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Memorandum from The City of London (BOP 56)memorandum fromm

 

This letter responds to the recent invitation to submit written evidence to the above inquiry. As the Committee may be aware, the atypical nature of the administration of the City of London necessarily means that direct comparison with practices in the London boroughs, or local government more generally, is limited. By way of example, spending on education and social services usually represents the largest component of a London Borough's budget but in the City of London this element represents less than 8% of the City's "local authority" spending. In contrast, the largest proportion of government grant to the Common Council (which exercises the functions of a local authority and police authority in the City) is for the police, a function which is not exercised by the boroughs or, for that matter, local authorities outside the capital.

 

The City of London serves some 8,000 residents and a daytime working population of around 350,000. Apart from its responsibilities within the Square Mile, the City Corporation also undertakes many activities which are not geographically confined and in that sense, the City Corporation is the 'head office' of a broader operation. In addition to national and international support for the financial services and related business services sector, there is a substantial research programme on issues of that sector (wherever in the UK it is based), a City Brussels Office dealing specifically with the EU and offices in China and India working to strengthen trading and investment links in both directions between the countries and the UK. The City Corporation has close ties with central Government departments especially the Treasury, the Foreign & Commonwealth Office and UK Trade & Investment.

 

The City is a corporation by prescription. The executive arm of the City which undertakes local authority functions conferred by Parliament is the Court of Common Council. The Committees of the Common Council deal with particular subject or policy areas, whether they derive from local authority or other powers vested in the City.

The members of the Common Council's Committees are not elected on a local government franchise under the Representation of the People Acts, but by a franchise set down by a combination of private parliamentary acts and the City's own legislative instruments, enacted by a procedure somewhat like Parliament's. Most of the members of the Common Council are elected on a business franchise which in the case of incorporated bodies (the biggest component of the business element) gives an entitlement to appoint representatives as business voters based on the number of people employed. Such an arrangement does not, of course, exist at all in respect of statutory local authorities. In consequence the interests which most Committee members represent, and thus their accountability, is not (as in statutory local authorities) to residents, but to business.

 

'Local' services in the City of London include those for the small residential population but most concern the running of the City as centre of international business. The form of "localism" in the City is also distinct with 100 'Commoners' and 25 Aldermen. The latter are unlike members of local authorities who used to bear the same name as they are directly elected. They form a separate 'Upper House' and executive of the City Corporation known as the Court of Aldermen. The City has 25 wards in an area which in a local authority might comprise a single ward. Individual members are therefore 'local' to a wholly different order of magnitude as against local authority councillors. Individual complainants are able to approach the members representing their ward but also have a further mechanism (not available in local authorities) by which the Common Council can be petitioned directly through the City's wardmotes. When this occurs (usually to create local publicity) the Common Council refers the matter to a Committee for a report.

 

As an executive of the City, the Common Council comprises the Commoners and the members of the Court of Aldermen sitting together and this arrangement is replicated in the Committees. They are all therefore 'members' of the Common Council. The functions of the Common Councilmen and women include general representational activities in their wards. Business voters predominate in 21 of the City's 25 wards. The functions of members of the Court of Aldermen are also representational but are directed increasingly to international promotion of the financial services sector as they advance to the Mayoralty.

 

The City Corporation has an ability to set a Business Rate at a different level from the National Non-Domestic Rate (NNDR). In 2003/04 for the first time the City Corporation exercised its power to vary the NNDR. Following extensive consultation with the business community, a premium was levied in that year for police and security purposes. This money already funds an additional 48 uniformed officers, an expanded Economic Crime Department to investigate money laundering, and the significant expansion of the City Security Zone. It should be noted that, unlike the Metropolitan Police, the City of London receives no extra government grant for its capital city policing responsibilities. The City's existing powers have worked well in the relatively short period they have been used and retain business support. The City has a direct form of engagement with the participating businesses because the members of the Common Council are directly elected and the franchise established by the City of London (Ward Elections) Act 2002 means that all businesses have an opportunity to participate in that process. The Common Council's composition provides the appropriate mechanism to ensure the necessary engagement with business on both the levying of the rate and the use of the resources generated by the rate. The consequence is that the Corporation is highly responsive to the needs of the financial and business communities, its constituents.

 

During the Lyons Review, the City Corporation submitted formal written evidence to the inquiry emphasising the City's unique position in terms of local government finance. The City of London Corporation supported the principle outlined in Sir Michael's final report, to allow local authorities to levy a supplementary business rate rather as the City already does. Sir Michael suggested the "London-wide supplementary rate would be set through agreement between the GLA and the boroughs, and in consultation with the business community, with a joint plan for the use of the revenues collected from that rate". Last year, alongside the Pre Budget Report 2007, it was instead announced that the City and the London boroughs would not benefit directly from the potential new income stream. It was instead decided that in London the GLA rather than the City and boroughs would be given the power to raise such a rate on a pan London basis.

 

The Committee's Call for Evidence suggests the Committee is interested in the extent to which local government services are a product of national or local decision making. It is widely recognised that the majority of the mechanisms for the delivery of local services by local authorities are the result of national decision making. Such mechanisms are not always appropriate for implementation in the City, especially if, when designing these mechanisms, there is little or no scope for local flexibility.

 

The distinctiveness of the City Corporation's internal management and representational basis makes apparent the difficulty of attempting successfully to shoehorn the City into general internal management provisions applying to statutory local authorities. For this reason, the City has been afforded provision in a range of statutes which allow for the City to achieve the same policy objectives as in other authorities but in a way most suitable to the City's internal structures.

 

The relationship between the local and police authority functions in the City is worth noting. In addition to providing local government services for the Square Mile, the Court of Common Council, through its Police Committee, also acts as the Police Authority for the City of London Police. The relationship between the police authority and provider of local services could not, therefore, be any closer. The City community values the existing arrangements for policing in the City which offer specialist crime operations, and also day to day territorial policing. Views expressed by business support the view that the City community believes the current model works best for the City as a whole and offers effective arrangements for democratic accountability. The high regard in which the City Police are held by business is illustrated in the numerous letters of support that accompanied the City of London Police's business case submitted to the Home Office in December 2005 as part of the (then ) police reform proposals.

 

October 2008