House of Commons - Political and Constitutional Reform Committee

Prospects for codifying the relationship between central and local government - Political and Constitutional Reform Committee Contents

Written evidence submitted by Henry Peterson, Consultant (L&CG 11)

Executive summary

This submission to the Select Committee argues that

codification of basic constitutional principles, defining the interlinked roles of central and local government, would have benefits for the citizen and for those working at all levels of government
codification, and a legislative redefinition of the statutory status of principal councils in England should accompany the proposed general power of competence, and replace the ultra vires doctrine
the European Charter of Local Self-Governance provides the best starting point for such codification
the devolution settlement offers a potential model for a more radical devolution of decision-making in England
such moves would need to include a rethinking of the principles of Parliamentary accountability for public expenditure, opening the way to place-based budgets and more cost-effective use of resources.
codification would assist in clarifying the Government's direction of travel (and destination) on the devolution of power and 'localism', and would reduce current ambiguities in the Government's approach.
a widely drawn general power of competence would have profound effects on the constitutional status quo. Research evidence on 'use' of the current wellbeing power is not a meaningful measure of levels of innovation by local councils.

Questions

1. Should the relationship between central and local government be codified? Should codification of the relationship between central and local government be considered in the context of a wider constitutional codification?

As the committee has noted, a number of local authorities have said in the past that codification is not high on their list of priorities, preferring instead early action on specific new powers for local government.

Both should be possible. Codification would help to widen public understanding of how government works, and provide a degree of security for the role of local government within our constitutional settlement.

From a practitioner viewpoint, local authorities currently operate in world where the groundrules can change at any time. As early witnesses to the committee have evidenced, incoming governments can (and regularly do) substantively re-interpret the role of local government. These changes may be abrupt, or may take several years to develop. Either way, those trying to make sense of decision-making and public service delivery at local level find the ground shifting under their feet.

One of the products of our unwritten constitution is that the average citizen, seeking an answer to the basic question 'how am I governed?' will search in vain for an answer. His or her local authority website may give an explanation of how the local council reaches decisions. The Parliamentary website does a good job in explaining how that institution works. But there are few sources which set out the basic principles underlying the interdependent relationship between the two levels of government.

The LGA publication one country two systems[5] points up how the very existence of local government has largely disappeared from more recent texts on the UK constitution, whereas 19^th century classical accounts of British government machinery would have focused on the connections between democratic local government and a parliamentary state. What the LGA refer to a 'continuum' of government', with taxation and representation at central and local level, is no longer coherently or widely promulgated as the core of our system of government.

Historians and analysts of our constitutional settlement have traced the shifts of in roles, relationships, and the 'balance of power'. Your predecessor committee explored these in depth. Similar enquiries were carried out by the Joint Select Committee in the 1995-6 session of Parliament[6]. Much of the evidence submitted to that inquiry, including the case for moving to European principles of subsidiarity, remains relevant today.

The Principles of Local Government[7], as drawn up in 1991 by the Association of County Councils, the Association of District Councils, and the Association of Metropolitan Authorities, long predate the 2007 'Concordat' (and are arguably better drafted and closer to the European Charter).

Codification would help in three main respects

It would remind people that our system of government is a continuum of national and local. The latter will often have the most direct impact on their daily lives. Citizens need to be more aware that their avenues for influencing their democratic representatives are twofold, and that their local council (or councils, in two tier areas) has autonomy over many issues and is not merely an agency of Whitehall.
It would provide local government with a principled basis for challenging those central government directives which appear to have no relevance or utility to a local context.
It would help to shift the culture of central and local government away from what has become an unhealthy relationship of master-agent on the one hand and growing subservience on the other, restoring important elements of pluralism in our democracy.
It would help to secure a more consistent role for local government, avoiding the widely varying interpretations which different central governments have adopted over the past 30 years.

2. If codification is appropriate, what degree of independence from central government and what powers should local government be given?

The most recent formal attempt to articulate the level of independence of local government culminated in the December 2007 Concordat agreed between CLG and the LGA.

This expressed the roles of local and central government in terms of 'rights and responsibilities'. The 'right' of a local council to address the priorities of their communities was asserted, subject to the proviso 'without unnecessary direction and control'.

This took matters little further. As pointed out above, successive governments have taken very different views on what constitutes 'necessary direction and control'. This formulation is very different from that of European principles of subsidiarity, as the committee has already heard from witnesses such as Roger Gough.

A perennial concern of Whitehall has been that left to their own devices, local councils will pursue too disparate a range of priorities and policies, contrary to the overall national interest. There is little evidence that this would be the case. In the early years of the Local Area Agreement framework (2004-2010), the last Government insisted initially that a significant number of indicators and targets in the 'outcome framework' developed for LAAs should be mandatory on councils and their local partners. Top-down control of the detail of policy implementation was seen as essential.

In practice, the degree of convergence between the selection of targets made by local partners, and those that Government Offices sought to impose from above, was sufficiently high (70-80%) for Whitehall to relax in later rounds of LAAs. Mandatory targets were dropped.

The question 'should there be limits to localism?' is being explored by the CLG Select Committee. Complex and difficult issues of universality, uniformity, local discretion and postcode choice are involved. Ultimately this must surely be a matter of political choice. There can be no objective standpoint from which to judge whether political priorities chosen locally are going to prove 'better' or 'worse' than a set chosen centrally, as the judgement is in the eye of the beholder. International experience does not suggest that devolved and decentralised models of government produce worse outcomes overall[8].

Without any form of codification, public servants work in a world in which views of the 'right' level of independence of local government can change swiftly.

As an example, the new Government has chosen to take a very different view from the old on what is now described as 'top-down performance management and bureaucracy'. Government business plans show Whitehall departments intoning the opposite of what they held us unalterable truths only 8 months ago. Departments now rival each other in their insistence that the old ways of ensuring delivery of policy at local level were misguided, and the new approach the only formula for success[9].

Only three years ago, the central/local relationship was defined in the CLG/LGA Concordat as follows:

Central government has the responsibility and democratic mandate to act in accordance with the national interest. Acting through Parliament, it has the over-riding interest in matters such as the national economic interest, public service improvement and standards of delivery, and taxation[10].

Three years on, central government takes a different view on where responsibility lies for public service improvement. Central micro-management is no longer the answer, and the LGA case for sector-led improvement is largely accepted.

In briefing material provided by civil servants to Eric Pickles on the abolition of the Audit Commission (and published on the CLG website in response a FoI request) the latest Whitehall view of this aspect of the constitutional settlement appears to have changed markedly from the past. The Ministerial briefing note reads[11]:

With localism, local public bodies principally need to operate within a framework of local democratic accountability and transparency. They still need to have accountability to Parliament for the use of public funds but there is at most limited accountability to Government (my emphasis). The aim therefore is to create an accountability framework fit for a localist world.

This principle that local public bodies have 'at most limited accountability to Government' will come as news to the many thousand public sector employees who have been employed in recent years in upward reporting to Whitehall, as part of the former National Performance Framework. They can be forgiven for being sceptical that this change of heart will last for long.

Small wonder that public sector employees, let alone citizens at large, are frequently confused as to respective roles of central and local government. There is little solid to cling on to. Hence any progress on codification, establishing broad principles rather than attempting to lock in place a set of functions for local government, would be of benefit.

3. How, if at all, should the status of local government be entrenched, or protected from change by central government?

Various options have been floated in the past, in efforts to get round our historic national reluctance to adopt a written set of constitutional principles.

A Local Government Act which incorporates a codification of the central/local relationship might last no longer than a single government. But it would at least be a start. The 1972 Local Government Act (as is often pointed out) managed to lay down the principles of local authority decision-making in a form that lasted for nearly three decades (besides being much simpler than its 2000 successor).

The committee may wish to consider whether the general power of competence will prove a game-changer in terms of entrenching the status of local government. If defined sufficiently broadly[12] such a new power presumably has the effect of overtaking the ultra vires doctrine? Will this prove a timely moment to re-frame the legislative status of local authorities?

Given powers to do anything lawful, unless specifically outlawed by legislation, the role of councils, as a layer of government extending beyond defined functions, duties and powers, is finally affirmed. Even if the new power allows for specific exclusions to be introduced via secondary legislation (as has been hinted recently) this shift of position from a 'vires' principle would be achieved.

Depending on how the new power is framed, this may prompt a useful re-visiting of the question of what exactly is an English principal local authority, in strict legal terms?[13].

Another factor likely to re-awaken public interest on the role and status of local government vis-à-vis central government is the impact of expenditure cuts. The question of 'who decides', with its related issues of local and national electoral accountability, could return with a vengeance as a range of former public services begin to disappear.

Subsidiarity - are we developing a unique English version?

New government policies prompt the question of whether the UK is pursuing a different form of subsidiarity as compared with European peers. The Coalition has committed to 'promote the radical devolution of power and greater financial autonomy to local government and community groups'[14].

Direct devolution of power or resources to community organisations or social enterprises, or other bodies which are not 'emanations of the state'[15] is surely a rather different form of 'subsidiarity' than that pursued elsewhere in the EU?

Professor George Jones has labeled such devolution as 'sub-localism'. Where it involves the transfer of power or funds to organisations which are not public bodies, or which have no obvious public accountability, and with locally elected representatives bypassed on the way, contentious issues will surface.

As currently being explored by the CLG Select Committee, the 'localist' agenda is now taking different forms. These might be described as:

Big Society localism (power and resources devolved directly to non-state bodies such as mutuals and social enterprises, described as 'sub-localism' by Professor George Jones)
'silo localism' (where individual Whitehall departments shed responsibilities outwards, with little regard to how these will then be integrated with other public services at local level)
'integrated localism' (where local authorities continue to attempt a convening or 'system leader' role, as with ideas around place-based budgets, Community Budgets, and local strategic partnerships/public service boards).

A firmer constitutional positioning of local government, with a wide general power of competence, would place councils more firmly at the heart of the current agenda on devolution and localism. This would follow a more European model of subsidiarity with a series of spatial levels of representative government, and decisions made as close as is practicable to the citizen.

If the results of this committee's endeavours lead to no moves towards codification, or to a more lasting constitutional settlement, this will be interpreted as a conscious move by Government to resist European models of subsidiarity in favour of a dispersed and fragmented form of pluralism.

Proponents of the Big Society argue that it will release innovation and competition, and be more responsive to citizens. Others raise concern over the risks of fragmentation and potential loss of democratic accountability.

The recent call for evidence from HMT/Cabinet Office on public service reform[16] signals a direction of travel that suggests that local authorities will play a diminishing rather than growing role in providing integrated public services to the citizen.

The focus is on 'greater diversity of service provision' and 'new forms of accountability' While there is reference to devolving power from central to local, the words 'local government' or 'local council' do not feature in the document (the term 'local authorities' featuring once, in a section on personalised payments).

Instead, the section on 'increasing democratic accountability at local level' has a curious paragraph reading 'The White Paper will set out how we intend to move services from a culture of 'bureaucratic accountability' where public services look upwards to serve Whitehall and central government, to a culture of democratic accountability, where public services are accountable to those whom they serve at a local level. This can include both a new and dynamic supply side, with multiple providers from the private, public and not-for-profit sector, so that individuals can choose the service that best fits their need and hold them accountable through choice. In some areas, it can also mean the introduction of elected individuals and bodies. (my emphasis)

Whitehall pronouncements on public service reform have been known in the past to ignore (or simply forget?) that we already have a framework of 'locally elected individuals and bodies'. In their eagerness to introduce 'new forms of accountability', it does not seem to occur to civil servants that existing councils fulfill this role, and could do it better if freed to get on with it.

Much of Big Society rhetoric harks back to the 19^th century, but sometimes seems to forget the origins of local government. It may be time for a reminder that councils are themselves the product of local communities coming together to form not-for-profit corporations in our major cities, to address the social, economic and environmental evils of their day. Community-led, 'bottom-up' in their creation through separate Local Acts of Parliament, energetic, innovative and celebrating local variance. What could be more Big Society?

As has always been the case, some form of local representative body will be needed in future to make the choices and judgements in circumstances where competing local interests cannot all be met. Someone will be needed to exercise leadership of 'place', bringing together a fragmented public sector to best effect for any one locality.

Amidst these multiple strands of 'localism', with a new 'right to provide' and a 'community right to challenge', will some counter-balance be needed? A re-assertion of the role of local government, through codification, would assist.

How else are choices and trade-offs to be made, when differing interest groups within the Big Society cannot agree? Who is to determine between conflicting priorities? It is not clear, as yet, how the Big Society agenda will meet these timeless requirements of a 'governing' role.

What consequences should codification or other change in the relationship between central and local government have on the accountability of local authorities to elected local politicians, local people and central government?

Were Parliament able to settle, in some permanent form, the relationship between central and local government, the consequences would be significant.

The citizen would get a better answer to the question of 'who's in charge of this or that aspect of my life'. There would be a move back towards a form of local government that meant what the label suggests - a genuine governing role at the local level with democratically elected representatives empowered to make the decisions that the current period of economic austerity requires.

Over time (and in the case of the devolved administrations it has taken a decade or more), public understanding of differing levels of accountability for government decisions would grow. The UK public now understand the fact that issues such as prescription charges and higher education fees are handled very differently in Scotland and Wales.

In the devolved regions, the Scottish Parliament and Welsh Assembly come across as a 'continuum of government' (to use the LGA's phrase). It is hard to conceive of either body making pronouncements about public sector reform, without reference to the role of local government. The Scotland Performs website[17] communicates a more coherent, citizen-friendly view of what the totality of government is doing, as compared with Whitehall's recently published Business Plans. Local partnership working, between all parts of the public sector, working is meshed more firmly into the system.

England too needs this level of connectedness between the citizen, and local and central layers of government. Codification of the central local relationship, coupled with other measures suggested in this and other evidence to the committee, would be a step towards this.

Such measures would also take the Localism debate, as being examined by the CLG Select Committee, to a different level. Once Parliament formally accepts the principle that local councils form a constitutional layer of government, with devolved powers and responsibilities framed in broad terms (rather than as delegated and specific 'functions') the route to place-based budgets and 'whole system' delivery of public services becomes that much easier.

4. Does the devolution settlement provide a relevant model for a possible codification of the status of local government?

Yes, in my view. It is hard to see insuperable obstacles to a codified settlement with English local government which followed the model of the Scotland Act 1999. Matters 'reserved' to Parliament would be defined. All matters not listed would be deemed to be devolved.

Such reform would need to be accompanied (as it was for Scotland and Wales) by restatement of the principles of Parliamentary accountability for expenditure on locally-based public services. In written and oral evidence to the CLG Select Committee on Localism, I have argued the case for the 152 upper-tier local authority areas in England to be handed a devolved single block grant, or place-based budget, covering the totality of local public expenditure as currently included within Local Spending Reports[18].

The sums involved would of course be much smaller than for Scotland or Wales as a region (although not of a different order to Wales for a large county area such as Kent or Essex). The principles on which the block funding was devolved could potentially be framed in terms as admirably simple as those defined by HMT for Scotland, Wales and Northern Ireland. These read:

'Government funding for the devolved administrations' budgets is normally determined within spending reviews alongside departments of the United Kingdom and in accordance with the policies set out in this Statement. The United Kingdom Parliament votes the necessary provision to the Secretaries of State; they make payments to the devolved administrations.

The allocation of public expenditure between the services under the control of the devolved administrations is for the devolved administrations to determine[19].

5. Are there examples of constitutional settlements between central and local government in other countries that are relevant to an appropriate model for the UK?

International comparisons suggest that a codified constitutional settlement is not enough on its own. Evidence already given the committee has highlighted two other factors that contribute to a successful central/local relationship:

a shared culture of public service, with interchange of personnel and routine joint working between layers of government (with Nordic countries such as Denmark often cited as examples).
the existence of a permanent body which can referee the relationship and take a view where differing interpretations of a constitutional settlement become a point of friction (with examples previously provided to the committee by Roger Gough)

In terms of constitutional settlements in comparable countries, the LGA has previously recommended that Government should legislate along the lines of Article 118 of the Italian Constitutional Law (2001). This reflects the subsidiarity principles of the European Charter, and would mean that councils are presumed to have the powers to provide any public service not explicitly reserved as the unique responsibility of a national body in the interests of assuring uniformity of service.[20]

In terms of the organisational cultures of different layers of government, there remains a long way to go to bridge the historic UK divide between civil service and local government. Two decades of top-down centralism were only beginning to be reversed in the closing years of the previous government. Centralist arrangements which fostered adversarial relationships between local public servants and their Whitehall counterparts have only recently begun to disappear[21].

There are also signs of silo centralism re-asserting itself in a number of areas. Whereas local councils and their partner agencies were making progress under the last government, in establishing a coherent 'family' of local partnership bodies covering the full span of public sector activity, there is no explanation from government as to how Police and Crime Panels, Health and Wellbeing Boards, and Local Enterprise Partnerships will interrelate.

Each body looks as though it will have a different status (some planned to be 'statutory' and others not). They will operate at different spatial levels, and their accountability arrangements, local and central, will remain beyond the comprehension of all but the very specialist.

These sorts of disjointed initiative, not for the first time, will complicate life for all those at local level trying to make sense of Government policy across the piece. Local players will find a way to cope (as they always do), but these dysfunctions do not help working relationships between the centre and localities. Government Office staff, who in some regions played a very positive role in bridging this communication gap in recent years, are now disappearing from the scene.

Overall, working relationships and culture still remain a long way from the sense of 'joint endeavour' and 'mature dialogue' that formed a key part of the original vision for the Local Area Agreement framework.[22] Despite the efforts of CLG to assert the importance of place and locality across Whitehall, and to build a culture of collaboration and co-design, advances made from 2004-10 remained patchy. The Institute for Government has charted the position in more depth[23].

By contrast, both the constitutional settlement and working culture in countries such as Denmark appear to be very different. Local authorities there have wide powers allowing them (for example) to deliver integrated provision of health and social care. This is coupled with a positive and well entrenched collaborative working culture, between all tiers of government. The need for more formal arrangements to encourage collaboration seems much less, as a result of this history.

In terms of a body to referee any central/local settlement, various options have been put forward:

The 2007 Concordat envisaged, as a modest start, that the former Central Local Partnership would monitor the operation of the agreement The CLP ceased to meet shortly afterwards, and no such monitoring took place.

The LGA proposed in 2008 that Parliament should set up a committee charged with pre-scrutinising legislative proposals with local government implications.[24] Lord (Michael) Bichard also made the case for such arrangements.

A standing select committee of parliament, to oversee a constitutional settlement, was proposed by the predecessor CLG Select Committee.

7. What is the value of existing attempts to codify the relationship between central and local government, through: the Central-Local Concordat or the European Charter of Local Self-Government? Should this Charter be placed on a statutory footing?

As is widely acknowledged, the 2007 Concordat signed between the LGA and CLG failed to have traction.

The agreement was reached between the LGA and a single local government department. There was little sign of efforts to ensure buy-in from other government departments when the agreement was first made. There has been every sign subsequently that the rest of Whitehall pays the Concordat little heed, or is unaware of its existence.

Placing the European Charter on a statutory footing would seem a substantive and worthwhile step, provided Government was genuinely committed to its terms. This could be either in the full form adopted by the UK Government in 1999 (but largely ignored in practice). Or it could be in a form with various exclusions (as the Charter allows) but at least fully debated by Parliament and with real ownership by legislators.

Following adoption, it would still need Parliament to play an active part in successive policing of the results, or in mediating where differences of interpretation emerged.

As Roger Gough has pointed out to the committee, the stumbling block to UK statutory commitment to the Charter has always been the financial provisions, with Article 9.4 reading 'The financial systems on which resources available to local authorities are based shall be of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks'. Until wider issues on the balance of funding are resolved, this obstacle to agreement will remain. But this Government's commitment to review funding arrangements for local government, and to re-localise the business rate, opens up possibilities.

A more radical approach to place based budgets, with block grant allocations made to upper tier local authorities, reflecting the totality of public expenditure in the area, would also change the financial context. This would be the case whether or not such 'local budgets' were accompanied by devolution of new tax-raising powers or alternative 'buoyant' income streams

8. How would the "general power of competence" for local authorities proposed by the current Government affect the constitutional relationship between central and local government?

A widely drawn general power of competence would have the effect of replacing the ultra vires doctrine, as the statutory framework within which local government operates. Local authorities would cease to approach local needs and challenges with the question 'would we have powers to do anything about this issue?' and would instead ask themselves 'what can we and our local partners do to help?'

The more progressive and ambitious local authorities have always asked the second question before the first. But the first still surfaces, and can hold things back. The doctrine of vires is a constant reminder to local government that it can act solely at the discretion of Parliament, and has no independent autonomy and no certainty of a long-term future.

Ministers have argued that local authorities have shown insufficient interest in using the existing wellbeing power[25]. I would suggest that research evidence on the 'use' of the wellbeing power, on which such statements are based, has its limitations and that there are many reasons why true 'use' is significantly under-recorded[26]. Statistics or percentiles of formal 'use' of the power are not (in my view) a meaningful measure of the appetite across local government for taking on wider responsibilities, or for innovation.

The reality on the ground is that progressive local authorities, through joint working with health, police, and other agencies, have become involved in a far wider range of activities than 30 years ago. The legislative framework providing specific vires for such activities has always been some years behind the curve.

The way in which a new general power of competence is framed, and its relationship with the ultra vires doctrine, will therefore be critical. The committee will have the benefit of being able to see the outcome on this issue, before finalising its conclusions.

3 December 2010

5 One country, two systems LGA December 2001 chapter 1 Back

6 Select Committee on Relations between Central and Local Government, which reported under the title Rebuilding Trust. Written Evidence HL Paper 97-II Back

7 These principles, as agreed by the ACC, AMA and ADC (forerunner bodies to the LGA) are set out on pages 120-121 of HL Paper 97-11, as part of evidence to the 1995 Joint Select Committee which published Rebuilding Trust Back

8 With a little help from our friends Roger Gough, Localis and LGA, Jan 2009 Back

9 See for example the Home Office Business Plan which states 'The Department will no longer impose unnecessary burdens and bureaucracy on the police through top-down targets, the Policing Pledge and a confusing set of national policing bodies and ring-fenced grants'. It is unsurprising if public servants at local level do not know whether they are coming or going. Back

10 Paragraph 5 of Concordat agreed between CLG and LGA, December 2007 at http://www.communities.gov.uk/documents/localgovernment/pdf/601000.pdf

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11 Document 20, Part B, as published on CLG website at http://www.communities.gov.uk/corporate/foi/disclosure-log/disclosurelog2010/abolitionauditcommission/

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12 The Conservative policy document Control Shift described such a power as one which would 'give local authorities an explicit freedom to act in the best interests of their voters, unhindered by the absence of specific legislation supporting their

actions. No action - except raising taxes, which requires specific parliamentary approval - will any longer be 'beyond the powers' of local government in England, unless the local authority is prevented from taking that action by the common law, specific legislation or statutory guidance. Back