Written Evidence submitted by Sir Howard
Bernstein, Chief Executive, Manchester City Council and Chair
of the Wider Leadership Group of the Association of Greater Manchester
Authorities (AGMA) (L&CG 15)
Introductory remarks
Thank you for the opportunity to contribute to this
important inquiry by the Committee. I would like to make some
introductory remarks about central and local government relations
that might be helpful in providing context and perspective before
I move on to answer the Committee questions.
Part of the problem about localism and achievement
of outcomes on the ground is that there is still a tension between
local government, its relationship with central government and
delivery. Though the Lyons Inquiry - which reported in 2007 -
had its remit extended to look at the form and function of local
government, we still lack a powerful national analysis about the
role of local government as agents of change, as shapers of places
where people want to live, work and invest and as transformers
of public services. That's why at a time when we see localism
given real stimulus at a national level, I think we are still
witnessing national government models of delivery - for business
support, the Work Programme, skills and so on - being perpetuated.
These centralised models have not been very spatially focussed
and therefore in my view may not be able to deliver as effective
outcomes as locally designed solutions.
Further, though the idea of 'place-shaping' has become
more mainstream since the Lyons Inquiry, there is still no clear
definition of the thresholds for devolution to places. For example,
that functional economic areas are the appropriate level for spatial
planning, housing, transport and labour market productivity; that
local authority and neighbourhoods are the appropriate level for
creating places where people want to live and spend their leisure
time; and that the individual level is for exercising influence
over service provision and immediate priorities. We need such
an analysis if we are to address not just constitutional reform
but the future shape of local government finance - which the Government
is committed to address in the Local Government Resource Review
early next year. It is needed for creating the conditions for
growth too.
The issue is therefore not just about powers but
an acceptance of the fundamental role which good local government
can and should play in providing the key integration and leadership
role between all public sector agencies in an area to deliver
efficient, quality public services which will deliver better outcomes.
It is also the key to reducing the demand for high dependency
services which is a national priority given the need for fiscal
re-balancing.
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?
Manchester City Council and the AGMA group of local
authorities in Greater Manchester (GM) are enthusiasts and practical
exponents of devolution. We want devolution because we feel that
we are closer to our areas and communities than central government.
If given more control over the levers and resources we can drive
more rapid economic growth in our areas and improve quality of
life in our communities.
The Manchester approach for many years has been to
create wealth through private sector growth, but public sector
reform - and reducing welfare dependency in particular - is the
other key strand of our strategy. It is this latter aspect where
constitutional reform in its broadest sense and devolution above
all, is important.
We know that we need to increase economic productivity
in Greater Manchester and to do this we need to be able to bring
services and functions together at the level at which they can
be most effective. Frequently, this means at the community or
neighbourhood level where they are closest to the recipient.
Using a model of integrated service delivery and integrated commissioning
which we are developing, we are combining a range of central and
local government services to reduce dependency. This work is
taking place in GM in some of the most deprived communities in
the country. We know from our early work in these city-region
pilot areas that by working with our partners in the Department
of Work and Pensions, Jobcentre Plus, NHS and other agencies,
we can develop new pathways into work for residents that until
now have existed on benefits. This is good for the residents
concerned, good for our economy and good for the public purse.
Our Manchester agenda is therefore very much about
reform as it is also about growth. Manchester wants ever improved
relations between central and local government. In recent years
through the type of work I have described we have made good headway,
but there is undoubtedly more work to do.
It is in this context that I approach the question
of constitutional reform: Will it help us to deliver the reform
that we need to deliver improved economic and social outcomes
on the ground?
By way of background the work on public service reform
and growth in Greater Manchester is building upon 20 years of
joint working across ten local authorities. Greater Manchester
- of which the City of Manchester is the heart - forms our functional
economic geography and it is to this wider sub-regional area that
we are seeking greater autonomy and devolution of powers and resources.
Much of what GM has achieved in recent years has been without
formal legislation and without a codified constitution.
There are clearly advantages and disadvantages to
legislative approaches governing the relationship between central
and local government. However, whilst in the past the City Council
has argued[27]
for a new constitutional settlement to enshrine the rights of
local government, I now think our recent experience would suggest
that this can be done in ways that utilise existing legislation,
tools and mechanisms.
For instance, AGMA is currently the only local authority
group in the UK which is utilising powers under the Local Democracy,
Economic Development and Construction Act 2009 to formally establish
a Combined Authority to better co-ordinate transport, economic
development and regeneration across the ten districts. We are
also seeking greater devolution to the newly approved GM Local
Enterprise Partnership (LEP) of a range of functions currently
exercised by the North West Development Agency. We are very eager
to ensure that our GM LEP when it begins work from 1st
April next year, is given the maximum amount of devolution possible
so it can drive the private sector job creation and growth to
support our public sector reform on the ground.
Overall, as far as Greater Manchester is concerned
we have reached a position where we are about to take responsibility
for large functional areas to the GM Combined Authority. Working
with other sub-regions across the North West we are also well-advanced
in developing transitional arrangements for the functional responsibilities
carried out by the North West Development Agency. Whilst we are
still in discussion with government departments about principles
and practical devolution of some of these functions, we hope it
will include most if not all of what is currently delivered by
the NWDA.
In the case of Greater Manchester I think it is clear
that the process of devolution, which began under the previous
government and continues under this one, has begun to provide
the foundation for more self-reliant and autonomous local government.
What is less clear now than it was in the past, is what added
value a codified constitution could provide to aid a process that
is already happening. Whilst existing and forthcoming legislation
in the form of the Localism Bill will, hopefully, provide for
the greater devolution that we seek, the question remains whether
it is necessary to go through a process of codification that may
not ultimately deliver better outcomes on the ground beyond those
which are already achievable.
In summary, it is my view that devolution to increase
the autonomy of local government needs to continue. This is already
bringing an increasing recognition of and respect for local government
by central government, and greater joint working to deliver better
outcomes on the ground. In this context, the merits of codifying
the relationship between central and local government could possibly
be outweighed by the time and effort that will be involved.
2. If codification is appropriate, what degree
of independence from central government and what powers should
local government be given?
Whether or not codification is appropriate, there
is a need to provide more powers to local government.
There are already ways that local government can
provide more powers for itself through existing legislation:
The Local Government and Public Involvement in Health Act 2007
allow local authorities the autonomy to establish local bye-laws
without the approval of the Secretary of State. Section 239 of
the Local Government Act 1972 allows local authorities to promote
a Bill in Parliament. The Manchester City Council Act 2010, which
received Royal Assent in April, gave the Council extra powers
to control people illegally street trading in busy shopping areas.
AGMA is also exploring a byelaw approach to implement a minimum
unit price for alcohol across the Greater Manchester footprint.
Whilst there are still many practicalities to be considered
with regards to this scheme it may also help the campaign for
national legislation for a minimum alcohol unit price.
On wider issues we have argued many times in the
past and in our submission to the 'Balance of Power' CLG Committee
inquiry for greater financial autonomy including the ability to
raise a higher proportion of funding locally. Many studies have
shown that urban areas with greater financial autonomy have greater
economic competitiveness. A 2004 study by Michael Parkinson[28]
found that a lack of powers at the city level helps explains the
poor economic performance of UK cities relative to their European
counterparts. The OECD average for locally raised finance through
taxation is 55%. France is very near to this at 54%, whilst the
UK is well below at around 17%. The raising of finance through
local taxes also brings with it stronger local accountability.
This greater financial autonomy can come in many
forms and these are matters that will be considered as part of
the Local Government Resource Review. For interest, with respect
to Tax Increment Financing which in Greater Manchester we plan
to take this forward by linking it to other funding streams to
maximise the delivery of growth within GM. Rather than focussing
solely on particular projects, there will be a focus on the wider
area within which a range of schemes boosting economic growth
and employment will be located. Taking an area-based approach
will reduce the risk of job displacement and increase the prospect
of increasing GDP; boosting employers' demand for workers; reducing
levels of worklessness and welfare payments. Supporting our approach
to public service reform outlined earlier, this approach would
not only to boost productivity across GM and encourage maximum
retention of additional business rates for investment, but it
will have the wider benefit to the national economy in helping
to drive growth in one of the country's key growth points.
In order to make these plans as effective as possible
we need the ability to exercise control over the various investment
streams to secure the maximum net impact on sustainable private
sector growth. This needs to include joint powers of prudential
borrowing without imposed limits; the devolution of a 'capital
pot' for funding of transport, housing, economic development and
environment and greater ability to pool funding between different
agencies to invest locally.
One issue that arises in relation to this question
is that capacity and capability for greater devolution has developed
at different speeds in different places. As a consequence there
may be a need for differential approaches to devolution across
different places and perhaps different types of authorities.
In GM devolution to our Combined Authority will be enshrined in
law before anywhere else in the UK. It is likely that other groups
of local authorities will wish to follow this approach.
There is a strong case for advanced and differential
devolution to cities which has been well set out in the Core Cities
group recent report 'Core Cities: Driving Recovery'[29]
which demonstrates how England's eight core cities - including
Manchester - can deliver more private sector growth, jobs and
prosperity with greater devolution from central government. This
case is further elaborated in the evidence they have submitted
to the Committee.
3. How, if at all, should the status of local
government be entrenched, or protected from change by central
government?
This question of entrenchment or protection is difficult
because the British constitution has been based on the sovereignty
of Parliament. Parliament is the supreme and final source of
law and it can change the constitution by passing Acts of Parliament.
A change of government often means changes to previous legislation.
It has been suggested by some constitutional commentators that
some Acts should have the status of 'constitutional statutes'
- such as the Human Rights Act 1998 or the European Communities
Act 1972 - making them more difficult, though not impossible,
to change. Arguably, legislation affecting the role and functions
of local government could be treated in the same way. A further
development of this notion might be that constitutional statutes
could only be agreed via a referendum and could only be amended
or repealed via a referendum.
As discussed in Q7 below the CLG Committee recommended
that the European Charter for Local Self-Government should be
put on a statutory footing which could provide some protection
of the status of local government. The Charter considers that
public responsibilities should be exercised by the authorities
closest to the citizens, a higher level being considered only
when the co-ordination or discharge of duties is impossible or
less efficient at the level immediately below. This begins to
address the issue of appropriate spatial level that I raised in
my opening remarks. The sentiments of the Charter are very much
in line with the process of devolution that is currently taking
place, but it lacks the definition of thresholds for appropriate
functions being exercised at appropriate levels that I think would
be helpful.
Though constitutional solutions are attractive there
are also cultural issues that underlie the tensions between central
and local government. These are often the reason why central
government wishes to change the role of local government by either
adding additional responsibilities or taking them away. In order
to deliver the transformational change in central - local government
relations that will enable local government to fully deliver the
localism agenda, there needs to be a significant cultural shift
in attitudes at a national level. These may happen over a period
of time and may or may not be assisted by legislation.
A very simple initiative that could help address
some of the cultural issues and aid understanding, would be to
have some form of guidance for both the civil service and local
government to work to. The type of manual that I believe Sir
Gus O'Donnell has produced (but not yet published) covering relations
of central government with Europe, devolved governments, peers,
civil servants and Councils could be very helpful to aid understanding
of the role that different tiers of government play. It could
also help ensure that all government departments work to the same
set of principles for devolution and that the role and value of
local government is recognised. It may be particularly helpful
to have such guidance once devolution from the regional tier is
completed.
4. 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?
From the perspective of Greater Manchester there
are strong governance arrangements already in place for AGMA which
are being both widened and strengthened as we develop the Combined
Authority and the GM LEP Board.
A codification or otherwise of the relationship between
central and local government is unlikely to change these local
arrangements which provide robust and accountable governance across
GM but at the same time maintain the autonomy of local Councils
and local Councillors and their accountability to their local
electorates.
Leaders of the ten GM Councils sit on the AGMA Executive
Board and each Council will nominate a member to sit on the GM
Combined Authority. AGMA has joint Committees for Waste, Minerals,
Planning, Health Scrutiny and statutory functions. It also has
a series of Commissions for the Economy; Planning and Housing;
Environment; Health; Public Protection; and Improvement and Efficiency.
Elected members are appointed to these bodies from each of the
ten Districts at the AGMA AGM.
We believe we have the most robust, democratic and
accountable governance arrangements of any city-region in the
UK. We believe that these arrangements should be decided upon
and maintained locally. If further devolution - including financial
devolution - is provided then there will be an increasing interest
in and accountability of local government to the local electorate
on an increasing number and range of services and functions provided.
5. Does the devolution settlement provide a relevant
model for a possible codification of the status of local government?
Devolution to Scotland, Wales and Northern Ireland
was confirmed by referendum thereby arguably giving greater democratic
legitimacy. As mentioned in answer to Q3 above, consideration
could be given to allowing referenda on constitutional statutes
thereby encouraging greater democratic involvement. It remains
however, that the devolved bodies are not sovereign and could
in theory be repealed by Parliament. Whilst I do not consider
that the devolution settlement needs to be replicated in England
there is a need to ensure that devolution to the local level continues
swiftly supported by existing and forthcoming legislation.
In relation to finance, the Scotland Bill is intended
to give the Scottish Parliament more control over raising the
money that it spends. Whilst Holyrood currently raises about
15% of its revenue, this could increase to 35% and allow the Scottish
Government to receive a 10% share of income tax raised in Scotland.
As the devolved Parliaments and Assemblies receive greater fiscal
autonomy, the lack of fiscal autonomy at local level in England
may become more apparent.
As outlined under Q2 above local government in general
in the UK needs to increase the share of finance that is raised
locally. Again these are questions to be dealt with in the Local
Government Resource Review.
6. Are there examples of constitutional settlements
between central and local government in other countries that are
relevant to an appropriate model for the UK?
The trend in continental Europe has been to decentralise
and regionalise decision-making, placing powers at the lowest
level. Continental cities have responsibility for a wider range
of functions which affect their economic competitiveness than
do their English counterparts. Continental cities typically have
more diverse forms of local revenue and more buoyant tax bases,
which make them less fiscally dependent upon the national state
and more proactive in their development strategies.
In France, decision-making used to be highly centralized,
but in 1982 national government passed legislation to decentralize
authority by giving a wide range of administrative and fiscal
powers to local elected officials. In March 2003, a constitutional
revision changed the legal framework towards a more decentralized
system and has increased the powers of local governments. In
the German system intergovernmental relations between the Federation
and the Länder reflects the fact that the Länder have
always been the main administrators not just of their own laws,
but also of most federal and directly applicable European legislation.
Again, the direction of travel in these continental
examples is what is important and which needs to be replicated
in the UK.
7. What is the value of existing attempts to codify
the relationship between central and local government, through:
- the Central-Local Concordat?
- the European Charter of Local Self-Government?
Should this Charter be placed on a statutory footing?
The CLG Committee recommended that the European Charter
should be enshrined in UK law. In this case Bills would need
to be declared in compliance with the Charter and impact assessments
carried out. This could help deliver greater authority for local
government but may only re-inforce a devolutionary process that
is already underway. Presenting this as a National Charter for
Local Self Government might help re-inforce the Government's existing
commitment and initiatives for devolution.
The CLG Committee found that Central - Local Concordat
had made little difference to relations between central and local
government. The most important changes that have happened in
Greater Manchester are as a result of the devolution of powers,
responsibilities and finance from national to local level and
this process should continue.
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?
This would give greater statutory basis for local
government to do anything that it feels necessary not restricted
by other legislation. However, it does not fundamentally alter
the relationship in the way that a written constitution would.
It would, however, be a key part of the devolutionary measures
described in enabling the greater autonomy of local government
and is therefore welcome.
6 December 2010
27 MCC stated in our evidence to the CLG Committee
on the Balance of Power: Central and Local Government in 2008:
Under the current settlement, local government will always
be subject to the whims of central government. A new constitutional
settlement is required that enshrines the rights of local government
and local democracy.
Back
28
Parkinson M
et al (2004) Competitive European Cities: Where do the Core Cities
stand?, London: ODPM Back
29
Driving Economic
Recovery: A New Partnership with a New Government. Core Cities
Group 2010. www.corecities.com Back
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