revenue. That is something that I do not think central Government would ever really invest in; they haven’t for 23 years, so what is going to change their mind? Let’s do it ourselves.
Similarly, we talked about mass rapid transit; we can do stuff like that ourselves. We could create a revenue stream that we could borrow against to try to invest in the infrastructure that our area needs. I think that is the biggest difference that “Rewiring the State” could lead to.
Q13 Chair: I understand that you have a potential four-year settlement, but I gather that the funding for 2028-29 is not yet baked into the calculations. Is that correct?
Rob Bridge: Again, this is where there is a difference between the combined authorities that are established and have integrated settlements and ourselves. Ours is really on a yearly basis because we have not had that integrated settlement. The one difference is that the gainshare pots that all the strategic authorities get are subject to the gateway review process. We passed that step again this year, so we were confirmed for the next five years.
However, as Mayor Rotheram, Katherine and Mayor Bristow have said, there are a number of things that we wait for and are then informed about. For instance, what will the amount of money in the skills pot be for us in this particular area? What will our transport allocation be? What will we get for other innovation and housing? We have to wait for that on a yearly basis, or subject to when there might be an allocation for two or three years, depending on what the spending review is. Getting into an integrated settlement conversation, which might not happen for us until ’28-29, aligned to the next spending review, would be when that changes, I suspect, for Liverpool. Those with an integrated settlement have an idea of the amount of funding for a sustained period, and I think that is one of the big differences.
As Mayor Bristow said, with fiscal devolution I think you look beyond that because, with business rates and income tax—which have been looked at—you then think about when you reset, what the right time is to reset, and how you make that growth continue to allow you to then get that certainty. That is not about the capacity in the organisation. That is about whether you can borrow to deal with some of the infrastructure deficits that parts of the country have, and which we know we have in Cambridge and Peterborough, to hopefully then drive that growth.
Q14 Chair: I think you are telling us that your current system makes it difficult to plan, whereas Steve has a block of money. He can plan and move bits of it between revenue and capital, which is a very different thing. Steve, we will ask the officials in a minute, but I gather that that ’28-29 funding, even for you, is not actually baked in, or is that not the case?
Steve Rotheram: Ours is a three-year settlement, but that has to be ratified each year by the Government, by Parliament. We are planning on what we have been told we are going to get. Even if sometimes it is not the best news, at least if we have the certainty, we can plan. If it gets better, brilliant. To attract somebody in, we have to start planning years before, and all of the infrastructure has to be put in place. We have benefited from that strategic overview.
Areas like St Helens, for instance, which is a former coalmining town that was absolutely decimated, has started to find its way back with infrastructure that we built, and then there is the ability to attract inward investment. When we talk about growth, nobody talks about growth on the doorstep, do they? They talk about jobs, though, and apprenticeships. They talk about wealth and improving the area. That is the sort of stuff we are doing.
Chair: Thank you. That is very helpful.
Q15 Matt Turmaine: On both sides, you have started to touch on some of these issues already, but could you just outline in a little more detail what opportunities fiscal devolution will unlock that are difficult to achieve under the current system that you are operating in? You started to talk about investment, transport and skills and stuff.
Paul Bristow: I can outline some of the things that I would do if I had the opportunity to go for fiscal devolution, be it either business rates or income tax. I would borrow off it in order to invest in infrastructure, because you are never going be able to do that with the budget that we have. It is always going to be certain pots of money over here and certain pots of money over there—and it is very, very challenging. If you can borrow over a long period of time, you can create a model where you can fund something like the Ely area capacity enhancement or mass rapid transit or a rail system. You can have that certainty, and the investors have that certainty that you can repay the money, even if it is over 50 or 60 years. I think that is the way.
Secondly, as I said, that would also give us the incentives to go for growth. I am very lucky to have in my area a high-growth area. When the Prime Minister was Mayor of Greater Manchester, he talked about the Manchester effect of 3% growth over a certain period of time, but over the same period Cambridgeshire and Peterborough were growing at 2.7% and 2.8%. But we did not have the opportunity, because we did not have the same resources and status as Greater Manchester, to derive benefits from that and go for even greater growth, and it felt a bit bitty. It felt that we would do one project over there because we were told we could do it, and one project over here, but it was not that big strategic piece where we could try and grow a region. Fiscal devolution and established status can change all of that.
Q16 Matt Turmaine: Steve and Katherine, from your perspective—obviously you have been having this experience for a little longer—is Mayor Bristow’s and Rob’s optimism well placed? Is this something that can definitely be achieved?
Steve Rotheram: I feel their pain, because I went through that for nine years and it is debilitating. That certainty allows you to do the things that you plan for. Everything that we have done is contained within a 10-year plan. That is our local growth plan in the Liverpool city region. It has been ratified by the national Government, so with the spatial development strategy that we have, we know the areas where we can build out. We know where houses and industries are going, and we know the transport links and the skills needs. All of that is available to us now and that certainty of funding provides us with the launchpad to go further than we have gone so far.
If you look at what we have done in the Liverpool city region, we have grown the economy by £3 billion in the last few years—£3 billion. Don’t forget, Liverpool was often one of those areas in a post-industrialised world that people cited: “Look at the state of what’s happening there.” Now, we have an innovation-led economic growth plan, and we are teaming up not with Cambridge but with Oxford University. They have chosen the Liverpool city region to partner with for scale-ups, spinouts and start-ups. It just shows you that we are changing the very nature of the economy.
We are very proud of our visitor economy—I am not decrying that. We have gone from £4.4 billion when I first took over to £6.8 billion posted last year. We have seen growth in that as well, but we do not just want that; we want to look at the technologies of the future, and the opportunities of AI and the dangers of it. We have just seen the job losses talked about at Jaguar Land Rover; I am not apportioning all of those job losses to AI, but it is a danger, so what can we do to get ahead of the curve? That is where those certainties of funding are really helpful, as well as the fiscal stuff. If we get an overnight visitor levy, just imagine what we could do.
Katherine Fairclough: We are keen to emphasise how much we welcome having the integrated settlement, but it is still a series of pillars of funding with some flexibility within them. What we are seeing in “Rewiring the State” is a much more open-minded approach to fiscal devolution. Some of those grants will be replaced by other sources of funding—from income tax and business rates—so we would be able to flex that funding more significantly than we can now. In order to give that confidence, both in terms of service delivery but also to investors and communities, us being able to demonstrate how that investment is being used in the round in future years would be a big game changer.
As the Mayor has described, we have a high level of interest from investors. They want certainty and to know that things will continue well in the Liverpool city region. Consequently, if we can see that growth is coming through more devolved funding, fiscal devolution and a fresh reworking of the settlement, that will give us the push that we need for the long term.
Q17 Matt Turmaine: Steve, you have kind of pre-empted my next question for Paul and Rob, which is: what systems do you think you need to put in place to take advantage of the new fiscal devolution? I was going to ask if you are talking to one another. You are talking to Oxford, but what do you think you need to put in place to take advantage of it? And then Katherine and Steve, perhaps you can say whether they are barking up the right or wrong tree in terms of anything else they need to think of.
Paul Bristow: I will let Rob answer as well, but I have a couple of points. The first thing to stress is when we talk about fiscal devolution, it is not necessarily new money. This is going to be the opportunity to raise locally what we already receive and then we may be able to get the proceeds of growth. We are not necessarily going to expect game-changing new cash to provide all these goodies. That is the first point.
Just talking about our area, we still face huge challenges. We are not part of the CRSTS funding, which is city deal transport funding. Greater Manchester gets £2.4 billion from the transport for city regions fund and another £1 billion from the city region sustainable transport settlement. Tees Valley, which is two thirds smaller than we are, gets £1 billion over four years. Our bus budget is £44 million a year, so we still have huge challenges when it comes to the amount of money that we are expected to provide for a predominantly rural region with two big cities, Peterborough and Cambridge—they are two reasonably sized cities.
In terms of our funding, different mayoral strategic authorities are at different places. Ours is certainly not in the place of Greater Manchester or even Liverpool. I did quite enjoy that Liverpool has done a partnership with Oxford. We went one better; we have done a partnership with your boss—you know, Manchester.
Steve Rotheram: I haven’t got a boss—I’m directly elected.
Rob Bridge: Steve talked about what you need in place. In Cambridge and Peterborough, we have had to do a lot around improving the governance and decision making for significant projects. If you have an integrated settlement, you have to have something called a single assurance framework. You need to have certain things in place to ensure the value for money for the projects that are taking place. That is really important.
The rewiring document talks about local accounting officers and how you make them locally accountable for value for money so that the taxpayer can see what is being spent in an area. That is where there is a big change. If you are saying that the proceeds generated in an area are now going to be used to do different things in an area, it is right that there is something in there that makes sure that the people who are responsible for it are held to account.
In local authorities, you have a similar arrangement. Section 151 officers are personally responsible for financial stewardship and the use of public funds. I think that having local accounting officers, whether or not they are chief execs, which I think is what has been suggested, and local audit offices is a very sensible way of making sure that the money that is generated in the place is then being spent on the right things in the place.
One of the questions that needs to be understood is, what money are you talking about in terms of the area? Is it purely what comes through the strategic authority? There was a mention of health earlier. Are you going to start talking about the health elements? Are you going to start talking about local authority zoning? That is a very important question that needs to be understood.
There needs to be disciplined governance around project management. How are decisions made? Do they provide the right payback? I recognise that the Green Book has been reviewed, but there is a point around balance. A decision was made a few years ago in Peterborough to invest in a new university. That had a big social value impact, as well as what it cost to build. It was a big allocation jointly done with the city council, Government and the combined authority. You now have a university in an area where 50% of the people who go—over 50%—come from a postcode in the area and would have never gone to university otherwise. From a social mobility point of view, alongside what it cost to do, it has been phenomenal. That is an impactful point on how devolution works in an area.
Q18 Matt Turmaine: Steve and Katherine, do you have any advice from your experience? Did you have to put in place anything to make sure that you could take full advantage of the new money?
Steve Rotheram: You might find this strange in the place that you work, but we do not have to be party political as metro mayors. There is a thing called UK Mayors where we all come together from all the different parties and share ideas. I do not think any of us believes in drawing up the drawbridge just because we are doing well. We are saying, “Have a look at this.” We were talking outside this morning about our buses. We have just re-regulated our buses and taken them back into public control. That is something that Paul might be interested in, so we are sharing notes. That is the way we learn those lessons, because the country has to benefit.
For one of the first times in my lifetime, the Liverpool city region is really doing well. All the economic indicators are going in the right direction. Even on productivity, which is the most sticky part, we are closing the gap nationally. If you have a look at what we have done with qualifications, we have halved the number of people without qualifications, and for NVQ level 4 and above, we are smashing it at above national averages. We are doing some really good stuff. I am more than happy to share with Paul or anybody else and learn those lessons between us, because UK plc has to benefit.
Katherine Fairclough: One of the things I was really struck by when the Mayor and I began working together was how we needed to build the organisation in order to respond and be sustainable. We had had a very busy first term. It was the Mayor’s second term, and more and more responsibility was coming our way. Mayor Bristow and Rob’s point about building their organisational capacity, capability and resourcing is absolutely key. It is really great to see “Rewiring the State” putting a real emphasis on that. There is as much on accountability as on building the capacity and capability.
The ways in which our deals came together were quite opportunistic for each area. It was a moment in time. We need more consistency across the board now—not that everywhere will be the same, but we need to have that challenging conversation about access to core funding. It feels like we are in the right space now with “Rewiring the State”, which has set out a really clear direction of travel, but you have to build the institution to run and deliver the MSA’s business every day. We cannot underestimate the scale of doing that. We have doubled in size over this period in order to respond, and we grew out of a transport authority that was already operating and very well run. Not everybody starts in that place.
Q19 Chris Kane: Steve, can I come in on shared learning? I am a Scottish MP, so we have had devolution for a long time. As I remark in this Committee quite a lot, it bothers me that the component parts of the United Kingdom do not learn from each other in a structured, almost strategic and statutory way. As we are embarking on more devolution, do you think we should give more time to thinking about how we bake in the requirement to take the time to learn strategic lessons about tackling similar challenges—for example, how we can learn from what is happening in Cambridge, Liverpool, Manchester, Glasgow or Aberdeen and get it right? It does not feel like the institutional requirements to do so are strong enough at the moment.
Steve Rotheram: I think there are differences between devolution for nations and for regions, to tell you the truth, and I will point to some of them. When Andy and I went to Glasgow, they said that they sometimes feel that devolution has bypassed them, because it is mainly Edinburgh that gets the funding and distributes it. I think we need almost double devolution for the nations.
In the regions, though, we are all very different and sometimes competitive, but there is also a lot of complementarity in what goes on and you can pull that together. A number of metro mayors are all going to India, but we are going to sell the UK; we are not going necessarily to sell our individual bits. There is a lot that we can do to learn from a more collegiate approach and to get above some of what I would call the Mickey Mouse politics.
Paul Bristow: I talked a second ago about the Manchester-Cambridge partnership, in which our two areas have come together to learn from one another. The reason we did that is that we have an ecosystem in Cambridge, especially around life sciences and manufacturing, where industry, academia and Government are all working together to create things. That is why the Cambridge economy has grown to such an extent around the biomedical campus. In certain ways, we cannot keep up in terms of congestion, water and energy, and those are some of the challenges that I have.
I know that Manchester is very interested in looking at how that occurred and what they can learn from it. I had my eyes open and was completely aware of that, so when we went to Manchester and Andy and his team came to Cambridge, I wanted to learn how their organisation has worked so effectively. One of the lessons I learned was how the university is so integral to the Greater Manchester combined authority and how they work together. Cambridge has perhaps the best university in the world as far as I am concerned, and there is a real opportunity for us to get the university involved in everything we do as a growth organisation.
I am always learning from other people. There is this thing called the rural transport group, where mayors and those in other areas get together. While other rural areas are dipping their toes in bus franchising, I am going to go ahead with it. I am a Conservative, but there is a huge national push to this sort of model. I am not doing it because I am hugely ideologically in favour of local authorities running bus services; I just think it is probably the best thing we can do for our area to get a reliable service. While other rural areas—York and North Yorkshire—are dipping their toes in and thinking about it, we are actually doing it on a budget of £44 million.
If there is one thing that keeps me awake at night as mayor, it is not opening Cambridge South station or the university in Peterborough; it is making sure that we have a long-term sustainable bus service that does not bankrupt us, because buses are expensive. But we are doing it, and if we can learn from Liverpool or Manchester, understanding that we are a predominantly rural authority of around 900,000 people rather than a big metro authority of 2.5 million people or whatever, we will. If we can learn lessons from other areas, we are going to take them, whether they are Conservative, Labour, Reform or whatever. We are going to do what we can to try to make sure that our area learns from the rest of the country.
Q20 Chris Kane: Local government colleagues in Scotland are pretty concerned that the Scottish Government have announced a consultation on local government reform north of the border. The concern is that it will be done to them rather than with them. At your level of devolution, how important is it to nurture relationships both down the way to local government and up the way to national Government, in a way that is lacking in Scotland at the moment? There is a real fear that this is going to be something that is done for the wrong reasons, and something that is done to local government, not with local government.
Paul Bristow: Politics in Cambridge and Peterborough is very diverse. We have parts of Cambridge with Green councillors, a Labour-run Cambridge city council, a Liberal Democrat-run county council and a Conservative mayor.
We are the combined authority, and we need to have effective working relationships with our constituent councils, whether they are run by Conservatives, Labour or the Liberals. If we do not, we will not get anything done. If I am being honest, when you look back at our authority, that is perhaps what has let us down in the past, but we are not going to make those mistakes again.
Q21 Chris Kane: To be clear, it is not party political; it is a layer of government. It is a new layer of government to make sure—
Paul Bristow: But we need to have partnerships with these organisations. Quite often, we are passporting money to them, and they are the delivery vehicle on the ground. The station quarter in Peterborough—with £50 million of public money—could be a real opportunity for Peterborough by providing a real gateway to the area. We have to work with local government to get that done. If we do not, we may as well pack up and go home.
Steve Rotheram: We are called a combined authority; our six local authorities are the combined authority. Each of those leaders has individual portfolio, but they are part of the cabinet that makes the overall decisions for the whole city region. It is not taking powers away from local authorities; it is enhancing what they already have. It is about providing that strategic leadership at times because, as we know, councils can change colours one year after another. If you are elected for four years, you can at least head in a strategic direction, and you have the four years in which to try. Councils do not really have the same opportunity.
I have not had any problems with our councils, and they actually like what we are trying to do to lead the area. Also, we now have a Reform council in our city region, which we never had before. It was Labour—by the way, that provides its own opposition—and now we have Reform, and this morning the Reform leader was at the launch of the new brand new bus fleet in St Helens, so I think it works.
Chair: Before I come to Sarah Olney, I want to clarify one thing that I was asking you about, Steve and Katherine. Paragraph 2.14 on page 25 of the NAO Report, which relates to multi-year settlements, says: “Budgets for 2028‑29 and 2029‑30 may be re‑examined during the 2027 Spending Review.” But I take your point, Steve, that you are of course going to get something reasonable to keep the services going, so you can plan for that at least. If you get a good settlement—well, the sky’s the limit. I just wanted to clarify that.
Q22 Sarah Olney: Paul, you talked about passporting on a couple of occasions, and I assume what you mean is that the strategic authority is getting funds from central Government, and you are then passing them through to your constituent local authorities to spend. The Report mentions that one of the frustrations faced by leaders of the strategic authorities is that they are somehow just another arm of central Government delivery, which seems a similar complaint.
Clearly, what MHCLG is putting in place to combat this is the outcomes frameworks. What is your experience of working with the Government on the outcomes frameworks? Obviously, they committed to changing the way they are put together. What change do you think would make the biggest difference to your ambitions for your strategic authority?
Paul Bristow: As I mentioned, we are already slightly curtailed in what we can spend, when we can spend it by and what we can spend it on. That will change when we get to established status, and hopefully it will change further when we get to fiscal devolution. As you said, we are negotiating an outcomes framework.
There is the criticism that we are just another layer of Government, if we are just passporting the money, but I would say two things to that. First, we have to get used to being a delivery organisation, and we are very proud of some of the things that we have delivered, such as ARU Peterborough and the Tiger pass, which benefits so many young people across our area, with £1 travel.
So we are a delivery authority at the same time, but it is about partnership working. A lot of the time, our constituent councils would not have the capacity to think about a big infrastructure project in their area, such as the Peterborough station quarter. They would talk about it for 30 years, but would they ever get that done, or the university and other things? That is what an organisation such as ours, a combined authority, can provide—the strategic focus to get these projects over the line.
One of the challenges of a potential outcomes framework is that, while we get further devolution, it could be just another opportunity for central Government to control what it is that you can do and what you can spend it on.
Sarah Olney: Do you see what I am asking?
Paul Bristow: That is a challenge; it is a risk and I am not going to pretend it is not, but it cannot get any worse than it has been. As a natural optimist, I think this should be seen as an opportunity, rather than just another constraint on our time.
Q23 Sarah Olney: How would you like to see the Government tweak the way in which they produce the outcomes framework in order to better support your ambitions?
Paul Bristow: It is important. No Government are going to turn around and just give money—a blank cheque—and say, “Get on with it and do what you want.”
Sarah Olney: We would not want them to.
Paul Bristow: There will always be central Government priorities about what they want to do. It is not necessarily about where you want to get to; it is how you get there. No Government are going to come in and say, “To be honest, I am not interested in having a skilled population,” or, “I am not interested in economic growth in this particular area.” Apparently, we are going to have growth in every postcode—apparently. This is about trying to help us get there. As long as you go into that negotiation on an outcomes framework with that in mind, we are going to be positive. Rob, do you want to come in on this?
Rob Bridge: In many ways, I am sure Mayor Rotheram and Katherine will give a view about how the outcomes framework has played into the integrated settlement conversations. At times, it has probably been more challenging than it needs to be. As Mayor Bristow just said, I have seen some of it. It almost feels like a constitutional scheme of delegation to the authorities. It is basically saying that you must do this, this and this.
We need flexibility within that outcomes framework so it allows local choice for whatever those funds are. I come back to my previous comments around local accounting officers and local audit offices. It is about looking at those as a whole and making sure that you have a system that holds the right people to account and makes sure that you see outcomes for what is being done, but is also flexible enough to give people on the ground enough flexibility to be able to move that, rather than saying, “You said you would do this by this date and you have not.” Sometimes big infrastructure projects are not as simple as that.
Q24 Sarah Olney: Isn’t the point of an outcomes framework that it is being measured by the outcome and not by the input? It sounds from what you are both saying that there is a little bit too much control of the input. It is not a true outcomes framework. Is that so?
Paul Bristow: That is probably always the instinct—that sort of control. If the Prime Minister does what he said he would do as the Mayor of Greater Manchester—if he pursues those ambitions in terms of devolution and greater powers and flexibility for locally elected mayors—I think Steve and I would probably both welcome that.
Q25 Sarah Olney: Steve, do you want to comment on your experience of outcomes frameworks?
Steve Rotheram: It is a necessary thing. You need parameters that you operate within, and it provides a framework for people like yourselves and all of the different scrutiny tiers that we have to go through—believe me, there are many. That is a good thing. Transparency of how we are spending public funding—taxpayers’ money—is the right thing. I am not moaning about that.
I agree with the flexibilities. If, for instance, one of our targets is to get more people with NVQ level 3s, we do not have all the levers for that at the moment. We have the adult education budget—we do a lot on that—and we have some limited funding below that. That is why the move by the Prime Minister to free up some of that funding means that we can hit those targets more readily.
One of the suggestions is that DWP budgets would come under metro mayors. That is a big chunk. Where certain people need to get these qualifications as a prerequisite of getting employment, that means we can match things up more easily. We do not have all the input levers, but we are then expected to be measured on the outputs.
Q26 Sarah Olney: You are accountable for the output, but you have not got the input.
Steve Rotheram: Yes.
Q27 Sarah Olney: On that point, can I ask a question? You talked about your constituent authorities. I am sorry; I cannot remember if there were five or six.
Steve Rotheram: We have six.
Sarah Olney: How well are you working with them in terms of streamlining their priorities against your outcome framework? Does that all flow very smoothly?
Steve Rotheram: Incredibly positive.
Sarah Olney: Good.
Steve Rotheram: I will just go back to what Paul was saying earlier about passporting. That is the frustration. So we are just a conduit for funding—really? Is that what devolution is? For me, it’s not. I genuinely do feel the pain that the likes of Cambridgeshire and Peterborough and the other non-MSAs are going through. It was that way for us for nearly eight years, but even within the constraints of those frustrations, we still did wonderful things, because you can work with partners differently.
You talked about the soft powers; the convening powers are huge when you become the metro mayor. The focus is about you trying to get more out of what is there, and we have always believed that there is as much talent in the Liverpool city region as in Peterborough and Cambridgeshire or anywhere else. What’s not been there is opportunity, and we are now providing that.
Q28 Sarah Olney: My question is about the outcomes framework, which is why I am focusing on that, although all the things you are saying are interesting. Is the outcomes framework the mechanism that enables the working with your constituent authorities, or is it something else?
Steve Rotheram: I don’t think it is as problematic as perhaps we are all making out, because our negotiations were quite good.
Katherine Fairclough: I could give you a practical example, if that would be helpful. What was really significant for us when we heard that we would be getting the integrated settlement, and the conversations that we had with the local authority leaders and their officers, was around the opportunity to shape the outcomes framework, and how we would then look at the whole system that we are all involved with, in order to drive the change that we needed. At times, the actual negotiation of the outcomes was challenging, like any negotiation—you know, “I want a bit more than you want to give”—but we secured a really strong set of outcomes.
You are absolutely right that there is sometimes too much focus on dictating delivery and inputs, rather than on broad outcomes, but what it led to, which I think is really powerful, is a whole-system conversation with our local authority constituents, with DWP, with our FE colleges and with others in the system to think about what system we would be looking for in an ideal world, and how the inputs that we all provide can help to deliver that overall outcome. What we see through “Rewiring the State” are more steps in that direction. There is something about breaking into a cycle, which we did with the outcomes framework and the integrated settlement, and then continuing to work through that into the future.
Q29 Chair: Following on from that exchange, let’s talk about the programme board, which meets every six months and which contains the great and good of the Treasury, MHCLG and yourselves. It measures delivery against the outcomes programme framework that Sarah was talking about, and resolves cross-departmental issues. How well does it work?
Katherine Fairclough: Well, because we are in year one of our integrated settlement, we have not yet had formal engagement on that front. However, there are lots of informal conversations, checking off points along the way.
At the moment, what we are finding is that things are working effectively. We are able to demonstrate progress in delivery, and as we get into the more formal stages as we work through the rest of the year, I feel confident that it will be effective. We have very good lines of communication between the Departments in terms of delivery, what is on track, and what might be struggling to deliver. If you have an open and transparent culture and way of working, that will give you benefits in the long term.
Chair: That is good to hear. Any other comments?
Paul Bristow: We are not quite there yet, in a sense, because we have only just become an established authority, but in general, the relationships we have with Government tend to be very positive. Is it frustrating a lot of the time? Of course it can be frustrating, especially when we specifically ask for things that will help our organisation to operate more constructively. It is a bit like our voting system. I need a two-thirds majority on my board in order to move a bus stop. If it is a transport issue, it is incredibly frustrating, and it is incredibly frustrating that sometimes Government are quite slow to try and remedy these issues. But that is just the way it is.
Steve Rotheram: Some Departments are more proactive and easier to work with than others.
Q30 Chair: Want to expand on that? [Laughter.]
Steve Rotheram: Yes, okay. I had some terrible conversations with DFE, because we want to do so much more. If we have an employer who wants to relocate to our area or FDI coming into our area, we need people with the right skills for that employer, but we do not have some of those pots of money, which has been a huge drawback for us.
There are others that have been problematic. DWP, at one stage, would not share data with us. We are all trying to do the same thing, so that was a bit problematic. But over the last few weeks and months, the difference has become stark. People in the machinery of Government really want to work closely with us, and they see us the mechanism to get economic growth in the country.
Chair: That is really good news. Thank you for your candour.
Q31 Tristan Osborne: My question is about local accounting officers. Rob, you somewhat pre-empted my question earlier: the White Paper says that it will consider a system of local accounting officers; you alluded to the fact that that could be a chief executive officer or similar, such as a 151 officer. Obviously, it does not give that clarity at present. Katherine and Rob, is that how you foresee this local accounting officer? Would it be the chief executive, in your minds? That would be common sense, but it is not defined clearly in the White Paper, is it?
Rob Bridge: My background is finance, so I have been a 151 officer. I suppose I just go back to those principles. I think it should be the chief exec. It is a similar role to the permanent secretary for Departments. I think that would very much be a strengthening of that arrangement into a local audit office, a local accounts committee or whatever needs to be there so that there is a mechanism for signing off and making sure that the funds being used are meeting all those requirements, as permanent secretaries do on behalf of Parliament now. That is probably the right place that it should be.
Katherine Fairclough: I would absolutely agree with Rob. There is something about the oversight that we have for the whole organisation and the responsibility for good governance, resource management and so on, so it feels like a natural place that that would be located. There is some development to be done around that to understand the parameters, and development support for all of us. It is a new role in a new world, so we would really want to make sure that we could fulfil that role completely.
Q32 Tristan Osborne: Thank you both for those very clear answers about where you see that. I suspect that is probably similar in other authorities. There is a lot of tension in the Report around the local accounting officer and parliamentary scrutiny. Steve, I think you highlighted some of the tension that you have with Government in terms of the strategic levers: the Government are telling you to do stuff, you are expected to deliver the outputs and are then held to account on the outputs. We have resource challenges—that comes out of this NAO Report very clearly—and we have the different challenges around how you manage internal stakeholders, be that within your group but also politically, externally. [Interruption.] My colleague Rupert might have something to add on that, but I was just wondering, in terms of parliamentary scrutiny, how you foresee that accountability with accounting officers. Is it similar to a council 151 officer, or do you foresee different challenges?
Rob Bridge: I think it is slightly different, because 151 officers are responsible directly to their councillors, the council and the auditors, so there is a point about how you set up a mechanism that comes back to Parliament. I have always said very clearly that, whether it is mayors or senior officers, we cannot be asking for more devolution and more funding and then not think that we have to be accountable for it and demonstrate how that is being used in an area. Some mechanism that means that the accounting officers have to come and speak to Parliament on their area is probably a sensible thing to explore, because at the end of the day, we need to show Members of Parliament and give you the trust that we are delivering what you have asked us to deliver. When I say that, I do not mean going back to the outcomes framework. It is more: “You’ve devolved those funds, you’re going to do something really important in that area to grow the economy, the skills, the jobs and the connectivity; now come and make sure that you can demonstrate you’ve done it in the right way.”
Katherine Fairclough: We already have really strong systems of local accountability—audit, assurance, local scrutiny committees; a whole range of measures—and can demonstrate really strong and robust governance and value for money. It is about being complementary to that, because the local assurance mechanisms are very strong already. The challenge that local scrutiny committees bring is hugely significant and very beneficial for us. Although there is always scope to develop that further and continuously improve, there is something about complementarity in another layer of scrutiny for the accountable officer alongside what is happening locally.
Q33 Tristan Osborne: Figure 5 in the NAO Report alludes to that, around the overlapping responsibilities. Steve and Paul, you have been parliamentarians and you have used the term “gamekeeper”—not just to use it but to use it sensibly. Given you have both worked in Parliament and you have had your current roles, where would you say there are lessons to be learned from an accountability perspective? Do you think that we should be less controlling? Implicit in the Report is that there is still too much central control.
Steve Rotheram: Less controlling, but we have to be more accountable. That is the big thing to take away. We are talking in the billions, and sometimes councils might be talking about tens of millions; if we got something wrong, the enormity of it is for all to see. We would be happy with any form of scrutiny at all.
Genuinely, after the Prime Minister we are probably individually the most scrutinised politicians because of the processes we have to go through. We have to go through it at departmental level. Each year, we have a gateway process that we get through. We have to provide audited accounts, and ours have been spot on every single year, so they are unqualified. We have to comply with the assurance framework. We have overview and scrutiny all the time. We have audit and governance all the time—it goes on. I do not know whether you have one, but local radio now has more of these—ours is called a hot seat: Andy used to do a phone-in, and we do a phone-in. You will see that mayors are also accountable to the electorate, which is really important. Over above all that sort of stuff, we have started doing mayoral question times—they are fun.
Paul Bristow: I am looking forward to my mayoral question time in Ely on 17 September. In terms of scrutiny, Steve is right; there are quite a few opportunities for councillors, government and the public in our areas to ask us questions. This experience—coming before the Public Accounts Committee today—relates to what Steve was saying; we are responsible for spending huge amounts of public money. Some sort of structure in place where Members of Parliament are able to hold mayors to account is probably not a bad thing.
Q34 Tristan Osborne: With the announcements today, timescales around how this will be settled with accounting officers is, I suppose, a moot point, because there might be changes coming.
Figure 8 refers to Australia and the model they have around devolution and their approach to agreements between central Government and devolved bodies. I do not know if you have had a chance to see that, but is that a reasoned model—where they have set up a financial relations council, which basically oversees you, rather than a parliamentary direct line of scrutiny? Or would that be another body that is in between you and Government, which is almost like triple-tier devolution and creates another sort of barrier?
Paul Bristow: I am not familiar with the model, so you will have to forgive me. I always take the view that opening up the windows and transparency and accountability leads to good decision making and good government, so I have no problem with that at all. I guess sometimes it becomes frustrating, certainly with central Government, when you have more hoops to jump through and more things to get in order to get to a point of delivery.
Sometimes, as Steve was saying, the willingness of Whitehall to engage is also frustrating, but that is changing. If you are a civil servant now and your focus is delivery, you probably should want to come to a devolved authority or a mayoral authority more than a Whitehall Department, with the direction of travel that there is now. There could be some sort of mechanism by which we can be held to account. I quite like the MP system, to be honest—I was one. That is what you are there to do and what we were once there to do—to scrutinise—and I think that would be a good thing.
Steve Rotheram: I can give an example of where the constraints are the problem. If we want to do a transport project, you are talking about big money—most transport projects are ridiculous amounts of money. With anything over £50 million to date, we would have to go back to the Department for Transport, for example, and say, “We want to build a train station.” Why are we asking national Government for the permission to build it when we have the funding? It is the money that is being allocated to us. We want to build it. We have gone through the planning application, the consultants and all that sort of stuff—we have spent a lot of money—and then we have to get permission from the national Government. I think that is where we have to push back a little.
Q35 Chair: This Committee is the main Committee to scrutinise Government expenditure, so we absolutely recognise the need for scrutiny, and I am glad that you recognised it this morning. In order for that scrutiny to be effective, however, it needs to have resources and independence. Do you have any ideas on that?
Steve Rotheram: I think we both agree.
Paul Bristow: Yes, I completely agree. The great thing is that if Members of Parliament hold elected mayors to greater accountability and scrutinise them, there is also a degree of separation. If that is done locally, sometimes an element of politics can be involved—but that is fine. I don’t mind that. We have to be accountable to our locally elected councillors and everything else, but perhaps with Members of Parliament there is that slight separation, a step back—you can look at things holistically, rather than thinking, “What have you done for my particular area?”
Chair: Steve, do you have any further comments?
Steve Rotheram: Yes, I think that is the important point. I was just wondering whether he would say that. We should not be scrutinised project by project; we are involved in hundreds and hundreds of them. Even with Members as astute as those on this Committee, how would you genuinely understand what I am trying to do in a place called Kirby in Liverpool, when we have another place called West Kirby, which is miles away? You would not know the difference between the two, so why would you get involved in that detail? I think we should be left to that, but we should be held accountable for the way in which we spend public money. Another point is that if we are not demonstrating additionality to you, that is something that you should quite rightly flag up, because if we are not getting a bigger bang for our buck, what are we there for?
Katherine Fairclough: For us, there is also a strong role for the National Audit Office and local audit in the way that the learning, best practice and standard setting are drawn from that source. It is important to emphasise the importance of localism—as the mayors have done—and the freedoms that devolution bring, but within a recognised framework. I guess this is your point about the Australian model, but there is something about how we have that extra layer of consistency as mayoral strategic authorities become more the norm, rather than an experiment. For us, that is about the next few years and how it continues to be embedded and strengthened to ensure good governance and accountability in the long term.
Chair: Yes, it’s a fine balance, isn’t it, this scrutiny? It has to be not overly burdensome, but effective. That is the balance we want to strike.
Q36 Rupert Lowe: It is a fine place, Liverpool, but I think scrutiny is my concern. If we are going to devolve power, I prefer to devolve it to the individual and let them make the decisions. But if we are going to devolve it to local mayors—may I just ask you, what do you think your local constituents think that a local mayor does? Do you think that they have a view on that? Do you think that they know what they are voting for?
Steve Rotheram: The same question could probably be asked of an MP, a councillor or—
Rupert Lowe: I am asking you that question simply because in order for scrutiny to be functional, you need the people who are electing you to understand what they are electing you to do. That is why I ask you the question, because I think that the concept of mayors is quite new to a lot of people. I look in shock and horror when I see boards across London that would make you think that Sadiq Khan is handing out large quantities of money himself. That is how it appears on the boards. I do not know whether you do that in Liverpool—I am sure you do not. I love the people of Liverpool and I am sure you do a great job for them, but the point is, I think Sadiq Khan loses sight of whose money it is—it’s not his money; it’s a budget that is handed out by Government to the mayors.
My concern here is that I sit on this Committee and, as Geoffrey says, this Committee is here to protect the taxpayer. It’s the taxpayer who takes it on the chin the whole time. Taxpayer money, as I see it around this table, is being wasted on a huge scale. I see that many local government bodies have no audited accounts, no accountability, that they file their accounts late but nobody punishes them, and that there are large data lags between the data being collected and the data being analysed. I see all sorts of weaknesses, and I guess that my concern for the public is that, if we are going to have all this devolution business—which I do not think has worked in Scotland, Northern Ireland or Wales—
Chris Kane: Is there a question, Rupert?
Rupert Lowe: The question is: where are the protections? You say more power to you to make decisions—I agree with that—but how do we make sure that that money is being well and properly spent on behalf of the people who are actually paying the taxes?
Steve Rotheram: I say this genuinely: I think you have completely misunderstood what devolution is. It is about the quantum of funding coming from taxpayers, but it is also about the ability of local people to decide how they spend it and to be held accountable for that spend, which we do. We are directly elected, so as—
Q37 Rupert Lowe: At the moment, the Government are handing you money with conditions. What you are saying is that you want less conditionality. The question then is about how we can have more scrutiny. I am not clear, having read this document, that we have the necessary scrutiny. “Mayor’s Questions” is, as far as I am concerned, a farce. I have watched Sadiq Khan, and he does not answer any questions. Prime Ministers never answer any questions in Parliament. Ultimately, I do not think that that is scrutiny. My question for the mayors is: how can we get the scrutiny that we need to ensure that you are held to account?
Steve Rotheram: I cannot let that pass without defending Sadiq Khan. I think he has done an absolutely fantastic job as the Mayor of London. I can only aspire to achieve some of the great things that Sadiq has done: the amount of housing that he has built, bringing derelict land back into use, the skills base—
Rupert Lowe: Let us talk about accountability; I did not make a judgment on whether he had failed or succeeded.
Steve Rotheram: On accountability, we have a number of things. You just mentioned local authorities being the recipient of funding down to that level. We have a more rigorous and robust accounting system to Parliament, and we have an assurance framework. If you were to give us some money, we sign in order to say, “We will spend it in these terms.” That is codified; you can have a look at what we have agreed.
The way the money is spent is something that you can scrutinise and have oversight of, but Parliament should not be passporting money to mayors just so mayors can be a conduit passing it on to local authorities. What is the point? That would be an unnecessary additional tier of governance. That is not what we do. We look to see whether we can use the Government funding we get, along with our own funding. Some combined authorities, including ours, have their own moneys. We make money from returns on our investments, which local authorities would be able to do and Government would not do on our behalf. We have money from a mayoral precept—
Rupert Lowe: So if somebody is scrutinising you, what is success—
Chair: Order. Let Steve answer, Rupert.
Steve Rotheram: This is where the fundamental issue is with not understanding devolution. It is not just about getting money and doing what Government would have done for us; it is about doing things differently and growing the pot.
We get money from all different sources, and we are using it to build an economy in our city region, in which we can identify four, five, six-year trends, and then build the skilled workforce for when those jobs come onstream. That is what planning is about. Ten-year planning, which is what we have all had to do through local growth plans, means that you can scrutinise where I am going with the Liverpool city region. It is a Government document—it is our document—that you have seen.
Q38 Rupert Lowe: But scrutinising a 10-year plan is quite hard. Scrutinising a one, two or three-year plan is quite hard.
Steve Rotheram: I have been going for 10 years now, Rupert, so you can have a look at what I have done over that time and whether I have achieved what I said I would 10 years ago. If you have a look at what I said I would achieve, I wanted to get close to the national averages on qualifications; we are smashing it—we are way, way beyond all that. I wanted to get economic growth; we have created an economy that is £3 billion stronger than it was when I first started. We said we would integrate our public transport system; I bought brand-new trains—we had trains of 50 years or so, and the new trains cost us less than the old trains. We have just bought a brand-new ferry for Ferry Cross the Mersey. We have just bought brand-new buses.
There is not a chance that a local authority or Government could have done those things. That dichotomy would not have worked.
Rupert Lowe: But scrutiny—
Steve Rotheram: You can scrutinise it all.
Q39 Rupert Lowe: I am asking you how we, as MPs and as the Select Committee, judge success versus failure.
Paul Bristow: If I may, there are two different things here: the first is accountability and the second is scrutiny. On accountability, the things that we must do, and almost go through, in order to spend public money are quite intense. As I think Mayor Rotheram said, and as Rob said, there are gateway reviews; you have to—
Rupert Lowe: Often too intense.
Paul Bristow: Often too intense—right. But there are certain things that you have to go through to get permission, if you like, to spend public money, to make sure that it is being spent correctly. With this push to devolution, I think those things are sometimes too intense.
Then there is the element of scrutiny as well, to make sure that you are actually spending that money well, and you have to be held to account for your successes or your failures. Ultimately, we go through quite a lot of scrutiny locally. Local councillors will talk to us about how things have been done, and, believe you me, they are reported. They usually end up on leaflets as well, and they are delivered everywhere, but that is politics. That is scrutiny.
To be honest, I would welcome the opportunity to have scrutiny from Members of Parliament. I do not think that is necessarily a bad thing, because we are spending significant amounts of public money. I am certainly not going to defend Sadiq Khan and the way he has spent public money, but I will—I don’t want to make Steve blush.
One of the challenges with elected mayors—you asked the question at the start—is, “What average constituent knows who their elected metro mayor is?” There have been examples where they have been successful: in Greater Manchester, Tees Valley and the West Midlands, we have had high-profile mayors. I will add Steve to that as well in Liverpool; if I knocked on doors in Liverpool, a lot of people would probably know who Steve Rotheram was. One of the things that I did when I was campaigning for this job was go around and ask people whether they knew who the Mayor of Cambridgeshire and Peterborough was, and very few did. I hope that is beginning to increase slightly.
That is one of the challenges with mayors: we have to get the public used to the fact that there are these metro mayors in place, responsible for spending huge amounts of public money, and they need to be held to account, in exactly the same way that Members of Parliament and sometimes local councillors are, for their delivery. I would welcome that.
Chair: Okay, we have given this—
Rupert Lowe: So we are agreeing that we need MPs.
Chair: Hang on. Rupert, we have given this a run, and we are running out of time. Very quickly: Chris.
Q40 Chris Kane: Before I ask my question, I am conscious that Rupert has never missed an opportunity to get an attack line clipped up for social media, so I would just like to balance that by saying that Sadiq Khan is doing a transparent job and an honest job, from this side of the table—
Rupert Lowe: I did not make a judgment on his job.
Chris Kane: And I think it is important that we put that on the table.
My question, if you do not mind, goes back to something that you said about a question time that you are doing. As we do more devolution, local media in this country is a bit hollowed out—there is not a huge amount to it. Do you think that the Government, when they are looking at their local media review, need to think about that when it comes to the role that the media, particularly local media, plays in scrutiny and transparency? Just a quick comment, please, because I know that the Chair wants us to move on.
Steve Rotheram: The local government reporters do a great job, and they do follow us around. If we are in their patch—say I went to Crosby, which is in Sefton—the local government reporters would be there, and they would ensure that that was posted on the BBC and other websites, so people would get to know a little bit about it.
To pick up on the point that I mentioned before, we still get people coming to see us about the bins, so there is some confusion—there is no doubt about it; that is a council’s job—but they also come about things that, before us, people would have gone to see their MP about. I think there is an issue in this country around people understanding political systems. Maybe we should do a lot more on citizenship, and then we would not see some of the things that we have seen happen in recent years in our political system.
Paul Bristow: I agree with your point about local media, particularly local television and local radio. I think Steve was talking about “The Hot Seat”; that is something that BBC Radio Cambridgeshire have also done a number of times with me, on a regular basis. I think it is a good thing; you get people ringing in and asking this, that and the other. It is about building a profile of mayors, and trying to increase their profile, so the public can hold them to account. Maybe if we did give more powers and responsibilities to mayors, more of the public would know who they were.
Chair: We have used up our allocation of time. I thank particularly our two mayors, but also the two chief executives—the two new accounting officers—very much. We have had a very interesting session; we have learned a lot and you have informed our report. An uncorrected version of the transcript will be out in the next few days. Following that, we will write a report, maybe with some recommendations; no doubt you will want to scrutinise that. We have enjoyed having you before the Committee. Thank you very much indeed for your time.
Witnesses: Cat Little, James Bowler, Will Burgon, Will Garton and Melissa Brown.
Q41 Chair: Welcome back to the Public Accounts Committee on Monday 7 September 2026. We now move on to our second panel. We have just heard from our local mayors from across England and their chief executives about the impact of introducing integrated settlements, as well as the challenges that mayoral strategic authorities could face as their responsibilities grow.
We will now look to explore the Government’s plan for advancing devolution, as set out in its “Rewiring the State” policy paper, and challenge MHCLG and HMT on how central Government’s oversight of mayoral strategic authorities can be more proportionate and better focused. We will also be scrutinising plans for strengthening accountability arrangements for strategic authorities and press MHCLG on how central Government should tackle poor performing MSAs.
Please all introduce yourselves, starting with Cat. We are very pleased to have you, Cat. It is an unexpected but welcome guest appearance.
Cat Little: I was keen to be here to represent the centre of Government. I am Cat little, the permanent secretary of the Cabinet Office, and also the chief operating officer of the Civil Service.
James Bowler: I am James Bowler, permanent secretary of the Treasury.
Will Garton: I am Will Garton, interim permanent secretary at MHCLG.
Melissa Brown: I am Melissa Brown, deputy director for English devolution in MHCLG.
Will Burgon: I am the other Will on the panel; I am the director for public services in the Treasury. That means my remit covers devolution and local government.
Q42 Chair: The timing of today’s statement is very frustrating. I was provided with a copy of the statement only after my Clerks asked for it—literally just before the hearing started. I really do not think that is good enough. We work very hard to ensure that our sessions are up to date and as useful as they can be for members of the public. I expect a little more helpfulness next time, please. I do not think it was even an hour before the start of this session; I think it was literally less than half an hour. It is really not good enough, if I may say so.
I have two top-of-the-session questions, starting with you, Cat. I think I warned you of this. You promised me after our joint session that you would keep me up to date with the rectification progress on Capita and your Department. I have heard nothing since; I do not know whether that is ominous or not.
Cat Little: Let me update you now and set out how we plan to further update you.
Q43 Chair: We are still getting dreadful cases. I was in my doctor’s surgery for a blood test the other day, and a couple came up to me saying that an aunt’s sister had just died. They had been in touch with Capita in October, and the poor aunt’s sister was living on benefits. When I got hold of it, it was sorted within an hour, but that is not good enough. They should have been able to sort it out themselves.
Cat Little: I entirely agree with you, and, as I have said several times here and committed to Parliament, this is not acceptable and we have to fix this.
Let me give you an update. There were two things that Capita committed to this Committee and to Parliament when they met with you in July. The first thing was to clear all the remaining workable stock cases by 1 September, and then to complete all of what they call the flow cases by the end of September.
Capita have assured us that they believe they have met the 1 September deadline. However, we are going to do our due diligence. We are looking at all of the MI, and I have asked my teams to assure me that they agree with Capita’s conclusions. The intention is for Ministers to update the House later this week through a ministerial statement.
We are also doing two other things, as you know. We have an independent auditor looking at a number of aspects of Capita’s remediation plan to assure us that the remediation plan is on track. That includes looking at their technology and the data transfers as well as the case management and the quality of customer service.
Although funded by Capita, we also have a remedial adviser undertaking work on our behalf. All that work concludes in the beginning of October, and we will give a full, comprehensive update to this Committee, both on the 30 September deadline and also on the work of our auditors at that point. I am very happy to provide much more regular updates over the course of September, as the Committee prefers, but obviously my Ministers will want to update the House as quickly as possible this week.
Q44 Chair: Understood. I do not want to prolong this anymore, but I have one further question. If you remember, at that joint session an item that was causing a great deal of concern was how you were going to deal with McCloud. I gather there is a deadline next year. If you cannot update us now, could you make sure it is in the statement or write to us?
Cat Little: Yes, I would like to write to you because I have undertaken a further review over the summer of McCloud, to get my own assurances on how best to respond to you. I will write to the Committee.
Q45 Chair: That is very helpful, thank you.
Will, I can see that the Minister is still on her feet, but can you give us any sort of sense—in a pithy way; I don’t want the entire statement repeated because it is a long old one—of what this afternoon’s statement means? People out there will be wondering about the elections next year. They will be wondering what is going to happen in their own local situation and, again, how this will affect the set-up of strategic authorities, which I gather the Government wanted to do by the end of 2028.
Will Garton: Yes, I can, Chair. If you have not had a chance to catch up, the Secretary of State has said to the House this afternoon that, following the Prime Minister’s statement last week that he was prepared to look at local government reorganisation, and following fresh legal advice, the Department has made the decision to withdraw its decision in four cases—Essex, Hampshire, Norfolk and Suffolk—and review 14 decisions made in tranche 3, which was announced in July. Included in that review are two areas where decisions have not yet been made: Cambridge and Peterborough, and West Sussex.
The Secretary of State has been clear that she wants to assure herself that that those current decisions are the right ones. We will work urgently over the next few weeks—we want this to be a short, sharp exercise so we can provide clarity to the sector. We are incredibly mindful of the amount of work that has gone into local government reorganisation in terms of offices and officials, and of the need to get certainty quickly. She has been absolutely clear in her statement that all elections scheduled for May next year will go ahead on existing boundaries, and she will come back and update the House as soon as is practical.
Chair: Thank you very much. That is really helpful. I am going to pass over to Clive. You are welcome to ask anything on that if you want to.
Q46 Mr Betts: I might do, because I can just add it on to the question I was going to ask. What steps are the Government taking to ensure that the reforms set out in the general principles of “Rewiring the State” are actually delivered? Will today’s statement make any difference to that?
Cat Little: I will start with the delivery of “Rewiring the State”, and I am sure Will want to talk about today’s statement. The “Rewiring the State” statement sets out the three areas under which we will deliver a new model of government under devolution by default. That was also set out in the First Secretary’s oral statement last week. There are three big parts to it.
First, the statement is about supporting local leaders, which involves a range of actions to empower and to provide local leaders with the resources, the decision making and the accountability mechanisms that they need to make decisions locally. Secondly, it looks at control over local tax revenues—I am sure we will come on to some of the fiscal devolution questions and accountability issues that you have. Thirdly, it is about strong local institutions.
All that has significant implications for the working of central Government, and also the civil service and arm’s length bodies. Part of the work that we are doing now is to make sure that there are full, detailed implementation plans, which will be set out in the White Paper, which the Government have set out will be coming in the next two months or so.
I can go into detail in any of those areas. A lot of work is currently underway. I suppose one of the most immediate things that I would highlight is that we have reorganised the centre of Government to be much more strategic, with the creation of the Office of the Prime Minister and Cabinet. We have also created No. 10 North as part of the engine room for delivering the devolution blueprint. We are also getting on with some very fast delivery in reorganisation of the civil service. By the middle of September, we will have moved some civil servants into all mayoral strategic authorities to support their work.
Q47 Mr Betts: So is the real answer then that we will not know the details until some time in the future?
Cat Little: There is quite a lot of detail in the blueprint—as much detail as we could put in at that point in time. We are about six weeks into the delivery of that blueprint. The details will be fleshed out with full implementation plans very shortly. As we are doing things, we are communicating and updating the House accordingly. I hope that the First Secretary’s statement last week was helpful to put a bit of flesh on the bones.
Will Garton: I am sorry, Chair: I failed to answer your question about the implications for devolution. The straight answer is that whatever the outcome of the review, we can carry on setting up mayoral strategic authorities in all the places that we have committed to do so and indeed also those impacted by local government reorganisation.
To give a couple of examples: we are due mayoral elections in Sussex and Brighton and Hampshire and the Solent in 2028. Those places are both affected by local government reorganisation. The mayoral timetable is unaffected by today’s announcement, so it is perfectly possible to have mayoral devolution in two-tier areas. For example, the Committee has just been hearing from Cambridge and Peterborough, which is a two-tier area with a mayor.
Q48 Chair: You came up with a one unitary solution for Gloucestershire, which everybody was delighted about. I think that everybody will be tearing their hair out tonight. You want to then move on to a mayoral strategic authority, which is going to be very tricky in Gloucestershire because we have various difficult options as to who we are going to combine with. How is this timetable going to work given that you want that all done by the end of 2028?
Will Garton: It is not straightforward—nothing in local government reorganisation is straightforward. Opinions are rightly extremely strong and often divided. My only point is that it is entirely possible to enter into devolution agreements with unitary areas and two-tier areas. We have done both in the past and we can do both in the future. Nothing in today’s announcement means that devolution for Gloucestershire or any other part of the country need necessarily be delayed.
Q49 Mr Betts: How can you form a strategic authority with constituent parts if you do not know what the constituent parts are going to be?
Will Garton: You need to know the outer perimeter. Let us take the east midlands, which as members of the Committee are well aware, has two-tier government currently: in Nottingham-Nottinghamshire and Derby-Derbyshire. We have a pretty good understanding in the vast majority of areas of where that is likely to be. That is not always settled, but where you know the outer perimeter, it is entirely possible to strike an agreement.
Q50 Mr Betts: Yet in the end the strategic authority is generally comprised of an elected mayor—as is the case in east midlands—and leaders from the constituent councils. Until you know what the constituent councils are and what they are going to be, how can you form this strategic authority?
Will Garton: Well, it would be perfectly possible, in a hypothetical situation, to have a county combined authority in a two-tier area over a geography. Let us say that there are eight councils, including the district, in that area. It would be perfectly possible for local government reorganisation to take place and the final number of councils to be four, making up the constituent members in the new end state.
Q51 Mr Betts: To go straight to the point: it looks a bit like making it up as you go along.
Will Garton: It may look like that to you, Mr Betts, but it is perfectly possible to do.
Q52 Chair: Will, what you have just said is that Gloucestershire could become its own mayoral strategic authority with the seven constituent authorities that we have at the moment. So why on earth are we going to an interim step of one unitary authority? Why do we not go straight to a mayoral strategic authority?
Will Garton: The Government have two objectives. One is to unitarise local government—views will differ on whether that is a good, bad or indifferent thing to do. The second objective is to set up combined authorities, which are multiple local authorities, over a functional economic area to start taking responsibility for planning, transport, the adult education budget and the like. Both of those are objectives.
Our current policy position is that we do not have a mayor over a single local authority. That is a policy decision that Ministers have made in the past. We want to see councils combine over a bigger travel to work area that also resonates with people’s identities. That is the policy decision that Ministers have made.
Chair: I am puzzled, but anyway.
Q53 Mr Betts: I have one follow-up point about the devolution itself. If you do not know what the first-tier authorities are going to be, you cannot begin to determine what is going to be devolved to them, can you? Unless, of course, there is not going to be any devolution to first-tier authorities.
Will Garton: I think you can decide what it is going to be—let’s take the example of Cambridge and Peterborough. You just had the mayor before the Committee. We have said that the local government reorganisation in Cambridge and Peterborough is subject to review. It is entirely possible that, simultaneously, Cambridge and Peterborough becomes an established mayoral strategic authority, benefits from a share of income tax from 2028, and benefits from the right to request and a whole number of other measures. So I disagree and I think it is possible.
Q54 Mr Betts: I didn’t ask you about the strategic authority. I asked about the first-tier authority—the local government base on which strategic authorities are formed. Have you any intention at all, through “Rewiring the State”, of devolving any powers to those first-level authorities?
Will Garton: Yes. As you will be familiar with, from the “Rewiring the State” document, we are really clear—this is the lesson from Manchester—that the most effective combined authorities are just that. They are a partnership with councils, with local government. The “Rewiring the State” document sets out that we want to do much more on sustainable local government, including a higher proportion of business rates retained, so that councils have a proper growth incentive to attract businesses to their patch.
Q55 Mr Betts: Can you tell me the powers that you are looking to devolve to the first-tier authorities?
Will Garton: In “Rewiring the State”, the commitment made is to look principally at business rates, but also to take a wider look at the sustainability of councils per se.
Q56 Mr Betts: You haven’t answered the question. I asked what particular powers you are looking to devolve. There aren’t any, are there?
Will Garton: I don’t think you are giving credit to how the majority of mayoral strategic authorities work. In practice, this is not strong executive power from the mayor. It is a partnership and a collaboration between a number of different councils. For example, when 16 to 19 goes, which is a commitment made in the document, it may be—this has been seen often before, as in the Manchester example—that a particular local authority leads on 16 to 19 while a different authority leads on transport.
Q57 Mr Betts: Okay, but in terms of delivery of service at very local level, there are no proposals to devolve any particular powers to individual councils.
Will Garton: “Rewiring the State” is largely focused on mayoral strategic authorities. It is inevitable that, as a result of that, councils will take on more responsibilities and more powers, but that is a decision to be made locally, not least because the voting arrangements in said strategic authorities are made up of the constituent members.
Q58 Sarah Olney: The English Devolution and Community Empowerment Act 2026 established in law foundation strategic authorities, including all non-mayoral combined authorities and combined county authorities, along with any local authority designated as a strategic authority without a mayor; and mayoral strategic authorities, including the Greater London Authority, and all mayoral combined authorities and mayoral combined county authorities.
The Government have said that mayoral strategic authorities will have access to a greater suite of powers, but how will you ensure that foundation strategic authorities and MSAs without “established” status are not disadvantaged? We have a patchwork of different kinds of strategic authorities across the country. They have all come into being at different times and in different ways. You are only making provision, however, for greater powers for the mayoral strategic authorities. What about all the others?
Will Garton: Melissa might want to come in on this. The Bill is an attempt to get rid of the deals culture that we have been involved in since 2014—a set of bespoke deals—and an attempt to provide a legal framework that is consistent. It is an attempt to move away from a patchwork to a much clearer map of what is available at which level. What you have described is entirely accurate; there are more powers, budgets and opportunities for places with a mayor than without a mayor. That is a deliberate policy decision by Ministers. There is not an attempt to—
Q59 Sarah Olney: What about people who live in an area without a mayor? Will they be disadvantaged?
Will Garton: After the publication of the document in July, we wrote to places that do not have a mayor and said, “If you’re now interested, do come forward and talk to us. We would like to engage”—whether that is a—
Q60 Sarah Olney: So it is a deliberate policy choice, to use your words, that certain areas should be disadvantaged?
Will Garton: That is not my language; it is yours. We are very clear in the document. It says that the Government think that there are benefits to having strong executive power and a single figurehead—I realise that there may be a divergence of views, but that is none the less Ministers’ views. Therefore, a share of local income tax, to take an example, will not be open to foundational strategic authorities; it will be open only to places with a mayor.
Q61 Sarah Olney: But that means that there will be communities that are treated as second-class.
Will Garton: The Government are also saying, in parallel, that if places want to come forward and—
Q62 Sarah Olney: So it is a bribe? Sorry to use that language, but that is how you are describing it.
Will Garton: Again, that is not language that I would use. There is an incentive, is probably the language I would use. If places want to come forward and want to have a mayor, we have written out to every place that does not and said, “Come and talk to us. Let’s find a way to establish it. If you prefer not to have a mayor and you prefer to have a foundational strategic authority, that is your prerogative. Nothing will be forced on anyone.” But if your question to me is whether there is a different level of power and responsibility for places with a mayor and without a mayor, the answer is yes, there is.
Q63 Sarah Olney: Who are you asking when you say you have written to those places?
Will Garton: Local authority leaders.
Q64 Sarah Olney: To use the London example—as a London MP—we go all the way back 2000 with our mayor, but I find that it is not anything to do with the local authorities and they are not working closely with the mayor. My constituency goes across two local authorities, and they do not get any involvement or any share of the additional council tax. Would you not agree that London is similarly disadvantaged? What can we do about that?
Will Garton: I certainly agree that London is different from the combined authorities that exist elsewhere in the country. With the makeup of the assembly, it is not a combined authority like every other devolution agreement that has been reached since Greater Manchester in 2014. It has a different set of arrangements. They are set out, as you well know, in the 1999 Act—that is a big bit of legislation. I agree that there is a different role for councils in London than there is in the rest of the country.
Q65 Sarah Olney: Do you think we are disadvantaged in London?
Will Garton: I think this set of Ministers would say that, on the whole, London has done pretty well over the years. I do not know whether that is disadvantage—there are certainly disadvantages or advantages—but it is a different set of arrangements. That is for sure.
Q66 Chris Kane: Can I talk about funding flexibilities? Paragraph 1.16 of the NAO Report says, “Bodies receiving an Integrated Settlement have full flexibility in how they spend the funding within each theme, and some flexibility across themes”. I want to talk about the “Rewiring the State” policy paper that was published in July, which says, “We have therefore agreed a set of immediate steps that we are taking now. These include greater flexibility to deploy funding within existing integrated settlements”.” That is a long-winded way of me getting to the question of what new funding flexibilities you will provide the authorities with and when they will be able to use them. That is probably a question for James.
James Bowler: Yes, thank you—I was feeling lonely out here. It is worth starting at this last year, 2025-26, which has been the first full year of integrated settlement funding flexibilities. This was a very big change in a local and regional flexibility. The first big change is multi-year, not annual, which this Committee will have heard a lot about over the last decades.
The second big change is a single fund. The flexibilities within that are that you can flex money between the six pillars that I think are in the NAO Report—you can move 10% of your funding between those—and you can move all your money from resource into capital spend and 10% the other way. There is also forward flex into future years. That is the structure under the Act and the integrated settlements we have put in place.
In “Rewiring the State”, we said that we are happy to consider further flexibilities as we take these things forward. You are seeing a major change that has just got under way in its first full year, ’25-26, with further flexibilities to come as we devolve more powers in both spend and tax assignment.
Q67 Chris Kane: I am trying to explore the greater flexibility—
James Bowler: When will people find out? We will publish a report into further fiscal devolution alongside the Budget on 28 October, so we will take a set of decisions there. In that, we will particularly set out how we intend to take forward the income tax assignment, which is due to start in April 2028. The spending review, which will set future years’ spending, will cover quite a bit of the delivery and the “how to”. The date for the spending review is not set, but it is due next year.
Q68 Chris Kane: When you do greater flexibility, you also introduce greater risk. How will you manage that additional risk?
James Bowler: We have three ways—three buckets, if you like—of managing greater risk. We think that more devolution is the right thing to do and that it will lead to better outcomes, but one of the checks and balances in the system is greater accountability at different levels, which I am sure we will come on to, including local scrutiny committees and local accounting officers. The checks into Government are on the performance side, which are the local outcomes framework and performance boards. We ultimately have powers to intervene if we feel that the risks have gone too far via MHCLG. Those are the buckets.
It is important and we think that it is the right policy to do further devolution, but it is right to proceed with greater accountability and audit as we do it.
Q69 Chris Kane: Are you expecting many big changes to the way you manage the risk, or just a general evolution with devolution?
James Bowler: The major change is that we are devolving a big chunk of funding and then the tax assignment will come in at a local and regional level. The big change is the capability and capacity, including doing accountability and audit at that level, so that local and regional voters can be assured of the accountability of the money that has been spent in their area, as well as having accountability back into Parliament and the Government. The big change, which comes with local scrutiny committees, local accounting officers and the further build-up of the local audit office, comes at the local and regional level.
Chris Kane: I will not steal the thunder of my colleagues, who will want to get into that in more detail throughout the rest of the hearing, but thank you for that.
Q70 Chair: James, I will ask you two different financial questions. One is to clear up what I was asking in the last session. Multi-year settlements are referred to on page 25 in paragraph 2.14 and figure 4 afterwards. You have given the multi-year settlements, according to figure 4—some nice, coloured graphs—for four years. But lo and behold, they have a multi-year settlement for ’26-27 and ’27-28, but when it comes to ’28-29 and ’29-30, they may be re-examined in 2027. When are they going to get clarity?
James Bowler: There is no mystery here; this is on the exact same basis as departmental spending. The way we do that is by setting budgets for the three years ahead—’26-27, ’27-28 and ’28-29—for resource. We set that at the 2025 spending review—the three years ahead. You then use the last year, ’28-29, as the base from which you roll forward future spending reviews, so the next spending review will roll that forward.
On capital, we do it a bit longer. I think that, at the local level, it is four years, and that is the same as the Department for Education or any other Department. The way we do spending reviews—which is more multi-year than anywhere else in the world—is that we do three years ahead on resource and longer on capital, and that is the same for this tier here. For ’28-29, people have a budget, but we will look at it and it will form the base year of the next spending review, where we will add on another two years’ resource. That is the same for everyone.
Q71 Chair: So they can be reasonably assured of their ’28-29 budget, but they cannot be assured of their ’29-30 budget.
James Bowler: But nor can any Department—nor can MHCLG at the moment. It is just worth saying—
Chair: I am trying to clarify this. I want to be sure, on their behalf, what a multi-year settlement means. I think I've got it: it is three years, plus a base year for the next—
James Bowler: I am sorry. I hope I am being clear. I will try again. For a Department—let us take MHCLG—we give it its resource budget three years hence, so MHCLG knows what its funding is up to ’28-29. When we do the next spending review next year, we will start with that year and we will add further years on. Obviously, MHCLG cannot devolve or allocate money or resource after that, because it does not have the money. The big change at the regional level is that—this is for the first time—last year they had this multi-year settlement. This Committee has been excellent on this.
If we look at what happened before, it was really suboptimal. We basically had the whole regional and local tier facing into central Government and having to bid, often, or sit with budgets from every single Department or even, with some Departments, multiple budgets, and those budgets often ringfenced to a particular allocation. I would assert, therefore, that the reform and change in this last year has been the biggest—certainly in regional and, to a certain extent, local government funding—for a long time. That multi-year settlement is one aspect, and another is the fact that they have a single budget, where they can flex money, as I said to Mr Kane. It is a really big change that we have made on funding flexibility, and it comes from—including from this Committee—the reality that we thought that what went before was really suboptimal.
Q72 Chair: That is very helpful, thank you. May I go on to fiscal devolution and ask how that is going to work? Today, I think, income tax and rates retention have been mentioned, but could it go further than that? If you were a strategic authority and wanted to encourage employment measures, you might want to do different fiscal measures to encourage that employment, or will that be outwith their competence?
James Bowler: That is outwith their competence at the moment. What is devolved is a matter for policy decisions by Ministers. We have had the experience of Scotland, Wales and Northern Ireland, which has come before, as we have seen, so you can see it there. What is being slated for devolution on the tax side of things is roughly three areas at the moment. First, we talked about business rates retention. The second one is income tax—it is worth stressing that that is an assignment of income tax that is raised in the area to that area, with the amount of grant given being taken away; it is not devolution of the rates or thresholds of that tax. The third is a smaller change, the overnight visitor levy. Those are the tax things. We could go further, but those would be policy decisions for Ministers. To an extent, Scotland, Wales and Northern Ireland show the options available.
Q73 Chair: A last question from me for the moment: if some areas are able to raise substantially more revenue than others, which is bound to be the case, how will Government decide how much they should retain and how much should be redistributed?
James Bowler: When we do an assignment of tax, like in our income tax proposals, we basically have to decide on three things: first, the amount we are going to assign—roughly, in this case, we link it to the integrated settlement. The second thing to decide is the redistribution element we want to put into that, which is entirely based on the fact that need is different in different areas, and the starting position is different in different areas. The third thing to decide—which I think colleagues before us were talking about—is the growth incentive, which is essentially the tax base. We will be giving an incentive that means that as the tax base grows, the area keeps the upside—but we have to work out how much that will be the case. It is quite an intricate thing. As I said, we have done it in devolved countries. The fiscal road map we are due to publish in and around the Budget is the document that will set out some of those decisions. It does not come into play until April 2028.
Will Garton: That is exactly right. The only thing I would add is that we do have some experience of doing this because we do it in the business rates system. It is exactly the same set of choices that James described: how often do you reset, what is the growth incentive and what is the fairness argument? It is on a smaller scale, and I am not saying that it is not a big and ambitious reform. It is hard to do, but we do have some experience of doing it.
Q74 Mr Betts: Coming on to the Government’s commitment that they are about devolution not delegation, I was just listening to James Bowler explain that the certainty that the strategic authorities could have about future funding was similar to that which Departments could have. But Departments are not devolved, are they?
James Bowler: Yes, but I am talking about a very significant change over a short period to go from a world where a huge amount of time, effort and bureaucracy had to be put into bidding to central Government to do that devolution. By definition, the way the spending system works—I think our multi-year assessment is actually superior in terms of length of settlement to other countries—you want to give long-term certainty, but you have to trade that off against whether you can be certain about how much tax revenue and other borrowing you are going to have. We think that we have got the right element. We go a lot further on capital because we recognise that people have to take some longer-term decisions in capital funding. But it is a very big change in a short period.
Will Burgon: There is a link with what we were just talking about with the Chair on fiscal devolution. While the advance to multi-year integrated settlements was a step towards multi-year, where previously it was only a year, so will the allocation of a share of income tax be an even more certain and long-term stream of revenue. Once that takes place for MSAs in 2028 it will provide much greater certainty even than the three years of an SR-given IS.
Q75 Mr Betts: In terms of the main budget for strategic authorities, it is still delegation, isn’t it?
James Bowler: No, particularly because of what Will has been saying. Once you assign income tax to an area you are reducing the grant equivalently. You are no longer saying that you have to wait for a grant from above to be allocated to you. Instead, you can be more certain that you will permanently get a share of the taxes raised in your area to spend. That is quite a significant change.
Q76 Mr Betts: In terms of the new powers and flexibilities for strategic authorities, spending Departments and their permanent secretaries will want to keep a grip on their money going to strategic authorities. They will not be very happy if they are going to spend money that was meant for a new school on a railway station because that is the decision the authority has taken, will they?
James Bowler: Pushing down more flexibility to local and regional level has been something that we have been pushing for a little while. Our view is that it is indeed better for outcomes that those decisions are taken locally and not regionally. We have made some progress in reducing ringfences and all the rest of it. The answer is that Departments are going to go that way. In terms of the accountability, the permanent secretary of MHCLG is accountable for the whole system and how that works. The individual accounting officers for the Departments are accountable for the policies that they are pursuing, including through that route. But if you take your example on schools, the local authorities and others obviously oversee quite a lot of the decisions on schools and have done for years. Permanent secretaries like me are used to working and collaborating through a whole host of different structures to deliver things, and the whole nature of this is to work in collaboration.
Q77 Mr Betts: But they are used to knowing that the money from their Departments’ budgets will be spent by local authorities on the things they are responsible for.
James Bowler: They are, but—
Q78 Mr Betts: That is not going to happen in future, is it?
James Bowler: That is not going to happen, but we think it that is the right thing to do. In the past, we have said to a local authority or MSA, “We will give you the money, but you must spend it only on this explicit thing and do 45 performance measures against it, and it is ringfenced so you can’t move it around,” and if you multiply that, with every Department doing it multiple times, the local authority and mayoral authority is just in receipt of a vast number of penny pockets and pots. We think that it is a much better system—better for local outcomes, growth and public services—if we do this. I think that the NAO Report acquiesces in that.
Will Garton: Let me give a good example of why fiscal devolution is such a game changer. Currently, if I am the chief executive of a council and I raise £1 of council tax that I want to spend on homelessness and rough sleeping, I pretty much have autonomy on how to do that in conjunction with my leader. If you also have £1 of grant from MHCLG, it comes with a whole bunch of stipulations. Fiscal devolution strips out the grant from MHCLG and replaces it with tax that is assigned locally, so it gives more autonomy to local leaders and accounting officers, and takes the power out of the hands of, as you put it, permanent secretaries in Whitehall.
Q79 Mr Betts: Right. Cat Little, are you sure that your colleagues and other permanent secretaries have really bought into this and are enthusiastic about it? MHCLG is probably really enthusiastic; it has argued for this for years. The Treasury has been a convert somewhere along the road, but I am not sure that every permanent secretary in every Department is.
Cat Little: I will not speak on behalf of all my colleagues, but I think, genuinely, yes. This is one of the first Cabinet statements agreed collectively across the whole of Cabinet. As accounting officers, our job is obviously to deliver the policy of Government. There are some really good examples of where taking accountability and control away from Government leads to better outcomes. The “Rewiring the State” document sets out some big delegations we have already changed on transport, so that is a really good example of central Government saying, “Let’s lift our controls and make sure that local leaders can take more decisions,” and we are very grateful that they will be accountable for that on behalf of the taxpayer.
Q80 Mr Betts: There has been some pushback from local councils—maybe Will Garton or Melissa Brown could respond to this—because the outcomes frameworks are still a bit of an effort to control what strategic authorities do, and each Department can decide what they think the money should be spent on in what way.
Melissa Brown: Yes, there has been pushback. We are looking at, in line with the ambition set out in the Cabinet statement, ways of streamlining the outcomes frameworks to make them higher-level and create greater flexibility for MSAs. We recognise that the outcomes frameworks as they exist at the moment for the current integrated settlements have a higher level of metrics and monitoring, so we are looking at moving to that model. That will be facilitated by the local accounting officer model as well, which will enable a stronger level of scrutiny in Parliament and locally.
Q81 Mr Betts: We will come back to that in due course. I remember the comprehensive framework assessments that were done in the 1990s and after, which were incredibly time-consuming. They were stored away in the Department or the Treasury—all these metrics and statistics that no one took any notice of, as far as I can work out. We want to get away from that.
Will Garton: We have done 11 to 14 outcomes that we are looking to achieve in the integrated settlement. The Cabinet statement, as Melissa said, says that we look to streamline that. It was quite hard getting it down to 11 to 14; colleagues understandably wanted more assurance, because they want to show this Committee, among others, that they are taking it all very seriously. As you allude to, 11 to 14 is many fewer than we have had previously, but I think that it is a good challenge to us to go further still, and Ministers have asked us to do that.
Q82 Mr Betts: Are you going to get agreement from the strategic authorities that that is the right level of oversight?
Will Garton: I think the Prime Minister has been very clear that this is a partnership. It is our explicit objective to try to come to a sensible, proportionate set of agreements. This is big progress compared with what we have achieved before, but it is definitely not job done.
Will Burgon: It is also worth adding that this is where there is huge alignment between the NAO Report and the statement. Obviously, NAO colleagues are used to producing reports at times of Government policy change. This one came out just as we switched Administration and had the statement so there were particular challenges for the team, but there is actually huge alignment between what the Report says about the outcome frameworks being the right direction of travel but, as you just described, still too restrictive in some cases and too focused on outputs over outcomes, and what the Cabinet statement said at exactly the same time.
While we are telling you that in the White Paper later this autumn you will see more detail on how we will put that into effect, it is also true, to your point about agreeing it with the MSAs, that the White Paper process is hugely collaborative—probably more collaborative than White Paper processes that we tend to see—in the way we are constructing and running it with the MSAs, mayors and chief execs directly through No. 10 North and MHCLG.
Cat Little: Briefly, the whole point of No. 10 North is to engage with MSAs and local leaders in a completely different way. At the first National Economic Council, we had the mayoral leaders there around the table, engaged in the formation of the “Rewiring the State” policy statement. They are talking to us constantly, so this is a completely different way of shortening the connections between central Government policy and what is happening at a local level.
Q83 Chair: Just to follow up on Clive’s questions and the mindset of permanent secretaries, in paragraph 17, page 11 of the Report on outcome frameworks, the NAO makes it clear that the Department for Transport “initially proposed 44 indicators, which it later revised down to 21 following negotiations with MSAs.” Who has the final say? Clearly, the mindset of the Department for Transport at that point was, “We need a lot more control,” and then somehow it has decided it does not need all that control. I understand that the Department for Transport has the biggest amount of money, but nevertheless, there has to be a certain amount of proportionality.
Cat Little: That is a really good example. A permanent secretary, as you know, is an accounting officer in an individual right. How they use taxpayers’ money and manage public money is their personal judgment. We are directly accountable to this Committee and to Parliament as a whole. That is an example of open engagement about the competing priorities within a large high-risk financial system, and working with the mayors to work out what the right answer is in managing financial risk. That is a really healthy example of us having that open debate and coming to a proportionate answer. I really believe that the mindset of permanent secretaries is proportionate control of the risks that we are responsible for managing on behalf of the public and Parliament.
Q84 Tristan Osborne: Clive mentioned the local accounting officers. I have a couple of questions, utilising some of the feedback we have had from mayors. In paragraph 3.9, the NAO Report is more open-ended than “Rewiring the State”, which specifically says that CEOs should be the local accounting officers. Is that your understanding of where we are heading with the White Paper? The Report is a bit more open-ended about whose responsibility it will be, so will it be the responsibility of the CEOs of the organisations?
Will Garton: Yes, and that is because “Rewiring the State” is subsequent to this document.
Cat Little: I should say that mirrors the official accountabilities that you see throughout the whole of the spending framework and “Managing Public Money”. That is to be consistent, and obviously permanent officials are best placed to be sustainably accountable for the use of public funds.
Q85 Tristan Osborne: Okay. That was a simple question with a simple answer. Secondly, when I asked mayors about engagement with existing MSAs, they seemed to be quite relaxed that that is the approach you wish to go down. With recent changes and the announcement today, are we still on course with the timeframes? Earlier you alluded to the fact that the timeframes are unrelated to the LGR changes, but are we still on course with those timetables?
Will Garton: Yes. Nothing the Secretary of State announced today has any impact on our desire, drive and impatience to get this done.
Q86 Tristan Osborne: My third question is linked to parliamentary scrutiny. Again, I challenged the executive officers and former MPs—as the two mayors were—around this. Figure 5 defines how external assurance will be undertaken. Within the document itself, there is weakness in the local government sector around audit; that has been well documented in history. My question has two parts. First, can we assume that these bodies will be appropriately audited—perhaps by the NAO or an external auditor like councils have undertaken. We have problems with local councils in terms of audits that take many years, and there is a long-standing complaint in the sector—in audit—around how long it is taking to audit.
Secondly, on the parliamentary role, this Committee has overarching responsibility around public accounts—and we are very busy. Have we looked at other types of models similar to Australia, where there are other bodies that can take more responsibility for that, in terms of not just output but the financial risk and controls around some of the spending?
Will Garton: Those are excellent questions. On audit, I have been in front of this Committee quite a few times—as has James—on all the heinous problems in local audit. I would say that it is improving; in 2022-23, 1% of audit opinions were published on time, and in 2024-25, that number was 91%. A fair number of those are still disqualified; I am not saying that this is game, set and match and that it is time to declare victory—absolutely not. There is a lot of work to do, but it is an improving situation, and the answer to your question is yes, the local audit office will engage with mayoral strategic authorities as they do with local authorities—we should think of them as part of the same system—and the Department engages particularly with the value for money and public interest reports that auditors produce. Even though we have not cracked it, we are making progress on audit.
Secondly, on what we are doing on scrutiny and accountability, as you say, this Committee or any other parliamentary Committee can call anyone they want. I would add that the English devolution Act that gained Royal Assent in April makes provisions for local scrutiny committees. They are explicitly tasked with looking at value for money and are made up of local councillors and up to 40% independents. They are incentivised to take expertise from external parties, and if a mayor did not turn up six times during the course of a year, they would lose their job. There is proper scrutiny being put in the system in the current legislation that Parliament just passed, and we need to lay secondary legislation in the next few months to ensure that those scrutiny committees are up and running by April next year. We are also clear, in “Rewiring the State”, that for the massive transfer of power that is going to happen, we need to do more on accountability; we want to say more about that in the White Paper in the autumn.
Tristan Osborne: I know that local scrutiny committees are part of somebody else’s question, and I do not want to steal their thunder.
Will Garton: That is my answer as well.
Q87 Tristan Osborne: Just on the audit, you have given assurance that the situation is improving, but can we get some assurance going forward that it will continue to improve?
Will Garton: Our public target is to have 100% of audit opinions published on time by ’27-28, up from 1% in ’22-23.
Q88 Tristan Osborne: And will they be qualified?
Will Garton: A number of them may be qualified or disclaimed, but our targets—on which you are rightly holding us to account—are public and transparent. I am here quite a lot to give updates, and I can assure you that I feel responsible for fixing this—even if I did not create it.
Q89 Chair: Will, you say that is not going to affect the strategic mayoral authorities programme, and it may not, but nevertheless, I must quote to you what the LGA put out in a statement: “Councils across the country will hold different views on the local government reorganisation (LGR) programme, for what it means for their areas, and the announcement of today’s review.” They go on to say, “But there is no excuse for the Government’s mishandling of this process. Today’s announcement, however, will have caused significant uncertainty, after councils have invested scarce public money and countless hours in the government’s LGR programme.” This is clearly going to be met with dismay. I indicated to you earlier what I think people in Gloucestershire will be saying about it, because I know how many meetings I have had with them and how much work has gone into all of this.
Will Garton: The Secretary of State was very clear about that in her statement to the House. We do not underestimate the blood, sweat and tears that have gone into getting us this far, and how difficult it has been. I am aware of that from my own engagement with councils up and down the land. That is taken as a given. We take that incredibly seriously. That is why we want to do this piece of work quickly and get back and tell the House the conclusions of our review.
It does not come as a surprise to me—I know just how much effort has gone into it. None the less, Ministers of this new Administration have wanted to satisfy themselves that the current arrangements are the right ones, hence us taking the decision to pause and review. But I empathise and understand that comment.
Q90 Chair: I understand that the Government needed to take powers to do this reorganisation in February. If you don’t get it sorted out by then, is that legislation likely to be put back? If so, what effect will that have on the elections next year?
Will Garton: The elections next year will go ahead as planned. I don’t think we need new powers per se to implement local government reorganisation.
Q91 Chair: Does it not require secondary legislation? An implementation order?
Will Garton: The make-up of the new councils will require secondary legislation, as we have done in Surrey, but we are not asking Parliament for a new power. We will be laying secondary legislation—I forget whether that is affirmative or not—for the final make-up of councils, but we are well used to doing that. We do not need primary legislation or something like that to give us the ability to lay those orders.
Q92 Matt Turmaine: I would like to ask a couple of questions about local accountability. “Rewiring the State” commits to a clear role for MPs in local accountability. What do you think the role of local MPs will be? I direct that to Cat, Will G and Melissa initially.
Cat Little: I will ask Will to start, and I will add to his reply.
Will Garton: To be honest, I don’t think we have a fixed view on this. It is something we want to engage with Parliament on. In a sense, we are not the best people to say how the experience of MPs should be utilised. You see it there in black and white—the commitment that Members of Parliament have to be involved, in terms of both accountability and decision making. Ministers will want to engage with Members of Parliament over the coming weeks and months, so we can set out a plan in conjunction with Members of Parliament. There is not in my bottom drawer a kind of “This is the best way to engage with Parliament” plan, because I think we need to ask Parliament.
Q93 Matt Turmaine: That is interesting. It would be interesting to hear about any ideas you have, because it can be quite challenging for MPs to engage on a scrutinising level with their local authorities as they exist at the moment. I appreciate that they are going through a stage of transformation, and there will be something new when this is envisaged to happen. With your experience, any pointers?
Melissa Brown: One thing that is in the pipeline—it is not being lived yet, because we are doing the regulations for local scrutiny committees—is that once those committees are up and running, MPs will be able to make submissions to their local scrutiny committees where they have concerns regarding the operation of the MSA, or lines of inquiry that they would like the local scrutiny committee to follow. That will be a new route into the strengthened local scrutiny committee.
I would also flag that we are thinking about the role of local accounting officers; like Will said, the options are quite broad and we genuinely want to engage and understand the best route. Different models can be applied in relation to this sort of committee and the way that mayors are called before them, so we are looking at those as well.
Q94 Matt Turmaine: Do you think that local public accounts committees would be an effective way of doing that?
Melissa Brown: The model of the local scrutiny committee is akin to a local public accounts committee. Where it does not match up to the model that some people talk about is in so far as the scope of public spending currently within the purview of a local scrutiny committee is limited to that which flows through the mayoral strategic authority and associated bodies, like development corporations. As we go further with devolution and more powers come within the remit of the strategic authority, that will naturally make the local scrutiny committee more of a true LPAC model, where you see a fuller gamut of public spending falling within the scope of that Committee. I think we will move towards it the further we go down the devolution journey.
Will Burgon: Let me add one point to that directly. You see in the Cabinet statement, with the reference to the NAO, that we are conscious of just how important the support you get from the NAO is to this Committee’s ability to effectively scrutinise Government Departments, and how, of course, hearings are preceded by reports. We are thinking about how the right support will be provided to local scrutiny committees, so they have a similar sense of infrastructure and support to enable them to scrutinise effectively. That cannot mean suddenly asking the NAO to replicate its function directly for those authorities; that would not work, but that is precisely the discussion that the Cabinet statement indicates we want to have with the NAO, and it is indeed the conversation that we are picking up with Gareth and colleagues.
Will Garton: The Local Audit Office is an obvious organisation that could take on some of that work of looking at the value for money of spend and supporting scrutiny committees as the NAO supports this Committee. That would be one option open to Ministers.
Matt Turmaine: Thank you. That is very interesting. Thank you for your contribution. I am sure Gareth would like to see an expansion of that responsibility at some point. [Laughter.]
Q95 Chair: On that point, I gather that there is literally one person at the Local Audit Office at the moment, and this is coming on like a tidal wave. What is being done to, very rapidly, scale up the local offices?
Will Garton: As you know, we needed primary legislation to establish the Local Audit Office because the previous architecture was dismantled. We got Royal Assent in April. We lay the secondary legislation to establish it in July. As you know, we have appointed Bill Butler as the chair. We are making executive appointments over the course of this year, and seconding in people from the Department to get it up and running. But you are right about the danger of asking the Local Audit Office to do more when our priority for them is the accounts and we must not lose focus on that. But I think over time there is an option—it would be good to discuss this and get input and views from this Committee—of asking them to take a wider role and look at the value for money of spending in the West Midlands combined authority, for example.
Q96 Chair: To go back to what you were saying, this Committee knows more than anyone else the value of scrutiny of central Government spending. The way that we are lucky enough to be able to do that is, first, we have the resources of the NAO behind us to provide us with the information, and secondly, the Committee is independent; it has to be chaired by a Member of His Majesty’s Opposition. Will these strategic authority settlements provide enough resources to be able to do that properly? If you are going to hand down billions—£15 billion over the next four years—it is essential that is properly scrutinised.
Will Burgon: Hopefully, you can take comfort from the way the Cabinet statement, even within those first two weeks, recognised the importance of capacity and capability to this system as a whole if it is to operate at the deeper level the Government envisage. That is in part of course about the capacity and capability of MSAs themselves. There is a huge discrepancy already, because of the time periods over which different MSAs have developed—take for example the capacity and capability of Greater Manchester versus some of the more nascent and recent MSAs—so part of what Government will need to do is make sure the funding is there for capacity and capability of the MSAs.
You are completely right that, for the system to function in the way we have been discussing, Government must ensure there is the right funding and resource for the organisations that are going to support it. The Local Audit Office is key to that. So I think for now the answer to your question is, yes, we completely recognise that, and we are determined to make sure that what is needed for the system to work is there. That is the direction Ministers have set us. Our expectation is that we able to say more about how that will work at the Budget.
Cat Little: I said right at the top of the session that this has large implications for central Government and for the resources we have. The really interesting question is if that resource is being moved in financial terms, the capability and capacity of central Government must also flow to local level. That is why we are seconding people directly from central Government into MSAs. We have a whole programme of options for how we build capability. I think the National School of Government will play a really important role in building capability across the whole of the public sector. The civil service has to become smaller and much more strategic and deft in our ability to move that capability across the United Kingdom.
Q97 Rupert Lowe: I am compelled to ask you all a question. We talk about the Westminster blob. Having sat around this table, I do not agree with you, Will: there is still a lot of work to be done on accounts being filed on time and work being qualified.
Will Garton: Oh, I agree. I did not say I meant otherwise.
Q98 Rupert Lowe: I have seen some pretty bad stuff. Is there not a danger that we just devolve the Westminster blob into a series of unaccountable regional blobs?
Cat Little: Obviously, I would not characterise the centre of Government quite as you have done. Fundamentally, by the nature of what we do on behalf of the state, we have some of the country’s most senior and capable experts in commercial finance transformation. In our work, we run a very high-risk set of systems on behalf of the taxpayer. Of course, there are things that we have to do better. On our capability, with the 6,000 commercial professionals that I run through the Cabinet Office, I absolutely expect us to be sharing that capacity and capability across the whole of the United Kingdom. We also have to get better at being more porous with the private sector and building capability for the whole economy.
Q99 Rupert Lowe: I am glad that you are proposing cutting central Government as you increase devolved local government; that is essential. In the summary, the NAO says that it found tension between MSAs’ expectations of autonomy and the accountability requirements of funding Departments. Are you happy that we can create a framework through which we can effectively hold to account the people who have been given this money to spend? After this, I will talk about MPs, because that is a very important point.
Will Garton: It is a work in progress, as I have tried to illustrate. Let us take in what is there: how do we do accountability at the moment? Currently, Steve Rotheram or Paul Bristow would say, “I feel accountable to my electorate,” although you may or may not agree with that. They also have to get their budgets and all their plans through their local authorities, which, apart from in London, are combined authorities. That is a second element.
Also, as we have discussed, if you are in receipt of the integrated settlement, you have to try to hit a number of outcomes. We have 12 to 14 at the moment—cue the debate on whether there are too many: is it too hot, too cold or just right? If you do not hit your outcomes, we have a matrix of interventions ranging from doing a bit more monitoring to intervening and ultimately clawing back money.
Then, we have the new local scrutiny committees that Melissa spoke to, which have more teeth than any other form of local accountability that we have had thus far. Then, in the Cabinet statement we said that we still do not think that this is enough and want to set out plans to go further. That is where we are now. I recognise that views will differ on whether that is the right level of accountability or whether it is too much or too little, but that is the circle that we are trying to square.
Q100 Rupert Lowe: Fine, but it is essential that we do have that. Coming on to MPs, it is important that they are included, because ultimately they are the elected representatives of the people. You have done me a favour, James, because you raised the issue of the overnight levy, which I was going to use as an example. My constituency, for instance, is coastal, so an overnight levy would have a greater direct effect on my constituency than on other constituencies. We need to ensure that MPs are included, not just in the scrutiny but in the decision making.
I have seen suggestions of a £5 or £10 overnight levy charge, but I have also seen polling that suggests it would put a lot of people off holidaying here; they would go abroad. At a time when our tourism, our entertainment and our pubs are declining massively, it is important that MPs are included, and I am slightly concerned that, based on the answer you gave, there is no plan to do that at the moment—it is a matter of discussion. It is essential that we get that right; otherwise, we will end up with an even more confused electorate, because the mayors will grab the power and the MPs will appear irrelevant.
James Bowler: It is worth saying a little about the overnight levy. The Government will set out the framework through which you can do that. On why this is in place, we are the only G7 country without that, so in terms of your competition point, lots of other countries do have that. The key to whether it is a good idea, or whether it should proceed, is about a couple of things. First, there is no compulsion, so you do not have to have an overnight levy. You can decide not to go ahead with one. Secondly, there is a requirement for an authority, if it wishes to have a levy, to consult. That is probably the time when everyone can get engaged, including local MPs.
Q101 Rupert Lowe: This is why it is important that MPs are involved.
James Bowler: Yes.
Cat Little: To add to what Will said, we absolutely agree with you. We are engaging with MPs. We are engaging with the NAO and with this Committee. We are looking at other models as well, because we are moving fast. We are going to set out exactly how we are going to do this as part of the White Paper, and we are going to be taking action.
Q102 Rupert Lowe: But Cat, to Geoffrey’s point, we are discussing things that keep changing. We really need a sitting target, so that we can actually judge whether it is going to work or not. At the moment, you say it is work in progress. We have not got a firm idea. We are talking about this, and we are talking about that. My constituency is in Norfolk, so as of this afternoon we are going have a borough council election next year because it is back to normal. All these things are changing, and it is extremely destabilising. If we cannot even basically set out what we are going to do because we have not reached a conclusion on that, that is when things go wrong and mistakes are made, because it is all being done in a hurry and it is not being thought about.
Cat Little: For us, this is how good policy development works. We want to engage; we want to iterate. That is why the White Paper will be coming out fairly shortly once we have undertaken a good policy development process. To your point, you do not want to rush into it; equally, we want to make sure the ambitions are reflected and we get this right.
Q103 Rupert Lowe: A lot of change has happened before the White Paper, hasn’t it?
Cat Little: Indeed. Change is constant.
Chair: Thank you. We will move on to Sarah Olney. I pinched one of your questions, Sarah. I’m sorry; I did not do it on purpose. You can do the next question.
Q104 Sarah Olney: That is quite all right, Chair. Will G, we have talked a little bit already about scrutiny and audit, but when will the local external audit system be in a fit state to allow Departments to reduce their monitoring of mayoral strategic authorities?
Will Garton: If you mean when do the 12 to 14 indicators that we have for the integrated settlement fall away, I cannot give you a straight answer because we still have to make that decision. We have talked about how they can be useful for scrutiny and accountability. We have said that 12 to 14 is far fewer than we have ever had previously. Ministers announced an intention to streamline them, but I cannot tell you what decision will be made over the coming months as to when there will be fewer, or how many there will be, because we have not made that decision yet. Ministers have not taken it yet.
Q105 Sarah Olney: Do you not have a deadline for the establishment of the permanent audit overview?
Will Garton: Are you talking about monitoring outcomes via the integrated settlement, or is your question about the Local Audit Office and the establishment of decent accounts in local government?
Q106 Sarah Olney: Establishing the Local Audit Office.
Will Garton: The Local Audit Office is now established. It is a body, thanks to the regulations that Parliament approved in July. We have been out to advert for a chief executive. We have appointed a chair. We want it up and running early next year.
We are not waiting for the LAO to be in operation to tackle the crisis in local authority accounts. As I said earlier, we have upped from 1% to about 90% in terms of accounts published on time. Just for the avoidance of doubt, Mr Lowe, I am in no way complacent that this problem is fixed, not least given the number of disqualified opinions. I am simply pointing to a trajectory that is improving on quite a challenging timeframe.
Q107 Sarah Olney: Presumably the end state of the trajectory that is improving is a fully up-and-running Local Audit Office. When will that happen?
Will Garton: Yes. Our target is for 100% of audit opinions to be published on time by 2027-28.
Q108 Sarah Olney: On the establishment of the Local Audit Office, you were talking about recruiting. When will that be fully up and running and taking on all of the audit responsibilities?
Will Garton: It will be fully up and running early next year. It is legally established now. We have appointed a chair. We are in the process of making executive team appointments over the next few months, but we needed a legal body to recruit them to, if you see what I mean. I am slightly at the mercy of Parliament.
Q109 Sarah Olney: What role will that play in providing strengthened local accountability?
Will Garton: The first job of the local audit office is to fix the unacceptable state of local authority accounts. That is the thing it must focus on beyond anything else, because we cannot have a system where James and I return every year and the whole of Government accounts are disqualified. Frankly, this Government’s view is that the decision to abolish the Audit Commission was a mistake, and provision was not made to replace it. That damage is being undone; that is the view of Ministers now. That is the primary thing the local audit office must get right, and nothing must take its focus off that.
The thing we have explored this afternoon—it is tentative, but hinted at in the Cabinet statement—is, in order to support scrutiny locally, what the best way of doing that is. We have discussed how this Committee benefits from the expertise of the NAO, and the Comptroller and Auditor General and I are meeting tomorrow to discuss how we might do more on that.
One option we will want to discuss with Ministers, although no decisions have been made, is whether to ask the local audit office to play a role in assessing value for money of the integrated settlement in the West of England combined authority. That is an option open to Ministers; it is not something we have decided on, but it would be an additional ask beyond fixing the accounts, which is the No. 1, primary job. Does that answer your question?
Sarah Olney: It does; thank you very much.
Q110 Mr Betts: Following on about local scrutiny, I have many good things to say about local government; I am very supportive of it. One thing that has never really worked very well is scrutiny committees. If you talk to most councillors, they have concerns and reservations, particularly when the scrutiny committee sits and the officers advising them on scrutiny come from the same departments being scrutinised. That happens regularly. When billions are being spent and scrutinised, how will we get that degree of independence, both in the advice and the process of scrutiny?
Will Garton: Local scrutiny committees, which we have legislated for—forgive the slightly duplicative language—replace the mayoral overview and scrutiny committees. It is a deliberate attempt to have a regime with more teeth. The ability to have up to 40% of the committee who are independents and experts is a good innovation, as is the ability to insist that the mayor attends and, if they consistently do not, they are out of a job—a different change to ratchet up the pressure. As I say, that policy was written before this Administration came into being, so as the transfer of power happens, there is clearly more to do.
Q111 Mr Betts: Okay, that is helpful. Just as we have the NAO to give us technical professional advice, we also have our excellent Committee staff to advise and assist us. Local scrutiny committees do not have that—they have good staff, but they are not independent of the areas being scrutinised.
Melissa Brown: One of the changes we are moving towards is partial independence: independent membership alongside representatives from the constituent authorities. We are also designing a mechanism whereby the local scrutiny committee must take advice from a panel of independent experts, focused around the different areas of competence for which the mayoral strategic authority is responsible. We are trying to build in that level of independence. We are also working closely with the Centre for Governance and Scrutiny on how it can offer training and provide support to upskill local scrutiny committees and their associated officers as they come on stream.
Q112 Mr Betts: Getting independent advice all the way through is key to this.
Will Garton: I agree. Just to repeat, our improvements to local scrutiny committees predate this Administration. There is more to come.
Mr Betts: Okay, right. We hear you; watch this space and see if it gets—
Will Garton: Indeed.
Q113 Mr Betts: Okay. Let me come back to the programme board, which is the effective monitor at national level to ensure that everyone is doing the right thing in the right way. It’s a bit clunky, isn’t it?
Will Garton: Well, I chair it, and I try to make my views—[Laughter.] I will say that it is no more than an hour and a half.
James Bowler: It is a triumph.
Will Garton: There is a tension, right? On the one hand, it is clunky. There are too many outcomes. You guys are micromanaging these people—I get that. On the other hand, how are you ensuring consistency, value for money, accountability and so on? People can say that we are too light, too little or not enough. We are trying to get it right, but I appreciate that there will be a range of views.
Q114 Mr Betts: This is a tension for all.
Will Garton: Yes.
Q115 Mr Betts: What Government want to do and what strategic authorities might want to do won’t always be the same.
Will Garton: No. I mean, that is devolution, right? I am just exposing that there is a trade-off. This Administration and this set of Ministers are very clearly up for more devolution. If that brings different priorities in different areas, they are more relaxed about that than the previous Administration, so we will respond accordingly.
Q116 Mr Betts: The outcomes programme board will monitor against four authorities. It is going to be agreed in the first place with the authorities that they are the outcomes—
Will Garton: Yes. The outcomes that we have with the integrated settlement are proposed by Departments and agreed by mayoral strategic authorities, with the Minister and I in the middle trying to reconcile the competing demands, which we do to the best of our ability.
James Bowler: The one thing I would say about the programme board is that I agree with the point about tension. You must have in the checks and balances—as you as a Committee do so well, and the NAO, too—a check on delivery, so that you are not just doing announcement and target; you are actually getting in and looking at delivery and implementation. All the learning that we have had over the public sector in all its guises is that you need that delivery check.
Q117 Chair: Will, I am just wondering how you are going to cope with all this. Are you going to work 24 hours a day? As you get more strategic authorities wanting to participate in these strategic boards, how will you actually cope?
Will Garton: That is kind of you, Chair. I am confident that we can cope. When I look at what local government is doing under significant resource pressure and what the new mayoral strategic authorities are achieving, my bigger worry is this: are they set up for success, not the Department? Whitehall—central Government—will be fine. I think we cope by ensuring that our partners in places are properly resourced, and that they have enough capacity funding to recruit staff and bring expertise into the organisation.
I am not saying that this is quite what you are saying, but the wrong response to this would be, “Devolution is now a massive thing. Let’s hugely increase the number of staff in MHCLG.” Instead, as with the rest of the civil service, we should look to reduce the number of staff in MHCLG and to transfer at least some of the administration budgets to new and emerging combined authorities, so that they are our decent partners.
Q118 Chair: I am coming on to that in a minute. First, I just want to talk about when things go wrong. The rubbish is building up on the streets of Birmingham. At the moment, you have a fairly quick mechanism. You can put that authority into strategic measures and you can send in the commissioners on the ground, who can do something about it quite quickly.
I am looking at figure 9 in the NAO Report, which is gradated into “minor” things that might go wrong and “moderate” things that might go wrong, and then it goes on to “major” things that might go wrong. I am still wondering whether the commissioners’ option—the strategic measures—is still there, because if something really major goes wrong, you need to do something about it quickly.
Will Garton: The answer is yes, they are. The best value regime that the Department runs applies as equally to local authorities as it does to mayoral strategic authorities. We have the same—I sometimes call it climbing a ladder, but my team correct me and say that it is a climbing frame, because you do not need to go from one stage to the other. So there is a best value notice, a best value inspection and then sending in commissioners. Those options exist in a mayoral strategic authority, as they do in a local authority.
We have had two mayoral strategic authorities that have received best value notices in the past, which have now had quite a useful bit of engagement with the Department about improvements. Those are Cambridgeshire and Peterborough, and the West of England. Those now have established status and are due to receive an integrated settlement at the next spending review. So we have intervened in combined authorities in the past and we are prepared to do so again.
Q119 Chair: Thank you; that is helpful. On mayoral strategic authorities building up capacity, I will quote two little bits of paragraph 2.17 of the NAO Report. “They”—the strategic authorities—“will not always hold all relevant expertise themselves and may need to draw on the capacity of constituent authorities and other local partners”, and this is the important bit: “MSAs may grow faster than their capacity to deliver, particularly in newer MSAs still putting core systems, staff and processes in place.” How will you make sure that these authorities are going to be able to grow capacity at the speed required for the devolution of functions to them?
Will Garton: I think this is one of the most important things for this bit of the Department over the next six months. We are acutely conscious that we are building new institutions and that takes time, effort and resource. The first thing we are doing is putting a bit more money in—that is a straight answer. Administration funding needs to go up a bit. Most of the combined authorities have, even as a proportion of their budgets, less administration spend than Whitehall Departments.
Cat has talked about the immediate actions that we are taking: secondments to MSAs from the civil service, opening up the civil service future leaders scheme, the national school of government, and the LGA peer support and review. Those are all immediate things and low-hanging fruit. That is necessary but not sufficient for the scale of transformation that is needed. We said in the Cabinet statement that we want to publish a blueprint of what a good strategic authority would look like. We will do that in partnership with our colleagues who actually run those institutions. We will set out what we think is needed and, critically, the gap between what exists today and what is needed, as well as plans to fill that gap. All that detail is coming in the autumn.
Q120 Chair: I am glad that you recognise the scale of the problem, because it is starkly revealed in the Local Government Chronicle of 5 August. I quote the second paragraph of its article: “Staffing levels ranged from 5.9 full time equivalent (FTE) staff at Devon & Torbay CCA to over 1,500 at the Greater London Authority and nearly 1,000 at both the West Yorkshire and West Midlands CAs.” There is a really big job to be done here if some of these are going to be ready to become mayoral strategic authorities.
Will Garton: Often, those large staffing numbers are where the combined authority comes from an existing transport authority. Transport authorities predate mayors in many circumstances. If you go to the north-east, for example, they have had a transport authority for longer than they have had a mayoral combined authority, so they have more of a history of working together, via the transport authority, and have an infrastructure to build on. We are acutely conscious that in other parts of the country there is not that existing infrastructure, and that is a priority for us to get right over the coming weeks and months.
Chair: I think we have covered the subject fairly well. As the Committee have no more questions, I will draw us to a close. I thank you all; you are very busy people. We are very pleased to have with us no fewer than three permanent secretaries. That has been very useful because this is a big, important and diverse subject. An uncorrected version of the transcript will be available in the next few days, following which we will produce a report, maybe with recommendations, which I hope you will study carefully. We look forward very much to seeing how it goes.
Finally, please do try to clear up what is being done today as quickly as possible because people out there will be in despair tonight, I think.
Will Garton: That is very well understood, Chair.
Chair: I thank you all again.