Local Government (Independence) Bill (HC Bill 72)

A

BILL

TO

Define the independence of local government; to regulate the relationship between
local and central government in England by means of a statutory Code; to require
public authorities to act in compliance with the Code; to provide that the Code may
only be amended by means of an order under the super-affirmative procedure,
approved unanimously by each House of Parliament or by a majority in each House
equal to or greater than two-thirds of the number of seats in each House; to exclude
any Bill to amend this Act from the provisions of the Parliament Act 1911; to make
provision regarding the powers and finances of local government in England; and for
connected purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

1 The Local Government Independence Code

(1) There shall be a Code, to be known as “the Local Government Independence
Code”, the principal purpose of which shall be to define and regulate the
relationship between central and local government.

(2) 5Schedule 1 (which sets out the terms of the Code) shall have effect.

2 Application of and compliance with the Code

Schedule 2 (which makes provision about the application of the Code, and
which requires public authorities, including central and local government, to
comply with the Code) shall have effect.

3 10Amendment of the Code

Schedule 3 (which makes provision for amending the Code) shall have effect.

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4 Interpretation and amendment of legislation

(1) A court or tribunal determining a question which has arisen in connection with
the functions of a local authority, or of the Secretary of State or other public
authority in relation to any local authority, must take into account the
5provisions of the Code.

(2) Schedule 4 (which requires that, where it is possible to do so, primary
legislation and subordinate legislation must be read and given effect in a way
which ensures compliance with the Code, and makes provision for the
amending of legislation where it is found not to be compatible with the Code)
10shall have effect.

5 Remedial orders

Schedule 5 (which makes provision about remedial orders to amend
legislation) shall have effect.

6 Statements of compatibility

15Schedule 6 (which makes provision for Ministers to make, or refuse to make, a
statement that a Bill is compatible with the Code) shall have effect.

7 Amendment of the Parliament Act 1911

Schedule 7 (which amends the Parliament Act 1911 so as to exclude any Bill
seeking to amend this Act from the provisions of the Parliament Act 1911) shall
20have effect.

8 Amendments to other enactments

The amendments set out in Schedule 8 (which provides for amendments which
are consequential on the making of the Code to certain enactments relating to
local authorities) shall have effect.

9 25Duty to review provisions in primary and subordinate legislation

Schedule 9 (which requires the Secretary of State to provide for the review of
provisions in pre-commencement legislation to assess their compatibility with
the provisions of the Code) shall have effect.

10 Interpretation

30In this Act—

local authority” means—

(i) a county council in England,

(ii) a district council,

(iii) a London borough council,

(iv) 35the Common Council of the City of London in its
capacity as a local authority,

(v) the Council of the Isles of Scilly, or

(vi) a parish council.

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(b) “statutory provision” means a provision of an Act or of an
instrument made under an Act.

(c) any reference to “local government” shall be read as being a
reference to one or more local authority as defined in subsection
5(1)(a).

(d) any reference to “central government” shall be read as being a
reference to the Secretary of State.

(e) “enactment” includes any Act of Parliament and any instrument
made under an Act.

(f) 10“the Code” means the Local Government Independence Code.

(g) “compliance with the Code” means compliance with the
principles contained within the Code.

11 Short title, commencement and extent

(1) This Act may be cited as the Local Government (Independence) Act 2014.

(2) 15The provisions of this Act come into force on the day on which this Act is
passed.

(3) This Act extends to England only.

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SCHEDULES

Section 1(2)

SCHEDULE 1 The Local Government Independence Code

1 (1) This Code—

(a) 5defines the relationship between central government and local
authorities; and

(b) makes provision about the financial independence and conduct of
local authorities.

(2) Local authorities and central government may seek legal redress in any case
10in which they believe a local authority (or two or more local authorities
acting together), or central government, are not acting in compliance with
the Code.

(3) For the avoidance of doubt, nothing in this Code shall affect the rights of
individuals; and individuals may continue to seek judicial review of any
15action by a public authority which they regard as unjust or as infringing
their rights.

Local Autonomy and Local Self-Government

2 (1) Local authorities’ accountability is to their electorates.

(2) Local authorities are autonomous, democratically-elected bodies which
20independently decide upon, administer and regulate public affairs and deal
with all matters of concern within their boundaries to the extent that such
matters are not the statutory responsibility of another body.

(3) Local authorities shall continue to operate within the rule of law.

(4) Local authorities shall continue to operate with full legal personality and
25under a general power of competence. Subject to sub-paragraph (3), local
authorities may pass measures on matters affecting the affairs and interests
of their area.

Scope of Local Government

3 (1) The powers and responsibilities of local authorities will continue to be
30prescribed by statute.

(2) Local authorities shall have power to exercise their initiative with regard to
any matter which is not statutorily excluded from their competence or
assigned to another body.

(3) Central government may not propose actions which are intended to, or may
35reasonably be regarded as being likely to, infringe the independence of local

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government, as defined in this Code, or affect local government generally or
any local authority, unless local government generally, or the local authority
concerned, consents.

Inter-Governmental Activities

4 5Central government and local authorities shall establish joint inspection
regimes to set and monitor the standards of services supplied or secured by
them.

Territorial Autonomy

5 The geographical boundary of a local authority can be altered only by a
10proposal from the local authority itself or from its electorate. Local
authorities must make arrangements for their electorates to put forward
such proposals for consideration. Any such locally-inspired proposal for
boundary changes, whether initiated directly by the authority or by the
electorate of the authority, must be developed with the involvement of the
15Local Government Boundary Commission for England and shall be subject
to approval of the electorate of the area concerned, under arrangements
made by the local authority concerned and approved by the Electoral
Commission.

Council Governmental Systems

6 (1) 20The electorate of each local authority, through methods agreed by the local
authority concerned, shall have the power to choose that authority‘s internal
political decision-making systems. The systems concerned shall include a
directly elected mayor and cabinet, a cabinet and leader, a committee
system, or any other political decision-making arrangement which the
25electorate may decide is appropriate.

(2) The electorate of each local authority, through methods agreed by their local
authorities, may, after a process of consultation carried out by the local
authority concerned, agree to and adopt any electoral system for use in
elections to that authority.

30Local Government Financial Integrity

7 (1) Local authorities shall be financially independent of central government,
save as otherwise provided for in this Code.

(2) Central government may not place any restriction on decisions by local
authorities about the exercise of their financial powers.

(3) 35The distribution of central government funds between local authorities shall
continue on the basis of existing equalisation arrangements. Distribution
will continue to be based on the principle of ensuring fairness and balance
between local authorities. The basis on which this distribution is carried out
must continue to be made public.

(4) 40Each local authority shall receive from central government a guaranteed
share of the annual yield of income tax, as follows. Central government must
in each financial year assign to the Secretary of State responsible for the
distribution of central government funds between local authorities an
amount of money equivalent to the yield from ten pence in the pound of

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income tax. The Secretary of State must make arrangements to inform each
taxpayer in England of the amount of their income tax which makes up the central
government funding distributed to English local authorities as a whole.

(5) The amount of the income tax yield referred to in paragraph 7(4) shall be
5renegotiated between central and local government whenever service
provision responsibilities are transferred between central government and
local authorities.

(6) Local authorities may raise additional sources of income in their areas in any
way they wish, and with the consent of their electorates as expressed
10through arrangements to be determined and put in place by the local
authority concerned.

(7) Local authorities shall be able to raise any loans, bonds or other financial
instruments which their credit rating allows and as independent entities will
be exclusively responsible for their repayment. All local authorities shall
15operate “a balanced budget” so that in any one financial year all outgoings,
including interest repayments on borrowings, shall not exceed income.

(8) Central government may not cap, or in any other way limit, local authorities’
taxation powers.

(9) The financial transparency standards that apply to central government shall
20apply to local authorities.

(10) Central government and local authorities may contract with each other in
order to pursue their own policy objectives.

Local Authorities’ right to co-operate and associate

8 (1) Local authorities are entitled, in pursuit of any undertaking, to co-operate in
25any way with any other persons, including local authorities, public and
private bodies, voluntary, charity or third-sector organisations, and
financial, commercial or private enterprises.

(2) Where more than one local authority is responsible for services in a
geographic area, those local authorities shall co-operate so as to maximise
30the well-being of those living or working in that area.

(3) Local authorities may join any association for the protection and promotion
of their common interests and may belong to an international association of
any sort.

Decision-making

9 35The administration of any local referendum or other vote on proposals put
forward by the electorate of any local authority, or other local decision-
making processes involving a public vote, shall adhere to standards set by
the Electoral Commission; and those responsible for the conduct of any such
decision-making processes shall be accountable to the Electoral Commission
40for their performance against those standards.

Legal Protection of Local Government

10 Local authorities may seek a judicial remedy in order to secure the free
exercise of their powers, and any other principles of local self-government

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or individual rights contained within this Code or otherwise enshrined in
law.

Section 2

SCHEDULE 2 Application of and compliance with the Code

5Acts of public authorities

1 It is unlawful for a public authority to act in a way which is not in
compliance with the Code.

2 Paragraph 1 does not apply to an act of a local authority if—

(a) as the result of one or more provisions of primary legislation, the
10authority could not have acted differently; or

(b) in the case of one or more provisions of, or made under, primary
legislation which cannot be read or given effect in a way which is
compatible with the Code, the authority was acting so as to give
effect to or enforce those provisions.

3 15In this Schedule “public authority” includes central government, local
authorities and any other person certain of whose functions are functions of
a public nature, but does not include either House of Parliament or persons
exercising functions in connection with proceedings in Parliament; and “an
act” includes a failure to act.

20Proceedings

4 (1) A person who claims that a public authority has acted (or proposes to act) in
a way which is made unlawful by paragraph 1 may—

(a) bring proceedings against the authority under this Act in the
appropriate court or tribunal, or

(b) 25rely on the Code in any legal proceedings.

(2) In sub-paragraph (1)(a) “appropriate court or tribunal” means such court or
tribunal as may be determined in accordance with rules; and proceedings
against an authority include a counterclaim or similar proceeding.

(3) If the proceedings are brought on an application for judicial review, the
30applicant must have a sufficient interest in relation to the act.

(4) Proceedings under sub-paragraph (1)(a) must be brought before the end
of—

(a) the period of one year beginning with the date on which the act
complained of took place; or

(b) 35such longer period as the court or tribunal considers equitable
having regard to all the circumstances,

but that is subject to any rule imposing a stricter time limit in relation to the
procedure in question.

(5) In sub-paragraph (1)(b) “legal proceedings” includes—

(a) 40proceedings brought by or at the instigation of a public authority;
and

(b) an appeal against the decision of a court or tribunal.

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(6) Nothing in this Act creates a criminal offence.

(7) In this section “person” includes a local authority.

Judicial remedies

5 (1) In relation to any act (or proposed act) of a public authority which the court
5finds is (or would be) unlawful, it may grant such relief or remedy, or make
such order, within its powers as it considers just and appropriate.

(2) But damages may be awarded only by a court which has power to award
damages, or to order the payment of compensation, in civil proceedings.

(3) No award of damages is to be made unless, taking account of all the
10circumstances of the case, including—

(a) any other relief or remedy granted, or order made, in relation to the
act in question (by that or any other court), and

(b) the consequences of any decision (of that or any other court) in
respect of that act,

15the court is satisfied that the award is necessary to afford just satisfaction to
the person in whose favour it is made.

(4) In this paragraph—

  • “court” includes a tribunal;

  • “damages” means damages for an unlawful act of a public authority;
    20and

  • “unlawful” means unlawful under paragraph 1.

Section 3

SCHEDULE 3 Amendment of the Code

Amendment of the Code

1 (1) 25The Secretary of State may by order make such amendments to the Code as
the Secretary of State considers appropriate.

(2) Before making an order under sub-paragraph (1), the Secretary of State must
consult—

(a) such local authorities,

(b) 30such representatives of local government, and

(c) such other persons (if any),

as the Secretary of State considers appropriate.

(3) Any orders for amendments made by the Secretary of State are subject to the
procedures set out in paragraphs 2 to 4 of this Schedule.

35Limits on power of Secretary of State to amend the Code

2 (1) The Secretary of State may not make provision under paragraph 1(1) unless
the Secretary of State considers that the conditions in sub-paragraph (2) are
satisfied in relation to that provision.

(2) Those conditions are that—

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(a) the provision does not reduce the powers or discretion of local
authorities unless the Secretary of State objectively considers that the
effect of the provision is proportionate to the policy objective
intended to be secured by the provision;

(b) 5the provision does not remove any necessary protection for local
government or breach the obligations arising under the European
Charter of Local Self-Government; and

(c) an order under paragraph 1(1) may not make provision to abolish or
vary any tax.

10Procedure for orders under paragraph 1

3 (1) If, as a result of any consultation required by paragraph 1(2), it appears to
the Secretary of State that it is appropriate to change all or any part of the
Secretary of State‘s proposals, the Secretary of State must undertake such
further consultation with respect to the changes as the Secretary of State
15considers appropriate.

(2) If, after the conclusion of the consultation required by paragraph 1(2), the
Secretary of State considers it appropriate to proceed with the making of an
order under paragraph 1(1), the Secretary of State must lay before
Parliament—

(a) 20a draft of the order, and

(b) an explanatory document explaining the proposals and giving
details of—

(i) the Secretary of State‘s reasons for considering that the
conditions in paragraph 2(2) are satisfied in relation to the
25proposals,

(ii) any consultation undertaken under paragraph 1(2),

(iii) any representations received as a result of the consultation,
and

(iv) any changes made as a result of those representations.

30Super-affirmative resolution procedure

4 (1) A super-affirmative resolution procedure shall apply in relation to the
making of an order pursuant to a draft order, as follows.

(2) The Minister must have regard to—

(a) any representations,

(b) 35any resolution of either House of Parliament, and

(c) any recommendations of a committee of either House of Parliament
charged with reporting on the draft order,

made during the 60-day period with regard to the draft order.

(3) If, after the expiry of the 60-day period, the Minister wishes to make an order
40in the terms of the draft, he must lay before Parliament a statement—

(a) stating whether any representations were made under sub-
paragraph (2)(a), and

(b) if any representations were so made, giving details of them.

(4) The Minister may, after the laying of such a statement, make an order in the
45terms of the draft if it is approved by a resolution of each House of
Parliament.