Memorandum by Lancashire County Council
(BOP 05)
SUMMARY
— Local government needs greater financial
autonomy from central government but otherwise has sufficient
power fully to perform its duties and obligations. — Local
authorities are well-positioned to improve scrutiny and oversight
of other public bodies, both regionally and nationally. —
There is scope for a national statutory or other formal settlement
that validates the current healthy state of local government in
England.
— As a vastly improved sector, local government
wants to collaborate with central government on policy research
and development and is ready to engage with Westminster and Whitehall
at a much deeper level than in previous years.
FURTHER DEVOLUTION
1. Does local government need greater autonomy
from central government? If so, in what ways?
1.1 Governments—no matter what their
colour—have tended to "talk up" the empowerment
of local authorities. Implementation of concrete steps toward
devolution has, however, fallen short of these rhetorical claims.
Lancashire County Council is somewhat sceptical of high-profile
promises of devolution due to central government's historic aversion
to decentralisation. Continued confusion over the precise nature
and strength of devolved responsibilities following the Sub-National
Review is but the latest example of an issue that remains frustratingly
unresolved.
1.2 Despite our serious misgiving about
local government finance mechanisms and the government's future
vision for regional structures, Lancashire County Council acknowledges
some aspects of the huge transition made possible by the modernisation
agenda. The new powers and duties granted to local authorities
in the 21st century have proved sufficient for the County Council.
Lancashire now delivers more and better services than ever before
and our capacity to serve is reflected in our retention of 4-star
status. Whitehall removed the "top-down" Best Value
Performance Indicators and gave us the freedom to decide our own
priorities with our local partners through the new Local Area
Agreement: Lancashire took full advantage of such latitude during
the recent revision of our sustainable community strategy. Liberating
area-based grants from ring-fenced restrictions is another step
toward true empowerment for local government.
1.3 However, local government needs greater
financial autonomy. Existing limits on local government tend to
relate to funding constraints and the quality of communication
with central institutions.
2. Do local government's role and influence
need to be strengthened in relation to other public services,
such as policing and health?
2.1 Local accountability of the public sector
is a huge contributor to the health of our democratic system.
Lancashire County Council has developed a number of innovative
and effective ways to engage with the community and other public
service providers. Through our local strategic partnerships, joint
district and County council decision-making committees like our
12 Lancashire Local committees and our pioneering efforts
to web cast council meetings, we have aimed to bring policy making
closer to the public.
2.2 In addition, our Overview and Scrutiny
committees hear testimony from other public service providers,
including NHS primary care trusts. Our status as a democratically-elected
body with a duty to ensure the well-being of County residents
means we are ideally placed to enhance the scrutiny and accountability
of other public sector bodies. At present, there are no clear
fiscal mechanisms that keep other public sector organisations
accountable to the people they are supposed to serve. Many of
these groups are legally obliged to engage in partnership work
with local authorities but, ultimately, there are no sanctions
or incentives to ensure effective co-operation with us. Central
government may wish to investigate the scope for formal and balanced
local authority oversight of police as well as health authorities.
Assessing the appropriateness of granting Select Committee-type
power (or other statutory powers) to local government Overview
and Scrutiny panels may be a potential starting point in this
regard. Or government may consider extension of local government
scrutiny of fire and probation services, utility companies, or
the higher education sector.
2.3 Recent suggestions that policing or
health should adopt separate democratic mechanisms to ensure public
accountability are misguided. In addition to creating wasteful
taxpayer expense, directly-elected health or police boards could
confuse voters, especially in three-tier areas like Lancashire.
Local government structures currently in place are more than capable
of coping with an additional duty to monitor policing and health
policy delivery in their areas.
2.4 The recent Policing Green Paper ("From
the Neighbourhood to the National: Policing Our Communities Together")
states the government's intention to introduce elected Crime and
Policing Representatives (CPRs) and approve their automatic chairmanship
of Crime and Disorder Reduction Partnerships (CDRPs). Crucially,
this new development is not a point for consultation with
local authorities. Hitherto, local authorities have been promoted
by central government as the "first among equals" in
Local Strategic Partnerships and local government is understand
to have to a community leadership role in determining local priorities
and working with all partners to achieve them. So, the green paper
represents a contradictory message from central government and
goes against the spirit of partnership previously required by
them. So, the green paper represents a contradictory message from
central government and goes against the spirit of partnership
previously required by them.
2.5 CPRs will lead to increased pressure
on police solely to address traditional crime priorities rather
than empowering their community safety partners to tackle the
underlying causes of crime. Much of local government reform has
focused on giving us the freedom and flexibility to address cross-cutting
issues (like crime) through partnership working. The introduction
of CPRs will undermine this positive development and gives the
impression that central government lacks confidence in its strategic
vision. For example, the 2006 Police and Justice Act's guidance
document, Delivering Safer Communities, mandated that Crime and
Disorder Reduction Partnerships should include the elected member
from the relevant local authority with portfolio responsibility
for community safety in order to ensure a democratic mandate and
accountability. Two years later, the government appears to have
changed its mind.
FINANCIAL AUTONOMY
3. To what extent do the current arrangements
for local government funding act as a barrier to local authorities
fulfilling their "place-shaping" role?
3.1 Local authorities are unique within
the public sector because the public is aware that a specific
tax exists to fund their operations. Unlike the NHS or police,
the link between taxes and local government-provided services
is highly visible. The media and public spotlight is always on
local government and, as a result, we are much more accountable
to the public than primary care trusts or police authorities.
3.2 The Local Authority Business Growth Initiative
(LABGI) serves to illustrate many of the problems that beset the
central-local relationship. Lancashire County Council, in common
with local authorities generally, is not able to rely on LABGI
as a dependable income stream because of concerns over the scheme's
complexity; the changes to the distribution methodology; the unpredictability
of allocations; and the difficulty in identifying the cause and
effect between the timing and incidence of economic development
activity and subsequent LABGI allocations. Lancashire County Council
feels that the allocation of LABGI grant awards in the final quarter
of the financial year does not support sound budgeting and long-term
planning. This does not appear to reflect the Government's support
of long term planning for local government, most prominently illustrated
through the introduction of three-year grant settlements. Coupled
with the unpredictability of allocations, this necessarily leads
to this and many other authorities to treating the funding as
one-off and so precludes its use for the funding of ongoing projects.
We are making our views on proposed reforms to the LABGI scheme
known to Communities and Local Government and HM Treasury and
future developments will demonstrate the effectiveness of this
latest consultation exercise.
4. Does local government need greater financial
freedom? If so, in what ways?
4.1 Currently, the way in which council services
are funded makes it difficult for local authorities to have financial
autonomy. Although the Government has made substantial improvements
in recent years in removing the earmarking of its specific grants,
individual Government departments and ministers continue to act
as if the ring fencing and hypothecation were still in place.
There are still messages being sent that, if money is not spent
in line with Government priorities, it will jeopardise future
grant distribution to authorities. This tension continues even
in the recent development of Area Based Grants (ABG); the newly
created ABG pot for each authority is in theory a general grant,
but the Government's identification of the sums building up the
pot, and of specific new additions to it, continues the (unspoken)
pressure to tie spending to the previously specific grant funded
areas from which the ABG pot was created. This point also applies
to a lack of flexibility on some major schemes on the method of
funding and procurement. We have little doubt that the current
Building Schools for the Future programme—a crucial part
of the County Council's efforts to improve the life chances of
young people in Burnley and Pendle—could have been completed
far more efficiently with significantly lower cost had a different
funding and governance regime been in place.
5. Should local government be able to raise
a greater proportion of its expenditure locally?
5.1 In terms of the balance of funding to be
raised locally, the position has changed significantly by the
introduction of the new schools' grant funding (the dedicated
schools' grant) which has largely removed the funding responsibility
for schools from local authorities. The ramifications of this,
fairly hasty, decision, are still being worked through in practice
but it has produced a financial dislocation at a local level which
cannot be healthy for a vibrant place shaping role.
5.2 What it has done means that, for County Councils,
the previous proportions between national and local funding have
been reversed for the remaining expenditure, excluding schools.
In Lancashire, council taxpayers fund 60% of our net budget of
£683 millioin in the current year; 35% is provided by our
share of the non-domestic rates income; and only 5% is provided
by revenue support grant. This has not only changed the gearing
ratio applicable to marginal increments of expenditure, but also
raises significant questions as to the legitimacy of the degree
of control and influence the Government continues to exercise
over the delivery of these services.
5.3 Local Government has long campaigned
for the return of non-domestic rates to local control, although
this would now produce distributional complexities if not complemented
by a reversal of the schools' funding charges.
6. What effect does the capping of council
tax rises have on local accountability?
6.1 There is no doubt that, whilst capping
is very effective in curtailing council tax rises, it is also
damaging to local accountability. The two main effects of capping
have been, firstly, a bunching of increases each year just under
the capping ceiling and, secondly, a perception that the Government
is to blame for the increases in the first place. There is a significant
body of research that suggests that this has been very damaging
to local accountability and this has translated itself into a
general apathy with regards to the local democratic process culminating
in low turnouts in local elections.
EXISTING POWERS
7. To what extent are local government services
a product of national or local decision-making?
7.1 The advent of regional institutions
necessarily complicates any answer to this question. New freedoms
for local government have masked to some degree the emergence
of these subtle forms of centralisation, accelerated by the creation
of new quangoes. It remains to be seen whether changes to regional
governance following the Sub-National Review (SNR) serve to enhance
or hinder the central-local relationship. Lancashire County Council
has made its views on the SNR known to central government through
a series of consultations. In short, we remain concerned that
newly-empowered regional agencies will not live up to their devolutionary
promises.
7.2 It is this sense that local-central relations
can be governed by mutual scepticism which prevents truly co-operative
policy making. While huge strides have been made toward involving
local government in decision making, concerns remain about how
and where policy is implemented. Lancashire County Council councillors
and officers report widespread reservations about central government's
basic knowledge of the geographic and demographic facts of the
County. Civil servants' repeated failure to appreciate that Lancashire
is a two-tier area serving more than a million people in 12 separate
and distinct cities and boroughs gives the impression that they
are not fully aware of the issues facing Lancashire residents.
7.3 For example, CLG allocated $50 million
in cohesion funds to the Lancashire sub-region (the County Council
plus the unitary councils of Blackpool and Blackburn and Darwen)
in 2008. The money was distributed via area-based grants—meaning
that funds went directly to district councils (as the administrator
of funds). However, in two-tier areas, this meant that upper-level
councils had no influence over the use of resources, despite
a raft of obligations (eg PSA 21) in this area of policy. So,
there is a common disconnect between resources and responsibilities.
7.4 Suggestions by the Department of Children,
Schools and Families, for example, that the County should regularly
convene meetings with all of Lancashire's head teachers ignores
the logistic and numerical impracticalities involved in such an
enterprise. Similarly, Lancashire often faces criticisms over
policy outcomes—school test results or pupil absence rates,
for example—that are based on simple absolute figures
rather than a percent of the total. Such was the case when schools
ministers launched the National Challenge this summer. Given the
County Council's size (we are the 4th largest local authority
in the country), any review of outcomes that focuses solely on
"counting" statistics will automatically distort Lancashire's
achievements. The lack of contextual awareness by national
decision makers complicates policy development and implementation
much more than the balance of freedom and accountability between
central and local government.
7.5 The London-centric nature of national
policy development serves to reinforce these concerns. While unavoidable
in one context, it is nevertheless reasonable to suggest that
civil servants go beyond the south east to experience local policy
in action. We were disappointed, for example, that a promised
series of regional events around this year's Draft Legislative
Programme failed to materialize. Again, it is noted that improvements
in consultation and monitoring mean that central and local government
are, to some extent, closer than ever. However, we should take
full advantage of new mechanisms (such as the Government Office
Network) to communicate with central government more effectively
in the future. Whitehall's insistence on "one-size fits all"
policies, while a common and long-held criticism by local government,
remains an issue for us, especially when data and other evidence
on Lancashire's needs, strengths, performance and population is
readily available thanks to new and better technology.
8. Does local government make adequate use
of its existing powers, such as its well-being, charging and trading
powers? What scope is there for greater use of those powers?
8.1 With the exception of greater financial
autonomy, central government has afforded us with sufficient powers
to endeavour to do all we can for the people of Lancashire. For
our part, we have validated central government's trust in our
capacity to deliver highly-rated services. Prior to the modernisation
agenda, local government was threatened by the transition of core
services—adult social care and education—to non-elected
bodies. But the duties placed on local government over the last
decade have led to positive changes and we are now the most efficient
part of the public sector, according to the Audit Commission.
Municipal government now enjoys a renewed vogue for "localism"
and the rhetoric of empowerment. However, new structures developed
over this time—especially in partnership working—would
not have been necessary if our "place-shaping" abilities
had not been truncated by previous governments. The ebb and flow
of the local government debate over time points to a need finally
to formalise the role of councils in the national political settlement.
8.2 Taking our work on community safety as an
example, we are confident that we have the necessary powers to
make a difference. What is desired is the freedom and flexibility
to use the power or powers most appropriate to the policy issue
to be addressed. Central government may want to know why we are
not using a specific policy tool but the local context may mean
that one power has more relevance over another. We want the freedom
to use the policy instrument most appropriate at our spatial level—not
central government insistence that we use all of the possible
policy interventions developed at the centre.
8.3 For example, Lancashire's Youth Offending
Team was challenged by the Home Office and Youth Justice Board
on why Individual Support Orders (ISOs) had not been rolled out
across Lancashire. Central government should be aware that such
prescriptive interventions require a good deal of labour-intensive
planning and coordination and in some cases reallocation of resources,
not least in the arrangement of positive activities for youths
issued with ISOs. Moreover, additional burdens are placed on local
authorities, such as the requirement to monitor activities and
ensure offender compliance. Central government grants additional
powers to local authorities but almost immediately wants these
powers used regularly and without consideration of impact on other
areas of work. Another example of Central Government trying to
drive local delivery was the Home Office review of the number
of ASBOs that were issued and the challenge to some areas across
the country of why more were not being issued.
8.4 Central government monitors the police
on their use of "sanction detections" (ie crimes for
which someone is charged, summonsed, receives a caution or other
formal sanction). At the same time, the government has been largely
supportive of our efforts to implement innovative restorative
justice models as part of our community safety strategy. Resolving
criminal cases using a restorative justice model has led to successes
in reducing first-time entrants into the criminal justice system.
It is this type of innovation that the government wishes to see
in local government. However, such innovation means that individual
cases do not count as sanction detections and consequently the
local police and the community safety partnerships are potentially
not in synch. Central government wants to encourage innovation
in policy development and service delivery but they do not always
provide the appropriate performance management environment for
this to occur. The previous focus on sanction detections took
discretion away from police officers. The current policing green
paper may well have addressed this particular issue but the example
demonstrates that potential contradictions in government policy
development must be assessed before new guidance or duties emerge.
8.5 Local government needs a chance to evaluate
policies to see whether they are effective. We certainly agree
with the need to remain accountable but we often have not ascertained
the effectiveness of a specific policy before further intervention
from central government must be entertained. This point relates
to one raised above; Central government continues its attempts
to influence the choice of indicators and related funding in area-based
grants even though such funding is not supposed to be restricted
in this way.
The scope for greater use of these powers rests
with the willingness of central government to acknowledge the
improvement in our sector, trust the rigour of the performance
management framework and allow the evolution of local government
to continue.
IMPROVING THE
RELATIONSHIP BETWEEN
CENTRAL AND
LOCAL GOVERNMENT
9. What difference has the central-local
concordat made to central-local relations?
9.1 Councillors and officers both report
that the CLG-LGA concordat does not enjoy high name recognition
and has made little, if any, difference to central-local relations.
For example, the changes to public representations on police matters
mentioned above necessarily limits the influence of local government
on community safety. However, we were not part of the discussion
on this issue, even though the concordat says we should have been
consulted.
9.2 While we value many of the services provided
by the Local Government Association and work closely with them,
central government should be wary of seeing any one organisation
as a conduit to reaching the entire local government community.
Nevertheless, the goal of responsible collaboration represented
by the concordat is fully supported by councillors and officers
alike. Formal, transparent, enforceable and monitored engagement
between central and local officials will go a long way to making
the informal promise of the concordat a reality.
10. Should an independent commission be established
to oversee the financial settlement for local government?
10.1 The fact that the idea of an independent
commission should be established to distribute central government
funds to local government represents in itself a general distrust
about the fairness and lack of clarity in the current Revenue
Support Grant system. A number of representative bodies, including
the Society of County Treasurers, and leading academics have produced
fairly extensive research highlighting the many flaws in the current
grant distribution model. The main criticisms are a general lack
of openness and clarity over its operation; an inflexibility which
prevents it dealing equitably with, for example, structural change
or reorganisation; and most importantly the degree of "ministerial
judgement" which is applied before the grant distribution
is finalised. It is this last point in particular which has led
to calls for an independent commission to oversee its operation
in order to remove any suspicion of political bias. In our view,
the current four block grant distribution system is so flawed,
it should be replaced by a simpler and more objective method without
the element of ministerial judgement being a part of it. Once
that is in place, the need for an independent commission would
reduce significantly.
THE CONSTITUTIONAL
POSITION
11. Given the UK's constitutional settlement,
what protections should be placed in law to ensure local government's
ability to fulfill its responsibility as a balance on the powers
of central government?
11.1 The local government community of course
recognises the sovereignty of Parliament in the UK's constitutional
settlement. Along with this acceptance of our role comes a commitment
to ensure that democratic rights are assured in regional and local
policy. We remain concerned about the "democratic deficit"
created by the rise of unaccountable regional "buffers"
such as the Northwest Development Agency. Local government is
made up of truly democratic institutions that should serve as
a check and balance on growing central power in the regions. Greater
local government scrutiny of regional agencies, properly resourced
and balanced, would formally recognise our democratic remit and
improve the accountability of public bodies.
12. What role should Parliament have in the
protection of local government's position within the UK's constitutional
settlement?
12.1 The pace of change in local government policy
over the last 10 years has been swift and constant. Local
government is the most scrutinised and efficient part of the public
sector. It could be that practitioners do not as yet fully appreciate
the changes undergone by the sector. Certainly, for our part,
we wish to concentrate on using the powers we have to their fullest
extent rather than lobbying for new non-financial powers. At the
same time, we would welcome a definitive settlement that gives
statutory validation to the current healthy state of local government
in England. At present, it appears that national policy makers
are at odds themselves about how to empower local government while
ensuring quality policy and service delivery across the country.
The uncertainty over the precise role and responsibilities for
(and scrutiny of) new regional ministers is a case in point. Similarly,
Government Office Network officials or newly-empowered regional
agencies may be at risk of becoming just another buffer between
local government and Whitehall and often act as advisors on implementation
rather than agents of true empowerment. Multi-Area Agreements
or the new Corporate Area Assessment both hold the promise of
effective devolution but these hopes still rest on government's
willingness to listen to local authorities. Lancashire
welcomed the opportunity to work with government throughout the
development of the new Local Area Agreement and this process—a
broad-based central government framework informed by local acumen
and priority-setting—offers a blueprint for the future of
central-local relations. Whitehall cannot continue to promulgate
overly-prescriptive regulations while at the same time call on
local government to display more flexibility.
12.2 The central-local relationship will always
benefit from open and meaningful dialogue. We feel that statutory
clarification of the relationship would improve policy development
and service delivery and fits with the spirit of constitutional
reform detailed in the Governance of Britain Green Paper
and the recent empowerment White Paper. Formal recognition of
our place in the constitutional firmament and enshrinement of
our consultation and scrutiny rights would put central-local relations
on a footing that reflects improvements in the sector and updates
our constitution in time to face the policy challenges of an ever-changing
Great Britain.
29 September 2008
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