Memorandum by Association of North East
Councils (BOP 20)
INTRODUCTION
1. The Association of North East Councils
is the political voice for local government in the North East.
It represents all 25 local authorities in the region, throughout
Northumberland, Tyne and Wear, Durham and the Tees Valley on issues
of concern to them and the communities they serve. It is a cross-party
organisation, with all of its members democratically elected and
accountable politicians.
2. The Association welcomes the opportunity
to give evidence to this inquiry, which touches upon some of the
most important issues facing local government today.
FURTHER DEVOLUTION
Does local government need greater autonomy from
local government? If so, in what ways?
3. A good starting point for answering this
question is the Local Government White Paper of October 2006 "Strong
and Prosperous Communities", which set out a vision of
"revitalised local authorities, working with their partners,
to reshape public services around the citizens and communities
that use them". A key element of this is the role of local
government as a strategic leader and place shaper.
At the local level, the council provides strategic leadership,
bringing together local agencies and groups to address local problems
and challenges. At the neighbourhood level, the local councillor
is advocate and champion for the local community, while at the
same time working with his/her fellow council members to ensure
that priorities are identified across the council's area, resources
are equitably shared and strategic priorities—such as social
cohesion or the response to climate change—are addressed.
4. The local authorities that the Association
represents are committed to pursuing this vision in partnership
with central government. What local government needs is both sufficient
autonomy to pursue the vision without being distracted by other
policy innovations that are at odds with it, and the confidence
that central government will be consistent in its approach.
5. Much of what Government has done in recent
years has been valuable in supporting the White Paper vision.
Furthermore the importance of the role of representative democracy
expressed in the recent Ministry of Justice paper "A National
Framework for Citizen Engagement" should be underpinning
the Government's approach to local government (this point is developed
further in paragraphs 26-27 below). Some examples of where
the Government has supported its White Paper vision include the
following:
— the Local Government and Public Involvement
in Health Act 2007 recognises local government leadership
by requiring partners to cooperate in achieving Local Area Agreement
(LAA) targets;
— LAAs are an important vehicle for working
with partners to reshape services around communities' and individuals'
needs;
— Multi-Area Agreements extend this principle
across geographical and institutional boundaries; and
— the Sub-National Review gives local government
a key role.
6. However, there are also examples of Government
initiatives and proposals that point in the opposite direction
and/or potentially undermine the role of local councils and councillors.
There could be said to be three strands to this:
— "bypassing the Town Hall"—an
apparent belief that power should be removed from elected representatives
and vested in groups and individuals in the community. As the
recent Communities in Control White Paper says: "This
is what empowerment is all about—passing more and more political
power to more and more people through every practical means";
— "micromanagement"—the
same White Paper puts forward a wide range of initiatives (some
of them no doubt highly worthwhile) which local authorities are
expected to take on board; these are to be followed up by six
detailed consultation papers. The impression is that local government
cannot be trusted to think for itself. A more distant but still
significant example of the same approach can be found in the Licensing
Act 2003 which specified, in primary legislation, the composition
of a local authority Licensing Committee. Details of internal
organisation really should be left to individual local authorities;
and
— creating competing electoral mandates.
This is most clearly seen in the Policing Green Paper which proposes
the direct election of Crime and Policing Representatives who
will form a majority on police authorities and chair Crime and
Disorder Reduction Partnerships. This will detract from the accountability
of local councillors, create confusion in the mind of the public
as to who is responsible for community safety issues in their
neighbourhood and risk undermining successful partnerships between
councils and the police. It could also let in single-issue or
extremist candidates.
7. The exact degree of autonomy to be afforded
to local government will always be a matter of debate but we would
like to see local government having at least sufficient autonomy,
not to mention a period of stability, to enable it to pursue the
vision set out in the Strong and Prosperous Communities
White Paper.
Do local government's role and influence need
to be strengthened in relation to other public services, such
as policing and health?
8. Local authorities have had a great deal
of success in recent years in building up strong partnerships
with other public bodies, not least in the fields of police and
health. However, we believe that there are still opportunities
for ensuring greater accountability of public bodies through a
deeper engagement of the local authority, with its democratic
mandate. Most if not all councillors have had the experience of
being approached by constituents to resolve issues which formally
relate to health or policing, over which the authority has, of
course, no formal powers. The public see their local council,
whom they elect, as the proper body to deal with such issues.
We could go much further towards making this a reality.
9. Real accountability could both:
— improve outcomes by ensuring that
services are more attuned to the needs of users, that users have
real opportunities to influence service provision, and that there
is strong joining-up of service provision; and
— contribute to democratic renewal by
recognising and reinforcing the value of political processes and
the role of public agencies.
10. Policing and health are two prime examples
both of what has been done and what could be done. The Policing
Green Paper, for example, includes a welcome recognition of the
need for police authorities to be able to hold their police forces
to account for such things as deployment of resources and improvements
in productivity. In health, there has been a movement towards
greater accountability at PCT level through such measures as power
for council overview and scrutiny committees to review local health
services (an opportunity that has been well developed by authorities
in this region); encouragement for PCTs to appoint a councillor
to sit on their Board as a non-voting member; more joint working
on commissioning and more joint appointments and shared management
structures. This could be taken further (see below) but it is
a good start.
11. For NHS Foundation Trusts, the Health
and Social Care Act 2003 established a framework of "membership
communities" whose members can stand as, and vote for, governors
of the trust. However, the evidence suggests that this attempt
at securing democratic accountability is of relatively limited
value, since membership is generally low in relation to the potential
catchment area, and while the Directors of the Trust are obliged
to consult the governors, they are not obliged to follow their
wishes.
12. An alternative would be to explore a
commissioning model under which the local authority would hold
the budget for, and be responsible for the commissioning of, local
health and policing services. Commissioning decisions, while ultimately
the responsibility of the council, would come out of an assessment
of local needs and priorities into which local people and frontline
councillors, as well as the council's partners, would have a major
input. This would be a bold innovation but it would take us a
long way forward in securing democratic accountability. We suggest
that it should be trialled in the first instance in a few authorities.
Undoubtedly authorities in the north east would be willing to
pilot such an approach.
13. The issue also needs to be seen in the
context of the new arrangements for Comprehensive Area Assessment
(CAA). These arrangements, while focusing on the performance and
potential of localities, propose organisational assessments for
local authorities and fire and rescue services but not for
other agencies whose support and commitment to deliver outcomes
is essential. The draft guidance states that the organisational
assessment will be designed to "ensure local accountability
at an organisational level, including delivering contributions
to Local Area Agreements and wider sub-regional or regional strategies".
It goes on to say that each organisational assessment "will
summarise how well the council or fire and rescue service manages
performance, covering how well it is delivering services, outcomes
and sustainable improvements in its priorities that are important
locally". CAA does not set how organisational assessment
of other agencies would take place to ensure they are influenced
to maximise the prospects of delivering LAA and other targets.
14. Local government's position as community
leader is articulated in successive Local Government White Papers
and, to some degree, in legislation (see paragraph 5 above).
Success in the role of community leader is, however, dependent
on councils being able to adequately influence other local, sub-regional
and regional agencies to ensure delivery of the outcomes set out
in (for example) LAAs. While there is much evidence that partnership
working continues to grow and strengthen, there remains a vacuum
in terms of accountability and influence should one or more partner
agencies fail to accept their responsibilities under the LAA.
FINANCIAL AUTONOMY
To what extent do the current arrangements for
local government funding act as a barrier to local authorities
fulfilling their "place-shaping" role? In particular:
— Does local government need greater
financial freedom? If so, in what ways?
— Should local government be able to
raise a greater proportion of its expenditure locally?
— What effect does the capping of council
tax rises have on local accountability?
15. Local government is largely dependent
on central government for its financial settlement which makes
it difficult for it to have true autonomy in fulfilling its place-shaping
role. Currently, local authorities receive an average of 75% from
central government (including Dedicated Schools Grant) and 25%
from council tax. At the heart of the problem is the gearing effect,
with a 1% rise in spending requiring a 4% increase in council
tax. This distorts accountability.
16. Sir Michael Lyons' report into local
government finance made some key recommendations in relation to
future financial management arrangements for local government
which would have addressed these issues. It is disappointing that
there has been so little action on Lyons' recommendations (except
to reject the abolition of capping) and we believe that the Government
should now set a timetable for considering them.
17. We welcome the introduction of the business
rates supplement but it is disappointing that the maximum level
has been set at 2p in the pound as opposed to the 4p recommended
by Lyons. More generally we would like to see real incentives
for councils to develop locally raised sources of income—unlike
some of the current incentive schemes (LAA reward grant for example)
which are in reality centrally controlled grants.
18. Capping of council tax increases also
conflicts with the accountability of local authorities for local
spending decisions. While the overall responsibility of government
for the totality of public spending is recognised, the reality
for local government is that national spending on local government
services is set to rise by only 1.5%, 0.8% and 0.7% above inflation
over the next three years, making it difficult for local authorities
to meet the additional pressures on services that will undoubtedly
arise.
19. Measures to support local financial
autonomy and accountability should include, at minimum, a revaluation
for council tax purposes. The lack of action since 1991, given
the significant relative movements in house prices, penalises
council taxpayers in deprived urban areas outside of London and
the south east. We would also support the return of local business
rates to local control, a measure that would significantly shift
the balance of funding.
EXISTING POWERS
To what extent are local government services a
product of national or local decision-making?
20. Current service provision is necessarily
the product of a combination of central and local priorities.
The new LAA framework gives a greater sense of shared responsibility,
but negotiations are still subject to central government agreement,
and the scope for purely local priorities remains low. This situation
is compounded by the financial system which, because of the gearing
effect, significantly reduces local authorities' ability to deliver
key priorities and to allocate appropriate resources.
21. To develop this point, the new LAAs
are undoubtedly a move in the right direction in terms of devolution.
In the LAA negotiation process leading to sign off in June 2008,
there was a much more open and mature dialogue between councils
and their partners at the local level, and central government,
over priorities to be included. There remains, however, a continued
emphasis from some parts of central government on ensuring that
"their" targets are included. The refresh of LAAs which
will take place over the coming months could be unduly influenced
by central government departments to amend targets in response
to central pressures rather than local priorities. While we accept
that devolution and LAAs are a journey (and comparison of the
old LAAs with the new illustrates this), localities remain relatively
powerless to ensure their LAAs genuinely reflect local priorities.
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 these powers?
22. While our member authorities are all
using these powers to varying degrees, there are concerns that
the legal framework means that the powers are, in reality, by
no means as extensive as they might appear at first sight. For
example, the trading power can only be exercised through a company
(or other trading vehicle) and this inevitably presents complex
legal, financial and taxation issues to any council that might
be thinking of going down this road.
IMPROVING THE
RELATIONSHIP BETWEEN
CENTRAL AND
LOCAL GOVERNMENT
What difference has the central-local concordat
made to central-local relations?
23. The concordat provides a useful mechanism
to manage the relationship between central and local government,
but the perception remains that it has not provided the radical
shift in the balance of power that it was designed to.
Should an independent commission be established
to oversee the financial settlement for local government?
24. This concept was endorsed by the Lyons
report and we would support it. It would take away at least some
of the politicisation of the current process for arriving at the
financial settlement under which decisions can be taken by the
government of the day for political purposes rather than being
based on an objective assessment of the needs of local government.
Given the UK's constitutional settlement, what
protections should be placed in law to ensure local government's
ability to fulfil its responsibility as a balance on the powers
of central government?
25. Going back to the beginning of this
evidence, we suggest that local government legislation should
be underpinned by recognition of the role of local government
as convenor of local public services and place-shaper through
its democratic mandate. It may be opportune as well to recognise
in law the primacy of representative over participatory government
as there are signs that this is being eroded by the desire to
delegate power away from those who are democratically elected
and therefore accountable to those who elected them, and by proposals
to create alternative democratic mandates—notably for policing
but for other functions as well, including National Park Authorities.
26. In this context we consider that attention
should be paid to the recent Ministry of Justice paper "A
National Framework for Greater Citizen Engagement", which
sets out a coherent framework for considering these issues. It
starts by asserting the primacy of representative democracy, which
enables people to exercise power over politicians through the
vote; allows for a fair distribution of power among all citizens
(one person, one vote); and gives government (both central and
local) the ability to tackle complex issues and make complex decisions
about competing priorities.
27. As the MoJ paper recognises, representative
democracy faces some challenges, not least the decline in formal
engagement, and needs to be reinvigorated by designing effective
public engagement which taps into people's willingness to engage
at the local level. But this kind of engagement is not a panacea:
it can over-simplify complex decisions and be vulnerable to manipulation.
Engagement mechanisms should therefore complement and not challenge
the supremacy of representative democracy. They should also be
accessible, transparent and embedded in the policy-making process
(not one-off "gimmicks").
28. We consider that legislators should
firmly adhere to the fundamental principle of the primacy of representative
democracy and ensure that any legislative proposals for devolving
power to (non-elected) local people should be subjected to the
kind of analysis outlined above.
What role should Parliament have in the protection
of local government's position within the UK's constitutional
settlement?
29. We consider that the CLG Select Committee
itself, with its role in the scrutiny of draft legislation, is
very well placed to secure the protection of local government's
constitutional position and the primacy of representative democracy.
September 2008
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