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Memorandum from
1. Executive Summary
· The well-being powers have increased the powers of local government extensively and we believe that local government does have enough powers.
· We have identified that these powers have not been used to the fullest extent by local government because of the risk-averse culture created by inspections, the constant measuring and monitoring of performance, and financial constraints imposed from central government.
· With regard to whether we need greater devolution we believe that it is clear from the interviews and case study evidence that it is not a matter of needing greater power but, rather, greater simplification of the system and structure.
· It is clear that unitary government makes it easier for local authorities to achieve local priorities and become place shapers. We have shown that the barriers to place-shaping and community leadership for our council have, by an large, been caused by the two-tier system in which we operate.
· There is, however, a perceived loss of power by the electorate as demonstrated by voter turnout which has dropped significantly over the last 25 to 30 years.
· This loss of power is because of the confusion over who delivers services locally and the lack of control we have as a district council in a two-tier area over the services that allow us to achieve our ambitions and priorities for local people.
· With central government determining
policy for local authority services, as well as the rise in quangos delivering
services, there is a democratic deficit and an overly complicated system of
public service delivery in
· With regard to finance we agree with the conclusions drawn by Sir Michael Lyons that there needs to be greater flexibility, better incentives and clearer accountability.
· We believe that the system of capping is a very blunt instrument to ensure local government acts responsibly and, where councils have demonstrated responsibility and been rated as excellent, they should be given greater financial freedom with regard to the setting of council tax.
· We believe that if we had the power to set, collect and use the
business rates for
· Furthermore, the current distribution of revenue support grant would be fairer, and not subject to political whim, if administered by an independent body.
· We have also identified that bidding for funding has detracted time and resources away from delivering services and, if this funding is needed, it should be included in the revenue support grant.
2. Introduction
2.1 The Corporate Services Overview and Scrutiny Committee set-up a cross-party working group to consider the balance of power between Central and Local Government following a call for evidence from a Parliamentary Select Committee. The Select Committee requested evidence via a press release in mid-July and an article in the First Local Government magazine in late July. The terms of reference for the Parliamentary Select Committee are broad and the review group therefore decided to address the four questions posed in the First magazine. These are outlined below:
The aim of the review was to answer the following questions raised by the Select Committee in First magazine:
1. Does Local government need more powers? Does it make sufficient use of those it has?
2. Are there any central government-imposed barriers preventing Councils from fulfilling their community Leadership Role
3. Do you think local government should have greater financial freedom?
4. Would greater devolution to local government lead to a 'postcode lottery' in public service standards? If so, does it matter?
2.2 The committee gathered evidence for the review through a series of interviews with officers, councillors and former councillors (see appendices A-E). They also researched case studies to support the information gathered at interview (see case studies 1-7).
3. Findings
3.1 Does Local Government need more powers? Does it make sufficient use of those that it has?
3.1.2 We believe that there are several issues that need to be addressed in responding to this question including the structure of local government, well-being powers, powers relating to raising our own income (see response to question 3.3) and the lack of a central constitution.
3.1.3 Structure We have identified that local government probably does have enough
power. This was identified during interviews with the Chief Executive, Leader
and one of our Directors, all of whom have significant local government
experience. The question is not whether
there is enough power but how can councils be allowed to use the powers they
have. To this end there should be a fundamental review of the structure of
local government. As a district in a two-tier area many of the constraints the
council faces are because we are a district. The council recognizes the need
for a strategic role in local government which in two-tier areas is taken by
the county. However this role has evolved over time and the county are becoming
more and more involved in service delivery, moving beyond their strategic role.
It is very frustrating for an ambitious district council to be dependent on
another tier of government to achieve its local priorities. For example, with
regard to congestion and air quality, strategic transport solutions to these
issues lie with the county not the district. We have identified that the
operation of local government in
3.1.4 Well-being Powers The well-being powers have increased our powers significantly
allowing councils to do almost anything in respect of improving the well-being
of their communities. We have, however, identified that councils are naturally
risk-averse because of the high level of monitoring, inspection and central
targets and performance management. If, for example, a council decides not to
pursue a particular national indicator in favour of pursuing a different local
target that council will be subject to heavy inspection and public ratings of
its performance. We believe that
3.1.5 Central Constitution We recognise that local government actions are informed by statute and that every power and duty bestowed upon us is through legislation. The numerous acts and guidance plus the number of different government departments involved has made this very complicated and we believe it needs to be simplified.
3.2 Are there any central government-imposed barriers preventing Councils from fulfilling their community Leadership Role?
3.2.1 Financial Restrictions Several of our interviewees identified that the organisation of local government funding has meant that we have had to jump through too many hoops to get it. There are too many government funds for local authorities to bid for which we believe should form part of the revenue support grant. The method of bidding for funding has meant that time is taken away from delivering services and diverted into participating in "beauty parade" bids for funding. This approach also means that funding does not always go to those who most need it but to those who can play the game with central government. The latest Comprehensive Spending Review has, however, created greater clarity as we now know our funding position over a three year period. When looking for case studies to evidence financial control, case study 6 considers the changes made to the fees for local land charges. It would appear that whilst the government allows councils to set their own fees this is actually on a restrictive basis and, in this example, has created a loss in council income which would have benefited the community.
3.2.2 Influence over key services outside of Local Government Local councils are very well placed to identify local need and represent local communities. As a local authority we have acted on behalf of residents to try and prevent changes to local public services that will adversely affect the local community (see case study 5). We have, however, found that we are not listened to and in this particular case this was reinforced by the secretary of state as they ruled in favour of the Primary Care Trusts decision. In case study 5 it is apparent that central government does act on local matters, thereby imposing barriers on the local council to act, as our objections have made no difference to the decision.
3.2.3 Two-tier arrangements As stated in the response to 3.1, the organisation of local
government is a barrier to the Council achieving its community leadership role.
As a district we are often not in control of the whole picture when it comes to
service delivery to local people. We can make ambitious priorities for
3.2.3 Targets and Performance Management All of our interviewees have identified that local government is heavily monitored and measured. This has led to performance management becoming an industry in its own right. It is appropriate to expect services to meet minimum standards but the present system is over-complicated and burdensome. Both Comprehensive Performance Assessments and the new Comprehensive Area Assessments require considerable effort and time from those being inspected. It would be interesting to measure the extent which the audit commission has grown over the last few years as inspection requirements on local government have risen. Too much money is being spent evidencing and monitoring performance rather than on delivering services.
3.2.4 Lack of clarity There is a lack of clarity as to who does what in terms of service provision. The emergence of quangos, non-democratically accountable organisations delivering services and affecting change, is a barrier to local councils (see case study 3). We have identified during interviews that, whilst it is clear who is responsible for service provision as this is set out in statute, the practicality of delivering services and setting policies has meant that this is consistently murky and blurred. This is not helped when Central Government announce policies on local service provision with inadequate consultation and funding (see case study 1 and 4 on concessionary fares and free swimming)
3.3 Do you think local government should have greater financial freedom?
3.3.1 Power Slide and Voter Turnout We note the slide in power over the last forty years from local government to central government, which is particularly apparent when considering how local government is financed. We agree with the view of Iain Roxburgh, Chair of the New Local Government Network who argues that: "Financial devolution is the key to real devolution that goes well beyond delegation. It is also the key to effective place shaping and to attracting a new generation of people to see local political action and membership of their local authority as the way to improve their locality and shape its future."[1] If you consider the figures for Maidstone, in 1986 voter turnout for a district council election was 46% by 1998 this had dropped to 27% and has only risen in 2006 and 2007 to approx 37% with the advent of postal voting. There has been a clear drop in voter turnout over the past 25 to 30 years. Greater financial freedom to set council tax could improve voter turnout dramatically.
3.3.2 Sir Michael Lyons spent three years reviewing local government finance and we are not in a position to carry out such an extensive review in the 10 weeks given to submit evidence to the enquiry. The Council does agree with the findings of Sir Michael Lyons in the Local Government Spending Review 2007 and these are summarised below:
· The high degree of central control, both through formal targets and monitoring regimes, and through softer and less direct controls the lack of flexibility that English local authorities have to raise additional revenues and use existing resources to support local priorities;
· the role of needs, expectations, national funding, efficiency and local choice in determining pressures on council tax;
· the confused accountability in the finance system which contributes to a poor understanding of how the system works and unrealistic expectations of how much services cost. The complex governance arrangements within English local government and how this affects work across authority boundaries to drive economic prosperity;
· the lack of trust in local government caused by poor accountability, concern about council tax and the impact of the adversarial relationship between central and local government; and
· the incentives in the system that distributes national resources, in particular how they can help to develop a more constructive relationship between central and local government and also to support local authorities in pursuing improvements in economic prosperity and housing supply in their area.[2]
3.3.3 Government Control The Council is concerned that two of its main sources of funding (government grant and council tax) are heavily controlled by central government. The third source of additional funding through applying for lottery grants and bidding for funding from non-governmental departments is in essence a "beauty parade" form of funding. We do, however, recognise that we have the power to raise income through fees and that these are not constrained by government unless it is in relation to land charges (see case study 6) or parking where we are not allowed to profit from provision of the service. We welcome the greater freedom and flexibility that has been given in growth point status funding but we were surprised that, to gain the funding, we had to demonstrate what we would be using it for. Now we have it we are not constrained at all centrally in how the funding is spent (see case study 2).
3.3.4 Government GrantWe recognise the need for government grant to ensure that there is equity of service provision. An independent body should be set up to allocate the revenue support grant to local government using a clear framework. An independent body to allocate funding would mean that funding would not be subject to political manipulation or be perceived to be manipulated.
3.3.5 Council TaxWe considered that the present system and agreed that it met in most respects Adam Smith's economic principles for taxation (The Wealth of Nations, 1776) Equality, Certainty, Convenience of payment, Economy in Collection.
It can be argued that council tax is convenient to pay and economical to collect and is also fairly stable as it is based on properties. It is not necessarily equitable in all senses of the word. There could be an argument for levying an income tax, however we believe that council tax is a 'good tax'.
3.3.6 Capping With regard to capping it was highlighted that capping by central government meant that the Council could not set the council tax it required to meet local service need. The Council does acknowledge the past problems which led to capping whereby some local authorities did not exercise financial control or responsibility. We agree that there does need to be some form of financial control but a more flexible system needs to be developed rather than punishing all councils with a 5% cap, particularly when councils have demonstrated strong performance.
3.3.7 Non-Domestic Business Rates Related to the lack of ability councils have to raise their own
income is the issue of the non-domestic business rates which is a national tax
scheme. Maidstone Council identified in 2001/2 that the amount of tax collected
was £39 million and the amount we received back was £5 million. We believe that
if we had the power to set, collect and use the business rates for
3.3.8 Improvements There has, however, been greater financial freedom in the last few years which the Council recognises and takes as positive action from the government. A clear example of this is new growth point status funding (see case study 2), although it is worth noting that we would have been expected to build extra houses regardless of whether we had been given funding. A further example is the ability for prudential borrowing which will help councils to achieve key priorities for local communities provided that they have the income to pay it back.
3.4 Would greater devolution to local government lead to a 'postcode lottery' in public service standards? If so, does it matter?
3.4.1 The term "postcode lottery" is very negative. If you treat every community and area as different with different needs, you should not therefore expect a uniformity of service delivery. As stated earlier, rather than equalising service delivery according to a national agenda, councils should be set minimum standards for service delivery i.e. literacy levels for education. We should be subject to local targets and held accountable through the ballot box rather than continually performing for central government to tick boxes that they believe are important. We have found locally that structures such as Local Strategic Partnerships (see case study 7) and the Local Area Agreement are not understood by our communities and, in two-tier areas, are hamstrung by local government structure and central government's persistence in issuing legislation appropriate for unitary areas that does not translate easily into two-tier areas.
4. Conclusion
4.1 We have identified that local government does have enough power bestowed upon it to carry out its role as a community leader and place-shaper. However the ability to use this power is limited by financial constraints and the risk averse culture that has pervaded local government. Financial constraints include the time and resources used to bid for funding and grants. This culture has been created by constant monitoring and a tick-box approach to rating council performance from central government. We believe that both structure and finance can and should be simplified, we do not however mean simplification through further tinkering from yet another new secretary of state but a wide-scale review of how local government operates and its financial arrangements.
September 2008 [1] Next Steps for Local Democracy, Leadership, accountability and partnership, July 2008, p.8 [2] Lyons Inquiry into Local Government - Final Report, 2007 p.77
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