Memorandum from Tony Travers (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 per cent of all UK tax revenues are paid to the Exchequer, leaving the council tax to raise just five per cent. 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)

 

· 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.

 

 

December 2008