Prospects for codifying the relationship between central and local government

Written evidence submitted by Professor Steve Leach, De Montfort University, Professor Vivien Lowndes, University of Nottingham and Dr Mark Roberts, De Montfort University (L&CG 05)

Introduction

The three individuals submitting evidence all have a long track record of research and consultancy in local government issues. But none of us is a legal expert, nor have we experience of drafting codifying documents of the type covered by the committee’s inquiry. In our evidence we therefore concentrate on topics which we think should be addressed in a codifying document (subsequently referred to as a Code) together with some suggestions how such issues should be addressed.

Desirability of a codified settlement

We agree strongly that there is a need for a Code setting out the relationship between central and local government. We recognise that the existence of such a document would need to be supported by changes in political and cultural behaviour, and that laws and agreements do not necessarily create relationships. However we are convinced that a Code would be a necessary (though not sufficient) condition in clarifying central-local relationships, and in particular, in avoiding the arbitrary (and politically motivated) interventions and ill-considered changes in the structures and processes of local government of which central governments have, in the last few decades, been from time to time guilty.

The point is best illustrated by examples:

· The disconnected series of changes made by central government in local government structure since 1974 – in particular the abolition of the GLC and the metropolitan county councils in 1986 and the ill-judged and inconsistent changes made in the 2006-08 period in local government structures in a range of shire counties.

· The impact of changes made in the mode of finance of local government – typically linked to political considerations such as the perceived need to find an alternative to the community change, which have led to abrupt and unsustainable changes in the balance between locally-raised revenue and central government grant in the finance of local government.

· Interventions by individual Secretaries of State which serve to confuse the public perception of the powers and responsibilities of central and local government. We might offer as examples here the then Home Secretary’s intervention in Humberside Police Authority and suspension of their Chief Constable in 2004, and the intervention by the then Secretary of State for Children, Schools and Families in Haringey Council to ‘remove’ the Head of Children’s Services in 2008. (We emphasise here that we are not making judgements on the ‘rights and wrongs’ of the actions of particular individuals in these examples.)

As well as having potential for shaping central-local relations in a positive sense, a Code would have real value in preventing arbitrary actions of this nature.

What should the Code cover?

We think it important that the Code should address the following topics:

· A clear statement of the principles underpinning the Code

· A clear statement of the division of responsibilities between central and local government, including the latter’s roles and functions

· A set of guidelines which recognise the need for the recognition of central government’s legitimate interests in the policies and patterns of service provision of local authorities and which develop means of safeguarding such interests, in different circumstances.

· The balance between central and local financing of local government’s activities and the ways in which the latter should be generated.

· The nature of local democratic arrangements e.g. voting systems, frequency of elections modes of decision-making etc.

· Territorial structure, and the way in which changes in such structures should be introduced.

· The role of local authorities in the partnership arrangements involved in local governance – what rights of leadership, influence or scrutiny should be involved?

· Arrangements for multi-tier government, in particular the relationship between central government, local government and regional-level ‘intermediary’ bodies.

· The role of neighbourhood government and ways in which the civic rights of individual citizens cam be strengthened.

· The approach to central regulation of local activity where appropriate, given the agreed principles, roles and relationships.

We address these issues in turn, some in more detail than others depending on our knowledge and experience.

Principles

We welcome the statement by the current Coalition Government quoted in the ‘Issues and Questions’ papers which emphasises the promotion of decentralisation and democratic engagement and the promise of a radical devolution of power and greater financial autonomy. In our view this stance is absolutely appropriate if it is wished to create and sustain a healthy democracy at the local level. It also provides a real opportunity to embed such values in the form of a Code to ensure they survive future changes in government or governmental attitudes. The creation of a general power of competence is one important expression of these values, and is a measure which we strongly support, and which would bring Britain into line with many of our European counterparts.

For similar reasons we support the formal ratification of the European Charter of Local Self Government.

We also consider that the principle of subsidiarity should be explicitly recognised and applied in the legal settlement. This principle has implications not just for the allocation of responsibilities to local authorities, but also for devolution of responsibilities to the neighbourhood level. A final important principle should be an explicit recognition of the community leadership role of local authorities in any endeavour to improve the welfare/quality of life of their inhabitants, given their status as the only local democratically-elected multi-purpose governmental agencies that exist at local level.

Roles, Functions and Responsibilities

Drawing on the above principles, it should be possible to develop a meaningful statement about the roles, functions and responsibilities of central and local government respectively (e.g. in relation to service provision regulation promotional activities and Community leadership). Indeed it is essential to do so if issues of finance, structure and democratic arrangements are to be addressed on a consistent basis. What should be avoided is the simplistic use of terminology such as ‘partnership’, ‘agency’ or ‘local autonomy’ to characterise the relationship and to use as a basis for more detailed specification of roles. The reality is that the relationship is too complex to be characterised by any of these vague and over-used terms, as we discuss in the next section.

Safeguarding Central Government’s Legitimate Interest in Local Affairs

A number of different service or policy categories can be identified, each implying a different relationship between central and local government:

· Services/policy areas for which the centre retains full responsibility (e.g. defence).

· Services/policy areas for which the centre allocates part of the policy implementation role to local authorities (e.g. housing benefit, civil defence), and local government, in effect, plays an ‘agency’ role. (Primary/secondary education has moved progressively closer to this model, and needs to be dealt with constitutionally on these terms – unless major policy changes are proposed).

· Services/policy areas which are allocated to local authorities, either as a statutory requirement (refuse collection/disposal) or on a permissive basis (local arts and cultural activities (including museums)).

· Service/policy areas where responsibility is shared. The local authority is allowed wider scope of autonomy but is required to achieve certain goals or targets (e.g. reducing Co2 emissions, promoting community cohesion).

· Service/policy areas where the centre wants to influence local authorities to take action (e.g. economic development, civic engagement).

· Service/policy areas where the centre wants to ensure that local authorities (as community leaders) have influence on local partner agencies (e.g. PCTs), for instance through powers of scrutiny, calling to account.

We acknowledge that it would be difficult for a document such as a Code to specify in detail how these six different types of relationship should be structured. However, we think it is important that these differences are recognised because they have important implications for other constitutional elements (e.g. allocation of finance). There may be a case for a schedule of agreements, attached to the formal Code to set out how these different forms of central-local relationship should be managed, in more detail than would be possible in the Code itself.

Finance

We are not experts in local government finance. However we are clear about the principles which should underpin the allocation of finding responsibilities. The key principle should be that the centre funds those local activities where it has a legitimate interest, for example:

a) Services where local authorities act as de facto agents (in whole)

b) Services which local authorities are required to provide (in a prescribed form, or on the basis of ‘minimum standards’)

c) Services which are primarily the responsibility of local authorities, but where the centre wishes to specify certain policy/service objectives (and measures for assessing their achievement) (this could be a case for partial funding)

All other policy/service areas should be financed by the raising of local resources (e.g. council tax, local income tax etc). Policy areas where the centre wished to encourage activity (e.g. aspects of climate change, economic development) should be financed, in principle, by specific (ring-fenced) grants.

We recognise that there would be considerable difficulty in allocating financial responsibility for (c) (and to a lesser extent (b)). Some kind of formula would be required which recognises differences in local authority size, demography, level of need etc. While negotiation would inevitably prove complex, the broad outcome of moving in this direction would be a major switch for centrally-provided grant to locally-raised finance, a move which would reflect and strengthen the principles of subsidiarity and maximum local autonomy.

Democratic arrangements

The Code would need to address the respective roles of central and local government in deciding different features of local democratic arrangements, for example:

a) Voting system (first-past-the-post, AV, or a variant of PR)

b) Frequency of local election

c) Definition of wards/divisions

d) System of decision-making (elected mayors, committee systems, etc)

Although there is room for debate about the respective roles in relation to each of these features, on balance we consider that: (a) and (b) should be matters for central decision (in consultation with the LGA and other interested bodies); (d) should be left wholly to the discretion of local authorities; whilst (c) should operate as at present, with local authorities submitting proposals to the Electoral Commission.

Territorial structures

There are major inconsistencies in the local government structure across Great Britain and in particular England, resulting from piecemeal and often ill-thought-out changes introduced since 1974. There are likely to be inconsistencies between the roles specified for local authorities and their capacity to undertake them efficiently and effectively (e.g. City of Leicester and Rutland are both local authorities, but one is almost 10 times the size of the other in terms of population).

In principle, there is a strong case for a major independent review to make recommendations for a local government structure which could best deliver the roles specified in the new Code. In the longer term, such a review is essential and should be undertaken by a properly constituted independent body such as a Royal Commission. However, in the shorter term, such a review would probably be impractical in the current climate and an unwelcome source of insecurity. What is essential is that the Code prevents central government from the arbitrary and often politically-inspired reorganisations it has initiated since 1974. The Code should establish a formal process for any future territorial review of local government structures.

Partnership arrangements

Local authorities have long ceased to be self-sufficient entities. Although the Code should have the effect of strengthening the degree of local autonomy, and the scope of local decision-making, the reality is that the current emphasis on partnership working and ‘local governance’ is likely to continue. In this context the key issue which the Code needs to address is how the lead role of local authorities in partnership arrangements is to be expressed, and what levers are available to exercise it. The scrutiny powers which currently exist in relation to health authorities and several other local agencies are one such expression and councils are now taking back responsibilities for economic development and public health.

But, if local authorities are to be genuine ‘community leaders’, their capacity to do so needs to be further strengthened. The priority here is the development of appropriate skills and capacities, not just in local authorities but in a wide range of local ‘partners’, and among local politicians as well as professionals. But a new Code can assist by entrenching the principle of local authority ‘community leadership’, and enabling genuinely innovative partnership working through greater financial autonomy for local government. Partnerships need to operate at different levels to be effective – whether via regional coordination (on economic matters) or neighbourhood-level community engagement. As discussed in the following sections, the Code needs to situate the roles and responsibilities of local government within a multi-level system.

Regional government

The role and structure of regional government is currently in a state of flux, and hence it would be difficult for the Code to address it directly. However , should central government wish to introduce some form of regional government which had an impact on the roles, functions and responsibilities of local authorities, it should not be able to do so in an arbitrary fashion (as in recent local government reorganisations). This is a matter of principle, whatever proposals come forward in the future for the regional level. A clause should be included in the Code which made the introduction of any such proposal subject to detailed consultation with the LGA, with the possibility of a referendum on options.

In the current circumstances, there would be value in re-designing the role of the government’s regional offices, so that they are more genuine regional instruments of mutual learning for both the centre and local authorities. For instance, some regional office staff could be employed by local government, rather than by central government departments as is the case at present. Further use of secondments from local government could also assist in shifting the role of regional offices towards supporting, rather than policing, localism. Given the abolition of the Audit Commission, regional offices could also put more ‘meat’ on their support for localism by taking on aspects of ‘soft’ regulation previously undertaken by the Commission (e.g. the generation and sharing of ‘good practice’, support for innovation).

Neighbourhood government

If subsidiarity is to be guiding principle of the Code (as indeed it should be), it would be important to recognise that subsidiarity does not just refer to the allocation of responsibility between central and local government. It has implications too for the allocation of responsibilities between counties and districts (in a two-tier system); and between town/parish councils and local authorities; and between local authorities and sub-units (such as neighbourhoods, community teams or area offices within them). The recognition of this aspect of subsidiarity is particularly important in the light of the current emphasis on localism and the ‘Big Society’. Neighbourhood level arrangements are central to both stimulating and unlocking sources of social capital in the furtherance of policy objectives (including the co-production of services, mutualism, self-help, and citizen engagement in decision-making).

The Code should require all councils to develop and introduce a ‘scheme of devolution’ (often building on existing set-ups), as was the case when unitary councils were introduced in Wales. The effectiveness of such schemes could be addressed, in circumstances where there were concerns, by the external audit process.

Regulation

We welcome the way in which the current government has recognised and responded to the over-elaborate system of central regulation of local services and functions. Any slimmed-down regulatory system that is developed should focus on services where there is a legitimate central government interest (see p. 3) and upon local authorities where there is objective evidence of poor performance. An enhanced role for regional offices in light-touch regulation has already been suggested above (see p. 6).

Conclusion

We agree strongly that there is a need for a Code setting out the relationship between central and local government. We have argued that the Code should:

· Clarify central-local relationships and prevent arbitrary and politically motivated interventions in the structures and processes of local government.

· Endorse the general principle of subsidiarity, and commit to the devolution of power to local government, including greater financial autonomy.

· Incorporate the formal ratification of the European Charter of Local Self Government.

· Specify and protect the roles and responsibilities of local government.

· Identify and safeguard central government’s legitimate interest in local affairs.

· Develop a model for central-local relationships in the case of shared responsibilities.

· Enable a major switch from centrally-provided grant to locally-raised revenues.

· Establish a process for any future territorial review of local government structures.

· Entrench the principle of local government ‘community leadership’, with particular reference to local partnerships.

· Establish a process for consulting with local government in relation to the future development of regional tiers of government.

· Require local authorities to introduce a ‘scheme of devolution’ to provide neighbourhood level arrangements, in accordance with the subsidiarity principle.

· Establish a light-touch regulatory system via regional offices, relating to those services in which central government has a legitimate interest.

2 December 2010