Memorandum from the New Local Government Network (BOP 24)
The New Local Government Network (NLGN) welcome the inquiry into the 'Balance of Power' being carried out by the Communities and Local Government Select Committee and are grateful for the opportunity to be able to set out NLGN's thoughts below.
NLGN is a not-for-profit making, independent think tank, which seeks to transform public services, revitalise local political leadership and empower local communities. NLGN is also the primary advocate of New Localism. 1. Summary1.1 NLGN welcome the existing devolutionary principles that have underpinned government policy in recent years. We believe that central government must follow this commitment through to ensure that the balance of power between central and local fosters trust, harnesses the potential for public service improvement at the local level and ensures a coherent democratic structure. Therefore, NLGN suggest that the government's devolutionary initiatives should be pursued to include: § giving local authorities more influence over local health and police partners; § allowing greater local fiscal autonomy through tax policy and business rates; § ensuring regional diversity in bodies that scrutinise central and regional government; § ending ring-fenced grants and empowering local communities to respond to cross-cutting service needs; § continuing the move away from central government targets and investing more in shared priorities through Local Area Agreements and Multi Area Agreements; § encouraging local authorities to play a more significant role in shaping the local housing mortgage market; § introducing legislative and scrutiny functions in parliament to ensure that services and powers are devolved where appropriate. 2. Further devolution
• Does local government need greater autonomy from central government? If so, in what ways?
2.1 Over the past decade
there has been a considerable devolution of services and decision-making
responsibility from
2.2 The Local Government White Paper and the Lyons Inquiry were vital investigations into the authority and influence of local authorities. Both recommended a radical re-balancing of power away from the centre to local democratic institutions. A number of policy proposals have been taken forward subsequently through, among others, the Local Government and Public Involvement in Health Act 2007 and the Empowerment White Paper (July 2008).
2.3 These reviews set out a new ambition for local government as a sector - of 'place-shaping' and of leading in their local 'place'. Councils must now lead their communities, operate across the totality of the local public service and manage the complex web of private, public and third sector partners. Local Area Agreements and the new Comprehensive Area Assessment promise to improve outcomes across the local area irrespective of the institution responsible and to put a new onus on local authorities to influence services.
2.4 This devolutionary impetus has gone hand in hand with a marked improvement in the services delivered at a local level, as demonstrated by notably improved CPA marks, with 83% of councils achieving 3 or 4 star status. Local authorities have been at the vanguard of the Gershon efficiency agenda setting an example for the rest of the public sector to follow. Together with the generally positive and proactive response from the local government community to the new range of challenges, this suggests that the sector has earned the right to a greater level of autonomy and influence at the local level.
2.5 Yet, despite these
notable transformations,
2.6 New methods of public service delivery are needed to respond adequately to the demands for personalised services, to meet rising citizen expectations, to provide joined-up services and to ensure participation from the community. All these require service delivery at a more local level.
2.7 The New Local Government Network believe that a greater degree of financial, fiscal, constitutional, regulatory, and political autonomy and control must underpin these transformations. This should involve devolution to the most appropriate level, whether it is at the sub-regional level through Multi Area Agreements, local authority level or enhancing the role of individual councillors. Specific examples of where action is needed include:
§ giving local authorities more influence over their local partners; § permitting greater freedom over funding streams across all service areas to allow local targeting and pooling of relevant funds; § transferring to local authorities greater freedom to set the priorities in their next round of LAAs; § enabling local government to take a more central role in the delivery and funding of a localised welfare system, including capability to capture local benefit savings; § encouraging local authorities to play a more strategic part, with the potential to derive financial long-term benefits for the community, by playing a more significant role in the local housing market; § making partners who are found not to be contributing appropriately to the delivery of LAA appropriate candidates for the transfer of functions and funding; § investing power in citizens rather than central agencies to evaluate local government performance; § building on the government's commitment to community empowerment and transferring genuine control to citizens and communities through individualised and neighbourhood services.
• Do local government's role and influence need to be strengthened in relation to other public services, such as policing and health?
2.8 We strongly believe that local authorities must be given new methods for improving the performance of other local public sector partners such as the police and health partners. 2.9 There is, currently, variable local democratic accountability. Despite significant attempts to align the service delivery and governance arrangements between some local Primary Care Trusts (PCTs) and councils, NLGN recommend that more radical reforms are needed. PCTs hold the stewardship of comparable sums of taxpayer money as democratically-elected local authorities. A decade of greater exposure, stronger audit practice and accountability has transformed councils into discernably better managers than many other corners of the public sector. Councils also have the democratic mandate to take difficult decisions. Where a PCT struggles to meet its financial targets and performance objectives, and there is organisational and popular consent, the PCT and unitary local authority, or county council, should be allowed to appoint joint posts on the senior management team. Pilot projects would offer a route to explore the potential benefits of integration of local health and council services.
2.10 Currently, there is also insufficient democratic accountability for local police services. We feel there would be merit in making Chief Constables directly accountable to local Council Leaders and that upper-tier local authorities, through the auspices of a reformed Community Safety Partnership, should subsume responsibility from Police Authorities for performance, budget and priority setting. To make this new democratic accountability viable and understandable to the citizen, PCTs and police authorities should be coterminous with local authorities.
3. 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:
3.1 The funding of local government continues to have a significant retardant effect on the sector. In many instances across the country, locally-elected members have reduced potential to impact on the strategic direction of their local area. There is very limited economic incentive to improve the local economy and, therefore, limited scope for long-term strategic investment. The ring-fencing of grant sets false boundaries for how local policy-makers tackle cross-agency and cross-service outcomes.
3.2 We believe that the government should look to reform the revenue raising powers of councils and devolve powers.
- Does local government need greater financial freedom? If so, in what ways?
3.3 Councils currently raise too little of their own money and rely too much on central government grant. Welcome though the reduction in ring-fenced grant is (Comprehensive Spending Review 2007), more needs to be done to encourage local agencies to tackle local problems in the most effective and strategic way. We believe that, with the successful introduction of Local Area Agreements, the Government should seek to remove any remaining ring-fenced grants that operate either through government departments or through NDPBs, and give councils freedom to tackle the local priorities they have identified in their LAAs.
3.4 Central government could start by unlocking local potential and aspirations by converting a myriad of regeneration grants into a single, un-ring-fenced and needs-based grant. Such freedoms could be initiated as a reward incentive for those authorities that have performed well in their LAAs.
3.5 NLGN would suggest that, until a government is ready to adopt a more radical revision of local taxation, revaluation of property and greater autonomy at the local level in deciding on council tax banding and rates would allow a more appropriate taxation regime.
- Should local government be able to raise a greater proportion of its expenditure locally?
3.6 NLGN believes that a fundamental shift from central to local revenue raising powers is necessary.
3.7 The 2006 Lyons Inquiry
argued for a significant role for local authorities in driving their local
economies. To this end,
3.8 We also feel that the Government should explore the potential for hypothecating a part of income tax specifically to local government. If this were to be distributed on the basis of the number of people in employment, the local area would have an incentive to promote local employment. The same could be done for VAT increases across a local area.
- What effect does the capping of council tax rises have on local accountability?
3.9 Council tax capping is a significant appropriation of local autonomy. It is, implicitly, also an acknowledgement of more fundamental flaws in the financial status of local authorities:
§ with local authorities receiving such a small proportion of their income from council tax compared to government grant, if a council wishes to raise investment it must increase council tax disproportionately. This 'gearing ratio' is about 4:1; § specific grants from central government constituted over half of council revenue (2006) and continue to constrain local actions; § councils have little incentive to develop their local economy as business rates are pooled nationally.
3.10 Together, these reduce the natural accountability of citizen to local democracy and add to the confusion of who remains ultimately responsible for success or failure of public services.
4. Existing powers• To what extent are local government services a product of national or local decision-making?
4.1 The traditional
command-and-control civil service model cannot meet the challenges posed by the
rapidly changing social and economic landscape. Growing complexity of demand
for services is increasingly matched by increasingly complexity of provision
with multi-agency working in evermore varied localities and neighbourhoods.
When local government should increasingly become the overseer of public
services in a locality, fundamental questions are posed about the future role,
construction and size of
4.2 Central targets continue to be misaligned and to distort the cross-working of public agencies at the local level.
4.3 However, the Government has set out a path which, if followed through, can lead to a better equilibrium between the roles of local and national democracies.
4.4 Public Service Agreements, Local Area Agreements and Multi Area Agreements offer new mechanisms for identifying, agreeing and aligning local and national priorities.
4.5 The reduction of central government targets from over 1,000 under the Comprehensive Performance Assessment to 198 under the new Comprehensive Area Assessment has shifted the decision-making power from central to local. However, the prescriptive nature of many central government grants, the large amount of public expenditure funnelled through NDBPs and much central government guidance continues to skew decision-making and influence in favour of national rather than local government. In addition, many of the transactional services carried out by NDPBs might better be devolved to local authorities.
4.6 Finally, the roll-out of Multi-Area Agreements from 2008 onwards promises the prospect of a new functional, viable and organic tier of government that operates at the correct spatial awareness to solve cross-boundary challenges such as skills, transport and employment.
• 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?
4.7 While issues of equity and fairness must always be borne in mind, NLGN feel that there is considerable potential for local authorities to trade in a greater number of services to their citizens and local businesses. Just a couple of examples for where local government could present an additional offer to its residents and at the same time bolster local council finances include: playing a role as mortgage lender to resolve strategic issues around housing and earn financial benefit for the community; offering a wider range of leisure and environmental services that fall outside of the traditional functions of a local authority. 5. Improving the relationship between central and local government
• What difference has the central-local concordat made to central-local relations?
5.1 The local government community gave a cautious welcome to the Concordat as signalling a new relationship between central and local government. Particularly welcome was the responsibility on central government to "progressively remove obstacles which prevent councils from pursuing their role, including reducing the burden of appraisal and approval regimes, the ring-fencing of funds for specific purposes and the volume of guidance it issues". This is a laudable goal. We acknowledge that the Government has adopted some policies to put this theory into practice and would urge it to continue on this journey.
5.2 Local Area Agreements represent a practical and every-day method by which to put many of the sentiments embodied in the Concordat into being.
5.3 Ultimately, NLGN are confident that greater flexibility and autonomy to set priorities at the local level will result in a new enhanced relationship between central and local.
• Should an independent commission be established to oversee the financial settlement for local government?
5.4 NLGN do not believe
that an independent commission should be established to oversee the financial
settlement for local government. An independent grant commission would not be
democratically accountable to local government and would, therefore, not
address the root problem. As such, the suggested reform would represent no
improvement on the current status quo, within which
5.5 There would be significant potential in shifting the onus from central to local oversight of the financial settlement. In this respect, it would be profitable for the Committee to consider whether the local government family should take responsibility for difficult issues like grant distribution and whether Council leaders should be made to face up to the collective distribution task themselves. This could consist of requiring a two thirds majority of support from Council leaders across the country.
6. The constitutional position
• Given the
6.1 NLGN has consistently argued for local council leaders as elected democratic heads to play a more prominent role in scrutiny of the legislature and policy.
§ Our research has demonstrated that the House of Lords does not reflect the regional diversity of the country. For this reason, and so as to ensure a representative second chamber, one of the options we have advocated is that council leaders should be given seats in a reformed House. § The £123 billion annual
spend by NDPBs is a significant proportion of the state's expenditure. However,
control of this money through NDPB board members does not represent the
regional diversity of the country but is a symptom of o specific nominations for these appointments should be sought from council leaders; o that a 'National Diversity Strategy' should complement the concept of equality of opportunity; o and that some functions of NDPBs could function more appropriately through local authorities § We welcomed the concept of regional select committees to hold the Government and regional bodies to account. Again, we would recommend that council leaders as champions of their local communities should be represented alongside MPs on these committees. § We would ask the Committee
to consider establishing a statutory LGA which would have the authority to engage
in meaningful dialogue on the issues that
• What role should Parliament have in the protection of local
government's position within the
6.2 NLGN welcome the Sustainable Communities Act 2007 which gives local authorities the opportunity to initiate policy development. It provides local authorities with a chance to take a more proactive leadership role in formulating policy and building stronger arguments for the devolution of powers, responsibilities and funding to the local level.
6.3 In its ongoing
sub-national review, the Government should consider whether Multi-Area
Agreements (
6.4 Finally, NLGN ask the Committee to consider reforms of parliamentary procedure and scrutiny to safeguard the position of local government. We believe that there is potential to build on the example set by the House of Lords' Delegated Powers & Regulatory Reform Select Committee, whose remit is "to report whether the provisions of any Bill inappropriately delegate legislative power (to Ministers), or whether they subject the exercise of legislative power to an inappropriate level of parliamentary scrutiny". We suggest that there would be potential in establishing a Commons / Lords Devolution Select Committee to check for inappropriately centralising legislation.
6.5 We would also ask the Committee to consider recommending a 'devolutionary test' for new legislation. This would be complementary to the Regulatory Impact Assessment, which evaluates the potential impact of legislation on equalities and business. Such a reform would mean that, in drawing up any legislation, the relevant department and government minister should always consider the principle of devolving relevant existing or new services to local authorities before drafting the bill. The assumption would be that services should be devolved unless demonstrated otherwise.
September 2008 |