Localism Bill

Memorandum submitted by Development Trusts Association (L 52)

This paper sets out the response to the Localism Bill from Locality [1] , a new nationwide network of over 600 settlements, development trusts, social action centres and community enterprises.

Our response has been informed by direct consultation with our membership in recent weeks and months. It therefore draws on the wide ranging experience of local action by the foremost community organisations in the country.

1. The Community Right to Buy/assets of community value

We are strongly in favour of the new right to buy. For many years the Development Trusts Association (DTA) has been arguing for a community right to buy to be introduced in England, following the experience of Scotland. The community right to buy is an important practical and symbolic step forward. If introduced effectively, it has potential to provide a very significant additional mechanism for community groups to acquire their own assets whilst increasing their confidence, independence, and capacity to deliver to local people.

We wish to highlight the following:

1.1 The moratorium must be a minimum of 6 months – this must be explicit and not left to local councils to determine. We would also like to see provision for an extended moratorium (e.g. for 12 months) where community groups can demonstrate good progress. Our experience across the country is that community asset acquisition, even by the most capable and well-established community organisations, takes typically from six months to a year to progress to the point of purchase (see appendix A for case study). Anything less will mean that community efforts will end in frustration.

1.2 The government is proposing that (unlike in Scotland) a community group should not have a right of first refusal within the moratorium period, but rather that at the end of the moratorium period the community group would compete against others on the open market. This presents a real difficulty. On the one hand we want to avoid the bureaucracy which has been a big problem in Scotland, but on the other hand it would be a disaster for this new community Right to lead to a widespread loss of assets of community value to the private sector We think a more balanced approach would be as follows. For assets of community value in public or third sector hands there should be a right of first refusal for community groups. This is because we believe it is a reasonable presumption that where assets of community value are already being applied for public benefit, the ‘default position’ should be to retain the public benefit, and only if there is no community purchaser should the asset then go onto the open market. A right of first refusal in such cases will require the introduction of various mechanisms, but based on experience to date we believe it is possible for local authorities, with support from the Asset Transfer Unit [2] , to devise a sensible and low-cost system to agree a sale price, to decide upon competing community bids, if applicable, and establish fair arbitration mechanisms. For assets of community value in private (commercial) hands we reluctantly accept that a right of first refusal might not be the best way forward. While this is not our ideal position, we can see that, as in Scotland, a desire to safeguard private sector interests will result in a level of procedure and regulation that will simply stifle community efforts in the vast majority of cases. It is surely better therefore, to have a simple system where a moratorium at least provides a window for any community group to prepare a bid, rather than a complex process that will, in practice, only tie up the community in red tape.

1.3 There needs to be an emergency listing procedure – i.e. when an asset of community value, which is not yet listed, has already been put up for sale.

1.4 There needs to be provision for appeal against the local authority refusal to list. Clear and concise guidance should be published to make it apparent that any type of asset can potentially be listed as an asset of community value.

1.5 The new Community Right to Buy should be explicitly additional. In other words local authorities and other public bodies should be able to continue to transfer assets to community groups under existing powers, if they so determine. However, we see this as an opportunity to enhance the existing ability for public agencies to transfer at an undervalue, without Secretary of State permission, by increasing the threshold from £2m to £10m.   

1.6 The new power will not be effective without nationwide access to technical support, feasibility support, and finance. The experience in Scotland, and in recent years in England, has demonstrated how important this can be [3] . The Asset Transfer Unit has a vital continuing role to play in providing expertise to community and public sectors, to maximise the viability and sustainability of community asset ownership, and to minimise the risk of communities taking on liabilities which they cannot manage successfully. Moreover, dedicated finance needs to be made available, combining grant, loan, and investment readiness support. Finance needs to come from a variety of sources, including national government (drawing on positive recent experience of specialist community enterprise initiatives, notably the Adventure Capital Fund, Communitybuilders, and the Community Asset Programme), social lenders (including the Big Society Bank and community development financial intermediaries), and local sources (including access to funds from the Community Infrastructure Levy, and incentivisation of local community share issues, where local people, including those on low income, can acquire a stake in local assets which matter most to them).

2. The Community Right to Challenge

In principle we support the new right to challenge. If implemented effectively it will give communities greater influence in ensuring services are delivered to a high standard and that services reflect the needs of their neighbourhood. However it does not go nearly far enough in providing opportunities for local community groups. It could in fact, be used by large national agencies or private sector organisations to take contracts away from local community bodies.

We wish to highlight the following:

2.1 As it stands the expression of interest could be used by local authority employees setting up a private company; this loophole needs to be closed. The regulations must also be specific and rigorous about the criteria for rejection of an Expression of Interest.

2.2 There should be a requirement that the expression of interest can only be initiated by a local organisation.  If for example a national charity is interested in submitting an expression of interest, they would have to do so via a local community partner.  This will encourage locally-driven small/large and local/national partnerships and collaborative working.

2.3 There is no explicit provision for redesign/co-design; the expression of interest should trigger a period to allow this.

2.4 The guidance must make it clear that the Local Authority should have the option of procuring the service directly from the organisation submitting the expression of interest. They should not necessarily put it out to open tender and where possible locally sourced delivery should be preferred (see appendix B). Also, the use of social clauses by service commissioners, as proposed in Chris White’s Social Enterprise Bill, should be standard practice for this purpose.

2.5 Significant attention needs to be paid to the support systems (see appendix C), particularly those for small or inexperienced community groups. There has to be a dedicated support package, specifically around working collaboratively, strategic planning and management and voice and advocacy. Not all the necessary support will be available at a local level. With other partners we have put forward outline proposals for a "community contracting capability" service, accessible to community groups in every part of the country and highly responsive to their individual needs. Without something along these lines many community organisations will simply not develop the knowledge and skills to participate effectively in this opportunity.

2.6 There needs to be greater development of the role of local councillors and their engagement with the community to maximise their positive involvement. Research commissioned by bassac through the Empowerment Fund and conducted by the Institute for Political and Economic Governance (IPEG) found that where there is a strong, mutually supportive, relationship between councillor and key community "anchor" organisations, the impact of joint initiatives was far more effective( see appendix D).

3. A community right to build and Neighbourhood planning

In principle the proposals for neighbourhood planning and the Community Right to Build fit well with Locality’s calls for ‘self-determining communities’. Locality therefore welcomes the proposed powers, and would like to see them introduced in a way which reduces the risk of damaging conflict and increases engagement and consultation between local authorities and communities on their common local aspirations.

We wish to highlight the following:

3.1 We would like to see the definition of a neighbourhood forum extended to include community "anchor" organisations [4] – multi-purpose community groups which can demonstrate extensive and accountable connectivity throughout their local community.

3.2 It is inevitable that the new power will lead to proposals from relatively narrow self-interested groups, some with political or financial backing, and this carries a risk of discrediting the entire approach. For example, controversial developments could be forced through on a simple majority of those participating in a vote, leaving a substantial number of local people (perhaps even the majority) feeling unhappy about the outcome. In some communities this could become a catalyst for serious conflict. Conversely, the requirement for a majority vote could in some cases disenfranchise minority groups, reinforcing a sense of exclusion and disempowerment. We would like to see an option for the independent assessor to introduce a period of reflection, mediation or arbitration, before proceeding directly to a referendum, in cases where there is potential for a seriously divisive outcome.

3.3 Many Parish Councils are moribund, and could become a barrier to community engagement and empowerment, and block well-supported community proposals. Parish councils should therefore not be the preferred body for this purpose over a recognised neighbourhood forum unless they can demonstrate adequate community engagement, for example through Quality parish council status. or in another suitable form. Wherever possible Parish Councils and the neighbourhood forum (and other relevant community organisations) should be encouraged to work together, but where this is not possible the independent assessor should be able to exercise judgment rather than give automatic precedence to the parish council.

3.4 The Community Right to Build Order was designed particularly with community land trusts and affordable housing in mind – it must ensure that the Right can be used for broader community purposes as well.

3.5 The support services introduced to support parish councils, neighbourhood forums, and community groups need to help them design viable schemes and bring them to practical fruition, so that this does not become a bureaucratic diversion of community effort.

3.6 The support services also need to encourage proactive positive relationship building between the local community and the planning authority so that wherever possible agreement and solutions can be found without the requirement to engage in a potentially adversarial or costly process.

3.7 It is not clear how much of the community infrastructure levy would be made available to communities affected by development. We want provisions to safeguard against exacerbating the poverty gap between wealthy and poor areas. Also, there are exclusions for how the funds can be applied (for example affordable housing and jobs/training and enterprise stimulation). We want to see these exclusions removed.

Appendices; Supporting Evidence

Appendix A; Community organisations will require time and support in order to establish an effective proposal.

Case Study; Hawthorn House, a listed building in Handsworth wood, Birmingham, housed the local library until November 2010 when it was closed by the City Council. Hawthorn House Trust was established by local residents who recognised the importance not only of the library service, but also of the building itself. Birmingham City Council have agreed to provide stock and shelving to the Trust if they can develop a sustainable business case for a volunteer run library service. The Trust has established a volunteer group of dedicated library professionals and is looking to further expand the volunteer base to develop skills and experience of local residents. It also aims to provide a base for other local services, such as Help the Aged, a nursery and medical facilities. The trust approached the Asset transfer Unit, hosted by DTA, for support in submitting a business proposal. This example highlights both the need for greater support and a greater period of time to establish a sustainable business case.

Appendix B; Locally sourced service delivery from a community organisation should be preferred by a local authority.

Case Study; A community organisation in the north-east of England had developed a pilot for a mobile youth village using funding from their local authority. The service was extremely popular and received excellent reviews from the local community. The council then reclaimed the service, taking the delivery ‘in house’. The very basis of the success of the scheme was the understanding, knowledge and existing relationship the community organisation had with its clients. This was removed and the community organisation now fear for the service and have real concerns that the local authority will move to only fund the in-house mobile service and that their hard work and innovation will be lost.

Appendix C; Increased support will ensure that community organisations can effectively participate in local service delivery.

Case study; Collaboration and enterprise are being used to drive community re-development in Witheridge, a small remote Dartmoor village in Devon. Here a partnership of six organisations has reviewed all the available community facilities and concluded that many are under-utilised and in a poor state of repair. The partnership has accessed feasibility grants and organisational support from Communitybuilders to develop the business plan and test the viability of a new community hub. The hub – to be funded by selling some of the sites owned by individual partners - will draw the partners together legally through the development of a new organisation and will allow partners to develop new trading activities.

Appendix D; Developing the links between local authorities and community organisations

The IPEG research referred to in the briefing found whilst there were many variables of a community anchors engagement with and councillor, where a positive, mutually beneficial relationship was forged there were obvious benefits for the community and for service delivery. Councillors in particular highlighted a community anchors ability to engage with the community, understand the needs and access issues of this engagement and to provide value for money in terms of service delivery.

Case study; Touchstone (a bassac member, based in Leeds) supports 2000 people with mental health difficulties in the community each year, it is the leading provider of services to people from black and ethnic minority communities and has built up an excellent relationship with commissioners. The organisation is praised by many councillors for its ability to deliver services to a wide range of citizens or groups that they find hard to reach and to a relatively limited budget. One Councillor noted; "Touchstone offers excellent services and value for money. It delivers services that are well-targeted in areas at need. They work with the community, and offer value for money."

February 2011

[1] The Development Trusts Association (DTA) and bassac will formally merge to form Locality on the 1 st April 2011.

[2] The Asset Transfer Unit is funded by DCLG and is delivered by the Development Truss Association, in partnership with the Local Government Association and Community Matters, and a stakeholder forum of 25 expert agencies.

[3] In Scotland , despite the cumbersome legislation, a very effective technical support and finance programme by the Highland and Islands Enterprises and the Big Lottery Fund, has led to big community gains: over half of the Western Isles are now in community ownership. In England , the work of the Asset Transfer Unit, and programmes such as Communitybuilders have stimulated extensive activity: over 1,000 asset transfer schemes are being attempted across the country according to the Asset Transfer Unit in 2010.

[4] The term 'community anchor' refers to a certain kind of independent community-run and led organisation, rooted in a sense of place (whether an inner city neighbourhood or a rural district), and with a mission to improve things for the whole community. Definition taken from http://www.comm-alliance.org/Communityanchors/ .