Localism Bill

Memorandum submitted by Essex County Council (L 44)


1. Essex County Council welcomes the opportunity to submit evidence to the Localism Bill Committee. Essex County Council have campaigned long and hard to arrest the centralisation of power in Britain and to give power and influence back to individuals and communities. We are hopeful that the Localism Bill will be strengthened as it progresses through Parliament, and that it can help deliver the fundamental shift in power promised by the coalition government.

2. We recognise that the Localism Bill is central to the government’s legislative agenda and we welcome the determined efforts of the Coalition Government to pass power from Whitehall to local government and communities. Whilst we welcome many of the Bill’s provisions, there are a number of areas where we believe the Bill does not devolve power far enough. In order to strengthen the Bill and fully realise the government’s localism ambitions, we hope the Committee will support amendments in five key areas. These are as follows:

- the General Power of Competence (clause 5) – we would like a requirement for the Secretary of State to try to reach agreement with local authorities before introducing limits on their powers;

- changes in local governance models (clause 10) – we believe that this power should lie with local people and we would remove the Secretary of State’s power to direct changes in local authority leadership structures prior to the holding of a local referendum;

- regulations governing European Union fines (clauses 31-34) – removing provisions that allow EU fines to be passed on to local authorities, subject to further consultation and greater understanding about how this may impact on already strained local authority budgets;

- reforms to the council tax system (clause 56) – we would like the Secretary of State to consult with local authorities before determining the threshold at which council tax increases are "acceptable’ or ‘excessive’; and

- strategic planning (clause 89) – we would like to see the strengthening of provisions on strategic planning issues that impact across multiple planning authorities to help ensure effective decision-making above the district level.

3. The remainder of this document outlines the case for each of these changes. We believe that, with these amendments in place, the Bill will pass even more power to local people and help secure better outcomes for local communities.

Proposed amendments to the Localism Bill

4. Communities and councils across England are keen to see the Localism Bill deliver the fundamental shift in power promised by the coalition government. As a localist champion, Essex County Council is no exception: we have campaign ed long and hard to arrest the centralisation of power in Britain and to give power and influence back to individuals and communities.

5. We have watched keenly as the coalition government’s approach to localism has developed. The government’s commitment to localism and devolution has already delivered some significant progress (e.g. the reductions in local grant ring-fencing). But it has, at times been inconsistent, with Ministers suggesting prescriptions on the frequency of refuse collection, publicity practice and the acceptable level of council tax increases. Perhaps more seriously, the government’s approach has underplayed the role of elected local authorities. Reforms to schools policy, Big Society initiatives, elected police commissioners and GP commissioning have placed many areas of local decision-making beyond the remit of local councils. Although the publication of the Localism Bill helps redress this balance, it does not do enough to decisively transfer powers to communities and their local representatives.

6. We recognise that, by placing the Localism Bill at the centre of its legislative agenda, the government are making a determined effort to pass power from Whitehall. While we welcome many of the Bill’s provisions, there are a number of areas where Essex County Council believes the Bill does not devolve power far enough.

7. In order to strengthen the Bill and fully realise the government’s localism ambitions, we hope the Committee will support amendments in five key areas. These are as follows [1] :

Limitations on the General Power of Competence – part 1, chapter 1, clause 5

8. Although the General Power gives local authorities the freedom to act within statutory limits and restrictions, the Localism Bill allows the Secretary of State to introduce future restrictions on what a local authority may do. The Bill requires that the Secretary of State must consult before exercising this power and we are keen to see this requirement strengthened. We are keen that the Secretary of State must consult and try to reach agreement with local authorities on the scope of any restrictions. This would ensure that central government moves to alter local powers would be subject to similar criteria as local action to change central government behaviour under the Sustainable Communities Act 2007.

9. If introduced, this amendment would help safeguard the Bill’s localist reforms and help prevent any future government repealing the power of councils and communities by order.

10. This amendment would preserve clarity on local government powers. A key advantage of the General Power is that it clarifies the powers of local authorities in a way that previous legislation failed to do (specifically the well being powers in the Local Government Act 2000). There is a risk that subsequent restrictions on local authority powers could reintroduce ambiguity and, in so doing, limit councils appetite to innovate in serving their communities. By stressing the processes of trying to reach agreement between central and local government, our proposed amendment would help ensure a mutual understanding of any future change.

Changes in local governance models – part 1, chapter 3, clause 10 (schedule 2; section 9N)

11. These provisions amend the Local Government Act 2000 empowering the Secretary of State to require local authorities to discard existing governance arrangements and start operating on a mayoral model. They allow for the creation of ‘shadow mayors’ in advance of local referenda on whether the authority should permanently change their governance system.

12. We accept that the Secretary of State should have the power to order mayoral referenda in particular localities. These referenda alone should determine whether changes in governance models are made. We are therefore keen to see the Bill amended to prevent the installation of ‘shadow mayors’ prior to these referenda.

13. The local mayoral referenda tend to confirm the status quo – local electors need to see clear benefits to costly and disruptive change before they support it. Of the thirty-seven mayoral elections held over the past ten years in England, twenty-five have confirmed the status quo and rejected mayoral governance.

14. By allowing the installation of ‘shadow mayors’ before a referendum is held, the provisions of the Bill risk undermining trust in both local and national decision-makers. At best the government may be perceived as installing a leadership model for which there is limited local appetite. At worst they may be seen as changing leadership structures to increase the likelihood that voters will support a move towards elected mayors.

European Union fines – part 2, chapter 1, clauses 31-34

15. The provisions of the Localism Bill give Ministers the power to require local authorities to pay all, or part of, any financial sanction imposed on the UK by the European Union Court of Justice. The impact of this on local authorities, and the services they provide, could be substantial - particularly given the 27% reduction in expenditure planned in the current spending review period.

16. In July 2010, DCLG announced that it expected fines of £155m in respect of accountancy problems in handling the European Regional Development Fund (ERDF) – a responsibility of the soon-to-be defunct regional development agencies. If these fines were passed on to localities, the impact in Essex alone could be equivalent to cutting funding for school meals in primary and special schools; removing two years worth of financial support for community policing or withdrawing financial support from vulnerable rural communities.

17. We do, of course, recognise that public bodies guilty of infractions should be held to account. But in its current form, the Bill would impose a new regime allowing central government to pass fines onto local authorities extra judicially, by executive action. These measures have not been subjected to consultation with local representatives and could result in significant financial strain on local authorities. With this in mind, we are keen to see these provisions deleted from the Localism Bill prior to a full consultation and an assessment of their impact on local services.

Centralised decisions on council tax levels – part 4; chapter 2; clause 56; (schedule 5; sections 52ZC to 52ZF)

18. These sections of the Bill empower the Secretary of State to determine, with the approval of the House of Commons, ‘acceptable’ levels of council tax and a threshold beyond which increases in council tax should be considered ‘excessive’. Where an authority’s council tax is deemed to be ‘excessive’, the authority will need to prepare an alternative ‘shadow budget’ based on council taxation levels below the threshold. These budgets will then be presented to local communities for decision in a local referendum.

19. Essex County Council recognises that the council tax has become overloaded and unpopular – we have worked hard to deliver real terms reductions in council tax over the past three years. We are however concerned that, by empowering the Secretary of State to determine ‘acceptable and ‘excessive’ council tax the Bill risks undermining elected councils’ ability to flex local taxes to meet gaps in funding. It is unlikely that electors will vote for tax increases – there have been few examples of non-binding referendums on Council tax, but in all but one example, the electorate voted for the lowest increase available to them. The impact of this could be substantial: each percentage point increase in a Band D council tax levy is worth some £5.6 million to Essex County Council. This sum could make the difference between providing and not providing psychological support for children with special educational needs; an economic regeneration service; funding to the local voluntary and community sector or our programme of support for local heritage and culture.

20. We are also concerned that implementing a centrally determined process would by difficult and costly in a three-tier area such as Essex. The complexity is exacerbated further by the existence of over 250 precepting authorities (i.e. Essex County Council, Essex Police, Essex Fire and Rescue Service and Town/Parish Councils). Where any major precepting authority sets an ‘excessive’ council tax increase, the Bill will require polls to be held across each of the county’s twelve billing authority districts. Where local precepting authorities levy ‘excessive’ council tax increases, we could see a patchwork of separate local referenda across each of these district.

21. To help ensure that local resources are sufficient to provide local services, and to reduce the risk of complex and costly polling exercises, we are keen that the Bill be amended. We want to see the Bill require the Secretary of State to consult and to try to reach agreement with local authorities on how ‘acceptable’ and ‘excessive’ council tax levels are to be defined each year. This is an issue that affects elected representatives at all levels of government – both local and national governments will face pressure when funding for local services falls short.

Strategic Spatial Planning – Part 5; Chapter 1; Clause 89

22. The Localism Bill abolishes Regional Spatial Strategies (RSS) which impose top-down development targets and policies on local areas. Essex County Council supports this provision having long argued that regional targets were ineffective, bureaucratic and undemocratic. The abolition of RSS does however create a gap between the proposed ‘National Planning Framework for England’ and the development plans of individual Essex districts. Just as a National Planning Committee, appointed by the Secretary of State, is required to examine proposals for nationally significant infrastructure projects, it is necessary that some local planning decisions be taken at a level above that of the individual district.

23. The Bill requires local authorities to cooperate, forming voluntary groupings to coordinate action on strategic spatial planning issues. But these voluntary groupings will have no executive powers in deciding spatial strategy or strategic development policy. There will therefore be no mechanism for resolving policy disagreements between authorities.

24. This gap in planning reforms could have a substantial impact on local communities. Without a clear mechanism for making decisions on strategic development, there is a risk that Essex’s work on growth points, town centre regeneration and transport improvements could be stalled. Had this planning vacuum existed over the past decade, improvements to the A120, A130 and A131 may not have been realised. Significant advances in the regeneration of Basildon, Colchester and Harlow Town centre, and of the Thames and Haven Gateway areas – advances that are now supporting the UK’s economic recovery – may never have been achieved. We are keen to see the government make provisions for strategic spatial planning, either through the Localism Bill or through supplementary legislation. It is important that any such provisions support the work of developing Local Enterprise Partnerships. This will strengthen the operation of the new local planning system and play a vital role in securing important future development.

25. Even with these amendments in place, it is important that the government retain a commitment to localism. It could be some years before the changes put in place by this Bill bring about changes in the behaviour of local authorities and local communities. The Localism Bill is being published at a time when councils are dealing with substantial budget reductions. There is little in the localism Bill that will help authorities meet the financial challenges they face. Although the General Power of Competence may provide councils with the scope to make greater use of use charging and trading mechanisms, wider opportunities to raise taxes or raise capital finance are curtailed.

26. Significant though this legislation is, communities will have to wait for wider reforms before the full extent of the coalition’s commitment to localism can be assessed. The single most important barrier to effective localism – the restrictive system of local government finance – is not addressed by the Bill at all.

27. Without greater financial and fiscal responsibility, local authorities remain within the grip of national government and central departments. We would hope that the Local Government Resource Review recommends the diversification of local authorities’ income and places far greater emphasis on locally raised revenue, and reduced reliance on central grants.

28. We would also hope that this review will provide elected councils with the levers they need to effectively shape local their communities. We would hope to see consideration given to councils raising money through a locally determined blend of taxes.

January 2011

[1] We recognise that the Bill may change significantly as it progresses through the Parliamentary process. We have therefore not set out specific amendments to the text of the Bill. Rather, we have highlighted the provisions that we are keen to see strengthened and the reasons why we seek these changes.