Localism Bill

Memorandum submitted by Local Government Group (L 114)

About the Local Government Group

1. The Local Government Group (LG Group) is made up of six organisations that work together to support, promote and improve local government. The six organisations are:

a. The Local Government Association (LGA)

b. Local Government Regulation

c. Local Government Improvement and Development

d. Local Government Employers

e. Local Government Leadership

f. Local Partnerships

2. The LGA is a cross-party and politically led voluntary membership body. Our 422 member authorities cover every part of England and Wales, and together they represent over 50 million people, spending around £113 billion a year on local services.

Summary of evidence

3. The LG Group welcomes this opportunity to comment on the content of the Localism Bill, and highlight issues of concern to members of the Public Bill Committee assigned with the task of scrutinising the draft legislation. Our written evidence and subsequent amendments are based on the front line experience of our member councils.

4. The LG Group welcomes the thrust of the Bill and the Government’s aims to decentralise power and decision-making. In particular we support a General Power of Competence for councils and the possibility of broad devolved powers for councils.

5. The guiding principle to help people have greater control over public services and decentralise power to the local level which is behind many of the measures in the bill is undoubtedly right. The 405 pages, 208 clauses, 24 schedules and several hundred order and regulation-making powers demonstrates clearly the difficulty Whitehall has had to understand and implement the "post-bureaucratic age" so enthusiastically championed by Ministers.

6. The moves to force English councils to pay parts of fines imposed on the UK national government by the EU has no place in a Bill seeking to shift powers and responsibility from central to local level. This policy is unfair, unworkable and unconstitutional.

7. The dismantling of the current complex, bureaucratic and inefficient housing finance system, following campaigning by the LGA, is very welcome. However, powers for Whitehall to impose arbitrary limits on councils’ housing borrowing, when the prudential code provides a well understood, flexible and effective mechanism for the self-policing of council borrowing threaten to render the concept of self financing meaningless.

Governance and local government powers

8. The general power of competence has the potential to enable a new central local relationship driven by bottom up action by councils. Key to this is providing a framework to allow councils to act in the interests of their communities confident in their legal standing, taking innovative steps that will save taxpayers money and be more responsive to what local voters say they want. The Power of Wellbeing was ultimately found wanting in this respect when the Appeal Court overturned the decision of a group of councils to create a collectively-owned insurer for councils.

9. We would encourage parliamentarians to probe a tension within the bill in the numbers of permissive powers afforded to councils, for example provisions which allow local authorities to adopt a voluntary code of conduct. The logical end result of a General Power of Competence is that councils will no longer need permissive powers passed down by central government to allow them to do things. Supporting the role of councils as government and not simply administration, taking distinctive decisions to provide for the needs of the place the council represents, and not simply administering the decisions of central government requires a legally robust power of first resort.

10. The Government proposes to expand the number of directly elected mayors. A key means of empowering local people is to allow them to decide their own governance arrangements and it is interesting that the government seeks the powers to impose a shadow mayoral model on areas in the same bill which provides councils the flexibility to return to the committee system.

11. Provided that is what local communities want and vote for at their own initiative, the mayoral model may allow genuine innovation and improvements in accountability, particularly if  the government exercises the powers the Bill gives it to transfer to mayors the functions of other public bodies. We would welcome a greater degree of clarity and transparency on the scope of these powers and costs attached to this provision. Communities which might wish to have a mayor will now take a close interest in what those functions might be. The possibility of Total Place powers, with associated budgets, would be very welcome. We must however avoid "tiers" of localism, with areas that have chosen an elected mayor having powers that aren’t given to areas that have chosen other forms of governance.

12. Councils have demonstrated that they have a very high appetite for opening up services to be delivered by third parties, CLG’s own research in 2006 demonstrated that significant levels of public services are already contracted out [1] ; for example Brighton and Hove Council for example has committed to a system of radical outsourcing, emphasising the role of social enterprises and voluntary organisations and Sheffield City Council has a contract with Green Estate, a local social enterprise, to manage green spaces in the city as part of a broader environmental regeneration programme. Many councils are now taking steps to go even further and are exemplars in re-skilling their core staff as commissioners rather than delivery managers (Essex, for example). Equally, local authorities are increasingly working with partners and local people to use assets effectively and commission jointly. For example London Borough of Newham is working across partner organisations on an integrated commissioning strategy relating to childhood obesity.

13. The community right to challenge and right to buy have the potential to support this work going forward. There is a risk however that these opportunities can be over engineered from the centre, creating unnecessary red tape that counter-productively stifles local enthusiasm. For example, there are at least 43 specific areas, within 11 Clauses, in which the Secretary of State is allowed to intervene and issue regulation on the community right to buy. This covers issues, from how community nominations must be put together, to what constitutes "land of community value". The decision about how best to encourage and stimulate community involvement as intended in the rights in the bill is most appropriately taken locally rather than via a centrally imposed process which not only prescribes the what local areas must do but the how they must do it.

14. The Bill seeks to promote accountability to local people by making provisions for four different types of referenda (for council tax levels, governance changes, local issues, and community planning). There is a risk that the variety of new mechanisms proposed will obscure the improvement in accountability in a fog of procedural confusion for local voters. There is also a certain irony in a localism bill that includes numerous powers for the Secretary of State to make regulations on how local referendums will operate, including a power for the Secretary of State to determine what constitutes a "local issue". We would welcome amendments that place discretion over how such referenda would work and interact at the local level rather than via detailed regulation.

15. We agree with the Government that it is for local people to determine whether a proposed council tax rise is excessive. The decentralising thrust of this proposal is mitigated, however by the proposals that Ministers will nationally fix the rate of tax that should trigger a referendum. A localist approach would provide local areas the freedom to decide and set a level of tax to raise and what to spend it on and to hold this to account through the ballot box at local elections; giving local voters greater choices and influence in local elections as a result.

EU fines

16. The clauses which would require local authorities to pay parts of national fines passed down to the UK Government by the EU are unfair, unworkable and unconstitutional.

17. It would be impossible for the Government to accurately and fairly judge the proportion of a fine that a council should be forced to pay; for example it would be impossible to accurately attribute liability for fines between countries of the UK, and then between individual English and Welsh councils for issues such as air quality. Councils are struggling to protect vital public services following an exceptionally tough financial settlement. This clause will create new financial uncertainty that makes future economic planning much more difficult. The UK is potentially facing, for example, a £300million EU fine for breaches of air quality targets. At local level this translates as a £15 annual increase on constituents’ council tax bills. Finally, this proposal would also put in place an entirely new regime for the Government to impose fines on councils extra-judicially, which is fundamentally unconstitutional. There is a significant danger that the imposition of fines could lead to costly and unnecessary legal battles.

Planning

18. The LG Group welcomes greater freedom and flexibility for councils to be able to work together to plan strategically for growth, without top down targets and strategies. Stimulating growth is a major priority and incentive for local authorities to work together across boundaries and with partners and in many areas this is happening already. Local authorities do not need to be told to work together and certainly do not require top down guidance as provided for in the bill to tell them how to do so.

19. Community Infrastructure Levy (CIL) is important as part of a wider package of incentives and measures including the New Homes Bonus and Tax Increment Financing to stimulate and encourage growth locally. The LG Group welcome the proposed removal of unnecessary national controls and complexity, but decisions on how CIL is spent locally should be taken by democratically accountable local politicians and not set out in central guidance.

20. The LG Group supports the principles behind the government’s approach to neighbourhood planning and local people around the country are already engaged with their councils in shaping their local area. We want to see a Bill that reduces, rather than adds to, red tape and complex processes facing local people and councils which often amount to a significant disincentive to many locally to get involved. The 44 pages, 6 Clauses and 3 Schedules proposed in the Bill do not provide the flexibility and local discretion necessary to ensure this policy succeeds.

21. The Government’s current approach also risks putting too much power in the hands of people who are not elected or removable by a democratic process, without enough assurance of inclusiveness, transparency and financial probity. The LG Group would like greater discretion afforded to local councillors, as the democratically elected representatives in their community to ensure that these measures are not open to abuse or dominated by those who shout the loudest.

Housing

22. The dismantling of the current complex, bureaucratic and inefficient housing finance system is very welcome. However, the power for the Secretary of State to revisit the settlement figure in the future, and potentially increase the amount councils have to pay to "buy out" of the scheme, is dangerous. The reform of housing finance is designed to give councils independence and financial certainty, but as drafted the Bill gives them neither.

23. The Government’s proposal to require housing authorities to draw up a local tenancy strategy recognises, correctly, that there would be risks in simply allowing all landlords in an area to decide individually if and how to make use of the flexibilities which it is proposing. In their strategic role, councils would certainly wish to ensure, so far as possible, that there is a coherent approach to tenancy issues in their area. The requirement, however, is a good example of an overreliance with familiar command and control mechanisms by civil servants throughout the Bill. We would prefer to see an approach which empowers local authorities to work in cooperation with housing associations to determine the appropriate approach to meeting housing challenges locally and would welcome the opportunity to discuss with the Government and the housing association sector whether there are alternative ways of achieving the same objective.

February 2011