Memorandum by Jeremy Smith (BOP 31)
INTRODUCTION
1. I would like to thank the Committee for
this opportunity to provide a brief written evidence in relation
to your Inquiry into the balance of power between central and
local government. I believe it is both timely and extremely important
to look at this subject, which has frankly been neglected for
too long. I am submitting this evidence in a personal capacity,
but my views are, I believe, fully in line with those of my organisation
(see next paragraph).
2. Since May 2002, I have been the Secretary-General
of the Council of European Municipalities and Regions (CEMR),
which today brings together over 50 national associations
of local and regional government in 37 countries (this includes
the LGA and CoSLA in the UK). I have worked in local government
for 25 years, and from 1990 to the end of 1995 I
was Chief Executive of the London Borough of Camden. I then became
the Director of the Local Government International Bureau (LGIB),
which represented UK local government in the European and international
arenas.
3. In May 1997, I was present in Strasbourg
when the representative of the UK government formally signed the
European Charter of Local Self-Government (a convention of the
Council of Europe). This was, therefore, one of the very first
acts of the incoming new Labour government. The Charter was ratified,
with commendable speed, in 1998. It has now been ratified by all
member states of the Council of Europe apart from three micro-states,
and can be said to lay down a common set of principles for local
democracy and local self-government for the whole of Europe—not
just the EU.
4. The Charter is drawn up in fairly general
terms, as is necessary for such an international instrument, but
its principles are generally clear. I attach as an Annex a few
extracts from the Charter, which I comment on below in the UK
context.
5. The main purpose of this submission is
to look at each of the questions raised by your Committee from
this comparative perspective; in brief, I contend that though
the UK system of local government is far from the "weakest"
in Europe, it has developed—especially in recent years—in
ways that single it out from all other countries of similar GDP
per capita, and in a system which (in particular in England) has
more overall central government top-down control than elsewhere.
I believe this over-centralised approach has had negative consequences
for the overall functioning of our political system.
HOW THE
UK'S SYSTEM
OF LOCAL
GOVERNMENT DIFFERS
FROM OUR
NEIGHBOURS
6. The UK local government system differs
from all or most of our European partners in four general respects.
We share some similarities with some countries on some of these
points, but overall, they mark the UK out as a special case.
(a) the average size; the UK has far a
far higher population per local authority than anywhere else,
and generally we have been tending the increase the size. Every
country has to look at the balance between identity, democracy
and efficiency, but the UK "solution" stands alone.
In Denmark, for example, which has strong local government, the
number of local authorities has been cut recently by over half
to 98—but compare Scotland—which has the same population
of five million—which has only 32. Germany still has over
12,000 local authorities. (If we were to include the parish
and town councils in England, we would look much more "normal"—but
this would require us to really empower them in a way that is
currently not on the political radar screen…).
(b) central controls, inspections etc..
It is well known that the UK —and especially England—has
had a system of central control and inspection unequalled elsewhere.
Let me cite just one British source in support—a speech
from John Hutton to the CBI's Public Services Forum in May 2007—exactly
10 years after the New Labour government was elected:
"Because we believed strongly
in the case for change, we drove it hard from the centre. We `owned'
the challenge of change. Both the problem and the answer. We came
to believe that policy makers and politicians in Westminster and
Whitehall were meant to be the brain for every creative impulse
across the system. It delivered improvements and continues to
do so. But it comes with a price. A stream of initiatives, targets
and legislation in which staff often feel passive recipients;
in which they have little influence or control….
We set national targets and oversaw
their delivery through one of the most expansive audit and inspection
regimes in the world. However necessary this shift, it prioritised
accountability to the centre." It underplayed the role of
the consumer in shaping public services. Or the importance of
public preferences and choices in driving performance. As such
it meant the `ownership' for change was `grabbed' by the centre
and left there."
(c) Central controls over finances. Of
course, the issue of finance is often one of tension between central
and local government, in many or most countries, and the UK is
not alone in having a very centrally-controlled system—the
Netherlands is another example where most funding comes from the
national government. But again, the UK (at present) is an outlier
amongst European countries in this regard—with a relatively
low level of locally raised taxation, from undiversified sources,
and with a still generally tight system of capping. It is worth
looking at our system in the light of Article 9 of the European
Charter, set out in the Annex; I believe we are right on the edge—if
not over it—in terms of our compliance with the Charter.
(d) The constitutional status of local government.
In short, in the UK local government has no formal constitutional
status; this is different from the position in a large number
of European countries. To take the clearest example, Article 1 of
the Swedish Constitution is as follows:
"Swedish democracy is founded on the
free formation of opinion and on universal and equal suffrage.
It shall be realised through a representative and parliamentary
polity and through local self-government."
Or take Article 28(2) of the German Basic Law:
"Municipalities must be guaranteed the right
to regulate all local affairs on their own responsibility, within
the limits prescribed by the laws…. The guarantee of self-government
shall extend to the bases of financial autonomy; these bases shall
include the right of municipalities to a source of tax revenues
based upon economic ability and the right to establish the rates
at which these sources shall be taxed."
The Polish constitution contains a whole chapter
dedicated to local self-government… and so on. Of course,
in a country with no single written Constitution, the task of
giving local government a proper constitutional status has to
be tackled differently—I suggest, through an Act of Parliament
which is agreed on by all of the main political parties, which
sets out the key principles, based on the European Charter—it
could even with advantage include the whole text of the Charter.
THE INQUIRY'S
QUESTIONS
7. I turn to the specific questions posed
by your Committee's Inquiry, which I have addressed mainly from
the "constitutional" or comparative perspective.
FURTHER DEVOLUTION
8. I firmly believe that local government
needs greater autonomy from central government. There are two
dimensions to this. First, are the existing "competences"
of local government sufficient and the right ones? Second, within
existing competences, are the controls excessive, reducing the
legitimate area of discretion beyond what is necessary or desirable?
9. On the first point, I would point out
that in many countries, responsibilities which in the UK are carried
out by Quangos or other public or private bodies, are those of
elected local authorities (at one level or another), for example,
health services, local police services, water services etc. Since
we have larger-sized local authorities than elsewhere, there should
in principle be more functions capable of being exercised by those
authorities. This would indeed be in line with the principles
of subsidiarity and "proximity", which are in effect
set out in Article 4 of the European Charter.
10. On the other aspect—less central
control over existing competences—I would recommend that
our whole system of controls is rethought Article 8(2) of the
European Charter says:
"Any administrative supervision of the activities
of the local authorities shall normally aim only at ensuring compliance
with the law and with constitutional principles", and Article
8(3) says that administrative supervision by a controlling authority
should kept proportionate to the interests at stake—which
would permit action in the case of failing schools, for example,
but not in relation to all or most services. Local democracy is
(should be) about real choices, within the legal rights of citizens
laid down nationally.
FINANCIAL AUTONOMY
11. Many commentators have addressed the
negative impact of "capping" on local accountability,
so I will not add to them—save to say that I am convinced
it does have such a negative impact. The problem with the current
council tax system is that it is the only main local tax, so that
the resources available to local authorities are not (per Article
9 of the European Charter) buoyant or diversified.
12. The fact that the proportion of finance
raised via council tax has increased—leading of course to
higher individual bills—is on the one hand (theoretically)
a good thing, but for obvious reasons is seen by citizens as a
bad thing. The only solutions are (a) to cut national income tax
by the same amount that the revenue support grant is increased,
and by which council tax is assumed to go up, so that there is
at a given moment a clear one-off "shift" in the national/local
balance of spending, or (b) to provide alternative or replacement
sources of local tax income (which again would require an explicit
equivalent off-setting "cut" in national taxes if it
is to be seen as fair).
EXISTING POWERS
13. The point made above about the abnormal
degree of centralization in the British local government system
remains important when considering how far local government services
are a product of national or local decision-making. The European
Charter emphasizes in Article 4(2) that
"Local authorities shall, within the limits
of the law, have full discretion to exercise their initiative
with regard to any matter which is not excluded from their competence
nor assigned to any other authority."
When the UK signed the Charter, it appeared
to many (myself included) that this Article was not complied with,
but the enactment of the "well-being" power has arguably
brought us into line with it. However, the issue of "full
discretion" covers the "how" tasks are carried
out, as well as "what" tasks may be carried out.
14. It is also worth considering, when looking
at whether local authorities make "adequate use" of
existing powers such as trading, that European Union law on the
internal market, as interpreted by the European Commission, places
real—and sometimes excessive—barriers on the powers
of local authorities to trade. It may limit in particular local-local,
or public-public, co-operation in service delivery, by deeming
the assignment of a service task to another authority to require
a full tendering exercise.
IMPROVING THE
RELATIONSHIP BETWEEN
CENTRAL AND
LOCAL GOVERNMENT
15. My organisation (CEMR) has recently
published a book comparing the consultation procedures between
central and local government (in particular national associations)
in over 30 European countries. (It can be found on our website
www.ccre.org, under publications). The English model—the
Central Local Partnership—is by no means the worst, and
includes some important principles and commitments, but unlike
a good number of countries, the overall procedure has no statutory
basis. This lack of a legal basis can weaken its status, in particular
with ministries other than the "local government" Department
which deal with aspects of local government functions, but which
may feel free to ignore what is signed up to elsewhere in Whitehall.
The Concordat goes a stage further, but whilst I have not been
able to follow closely its follow-up, it suffers from the same
potential weaknesses. (In CEMR, we have very recently drawn up
a draft Charter on Good Practice in Consultation, which seeks
to cover these and other points, and emphasizes the need for a
legal basis or at least a full commitment from all main parties).
16. Having made these points, we must also
reflect that a relationship is a matter of political will, not
just of legal requirements. But equally, unless the law or constitution
reflects or symbolizes a more equal partnership, existing patterns
of political behaviour and attitude will endure. So I would argue
for a firm statutory basis for a future concordat, following wide
consultation with all main parties, and if at all possible with
their support.
THE CONSTITUTIONAL
POSITION
17. In the absence of a single formal written
constitution, it is difficult to give entrenched constitutional
protection to democratic local government. But this does not mean
that the issue should be ignored —on the contrary, the lack
of constitutional protection in the UK is a strong argument in
favour of taking more steps now to get a more equal and balanced
relationship between the central and local spheres of government.
18. It is worth re-emphasizing that in the
modern world, no one "level" of government can tackle
the big issues that face us successfully. That is why all modern
notions of good governance now recognize the need for partnerships
between all levels of government (and of course, other key actors)
based on mutual respect to tackle these issues—take climate
change, the aging society, crime, drugs, urban renewal… the
list is very long. The international community and the EU operate
at their levels, but local and (where it exists) regional government
are essential components of a system of multi-level governance.
That is also why every single EU Member State signed up, in the
Lisbon Treaty, to the need for the principle of subsidiarity to
be extended to explicitly cover the local and regional levels,
as well as the European and national levels. The age of "central
government knows best" is—or should be—long past.
19. The European Charter of Local Self-Government
provides, in Article2:
"The principle of local self-government
shall be recognised in domestic legislation, and where practicable
in the constitution"
The UK is at present in breach of this simple
requirement. The principle of local self-government is nowhere
specifically mentioned or recognized, let alone defined within
the British (or English, Welsh, Scottish, Northern Irish..) context.
This is a really important first step on the way to a more valued
and protected system of local democracy in our country.
20. Although we have no easy means in UK
constitutional practice of entrenching rights etc., we have a
long history of adopting legislation which everyone knows is "for
the long run" and has a certain constitutional value—and
not to be part of the ordinary cut and thrust of day to day party
politics. It cannot be a difficult task, in principle, to reach
agreement between all of the major political parties, with the
LGA and other representative UK associations of local government,
on a set of principles that define modern local self-government.
And if all agree, it provides a reasonably strong guarantee that,
for years to come, the rules and spirit will be respected. This
would need, moreover, to be accompanied by a special oversight
body—perhaps made up of members of both Houses of Parliament
and senior local government representatives or experts nominated
by them.
21. Of course, the existence of such a consensual
Act of Parliament would make its contents ultimately justiciable,
and this may be a matter that causes some reserve. But if ministers
and Members of Parliament take into account that in many European
countries, this has long been the case, without any evident damage
to their political or economic systems, it is hard to see what
cogent reasons exist for claiming that the UK is yet again a special
case. On the contrary, such an Act could lead to a necessary,
positive strengthening and rebalancing of our political system.
Annex
EXTRACTS FROM THE EUROPEAN CHARTER OF LOCAL
SELF-GOVERNMENT
Article 2—Constitutional and legal foundation
for local self-government
The principle of local self-government shall
be recognised in domestic legislation, and where practicable in
the constitution.
Article 3—Concept of local self-government
1. Local self-government denotes the right and
the ability of local authorities, within the limits of the law,
to regulate and manage a substantial share of public affairs under
their own responsibility and in the interests of the local population.
2. This right shall be exercised by councils
or assemblies composed of members freely elected by secret ballot
on the basis of direct, equal, universal suffrage, and which may
possess executive organs responsible to them. This provision shall
in no way affect recourse to assemblies of citizens, referendums
or any other form of direct citizen participation where it is
permitted by statute
Article 4—Scope of local self-government
1. The basic powers and responsibilities of local
authorities shall be prescribed by the constitution or by statute.
However, this provision shall not prevent the attribution to local
authorities of powers and responsibilities for specific purposes
in accordance with the law.
2. Local authorities shall, within the limits
of the law, have full discretion to exercise their initiative
with regard to any matter which is not excluded from their competence
nor assigned to any other authority.
3. Public responsibilities shall generally be
exercised, in preference, by those authorities which are closest
to the citizen. Allocation of responsibility to another authority
should weigh up the extent and nature of the task and requirements
of efficiency and economy.
4. Powers given to local authorities shall normally
be full and exclusive. They may not be undermined or limited by
another, central or regional, authority except as provided for
by the law.
5. Where powers are delegated to them by a central
or regional authority, local authorities shall, insofar as possible,
be allowed discretion in adapting their exercise to local conditions.
6. Local authorities shall be consulted, insofar
as possible, in due time and in an appropriate way in the planning
and decision-making processes for all matters which concern them
directly.
Article 8—Administrative supervision of
local authorities' activities
1. Any administrative supervision of local authorities
may only be exercised according to such procedures and in such
cases as are provided for by the constitution or by statute.
2. Any administrative supervision of the activities
of the local authorities shall normally aim only at ensuring compliance
with the law and with constitutional principles. Administrative
supervision may however be exercised with regard to expediency
by higher-level authorities in respect of tasks the execution
of which is delegated to local authorities.
3. Administrative supervision of local authorities
shall be exercised in such a way as to ensure that the intervention
of the controlling authority is kept in proportion to the importance
of the interests which it is intended to protect.
Article 9—Financial resources of local authorities
1. Local authorities shall be entitled, within
national economic policy, to adequate financial resources of their
own, of which they may dispose freely within the framework of
their powers.
2. Local authorities' financial resources shall
be commensurate with the responsibilities provided for by the
constitution and the law.
3. Part at least of the financial resources of
local authorities shall derive from local taxes and charges of
which, within the limits of statute, they have the power to determine
the rate.
4. The financial systems on which resources available
to local authorities are based shall be of a sufficiently diversified
and buoyant nature to enable them to keep pace as far as practically
possible with the real evolution of the cost of carrying out their
tasks.
5. The protection of financially weaker local
authorities calls for the institution of financial equalisation
procedures or equivalent measures which are designed to correct
the effects of the unequal distribution of potential sources of
finance and of the financial burden they must support. Such procedures
or measures shall not diminish the discretion local authorities
may exercise within their own sphere of responsibility.
6. Local authorities shall be consulted, in an
appropriate manner, on the way in which redistributed resources
are to be allocated to them.
7. As far as possible, grants to local authorities
shall not be earmarked for the financing of specific projects.
The provision of grants shall not remove the basic freedom of
local authorities to exercise policy discretion within their own
jurisdiction.
8. For the purpose of borrowing for capital investment,
local authorities shall have access to the national capital market
within the limits of the law.
September 2008
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