Localism Bill

Memorandum submitted by District Councils’ Network (L 172)

SUMMARY OF THIS SUBMISSION

This submission is made by the District Councils' Network (DCN), a member-led network of 170 English district councils, which provides a single voice for district councils within the Local Government Association and acts as an advocate with Government and other national bodies.

The submission starts with general comments on the Localism Bill and then addresses the main provisions in the order in which they appear in the bill, relaying common concerns of member authorities of the DCN. The length and coverage of the bill are such that this submission focuses on a number of overarching concerns and issues. It sits alongside specific, detailed commentary from individual councils and representative bodies who will be presenting a district council perspective on topics such as housing and planning.

In general there is support for the ambitions of the bill. Recurring concerns are the level of prescription, the volume and extent of the powers delegated to the Secretary of State - both of which are contrary to the localist and decentralising ambitions of the bill - and the significant financial burdens that will arise for district councils.

GENERAL COMMENTS

1. The overall aim of the bill - to decentralise power and decision-making - is broadly welcomed by the District Councils' Network.

2. The Bill consists of 407 pages, 207 clauses and 24 schedules. Within the Bill there are at least 142 powers for central government to lay down regulations, issue guidance and otherwise specify how localism will work in local areas. This is inconsistent with the General Power of Competence, does not reflect ambitions for genuine localism and any improvements to local flexibilities and freedoms are likely to be encumbered by new red tape and bureaucracy.

3. In relation to concerns about the significant costs that will be incurred by district councils in implementing the bill, paragraph 463 of the Explanatory Notes to the Localism Bill states:

"Financial Effects - The Bill places several new duties, or extended duties, on local authorities and/or partner authorities and other public bodies. The Bill will create an estimated charge of £21m per year on local authorities. Funding for this new burdens cost will be provided by the Secretary of State through Spending Review 2010 in line with new burdens assessments for each policy proposal."

And paragraph 464 states:

"Public sector manpower implications - This Bill will not represent a significant change to public service manpower."

4. We have not seen the basis on which these estimates have been made but we assert that they are a gross under estimate of the actual costs that will be incurred. We are concerned that any mechanism for covering district councils’ future cost burdens, arising from the bill’s requirements, is transparent, equitable and clearly additional to existing funding levels.

COMMENTS ON THE MAIN PROVISIONS OF THE BILL

The General Power of Competence

5. This power is welcomed by the DCN. However, the reservation of powers for the Secretary of State to make orders preventing specific activities using the power, and orders making use of the general power subject to conditions, contradict the principles of localism and decentralisation that the bill aims to achieve. The power will be of limited value unless a plethora of restrictive legislation and regulations is removed.

6. The DCN is concerned that the financial environment in which local government now operates, and will continue to do so in future years, will limit adoption of the general power of competence. It is important that positive progress is made through the review of the local government finance system to grant increased financial freedoms to facilitate proposals in the bill.

Clause 1

Governance Arrangements

7. The freedom to choose a governance structure should be a local issue to meet the individual circumstances of each council. Although not affecting district councils the move to enforce mayoral arrangements on 12 cities is counter to these principles and is a precedent that we would not wish to see set.

Clause 12

Predetermination

8. The clarification on predetermination is supported as it enables councillors with a specific interest in a local issue to take part in debates on that issue. We seek clarity over whether pre-determination flexibilities will apply to scrutiny committees.

Clause 13

Standards

9. The removal of the Standards Board regime and the introduction of a duty that ‘a relevant authority must promote and maintain high standards of conduct by members and co-opted members of the authority’ is an area of risk for district councils. Party political groups may require additional support as they do not always have the capacity to support all of their members.

Clauses 15 & 16

10. The criminalisation of benefitting from a deliberate failure to register or declare personal interests is a strong deterrent. However the success of the measure will only be established through case law. Further clarification on which body would bring such cases to the magistrates and which body will be charged with the collection of evidence would be beneficial to determine whether any additional burden will be placed on local authorities.

Clause 17

Pay Accountability

11. Councils across the country are embracing the call for greater transparency in their spending and publishing information on senior officer pay through their websites. Powers reserved for the Secretary of State to issue guidance on the content of a senior policy pay statement are contrary to the principle of localism.

Clause 21

EU Fines

12. Across the local government sector there has been strong opposition to moves to force English councils to pay financial sanctions imposed on the UK. The LGA has argued that extra-judicial determination of whether a local authority’s act or omission caused or contributed to the infraction of EU law is "unfair, unworkable, dangerous and unconstitutional". The DCN strongly opposes this element of the bill.

Clause 30

Small Business Rate Relief

13. A scheme that reduces administration in the award of small business rate relief is welcomed. In developing such a scheme the Secretary of State will need to consult with collecting authorities and small businesses.

14. The proposed extended powers for the granting of discretionary rate relief risks raising false hope in the business community and councils could be faced with an increase in applications that, in reality, they won’t be able to support financially – 75% of any discretionary relief granted under the new powers would have to be met by local authorities and, consequently uptake may be limited. The Secretary of State has again retained powers to issue guidance related to the scheme that without further clarification, would appear to contradict the principle of localism.

Clause 36

Clause 37

Community Empowerment - Referendums

15. The proposals for the initiation and regulation of referendums are particularly complex and impractical. The power for the Secretary of State to regulate the conduct of local referendums is contrary to the spirit of localism. Councils should be reimbursed with any costs associated with referendums, which are not insignificant. For example, one district council estimates that a stand alone city-wide referendum would cost in the region of £120k (or £50k when combined with another election). Most district councils only routinely hold elections every four years, so substantial additional costs are very likely to arise.

Clauses 39 &c

Council Tax Referendums

16. To deliver the spirit of localism any decision to increase council tax rates should be an issue for the local authority and their community. Notwithstanding concerns about the principle, in practical terms the cost, complexity and timing issues involved in holding such a referendum is very likely to deter any exercise of this provision.

17. The Secretary of State's new powers to create alternative notional amounts (ANAs) for council tax rises, setting the principles for determining excessive council tax rises, and to decide when referendums take place are all contrary to local control over local finances.

Clause 56

Clause 59

Community Right to Challenge

18. A key concern for districts, especially smaller districts, is the additional burden of a compulsory procurement exercise for each accepted expression of interest. These are likely to incur significant additional costs and be a drain on back office resources. The potential for cherry picking of services could have an impact on the effective and efficient delivery of remaining services due to loss of critical mass and synergy.

Clause 66

PLANNING

Duty to Co-operate

19. The Government has signalled its intention to strengthen what it means by a "duty to co-operate". This is essential in order to clarify the roles of county and district tiers and to clarify the penalties for failure to co-operate. Important strategic goals, such as housing numbers and climate change issues, will now have to be embedded in Local Development Framework documents giving districts a welcome, greater strategic role than previously. Local Enterprise Partnerships are unaccountable and are not equipped to have a formal role in strategic planning.

Clause 90

Community Infrastructure Levy (CIL)

20. The distribution of CIL funds must be determined by accountable, local politicians and not subjected to detailed regulation by Government. As well as capital provision, the bill proposes that CIL could also be used for the operation and maintenance of infrastructure and for neighbourhood facilities. This is likely to reduce the amount of essential new infrastructure that could be provided through CIL.

Clause 94&c

Neighbourhood Planning

21. It would be helpful if the bill more explicitly emphasised Ministers' assertions that Neighbourhood plans cannot overrule more strategic assessments and policies contained in LDFs. Unwarranted expectations in neighbourhoods are in danger of being raised on this point.

22. We welcome Ministers' reassurance that the Government will reimburse councils for expenditure on the development of Neighbourhood Plans and it would be helpful if the bill clarified that this will be through a mechanism other than formula grant. Potentially there could be very significant resource implications for small district authorities. If the costs are similar to the costs associated with ‘area action plans’ it is estimated that a neighbourhood plan could cost between £30,000 and £100,000.

23. There is a potential risk of neighbourhood forums being undemocratic or unrepresentative, particularly in non-parished areas. Therefore councils should be free to develop local frameworks for neighbourhood planning, which recognise the role of local democratic representatives in making difficult choices and protecting the more vulnerable and less vocal. We are also concerned that the outcome of referendums could be unduly influenced by unrepresentative campaigns, particularly if there is no minimum turnout for the referendum to be binding. District councils must be reimbursed costs for managing these referendums.

Clause 96 &c

Neighbourhood Planning and Parish Councils

24. In those areas with parish councils, neighbourhood forums are a potential source of conflict and clear guidance is needed. If a district council is obliged to cooperate with a large number of parishes wanting to prepare plans at the same time it could place unsustainable pressure on planning departments.

Clause 96 &c

Enforcement

25. The proposals are generally welcome but are likely to increase the demand on enforcement activities and raise public expectations that decisive action will be taken swiftly. In addition, establishing that someone has deliberately tried to circumvent the 4 and 10 year time limits for taking enforcement action system may prove problematic. Re-examination of the time limits across the board would be more straightforward.

Clause 103 &c

HOUSING

Reform of Council Housing Finance

26. The DCN welcomes the commitment to reforming the Housing Revenue Account Subsidy System. Subject to the details of the final settlement this will allow freedom to manage housing stock effectively and create realistic, long-term business plans.

27. However, there is a major concern that a future Secretary of State is being given the opportunity to revisit and change the ‘settlement’. This introduces an additional risk into a matter over which there should be certainty and clarity. Once agreed, the settlement should not be open to renegotiation, which will hamper investment in new house-building and the contribution this can make to the Coalition Government’s plan for 150,000 new homes by 2015.

28. There is a further concern from some councils who are likely to be financially disadvantaged by the new proposals. Some councils have a high settlement debt allocation and therefore a high annual interest payment (which is more than the current annual payment made to central Government), while having to meet a high investment need. The following proposals will help to address this:

o The removal of the debt cap at the settlement level.

o Allowing councils to keep 100% of the receipts from Right to Buy sales, rather than the current 25%.

o Taking local investment needs into account when allocating the settlement rather than basing this on regional figures

Clause 140 &c

Flexible tenure

29. The DCN recognises the benefit to tenants and to local authority landlords in using flexible tenancies in certain circumstances. This is subject to the following:

o Tenancy decisions are a local policy decision and should be left to local discretion. Policies should be based on local need and local circumstances, to promote the economic and social wellbeing of all residents (not just those on the waiting list). The Government should not interfere with these decisions and such intervention goes against the spirit of localism.

o It should be up to councils to decide what the minimum period should be for social tenancies. It is not clear how a minimum 2 year fixed term tenancy has been determined. There is ample evidence of the many dysfunctional outcomes for communities and families from managing homes and neighbourhoods on a short term basis of just 2 years.

o It is important that the housing reforms are considered in the wider context with the changes to the Housing Benefit scheme, welfare benefits reform and further reform on social care.

o The Government should provide full compensation for the preparation of a local strategic policy on tenancies (estimated cost of £20,000)

Clause 126 &c

March 2011