WEDNESDAY 6 FEBRUARY 2008

MR PHIL WOOLAS MP, MR MARTIN HURST AND MR DAVID WRIGHT

  Q1060  Chairman: PPS25 puts quite a considerable burden on local authorities having the expertise to apply the guidance that is contained in it. What is being done within government to ensure that local authorities have actually got that expertise?

  Mr Woolas: It is slightly outside my remit, but the strategy of improving the expertise of planning officers that has been undertaken in the last few years from undergraduates through to resources in local authorities is pertinent to this, and the working together of the planning authorities, the Environment Agency and indeed other bodies is part of that. Of course, there is the opportunity also of resources through developers where section 106 and similar arrangements can come into play, so, as in all of these efforts in climate change adaptation, and that is how I see it, there is a transformation that we require in the country to increase the expertise and there are specific programmes of training the planning officials that have been undertaken, but I would not pretend to you that it is perfect; it is a learning curve.

  Q1061  Chairman: Let us move on then to an area which we touched on briefly which is the question of the budget which your Department has at its disposal. Can we just start by making certain that we understand the elements of the budget which were helpfully listed in the ministerial statement of 4 February. In the first column, I notice that some £261 million across the current CSR is listed for "local authorities' own spend (estimated)" and it is a level trend, so that says to me that in real terms it is actually a falling estimation of how much local authorities are going to be spending. How did you derive that 87 was the right number?

  Mr Woolas: We took what they did now and we looked at the DCLG RSG settlement and we extrapolated the flat line.

  Q1062  Chairman: So you are quite happy that in real terms local authorities are projected to reduce their real terms expenditure on flood matters at a time when you think that the risks are increasing?

  Mr Woolas: No, I am a devolutionist and I believe that for local authorities the less ring-fencing they have, the better it is.

  Q1063  Chairman: But in terms of adding up the total national budget, this number is included in it, so it is really a bit of a cock-shy.

  Mr Woolas: It is an estimate based on a three-year period and the alternative policy would be to attempt to ring-fence capital and revenue budgets and I do not think—

  Q1064  Chairman: But it is a formula that determines how much money local authorities receive within their revenue support grant and, when the formula cranks out the results, obviously factors affecting individual authorities, I presume, are taken into account in determining allocations. I do not blame you for saying, "I'm a devolutionist", but, against a background where the Government has made a considerable amount of play in global terms in saying that its overall expenditure through the Comprehensive Spending period is going to go up, I think a lot of people will be rather surprised to find at the local level, when lots of little smaller-scale works, for example, might be required, that you have got a level cash figure as part of your estimate because there is no guarantee that any one local authority will spend anything on flood protection. Mr Wright, perhaps you could assist us. If you are the man with the detailed answer, help me out of my lack of knowledge on this and give me the facts.

  Mr Wright: Approximately half of the total of £87 million is levies that the local authorities pay to the Environment Agency and internal drainage boards, and they do fluctuate from year to year, so, as the Minister said, they are based on past trends, and they do fluctuate from authority to authority, but overall the level is pretty stable. The other expenditure is the local authorities' own expenditure on flood and coastal erosion works which again fluctuates by authority and, typically, it may be small-scale maintenance amongst the authorities.

  Q1065  Chairman: But, given what happened last summer, there has certainly been a stirring of very considerable interest at local authority level in having to do something about what has transpired. I suppose my question is that within the way that the Grant Settlement Scheme works, is there any way in which it can be amended over this CSR period to reflect a heightened need for activity at a local level?

  Mr Woolas: Well, of course in many cases the schemes for both coastal erosion and flood defence are joint schemes between authorities and other partners, so the plans are agreed between local authorities, but what this represents, which I think you are also saying, is an estimate of what they are doing based on previous trends and I suppose we can exhort them to do more, but the policy option would be to ring-fence—

  Q1066  Chairman: It looks like local authorities are stuck. Let us move on to the next column then, "retained for now in Defra". We discussed the fact that, out of that pot, you have preliminarily allocated £34.5 million for Pitt, but we do not know how much the rest of Pitt is going to cost, so will the final proposals of Pitt be fully costed by the same mechanism that has come up with the 34.5 million?

  Mr Woolas: We do not know.

  Q1067  Chairman: But you knew enough to decide the 34.5 as a number, so do not say you do not know. All I asked was about a mechanism. What I did not ask is how much is Pitt going to cost. How are you going to work out what the rest of it is going to cost?

  Mr Woolas: When we get it, we will sit down with it, but we do not know that the 34.5 million—

  Q1068  Chairman: That is not the answer because you gave us an answer earlier on to say that your officials and Sir Michael's team had so far made some kind of cock-shy, particularly with reference to the interim findings. It says here, "We are also making an initial provision of £34.5 million which may be needed to implement Sir Michael Pitt's recommendations". Well, I think it is definitely going to be, but it is funny language, that. What I am interested in is how are you going to work out what the rest is going to cost?

  Mr Woolas: For the record, we did not say it was a cock-shy, I think it was somebody else who said it was, but it is not a science. Obviously we are waiting on those recommendations.

  Q1069  Chairman: I am sorry, I know it is not a science, but I asked the question of how are you going to do it. This 34.5 million as a provision, you did not pluck that out of thin air. It must have some basis.

  Mr Woolas: The figure is 62.5 million.

  Q1070  Chairman: No, I am talking about Pitt. The 62.5 million is the "retained for now in Defra", which is in column 2 of your Department's press release.

  Mr Woolas: I am sorry, I am just saying that the 34.5 is part of that 62.5.

  Q1071  Chairman: I got that from the earlier answer. I am just still interested to know how you decided that 34.5 was the right number.

  Mr Woolas: It is a guesstimate.

  Q1072  Chairman: It is a guesstimate which your officials, knowledgeable with all that expertise you told us about at the beginning, have worked out with Sir Michael. What actually is it for though? You say it is a guesstimate, but is it for the 15 priority things or is it for something else? What is it for?

  Mr Woolas: Without wishing to be in danger of repeating myself, it seems prudent to me to have an amount of money from the total amount available to be there to implement specific recommendations from an independent review, and I cannot justify the particular 62.5 as opposed to 60 or 70 or 50 or 80, but I would point it out as evidence of our commitment to the independence of that review and to the importance that we place upon it. If you take, for example, the coastal erosion area where we are further down the line in terms of development, we have allocated in that area similarly, from the total package, some 30 million—

  Q1073  Chairman: I would love to see the note that you got from your officials where it said, "Ministers are advised that Sir Michael is coming up with a very long list and there might be a big bill attached to it, so we had better make some provision for some of this", and inside that note I would be wholly unsurprised if there was not an estimate, to use your own word, of what you thought the global total might be. Somebody else might have said, "Well, it's going to be spread out over a period of time, Minister. It ain't all going to come in one fell swoop", so you got a recommendation as to how much you should put by out of the 62.5, so at least you could say you were doing something over the three-year period of the Comprehensive Spending Review and that would give you a defensive position because the bill will no doubt come to more than the 34.5 million, but you are doing your best. Is that not what you actually had on your desk?

  Mr Woolas: Had I done the opposite and not allocated any money, then you, I think, would have a very strong criticism—

  Q1074  Chairman: You did not answer my question. You have had that submission and I am quite certain there is a mechanism where somebody will have costed out, roughly speaking, back-of-the-envelope stuff, what Pitt is going to cost, and you have decided as a Department how much in the next three years you can actually put towards that bill. Is that not true?

  Mr Woolas: No, it is not. Defra officials never do anything on the back of an envelope, they do it comprehensively and—

  Q1075  Chairman: Well, let us say it is on the front of an A4 piece of paper as a ministerial submission, "Pitt's interim findings". You must have had a note on that.

  Mr Woolas: My experience—

  Q1076  Chairman: Did you not have a note from your officials about Pitt's interim findings?

  Mr Woolas: Mr Jack, your experience is greater than mine in regards to this Department. Weighty submissions are—

  Q1077  Chairman: No, I had the same two years that you are going to have, so we are about on a par!

  Mr Woolas: You had a year earlier as well to give you some knowledge that prepared you for your period, if I am correct, but my serious point, if I can use the parallel please of the coastal defences situation where one has revenue and capital allocations for the programme and a pot of money made available of £28 million for what is called `the adaptation toolkit', that is a pot of money that is available for communities, local authorities and flood defence committees where they can say to us, "Look, in our part of the country there is a specific problem and it needs some resources to solve it", and it may be as simple as moving a caravan park in order to sustain the tourist industry in that area. Now, that is not something that is part of my capital programme to defend the sea in a particular pot, so yes, it is a guesstimate. How much do we need for that? It is a guesstimate, but I think it is responsible planning because it is taken from the total which, in terms of the weight of the submissions in this period, in the box, the 1.8 million, were a lot heavier and a lot more substantial even though the 62.5 and the 34.5 were also comprehensive.

  Chairman: Well, we will come on to the bit in the further right-hand column. You have tweaked the interest of a number of my colleagues.

  Q1078  Patrick Hall: Just quite simply, when Pitt's final report is available in June/July, there will be a fresh assessment and it will not be a guesstimate then presumably, it will be a bit more definitive. If that comes up with a figure that is higher than the 34.5, does that additional sum come from the 62.5? Secondly, is it then expected that, whatever it is, the spending will be mainly in the financial years 2009/10 and 2010/11, the first full financial years after this June?

  Mr Hurst: The first point to make is that, as I said before, there are two sets of recommendations from Sir Michael Pitt. There are 15 urgent recommendations, many of which are main budget recommendations, things like talking to people, putting together plans, et cetera. There are then 72, if I remember correctly, interim conclusions. The 34.5 million is meant to address the costs for both and it has been put aside as a guesstimate, as the Minister said, to cover both. Now, obviously it is as guesstimate because we do not know what the final recommendations of Sir Michael Pitt will be. When Sir Michael Pitt comes up with his final recommendations, the Government will have to consider its response and it would not want to make a response without costing that response. There will be some decisions to be made, I am sure, because for some of the response, there are different times when you may want to do it. You cannot say, for example, in surface water that you would necessarily do so much in the next two years and so much in the two years after that, so there is no definitive number. When he comes up with his definite conclusions, people will have to make a judgment about whether it needs more than we have currently allocated within the Spending Review period, in which case it has to look to its own resources, whether it is from its own reserves or whether it is from reallocating programmes or whether this is something that we ought to look to the next Spending Review to sort out, so there is no definitive answer because we do not know what the conclusions will be.

  Q1079  Patrick Hall: But we will know later on this year.

  Mr Woolas: But my priority will be to give certainty and stability to the flood defence plans for communities and what I want at all costs to avoid is allocating money to the Environment Agency and others and what I will not do is go and ask for it back.