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


2  The rationale for codification: next steps beyond localism

    "There was once a time when local government was at the centre of local decision-making. Councils had the power and authority to make a difference. They could bring about dramatic, positive improvements to the local area. Decades of centralisation, however, left councils distracted by bureaucracy and targets and often powerless to make changes. This government will restore local government to its former glory because we believe this is the best way to build a stronger economy and fairer society." - Rt Hon Eric Pickles MP, June 2011[6]

13. Local councils have an ever-increasing number of statutory duties imposed on them by the centre. Thus, they are not currently independent, free-standing organisations. In a statement made on 30 June 2011, the then Minister for Decentralisation, Greg Clark MP, stated that there were "at least 1,293 duties imposed on each local authority".[7] Such imposition of duties by the centre on local government is against the principles and practices of localism. The table overleaf shows that more than half of these duties have been added in the last 15 years. These nationally imposed duties reduce the money available for local government to respond to local priorities. If the Government is serious about devolving power to local authorities, this huge central burden must end.

14. It would depend on how any legislation was framed, but we intend that the code would supersede the 1,293 duties currently imposed on local government. The code would have the authority of being a statute which had been entrenched and would of course be interpreted in line with the European Convention on Human Rights. It would also build on, and go further than, the general power of competence. What the general power of competence shows is that very broad powers for local authorities have been introduced. Section 5 of the Localism Act enables the Secretary of State, through order-making powers, to amend, repeal, revoke or disapply existing statutory provisions that prevent or restrict local authorities from exercising the general power of competence.


Source: Department for Communities and Local Government

15. All parties appear to accept the need to reduce central burdens on local government. We note and welcome the commitment of the Government to the concept of localism and greater freedoms for local government. The Coalition's programme for government stated:

    The Government believes that it is time for a fundamental shift of power from Westminster to people. We will promote decentralisation and democratic engagement, and we will end the era of top-down government by giving new powers to local councils, communities, neighbourhoods and individuals.[8]

The Coalition's programme for Communities and Local Government states: "We will promote the radical devolution of power and greater financial autonomy to local government and community groups. This will include a review of local government finance."[9] A code similar to the one discussed in this report could fulfil the Coalition's pledge radically to devolve power to communities.

16. At the 2010 Labour party conference in Manchester, the Labour leader, Rt Hon Edward Miliband MP, said: "We need more decisions to be made locally, with local democracy free of the constraints we have placed on it in the past and free of an attitude which has looked down its nose at local government."[10]

17. The Coalition Government has pursued a number of measures in its localism agenda aimed at strengthening the hand of local government. The Localism Act 2011 gave local councils the general power of competence, which allows councils to do "anything that individuals generally may do".[11] However, it does not repeal any existing regulation on local government, so the ability of local government to act under the general power is constrained. To be used fully these powers require finance. Sunderland City Council noted in their written evidence that "the Act contains around 140 reserve powers for the Secretary of State".[12] The localism agenda only opens the door to greater powers for local government; we propose that the code is a useful way to take this agenda forward. It is important to say that the draft code would do nothing to inhibit the general power of competence, but would instead give local government greater autonomy over all its affairs.

FAILURE OF NON-STATUTORY OPTIONS

18. All previous non-statutory attempts to create a more equal partnership between central and local government in England have fallen short, despite good intentions. Sir Merrick Cockell, the Chair of the LGA, told us decentralisation was necessary because "a very centralised state does not satisfy people's needs".[13]

19. The 2007 Central-Local Concordat aimed to foster new partnerships between central and local government while setting out a framework of rights and responsibilities that each partner should uphold. These rights included the right of central government to set national policies. The Concordat stated that "councils have the right to address the priorities of their communities as expressed through local elections".[14]

20. However, the Concordat quickly fell into disuse because it was agreed only by the Department for Communities and Local Government and the LGA, and had no legal force as it was not enforced by statute. The then Chair of the LGA, Baroness Eaton, said of the Concordat:

As a principle, nobody could have argued with it but it did absolutely nothing. It was words where nobody delivered anything. As a result of it we used to have a central local partnership; central governments were supposedly to present their Ministers to us so that we could discuss things that were of mutual concern and interest, and Ministers didn't come and it delivered absolutely nothing.[15]

21. In order to avoid the fate of the Central-Local Concordat, it is clear that any successful rebalancing of the relationship between central and local government must deliver a Whitehall-wide agreement that local government should have greater autonomy over its affairs. It is hard to see how such an agreement could work unless it was enforced by statute.

22. Dr Chris Himsworth, Professor Emeritus of Administrative Law at the University of Edinburgh[16] and Henry Peterson,[17] a consultant on local government and public service reform, queried why the Committee's draft code had not been based on the European Charter of Local Self-Government, which in itself is a code for relations between central and local government. The European Charter of Local Self-Government was adopted by the Congress of Local and Regional Authorities of the Council of Europe, the local and regional arm of the Council of Europe, in 1985.[18] The Charter has been ratified by 45 members of the Council of Europe since 1985.[19] The UK ratified the Charter in 1998.

23. The Centre for Public Scrutiny suggested that putting the European Charter of Local Self-Government on a statutory footing might be the best way of codifying the relationship between central and local government.[20] However, Professor George Jones and Professor John Stewart disagreed that the European Charter could be put into statute without amendment. Councillor Peter Martin, Leader of Essex County Council, stated that a new code could be useful as previous charters and concordats "have failed, not because of their particular provisions, but because they have been ignored in successive governments' policymaking".[21]

24. The Government has stated that it deems itself to be fully compliant with the European Charter,[22] although Durham County Council have stated that they believe the Government is currently not honouring its obligations with regard to the European Charter because "the centralised handling of local government funding and limitations on local tax raising powers amounts to a high degree of central supervision and confuses lines of accountability from local government to its citizens".[23] Henry Peterson drew attention to a discrepancy between paragraph 8.27 of the Cabinet Manual, which asserts that "ministers can direct local government to adhere to national policy frameworks where legislation permits"[24] and the European Charter of Local Self-Government to which the UK is a signatory.

25. Kent County Council succinctly summed up the problem with applying the European Charter:

the 'European Charter of Local Self-Government' has never been fully implemented in the UK simply because the UK Government does not have a single codified (written) constitution to which to append it: but in any case successive governments have shown little interest in applying its substance.[25]

26. The explanatory report for the European Charter of Local Self-Government stated that its purpose was "to make good the lack of common European standards for measuring and safeguarding the rights of local authorities".[26] The Charter's basic principles are sound and are reflected in our draft code. We believe, however, that our draft code better reflects the specifics of England's situation, and the Government's ongoing localism agenda.

THE REGIONAL GOVERNMENT OPTION

27. The traditional response to devolution in England has always been to develop the English regions, some of which have population sizes that are comparable to the population sizes of the other three parts of the Union.

28. The London Assembly is the only directly elected regional body in England. The Assembly has 25 directly elected members, led by the Mayor of London. The Assembly's role is defined in the Greater London Authority Act 1999.

29. The Regional Development Agencies Act 1998 established eight unelected regional bodies in England. In May 2002, the Government published a White Paper, Your Region, Your Choice, outlining its plans for the possible establishment of elected regional assemblies. The Regional Assemblies (Preparations) Act 2003 made provision for referendums to be held to create such assemblies. Three referendums were planned for the regions of North East England, North West England, and Yorkshire and the Humber.

30. The referendum on the North East England Assembly was held on 4 November 2004 and the creation of an elected assembly was roundly rejected by 696,519 votes to 197,310.[27] No more referendums were held and plans for elected regional assemblies were quietly scrapped.

31. The Regional Development Agencies and Government Offices in the regions were then abolished by the Coalition Government.

32. While we are concerned about the centralisation of power in England, we do not believe that resurrecting regional government would currently be a viable option. There were no submissions advocating a return to regional government. Should independent councils wish to join together to provide certain functions or services at sub-regional or city region level then they should be free to do so, as long as it requires no subsidy from central government. However, care would need to be taken to ensure such contractual agreements did not leave future councils hamstrung.

CITY DEALS

33. We welcome the commitment of all parties to the concept of localism and the Government's willingness to devolve powers from Whitehall to local government. However, we do not wish to see a situation in which powers are increasingly devolved to large city regions while those who live in rural areas are excluded or only able to access devolved power by aligning themselves to a large city. We hope that the Government continues to devolve power down to localities as a matter of principle. Our code is the mechanism through which the extension of localism can be protected and promoted as a continuing facet of the constitution, thus enshrining localism as a permanent part of the political and policy landscape of English governance.

34. On 8 December 2011, the Deputy Prime Minister, Rt Hon Nick Clegg MP, talked about the Government's proposals for City Deals, which would hand powers to city regions to complete specific tasks:

we are launching a series of deals to recast the relationship between central government and our cities, in what we hope will be an unprecedented transfer of power—to unleash city power, to boost entire regions, to get our national economy growing and to begin correcting the dangerous imbalance in that economy.[28]

The first wave of City Deals were announced on 5 July 2012 and involved Greater Birmingham and Solihull, Bristol and the West of England, Greater Manchester, Leeds City Region, Liverpool City Region, Nottingham, Newcastle, and Sheffield City Region. Each City Deal is the result of a negotiation between the Government and the specific city. Newcastle, Sheffield and Nottingham have been allowed to use tax increment financing to fund infrastructure projects while Birmingham, Bristol, Leeds and Sheffield have had their transport budgets devolved, which should enable them to take long-term decisions about their city's transport systems. The second wave of City Deals was announced on 29 October 2012 and will, according to the Cabinet Office, see a further 20 city regions "compete for deals that will see Government devolve powers in exchange for responsibility for delivering growth locally".[29]

35. When the Deputy Prime Minister gave evidence in April 2012, he was positive about the City Deals initiative:

It is really quite a big, bold thing. We basically said to the eight largest cities in England, "Come here and look at the Whitehall cupboard and tell us which powers, which hitherto have been hoarded by Whitehall politicians and civil servants, do you think you could make best use of to promote growth, prosperity and innovation in your communities?"[30]

36. Will Godfrey, Bristol City Council's Director of Strategic Services, who was closely involved in the negotiation of the Bristol City Deal, hoped that the City Deals would be stuck to, as previous deals between central and local government had sometimes been overtaken by national events. He stated:

One caveat for me is that the deal will be successful as long as what was agreed on 5 July translates through the legislative statutory process into real outcomes. The clue is in the name, really: a deal is between two parties and two partners. My fear and concern is that we might get sidelined into some national legislative processes that are outside the deal framework. That is a danger.[31]

37. Sir Howard Bernstein, Chief Executive of Manchester City Council, stated that the City Deals should be the beginning of the decentralisation of power to local government, rather than an end point. He told us: "the City Deals have been a step forward and have challenged some of these longstanding ways of working, but can only be the first step in a much longer process".[32]

38. We were heartened to see that on 30 November 2012 the Financial Times reported that the new single funding pot for local areas to be announced in the Chancellor's 2012 Autumn Statement would "strip Whitehall of up to £58bn of business support funding and place it in local hands in the biggest act of financial devolution England has ever seen".[33] We will keep a watching brief on these developments.

39. The constitutional position of local government is evolving. We hope the new City Deals will devolve powers and finance from central government to enable local councils to help tackle problems specific to their areas. We see this as a good start to a process which should continue until all local matters are dealt with locally.

GREATER FINANCIAL INDEPENDENCE FOR LOCAL GOVERNMENT

40. We heard much evidence that any attempt to make the relationship between central and local government more balanced would be meaningless without giving local government its own source of revenue. Various inquiries into the balance of power between central and local government, from the Layfield Committee, which reported in 1976[34] to the Lyons Inquiry, which reported in 2007,[35] have recommended greater financial autonomy for local government but have been largely ignored by the centre.

41. At a constitutional level we welcome the potential for more autonomy for local government implicit in the Local Government Finance Act 2012, which will allow local councils to retain a greater proportion of business rates raised in their areas, and the Government's decision to reduce the ring-fencing of local government funding, which will give local government greater freedom over how it spends its money. However, both these measures fall short of giving local councils real financial autonomy. We believe that to achieve fully the potential of localism, a key plank of the Government's policy platform, local government requires financial freedoms. Power and finance must go together if local government is to become an equal partner with central government. Central and local government will still have their own specific spheres of competence.

42. The direction of travel that central government intends for local government is evident from the efforts to unify a range of grants into the main grant pot, the Revenue Support Grant. Budget lines are being consolidated into the Revenue Support Grant (for example, the Early Intervention Grant) and the incorporation of the Business Rate into the Formula Grant is also to be welcomed. Reducing ring-fencing gives local government greater discretion over spending. However, set against this greater discretion are the vast number of duties that mean that in reality local government spending is still highly prescribed.

STATUTORY PROTECTION FOR LOCAL GOVERNMENT IN OTHER COUNTRIES

43. English local government lacks some of the most basic constitutional protections that are available to some of its counterparts in a number of other mature European democracies. It is central government that finalises the shape, size, structure, powers, responsibilities and functions of English local government. Indeed, English local government lacks the right to continued existence and central government can and has amalgamated councils, restructured boundaries and even abolished councils or entire layers of local government. England is alone, not only within the Union but in other mature democracies, in not having a devolved settlement that includes local democracy.

44. For example, France's written constitution states: "'Territorial communities may take decisions in all matters arising under powers that can best be exercised at their level.' (Article 72 du Titre XII)".[36] Article 137 of the Spanish Constitution (1978) states: "The State is organised territorially into municipalities, provinces and the Self-governing Communities that may be constituted. All these bodies shall enjoy self-government for the management of their respective interests".[37] Article 24 of the German Constitution states: "Insofar as the Länder are competent to exercise state powers and to perform state functions, they may, with the consent of the Federal Government, transfer sovereign powers to transfrontier institutions in neighbouring regions".[38]

45. In federal systems or states with written constitutions, the basic rules of the game are codified and the relationships between the levels of government can be balanced and set out. By doing this, the institutional relationships are clarified and, for local government, protected. Statutory codification, and entrenched and constitutionally defined freedoms for local government, would allow England to join this democratic family.


6   Public Service Review: Local Government and the Regions, Issue 18  Back

7   HC Deb, 30 June 2011, col 58WS  Back

8   HM Government, The Coalition: our programme for Government, May 2010, p 11  Back

9   Ibid.  Back

10   "Ed Miliband signs up to localism agenda", 28 September 2010, Local Government Chronicle Back

11   Local authorities: the general power of competence, Commons Library Standard Note SN05687, September 2012  Back

12   Ev w46 Back

13   Oral evidence taken before the Political and Constitutional Reform Committee, Do we need a constitutional convention for the UK?, 6 September 2012, Q147 Back

14   HM Government and Local Government Association, The Central-Local Concordat, 12 December 2007, para 10 Back

15   Q 126 Back

16   Ev w23  Back

17   Ev w83 Back

18   What is the Congress? Local Government Association. http://www.local.gov.uk/web/guest/european-and-international/-/journal_content/56/10171/3511244/ARTICLE-TEMPLATE  Back

19   Council of Europe, European Charter of Local Self-Government, CETS No: 122. http://conventions.coe.int/Treaty/Commun/ChercheSig.asp?NT=122&CM=8&DF=13/11/2012&CL=ENG  Back

20   Ev w144 Back

21   Ev w31 Back

22   Government Response to the Communities and Local Government Committee report into the balance of power: central and local government, Cm7712, para 17 Back

23   Ev w78 Back

24   HM Government, The Cabinet Manual, October 2011, para 8.27  Back

25   Ev w74 Back

26   Council of Europe, European Charter of Local Self-Government: Collection and references, March 2010, p 39 Back

27   "North East votes 'no' to assembly", BBC News, 5 November 2004 http://news.bbc.co.uk/1/hi/uk_politics/3984387.stm  Back

28   Speech given by Deputy Prime Minister, "Do it your way - Deputy Prime Minister launches new 'city deals in Leeds'", 8 December 2011, http://www.dpm.cabinetoffice.gov.uk/news/do-it-your-way-deputy-prime-minister-launches-new-city-deals-speech-transcript  Back

29   Cabinet Office website, "Wave 2 - City Deals" , 29 October 2012, http://www.dpm.cabinetoffice.gov.uk/content/wave-2-city-deals  Back

30   Oral evidence taken before the Political and Constitutional Reform Committee, The Coalition Government's programme of political and constitutional reform, 19 April 2012, Q 171 Back

31   Political and Constitutional Reform Committee, Do we need a constitutional convention for the UK?, Thursday 6 September 2012, Sir Merrick Cockell, Ged Fitzgerald, Will Godfrey and Tom Riordan, Q 158 Back

32   Ev w100  Back

33   "Osborne aims to strip Whitehall of up to £58 billion", Financial Times, 30 November 2012 http://www.ft.com/cms/s/0/470b815a-3af4-11e2-bb32-00144feabdc0.html#axzz2EIbVEHFX  Back

34   For further information, please see Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions, Local Government Revenue, Ninth Report of Session 2003-04 Back

35   The Lyons Inquiry (2007). Final Report and recommendations, http://www.lyonsinquiry.org.uk/  Back

36   Assemblee Nationale, Constitution of October 4, 1958, Article 72 du Titre XII  Back

37   The Constitution of Spain 1978, Article 137 Back

38   Basic Law for the Federal Republic of Germany in the revised version published in the Federal Law Gazette Part III, classification number 100-1, as last amended by the Act of 21 July 2010 (Federal Law Gazette I p. 944). Article 24.1(a)  Back


 
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Prepared 29 January 2013