Memorandum from Emeritus Professor George
Jones and Emeritus Professor John Stewart
SUMMARY
- Localism and decentralisation can strengthen
government at both the national and local levels.
- Community involvement and decentralisation to
local communities should be seen by local authorities as a means
of strengthening local representative democracy rather than as
opposed to it.
- There are many difficult issues to be faced in
decentralisation to local communities, which are likely to limit
its development. Their potential is most likely to be realised
with support by local authorities committed to community involvement.
Central government should leave local authorities to experiment
in finding ways most appropriate for their localities without
departmental interventions.
- Central policies on localism and decentralisation
are likely to be successful only if there is real authority for
those policies in central government and procedures to enforce
them over all departments.
- To realise the potential of these policies local
authorities will have to cast aside a habit of deference which
has limited some, although not all, to being agents of central
government rather than local governments for their areas.
- "Place-based budgets" could transform
the working of the fragmented system of community governance,
provided local authorities are given powers to match their responsibility
for these budgets.
- Localism and decentralisation require a significant
increase in the taxation powers of local government.
Localism and Decentralisation
1. We welcome the Committee's inquiry into the
Government's policies on localism and decentralisation of public
services. We regard both as necessary for the effective delivery
of public services and the good governance of society. Because
areas vary in their social, economic and environmental conditions,
services are likely to be more efficient and effective if those
responsible for their delivery understand those conditions and
the problems and aspirations of local communities and citizens.
Centralisation tends to uniformity imposing targets, procedures
and practices that take little account of local circumstances
and citizens' concerns.
2. There is an illusion that central government
knows best because it has knowledge and capacities not available
to individual local authorities. Its scale is seen as an advantage,
although scale has disadvantages as well as advantages, with diseconomies
of scale as well as economies, in particular problems of communication.
Defects of centralism include:
- central Government does not directly deliver
local services and hence has no first-hand knowledge of service-delivery;
- central government has no direct knowledge of
local conditions and the concerns of local citizens; and
- the lack of direct experience of the local level
means that too often the centre does not appreciate its importance.
3. There has been little research into the impact
of centralisation and decentralisation on the effectiveness of
service-delivery. Comparison is difficult because of the extent
to which local services are subject to central control. Examples
are often quoted of service-failures at local level, but examples
could be multiplied for central government and its agencies. The
Committee should reflect upon why local authorities avoid deficits,
while many health authorities have been in severe financial deficit.
4. The role of local authorities extends beyond
the provision of services. Local authorities as local government
are concerned with the good governance of their areas, as was
recognised by the powers of well-being in the Local Government
Act 2000 and the Government's commitment to a power of general
competence.
5. The concerns of communities and citizens and
their aspirations for the future are given expression in local
politics both by local parties and by the pressures and demands
made by the multiplicity of communities and individual citizens.
An active political process at local level is a condition of good
governance, but that process requires a new stress on "localism"
since it cannot develop when limited by excessive centralisation.
Decentralisation through localism should be seen also as a condition
of good governance at the national level. It reduces the burdens
on central government, focusing all its resources on issues that
can be dealt with only at that level. Decentralisation in the
system of government creates a capacity for handling the diversity
of society.
6. Elected local government is the only democratically
legitimate and accountable form of localism. Everything else is
either central government or the private sector. Local government
is the government of difference, both responding to differences
in local conditions and creating it as local authorities respond
to the aspirations of local people. These differences should not
be criticised as a postcode lottery but celebrated as local choice.
Diversity creates a capacity for learning in the system of government.
Little is learnt from uniformity except that mistakes have been
made everywhere. Much can be learnt from the diversity of relative
success and failure in different areas.
7. No definitive boundary can be drawn between
centralisation and decentralisation or between centralism and
localism. Localism and the "Big Society" are concepts
and broad approaches to governing, rather than specific and concrete
policies, which can express trends towards either centralisation
or decentralisation. Such boundaries will be determined by the
push and pull of political processes. One can never be certain
the right balance has been achieved, but one can identify that
the present imbalance is dangerous for the effectiveness of both
central and local government, as was recognised by the report
of the CLG Committee The Balance of Power: Central and Local
Government [HC 33-1, 2008-09].
8. The guiding principle should be that central
government should intervene only when there is a clear national
interest requiring action. This action by central government should
require explicit justification and not be the automatic response
that leads to detailed prescription in legislation, regulation
and guidance, buttressed by bureaucratic procedures, overbearing
inspection and detailed reporting. We welcome the Government's
commitment to reduce regulation, targets and inspection.
Decentralisation to Communities
9. The Government stresses that decentralisation
should involve decentralisation both to community groups and to
local authorities, which immediately raises the question of the
nature of the relationship between these two processes. Yet the
Government has not clarified the relationship between decentralisation
to community groups and decentralisation to local authorities,
which is necessary if conflict is to be avoided. Nothing could
be more fatal to the Government's policy than conflict and hostility
between community groups and local authorities. The Committee
should focus on this critical issue. Problems in decentralisation
to communities can be resolved only at the local level through
the community-leadership role of local authorities, but local
authorities will be able to resolve the issues only if they are
fully committed to community involvement.
10. Key questions for the Committee to investigate
are: what are the communities to be involved, and how they are
determined? Are they communities of place or communities of interest,
concern or background, or are they of all these types? How are
their geographical or organisational boundaries to be designated?
If such boundaries are to be decided by the communities concerned,
then how can overlaps and gaps in responsibilities be avoided?
What issues are suitable for decentralisation to communities,
and what are of wider concern? How is expression to be given to
the wider community interest? Is a community group required, and
if so then how can one ensure it is representative of and accountable
to the community? How is financial control and probity in the
use of public resources and public powers to be secured? Can a
private organisation assume "community" responsibilities?
11. It may be argued that concern for such issues
could stifle development through top-down (although local) bureaucratic
procedures. That is not inevitable provided there is a commitment
to community involvement. These issues will not be resolved unless
they are faced, and if they are not faced serious problems will
arise that could bring the policy of decentralisation to communities
into disrepute. Conflicts could arise between different groups
claiming similar responsibilities; prosperous areas may gain attention
while deprived areas are neglected; community groups may be dominated
by a small elite with little accountability to local people; interested
parties may dominate without rules about declaration of interest
and for probity of behaviour; public funds may be abused with
ensuing financial scandals; and corrupt people may assume control
of community bodies. The need is for procedures that provide safeguards
without unnecessary bureaucracy.
12. Local authorities should be given responsibility
for promoting and supporting decentralisation to communities.
They should work with local people in determining activities for
decentralisation to communities, deal with overlaps and gaps and
develop frameworks that protect accountability and probity. The
principles of representative democracy should guide the approach
to decentralisation, and those who make decisions in groups should
be representative of the communities they serve. Representative
institutions can provide accountability to local people. Urban
parish councils—like existing rural parish councils—have
a role to play with their established procedures for ensuring
probity and financial control.
13. The development of community involvement
cannot replace representative government but could strengthen
it. Local authorities are well placed to bring about community
involvement. They should take initiatives and not wait to be told
what to do by central government. They should build up the role
of the councillor as community representative, enabling community
involvement in the work of the authority and other public bodies
and in meeting community needs. The effectiveness of this role
depends upon interaction between elected representatives and communities
and citizens. Such interactions happen now, but often their focus
is limited to the problems of single individuals. The council
should support the councillors' role in community involvement.
As community representatives they can ensure contact between community
groups and the local authority and assist in their work. There
are 20,000 such community representatives (ie councillors) who
could be a rich resource working with community groups and in
interactions with them without the need for direct intervention
by central government. It should learn to trust local government
as the elected body for the area.
14. Local government is at its most effective
when close to the communities in its locality. Working together
local councils and community groups can strengthen both local
democracy and community activities. Local authorities could build
community involvement, using the growth in their powers and their
freedom for initiatives that the Government has promised in its
policies for localism and decentralisation. However, since 1945
central government has removed much local autonomy and power,
making it less likely councils will themselves pass power downwards.
15. There is a need for realism about the extent
to which community groups can or should take over responsibility
for the delivery of services. Many activities involve more than
one community. In some communities there will be limited or no
interest in such developments, or opinion may be divided. Certain
council policies set a framework within which community groups
should act. Community interest may decline over time as individuals
who took the original initiative leave the area. Differing views
on the policies to be followed may divide the community. The reality
is that direct involvement of communities in the provision of
services is likely to be limited compared with the scale of work
and activities by local authorities and other public bodies. Developments
are likely to be patchy, being taken up more by some communities
rather than others and varying over time. Because of these reservations
about what community groups can spontaneously achieve, the involvement
of the local authority working positively with local communities
is important to their success.
16. The local authority can and should involve
communities and citizens in many ways. Local authorities will
be realistic about how far that involvement can go, reflecting
their understanding of their areas and the communities within.
Local authorities should be committed to pursuing that involvement
while recognising the limitations on how far it can be pursued.
The changes in central government required to
secure decentralisation
17. Past experience shows it is easier to announce
a policy of decentralisation than to ensure it happens. The reasons
lie in the working of central government departments. Even when
the initial policy is accompanied by measures of decentralisation
it is not long before the operations of departments reassert the
dominant centralist approach. Michael Heseltine, when Secretary
of State for the Environment (1979-83) held "a bonfire"
of 300 controls. Over time new central controls more than replaced
the number abolished.
18. The consequences of the dominant centralist
approach are to be seen in detailed prescription through legislation,
regulation and many pages of guidance; in the numerous procedures
and reports required of local authorities; and in the many inspections
imposed on them. These practices are well-illustrated in a recent
dossier from the Local Government Association: Reducing the
burden—allowing councils to get on with their day
job [11 August 2010]. The press release accompanying the dossier
noted "Thousands of pages of official guidance that has no
legal force", and the dossier itself stated that "CLG
and quangos collect 2500 separate data items from council housing
departments" [Annex A: 3]. There is no adequate information
on the extent of staff time and costs arising in both local and
central government from this centralisation. The reason why excessive
central requirements occur, despite commitments to decentralisation,
lies in the workings of central government. The Committee could
helpfully examine what in the operations of departments has led
to an excess of controls and prescription. Only if that process
is understood can it be changed, and if it is not changed then
policies of localism and decentralisation will wither away. Four
key factors are involved.
19. The first is the dominance of departmentalism,
with the policies of a department having priority over the Government's
policies on decentralisation. Ministers and civil servants manage
budgets, develop policies and assume powers to secure their aims,
including powers over local authorities. Even in DCLG the same
factors are at work. The present Secretary of State is deeply
committed to giving local authorities freedom from central controls,
yet where he has strong views on how local authorities should
act he proposes new powers to enforce those views: for example,
he insists on the publication of details of expenditures of over
£500; he supports new controls over council newspapers; despite
giving authorities freedom to re-introduce the committee system
he proposes to impose directly-elected mayors on big cities subject
to a confirmatory referendum; and, while opposed to capping, he
will require referendums from authorities proposing an increase
in expenditure he regards as excessive. Freedom for local authorities
is only real if it means freedom to act in ways central government
does not like, rather than freedom merely to do what the Government
likes.
20. The second factor is that policies are specified
in detail through legislation, regulation and guidance, and supported
by procedures, inspections and reports to ensure the policy is
implemented. Departments work out how the policy should be carried
out in practice rather than leaving it to local authorities which
have more relevant experience of practice at local level than
does central government. This process is the way the civil service
has learned to work and is deeply embedded in its culture. It
is elitist and lacks confidence in local government and believes
the centre knows best what is required, with the result it creates
too many authorities dependent and expecting guidance rather than
using their own initiative.
21. The third factor is that, while no department
explicitly sets out to limit local authorities' freedom to act
or to place burdens on local authorities, no department considers
the cumulative effect of such decisions on the workings of local
authorities. Each new policy and each new procedure is considered
on its merits without consideration of how it adds to the burdens
on local authorities or how it affects their operations. The requirement
on local authorities to publish details of expenditure of over
£500 is likely to generate much correspondence, each leading
to detailed responses. Policy on academies and free schools was
developed without any apparent examination of its impact on the
role of local authorities.
22. The fourth factor is the failure of central
government to recognise that the primary accountability of local
authorities is to their local citizens who have elected them.
The Government's decision to abolish the community area assessment
is welcome recognition that the proper assessment is by local
citizens as voters. Rather than submitting to inspection by a
national system, local authorities can benefit from peer review
as organised by the LGA and its associated bodies. Such processes
give expression to the principle of shared learning. External
reviewers of a local authority should accept that those inspecting
an authority have as much to learn as those being reviewed. They
do not necessarily know best. The danger is they and central government
believe they do know best.
23. These four problems can be overcome, but
only by fundamental change in the workings and operation of central
government. The Government should initiate a review of all requirements
placed on local authorities to identify the extent to which they
are consistent with its policies on localism and decentralisation.
This review should cover the proposals of the Lifting the Burdens
Task Force set up by the previous Government, many of whose recommendations
were not carried into practice [Final Report November 2008], but
it should range much wider. The review should encompass legislation,
regulations and guidance. It should assess the staff resources
and costs involved in reports, procedures and data required from
local authorities, and lead to proposals for change that should
significantly reduce administrative overheads at national level
as well as in local authorities.
24. At present the power of DCLG to secure the
implementation of Government policies on localism and decentralisation
is limited. DCLG lacks the necessary authority in Whitehall. It
should be charged with the responsibility of ensuring the application
of those policies and in the future workings of central government.
It will need to understand the present position and the implications
for local-government expenditure and the staff required at both
local and national levels. DCLG needs to be able to bring pressure
to bear to ensure service departments in their relationships with
local authorities conform to the Government's programme for localism
and decentralisation.
25. Procedures will be needed to restrain central
departments, including DCLG itself. Proposals to institute policies
and procedures bearing on local authorities should require the
approval of DCLG. This requirement will involve the introduction
of routines that may be regarded by civil servants as bureaucratic.
But departments should be asked to state what national interests
are at stake in their proposals. They should be asked why detailed
legislation, regulations and guidance are required, given the
Government's policies for localism and decentralisation. They
should be asked what staff resources and what costs will be required
at both national and local levels, and how these estimates have
been arrived at, possibly subject to checks by the National Audit
Office.
26. DCLG should make decisions on whether the
policies and actions of departments are consistent with the Government's
programme on localism and decentralisation. It should report to
a powerful Cabinet Committee any retreat from the Government's
localism and decentralisation agenda. The results should be subject
to parliamentary scrutiny through a review by the Joint Committee
of the Commons and Lords as proposed by the CLG Select Committee's
report The Balance of Power: Central and Local Government.
[HC 33-1 (2008-2009), paras. 138-142]. Through these channels
both the executive and the legislature can play a part in sustaining
localism and decentralisation.
Requirements from Local Authorities
27. Localism and decentralisation require local
authorities to develop community involvement and support community
initiatives by working closely with citizens. Local authorities
should be ready to use to the full their powers to meet community
needs and aspirations. It requires local authorities to be local
government.
28. This role will not be easy when local authorities
and other bodies at local level are expected to reduce their expenditure.
There is a danger that local bodies will be required to bear an
unfair share of cuts. Central government has always found it easier
to reduce the expenditure or grants to other public bodies than
to reduce its own direct expenditure.
29. There are opportunities for the reduction
of expenditure. "Place-based budgeting", if radically
implemented, should lead to more sensible use of resources at
local level. A reduction in the demands made by central government
for reports, in applications for specific grants or in having
to meet the requirements of inspections should lead to significant
economies. Discretion to innovate both in a local authority's
own activities and in its support of initiatives by communities
is likely to be a better use of resources. Many local authorities
have shown the scope for local action even within present constraints.
30. The endless flow of departmental prescription
and guidance suggests that central government has not seen local
authorities as governing local areas in interaction with their
citizens but as agents for central government. The danger is that
central government assumes it is more important for local authorities
to satisfy central government and its inspectors rather than to
satisfy their citizens. Inspectors have become instruments of
central government in assessing local authorities and can easily
condemn innovations because they do not conform to what has been
declared good practice. If local authorities are to fulfil a role
in community leadership, they must reject this subordinate role
and not seek guidance from central government, which central government
has often given as a justification for the proliferation of guidance.
Years of centralisation and regulation have left councillors unsure
of their capacity to act on their own initiative.
The System of Governance at Community Level
31. The Government's policy of localism and decentralisation
highlights the state of governance at local level. Almost for
the first time it enables consideration of how local areas are
governed by a complex of agencies and authorities. Too often in
the past institutions of government have been considered and re-organised,
focussing on the requirements of a particular department without
regard to the impact on other public bodies and on the system
of governance at local level.
32. The result has been the present fragmented
structure of governance which has clear weaknesses. It is wasteful
of resources. It fails to focus relevant institutions on the needs
of a locality through an integrated approach, with instead each
institution governed by its own central-government-departmentally-defined
areas of concerns. This maze of institutions and powers confuses
the public, and apart from the local authorities lacks clear local
accountability. Attempts have been made to deal with some of these
issues by creating partnerships, which have, however, added to
the confusion of bodies invisible to the public and lacking clear
accountability.
33. Recent developments and the analysis of expenditure
both in "Total Place" and in other initiatives by local
authorities have led to discussion of "place-based budgeting".
The recent LGA paper on Place-Based budgets: the future governance
of local public services [June 2010] rightly identifies the
need to
- Achieve significant economies by eliminating
unnecessary duplication of resources.
- Make an effective impact on social, economic
and environmental problems through integrated working.
- Enhance local accountability and local democracy.
34. We commend this paper to the Select Committee
as showing how "place-based budgeting" can improve the
governance of local public services. But three issues require
further work:
- The report identifies areas which could provide
the basis for "place-based budgets", recognising that
this issue should be resolved locally. In many areas they suggest
partnerships between local authorities. But such partnerships
weaken the clear accountability of an individual local authority
and should be avoided wherever possible.
- The paper proposes that area-based budgets should
be drawn up by a local board composed of elected councillors,
in effect the cabinet where based on a particular authority. Further
work is required on the board's responsibilities and powers over
that budget. The implication, if place-based budgeting is to be
firmly based on local accountability, is that the board should
allocate resources to and commission services from other public
bodies—that implication should be made explicit. The lack
of such powers was a weakness in Local Area Agreements and could
be a weakness in the Government's proposals for the role of local
authorities in strategic planning in health, which do not provide
adequate powers for local authorities to support that role. To
achieve area-based budgets will require DCLG to overcome the kind
of departmental defensiveness considered above.
- The paper proposes that, alongside accountability
for place-based budgeting to local voters through elected local
authorities, there should be accountability to Parliament for
the proper use of nationally-raised tax-payers' money voted by
Parliament. There are also references to what is, in effect, accountability
to ministers through performance-management systems. The result
of these different arrangements could confuse rather than strengthen
accountability. Local accountability should be at the heart of
the Government's policies for localism and decentralisation.
The Final Piece of the Jigsaw: Financing Localism
and Decentralisation
35. It is not enough for CLG to promote localism
and decentralisation. The Whitehall spending departments whose
work impinges on local authorities and localities, like Education,
Health, Work and Pensions, Transport, the Home Office, Environment,
Food and Rural Affairs, Energy and Climate Change, and Culture,
Olympics, Media and Sport, all have to be committed to localism
and decentralisation. For place-based budgeting to be effective
they need to ensure their budgets and policy decisions for localities
follow the lead of the local authorities. Such decentralisation
requires a cultural change among departmental civil servants,
and officials in their quango offshoots, and such change is unlikely
to emerge unless there is political commitment to localism and
decentralisation from ministers, and above all from the Prime
Minister and the Chancellor of the Exchequer, the first two Lords
of HM Treasury. There is no place for "ring-fencing"
of service budgets in the new localist world.
36. The Treasury has to be as committed to localism
and decentralisation as is CLG. It must champion decentralisation
not only of expenditure decisions but also of taxation decisions.
It too must reject centralisation. The Treasury controls 96% of
taxation, with only council tax as the 4% beyond its direct control,
but even it is capped by CLG. The council tax finances only around
25% of local-government expenditure. For decentralisation to be
genuine, elected local government should be drawing the lion's
share of its revenues from local taxes it levies on its local
voters. That shift in the balance of local spending and taxing
will enable more responsible, responsive and accountable local
government, no longer acting as a supplicant on central government
demanding bigger grants, and more involved in interacting with
its localities. Citizens, community groups and councillors will
behave more responsibly in their use of resources if they know
that any demands for higher standards, better services and fewer
cuts will have to be paid for by local-taxation increases bearing
on them. This local fiscal discipline should be welcomed by the
Treasury, since it will no longer be bombarded by local authorities
seeking larger grants. Instead local authorities will be their
allies in the wise use of resources. These authorities, more reliant
on local taxation than central grants, and playing the lead role
in place-based budgeting, will help the Treasury avoid its incessant
battles with Whitehall spending departments, since decisions on
spending and taxing will have been decentralised to local authorities.
Cabinet squabbling will be diminished, enabling the Treasury to
concentrate on issues of macro-economic management and international
finance.
37. The Government has promised a review of local-government
finance. This review need not take years, since the evidence has
been accumulated in numerous previous reviews, notably by the
1976 Layfield Committee on Local Government Finance [of
which we were members] (Cmnd. 6453), and in the more recent Lyons
Report of 2007, Place-shaping: a shared ambition for the future
of local government.. All that is required is political will.
That will should now be here because of the sheer problems facing
public finances and the Government's commitment to localism and
decentralisation. The political moment for change is now. The
Committee should enthusiastically encourage this change and support
a radical shift from centralisation across the whole of government.
Returning taxation powers to local government is a pre-requisite
for genuine localism and decentralisation.
Conclusions
38. For localism and decentralisation to be effective
central government needs to exercise self-discipline and relax
its controls over local authorities. It should not make detailed
and random interventions into delivery; it should abolish ring-fenced
specific grants; it should not cap local-authority decisions on
levels of council tax or make a judgment on whether a particular
expenditure of an authority is excessive; and it should not confine
local government to only one tax.
39. Our main conclusions are:
- Localism and decentralisation can strengthen
government at both the national and local levels.
- Community involvement and decentralisation to
local communities should be seen by local authorities as a means
of strengthening local representative democracy rather than as
opposed to it.
- There are many difficult issues to be faced in
decentralisation to local communities, which are likely to limit
its development. Their potential is most likely to be realised
with support by local authorities committed to community involvement.
Central government should leave local authorities to experiment
in finding ways most appropriate for their localities without
departmental interventions.
- Central policies on localism and decentralisation
are likely to be successful only if there is real authority for
those policies in central government and procedures to enforce
them over all departments.
- To realise the potential of these policies local
authorities will have to cast aside a habit of deference which
has limited some, although not all, to being agents of central
government rather than local governments for their areas.
- "Place-based budgets" could transform
the working of the fragmented system of community governance,
provided local authorities are given powers to match their responsibility
for these budgets.
- Localism and decentralisation require a significant
increase in the taxation powers of local government.
September 2010
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