Memorandum by Professor Tony Travers,
London School of Economics (BOP 57)
THE CONSTITUTIONAL
POSITION
Local government has a weak position within
the United Kingdom's unwritten constitutional arrangements. As
Parliament and the executive have extended their powers, notably
during the years since 1945, the democratic "space"
left for local government and democracy has been reduced.
Because sovereignty in the UK is located in
Parliament, all existing local government, including its tax-raising
power, is subject to the continuing assent of the House of Commons
and the House of Lords. Moreover, any attempt to redistribute
power within the existing "constitution" would require
Parliament and the executive to relinquish part of its own power.
Parliament acts as a check on the executive
and can scrutinise the operation of the Government. It would thus
be possible for the House of Commons and/or the House of Lords
to decide to create a constitutional role for itself in relation
to local government. Given the direct links between the make-up
of the House of Commons and the government of the day, it is hard
to imagine Parliament being able to create a framework for protecting
local government that was opposed by the executive. However, it
is easier to imagine an agreement to set such a framework up than
it would be to envisage the resolution of a significant disagreement
between Parliament and a government about a particular, contentious,
issue.
It would be possible for a committee of the
House of Commons, or a joint committee of both houses, to examine
and report on issues such as:
— The impact of legislation on local government
autonomy.
— The use of regulations and other directions
to intervene in local decision-making.
— The operation and limitation of local
taxation.
— The impact of central funding mechanisms.
— The costs and impacts of audit and regulation.
— Other issues determined by the committee.
The power and legitimacy of Parliament would
ensure the committee's findings were given publicity and a hearing
on the floor of the House. As with other Parliamentary committee
reports, the government would be free to determine how it responded
to them. But by tackling such a constitutional subject as local
government, it would be unlikely that a government could ignore
any important findings.
EXISTING POWERS
Local government has faced a reduction in its
formal powers that has taken place over many years. Successive
governments have taken services such as public utilities, health,
ambulances, the courts, advanced higher education, further education
and, to a significant degree, schools and transferred responsibility
to appointed agencies or regulated privatised industries. Britain's
changed role in the world, notably its loss of Empire, has contributed
to a shift of political emphasis from a "global" to
a national or local role for central government. Local democracy
has been diminished as the centre has colonised British public
administration.
Remaining powers represent a minority of the
local State. Local government is only one of a number of service
providers, though it is required to provide civic leadership (through
Local Area Agreements) of health authorities and trusts, the police,
cultural bodies and any other institutions providing public services.
There is a powerful argument for transferring
a number of quango-run services to the control of elected local
government. It is unclear how appointed bodies provide any local
democratic legitimacy to their actions or outcomes. Accountability
via Whitehall for any local service is doomed. It is inconceivable
that people living in, say, a neighbourhood of Sheffield, Milton
Keynes or Surrey would be able to access a central department
to make known their views about public services. Moreover, the
expectation that Whitehall can deliver such responsiveness will
burden Members of Parliament who have become, in effect, conduits
from their electors to Whitehall.
Existing local government powers are vastly
diminished as compared to the heyday of municipal power. There
are powerful arguments for shifting powers back to the local level.
FINANCIAL AUTONOMY
Local government's lack of financial autonomy
is at the root of the "balance of power" problem. Governments
have attempted to tackle weaknesses in the system of local government
finance for many years, but without success. In modern times,
the Layfield Committee (1974-76) and the Lyons Inquiry (2004-07)
produced long and detailed analyses of the problems associated
with local government finance. However, on each occasion, no substantive
reform was undertaken in the light of the respective reports.
Local government has a single, limited, tax
source. 95% of all UK tax revenues are paid to the Exchequer,
leaving the council tax to raise just 5%. This balance between
central and local government means the UK as one of the most fiscally
centralised of all western democracies. Moreover, council tax
is capped, which undermines the very basis of local government
autonomy.
Until the problem of local government's weak
and capped tax arrangements is tackled, central government will
continue to be able to assert control over local authorities.
Layfield and Lyons both explained this reality at some length.
In the short to medium term, a number of improvements could be
made, including the following:
— an end to council tax capping;
— allowing local authorities to keep at
least part on any additional tax base generated (both council
tax and non domestic rate); and
— the creation of an independent "grants
commission".
In the short term, as a response to the financial
and economic problems facing the country, it would be possible
to allow councils greater discretion to experiment with new forms
of borrowing and new mechanisms for delivering regeneration and
housing projects. The "prudential rules" system of capital
control, which was a significant improvement on earlier control
systems, would allow experimentation if councils were encouraged
to do so.
FURTHER DEVOLUTION
Radical devolution to Scotland and Wales did
not cause a political or economic threat to the UK or its constitution.
As such, it is hard to see why further devolution of powers to
local government would cause any problems. British history suggests
that when local authorities have greater autonomy they do not
indulge in a "race to the bottom". Rather, service standards
are improved as councils compete with each other to improve provision
and to provide an attractive place for investment.
Devolution of powers and financial autonomy
to local government would be a signal that the UK's democratic
arrangements were being revitalised. Such a move should help revive
local political institutions and, thus, interest in democracy.
Parliament, as the pinnacle of British democracy, would also gain
from a revival in local government.
Tony Travers
December 2008
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